Chapter

Country Surveys

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1971
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Afghanistan

Exchange Rate System

The par value is 0.0197482 gram of fine gold per Afghani or Af 45.00 = US$1. The Afghanistan Bank (Da Afghanistan Bank, the central bank) charges commissions ranging from

of 1 per cent to ½ of 1 per cent on exchange transactions. The Bank’s official buying and selling rates for the U. S. dollar are Af 44.70 and Af 45.30, respectively. The official selling rate applies to certain foreign exchange payments by the Central Government. The official buying rate applies to the proceeds of exports of karakul (which is exported only to the convertible currency area), wool (except cashmere wool exported to the convertible currency area), cotton, and natural gas (which is exported only to the U. S. S. R.); to 30 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. Exchange subsidies are applied to the official buying rate as follows: Af 3.12 per US$1 for export proceeds from cotton when payment is received under a bilateral payments agreement; Af 10 per US$1 for proceeds in convertible currencies from exports of wool; Af 25 per US$1 for proceeds in convertible currencies from exports of cotton; and Af 20 per US$1 for proceeds from exports of karakul.

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 to an exchange tax of 9.5 per cent. The Afghanistan Bank maintains its operational free market selling rate for the U. S. dollar within Af 2.0 per US$1 of the daily free market rate quoted in the bazaar. On December 31, 1970, the free market rate of the Afghanistan Bank was Af 86.50 buying, and Af 87.00 selling, per US$1, and the free market rate in the bazaar was Af 89.75 buying, and Af 90.25 selling, per US$1. The Afghanistan Bank also posts free market rates for deutsche mark, French francs, pounds sterling, and Swiss francs, which are set by applying their par values to the current free market rate for the U. S. dollar, and free market rates for the Indian rupee and Pakistan rupee that are determined by demand and supply for the currencies concerned. The Afghanistan Bank from time to time sells in the free market bilateral agreement dollars and bilateral agreement sterling resulting largely from loans for consumer goods under certain of Afghanistan’s bilateral payments agreements; most of this exchange is purchased by government commercial and industrial enterprises for their imports from the countries concerned. The selling rate for U. S. S. R. clearing dollars was Af 60.50 per US$1 on December 31, 1970, and that for mainland China clearing sterling, which is maintained at par with the free market rate for pounds sterling, was Af 198.80 per £ stg. 1. On the same date, the selling rate for clearing dollars under the payments agreements with Bulgaria, Czechoslovakia, Poland, and Yugoslavia was Af 55.50 per US$1.

Administration of Control

Foreign exchange is controlled by the Government through the Afghanistan Bank. The control is facilitated by the existence of relatively large companies, some of them government owned or government controlled, 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.

Prescription of Currency

Settlements with countries with which Afghanistan has bilateral payments agreements 1 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. 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, agricultural and food products, 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.

Exchange is provided at the official rate for imports by the Government. Payments for imports through the banking system may be made only under letters of credit, against which 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 the letter of credit. Such deposits may be used as collateral to obtain loans from commercial banks. The Afghanistan Bank is authorized to refuse to sell foreign exchange for the importation of a group of consumer goods that are regarded as nonessential. However, exchange for these items may be purchased either from the commercial banks or in the bazaar.

Payments for Invisibles

Central government payments for foreign debt service and other invisibles are made at the official rate. All other payments are settled at free market rates. Travelers leaving Afghanistan may take out not more than Af 500 in Afghan banknotes.

Exports and Export Proceeds

Exports are not subject to license. 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). However, exporters of cotton are required to sell at least 20 per cent of their total exports to countries from which payments will be received in convertible currencies. Karakul is not exported to payments agreement countries.

Exchange receipts from exports of karakul, wool, and cotton must be surrendered at the official rate, irrespective of destination. The net proceeds of all exports other than karakul, wool, and cotton, irrespective of the currency in which they accrue, must either be sold at free market rates to a domestic bank or be used by the exporter or a third party to pay for imports.

Export receipts from cotton are subject to an exchange subsidy at the rate of Af 25 per US$1 for convertible currency receipts and Af 3.12 per US$1 for exports settled under bilateral payments agreements. Convertible currency receipts from wool exports are paid an exchange subsidy at the rate of Af 10 per US$1 and those from karakul exports are paid an exchange subsidy of Af 20 per US$1.

Proceeds from the export of walnuts received over bilateral payments accounts are subject to an exchange tax of 9.5 per cent.

Proceeds from Invisibles

Thirty 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 70 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 bring in Afghan banknotes not exceeding Af 500.

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 (February 10, 1967) provides for a number of benefits, which include (1) income tax exemption for five years, beginning from the date of the first sales of products resulting from the new investment; (2) exemption from import duties on essential imports for five consecutive years after approval of the investment; (3) exemption from taxes on dividends for five years after the first distribution of dividends, but not more than eight 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 for ten years after the approval of the investment; and (6) mandatory purchases by government agencies and departments of their requirements from enterprises established under the law where such products are substantially competitive with imports in price and quality. The law 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 25 per cent of the total registered capital. All the foregoing transfers are made through the free market. Joint ventures of foreign and Afghan capital are encouraged, but no specific percentages of domestic participation are prescribed and 100 per cent foreign-owned investments are not precluded by law.

Gold

Residents may freely import and purchase, hold, and sell domestically gold in any form. 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 1970

February 10. The exchange subsidy on proceeds from cotton exported to the convertible currency area was increased from Af 19 to Af 25 per US$1, raising the effective export rate from Af 64 to Af 70 per US$1.

April–July. Import duties were imposed on the items that had been removed from the list of prohibited imports in September 1969.

April 22. The prohibition on the export of cottonseed was lifted.

June 21. The exchange rate for free mainland China clearing sterling was appreciated to the level of the Afghanistan Bank’s free market rate for pounds sterling and henceforth followed the fluctuations of the latter. For the past few years the rate quoted had been at a discount on that for pounds sterling.

June 29. The middle rate for free U. S. S. R. clearing dollars was raised from Af 55 to Af 60 per US$1.

July 1. The middle rate for free clearing dollars for Bulgaria, Czechoslovakia, Poland, and Yugoslavia was raised from Af 52 to Af 55 per US$1.

Algeria

Exchange Rate System

No par value for the currency of Algeria has been established with the Fund. The official unit of currency is the Algerian Dinar. The exchange rate for the French franc is a fixed rate of DA 1 = F 1.12499, giving the relationship DA 4.93706 = US$1. The Central Bank of Algeria deals in French francs and the other French Franc Area currencies at fixed rates, free of commissions or charges. Buying and selling rates for specified currencies of countries outside the French Franc Area 1 are established by the Central Bank of Algeria on the basis of the daily rates quoted on the Paris exchange market for these currencies. The exchange rate applicable to “agreement dollars” is the average rate for the U.S. dollar in the Paris market on the day preceding the entry on the clearing account. The predevaluation rate for the French franc and the prerevaluation rate for the deutsche mark are applicable to certain payments or receipts in the respective currencies. The Central Bank charges on its transactions in non-Franc Area currencies a commission ranging from 0.2 per mill to 1.5 per mill, depending on the nature of the transaction, and a tax of 6 per cent on the amount of the commission. The foreign exchange reserves are centralized in the Central Bank; authorized banks must clear their foreign currency position with their correspondents in the French Franc Area at the end of each day but they are under certain conditions permitted to hold outside the French Franc Area 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 of Algeria assists in the formulation of the exchange legislation and regulations and is responsible for their execution and for their application by the authorized banks. In addition, three commercial banks and the Postal Administration have been given authority to carry out some of the detail of exchange control. Import and export licenses for all commodities are issued on the advice of the competent ministry by the Ministry of Commerce and 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 Viti-vinicoles (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. 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. All foreign borrowing requires the prior approval of the Minister of Finance.

Prescription of Currency

Algeria has traditional ties with the French Franc Area, but the Central Bank of Algeria does not maintain an Operations Account with the French Treasury and Algeria applies exchange controls to transactions with the Area.2 Settlements with other countries in the French Franc Area are generally made in French francs. Settlements with countries with which Algeria has concluded bilateral payments agreements are made through special accounts under the terms of the agreements. Some of these accounts are denominated in Algerian dinars and others in U.S. dollars of account. Algeria maintains payments agreements with Albania, Bulgaria, mainland China, Cuba, Czechoslovakia, Guinea, Hungary, North Korea, Poland, Rumania, the U. S. S. R., the United Arab Republic, and Yugoslavia. Settlements with other countries are usually made through Paris in French francs, and sometimes in the currency of the country concerned.

Nonresident Accounts

For residents of countries outside the French Franc Area, the regulations pertaining to nonresident accounts are similar to those applied until early 1967 in France; most of these accounts are Foreign Accounts in Convertible Dinars or Internal Nonresident Accounts. For residents of other French Franc Area countries, there are three types of accounts in Algerian dinars: Individual Suspense Accounts, Franc Area Accounts, and Final Departure Accounts. Except as described below, all operations through these accounts are subject to authorization.

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

Franc Area Accounts may be opened only with prior authorization from the Central Bank of Algeria. They may be credited freely 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 person residing in Algeria, but not of Algerian nationality, who intends to leave Algeria for another country in the French Franc Area. These accounts may be credited freely with an amount equivalent to the holdings at October 20, 1963 in the account of the person concerned; with the proceeds from sales of real estate of the account holder, provided that the sales are made through the intermediary of a notary public; and with any other payments, up to DA 1,000. The Central Bank may authorize the crediting of other 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.

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

Imports and Import Payments

Imports from Israel, Portugal, Rhodesia, and South Africa are prohibited. Certain imports are prohibited regardless of origin. All imports from bilateral payments agreement countries require a license. Imports from all other countries of a large number of commodities are subject to either quantitative restriction or a special import procedure. Imports of firearms, ammunition, and explosives require an import license from the Ministry of the Interior (for civil and military firearms) or the Ministry of National Defense (for munitions and explosives). All other imports from countries with which Algeria does not maintain bilateral payments agreements may be made freely; some liberalized imports, however, require the prior visa of one of the import monopolies.

The Government has the monopoly over the importation of many commodities through ONACO, OAIC, SNTA, ONCV, SNED, SNS, SONATRACH, SONACOME, and other similar organizations.

Imports that are not liberalized are in principle licensed in accordance with an annual import program which is based on global quotas.

Payments for liberalized imports, unless originating in a payments agreement country, do not require approval by the Central Bank. Liberalized imports not exceeding DA 10,000 in value require only the submission of an invoice to the customs when imported from a country with which no payments agreement is in force, but must subsequently be domiciled (registered) with an authorized bank. Liberalized imports exceeding DA 10,000 and all nonliberalized imports must prior to the transaction be domiciled with an authorized bank, to which the necessary import documents must be presented and through which all payments related to the transaction must be made. All imports for which payment has to be made before the goods reach Algeria must be domiciled with an authorized bank, and, 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. Payments for liberalized or nonliberalized imports may be approved by, and settled through, the Postal Administration up to an import value of DA 5,000. Import licenses require the visa of the Central Bank.

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

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

Imports from the French Franc Area are regulated by Notice No. ZF2 of October 23, 1963, which sets out a procedure similar to the procedure applied to imports from other countries.

Goods normally subject to import license and quota restriction 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 post office, either freely or up to specified limits for certain payments such as (1) those relating to approved trade transactions and maritime contracts, (2) travel expenses, (3) transfers of salaries and wages, (4) educational expenses, (5) advertising expenses, and (6) payments relating to government transactions with foreign companies. For payments for which the approval authority has not been delegated, the granting of exchange must be authorized by the Central Bank. The transfer of family remittances is suspended. All insurance must be concluded with Algerian companies.

Residents of other French Franc Area countries working in Algeria under the program for technical cooperation may transfer abroad a certain percentage of their net salaries: 50 per cent for single persons or married persons having their families in Algeria; 70 per cent for persons having their families abroad; and 100 per cent for employees who spend their vacations abroad (the transfer being limited to the duration of their absence from Algeria). For other workers from French Franc Area countries who have contracts with employers and hold the necessary employment documents, the amounts that may be transferred are 30 per cent, 50 per cent, and 100 per cent, respectively, for the groups enumerated above. Residents of other countries who are employed in Algeria under the program of technical cooperation are permitted to transfer abroad 30, 50, and 100 per cent, respectively. For workers from other countries, who have contracts with employers and hold the necessary employment documents, the corresponding percentages are 25, 45, and 100. The payments must be transferred once a month on the basis of the renumeration 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 the French Franc Area, the foreign exchange allocation is equivalent to DA 100 a person a trip (DA 50 for children under 15) and is issued on presentation of a valid passport and travel documents, including the approval of the wali of his place of domicile; for overland travel, the allocation is DA 100 a person a year for adults and DA 50 for children under 15. These allocations are not applicable to persons living in border areas. Algerian workers who hold a card of ONAMO (Office National de la Main-d’Oeuvre) are entitled to the equivalent of DA 200 a person a trip. Foreign exchange for business travel is subject to authorization by the Central Bank of Algeria. Funds in EFAC accounts (see section on Exports and Export Proceeds, below) may be used for business travel.

Pilgrims traveling to Saudi Arabia can obtain Saudi Arabian riyals up to the equivalent of DA 1,500 a person; the allocation can be taken up in the form of a check by those traveling by air or sea, and in banknotes by those traveling over-land. 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, Portugal, 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. Some exports to the French Franc Area, all exports to countries outside the French Franc Area that are not included in the free export list, and all exports to countries with which Algeria has bilateral payments agreements require licenses. The export of specified products is reserved for certain state trading organizations.

With certain exceptions, exports must be domiciled with an authorized bank. Prior registration is not required for exports that are made on a firm sale basis, provided that they do not exceed DA 5,000 in value and that they are payable in not more than 30 days. After customs clearance, such exports must be registered, if they were not registered earlier. If the payment period is more than 30 days, the exports may be registered only after authorization is given by the Central Bank. Sales on consignment are expressly subject to authorization by the Central Bank, and registration must always take place prior to customs clearance.

The proceeds of exports, including those to the French Franc Area, must be surrendered upon receipt and in any case not later than 30 days following shipment, except when prior authorization from the Central Bank is obtained. Petroleum companies holding mineral rights must repatriate to Algeria at least 50 per cent of the proceeds from their exports of hydrocarbons, subject to the same time limits. Certain percentages of the proceeds from exports other than petroleum and petroleum derivatives may be kept in special EFAC (Exportations-Frais Accessoires) accounts. Exporters to the French Franc Area may retain 5 per cent of their export proceeds (up to DA 20,000 per export transaction), while those to the convertibility area (i.e., all other countries except those with which payments agreements are in force) may retain 12 per cent if they export to the United States or Canada and 8 per cent in all other instances. EFAC accounts are denominated in dinars and are held with the bank at which the export is registered. Certain payments may be made from these accounts without prior approval by the Central Bank.

Proceeds from Invisibles

Proceeds from invisibles must be repatriated and surrendered.

There are no restrictions on the import of foreign banknotes, coins (except gold coins), checks, and letters of credit, but foreigners must declare such holdings when they enter Algeria. 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 retransfer of capital are only permitted in respect of investments approved under Ordinance No. 66-284.

Gold

Residents may purchase, hold, and sell gold coins in Algeria for numismatic purposes. Imports and exports of gold in any form require licenses issued by the Central Bank; such licenses are not normally granted except for imports and exports on behalf of authorized industrial users, and licenses for imports for industrial use have not been issued for some time. Under the terms of Ordinance No. 70-6 of January 16, 1970, unworked gold for industrial and professional use is 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. Commercial imports of jewelry and of other articles containing gold are suspended.

Changes during 1970

On various occasions during the year, a large number of commodities became subject to either quantitative restrictions or a special import procedure.

January 9. A trade and payments agreement with North Viet-Nam was signed and came into force provisionally the same day. All normal current payments would be effected in convertible currencies.

January 16. Ordinance No. 70-6 created the Agence Nationale pour la Distribution et la Transformation de l’Or et des Autres Métaux Précieux (AGENOR). The principal task of AGENOR would be the distribution of unworked gold for industrial and professional use, under directives established by the Minister of Finance and transmitted by the Central Bank. The previous functions of the Central Bank concerning the distribution of gold to jewelers were transferred to AGENOR. This agency could purchase in Algeria, hold, transform, and distribute any other precious metal. AGENOR could also, within the framework of the exchange control regulations, import and export any precious metal.

January 31. The bilateral payments agreement with Mali was terminated.3

February 19. Ordinance No. 70-21 created SONACOB (Société Nationale de Commercialisation des Bois et Dérivés) to which was reserved the import of wood and related products; BOIMEX was abolished.

February 19. Ordinance No. 70-22 created SNCOTEC (Société Nationale de Commercialisation des Textiles et des Cuirs) to which was reserved the import of textiles and leather products. GITEXTAL, GADIT, GIAC, and GICP were abolished. The only remaining professional association was GAIRLAC.4

June 23. Instruction No. 5HC of the Ministry of Finance and Planning was issued. With effect from July 1, petroleum exporting companies had to repatriate their export proceeds upon collection and not later than 30 days after the date of shipment. Balances maintained in Algeria by companies holding mineral rights could not be transferred abroad without authorization of the Central Bank. Amounts of export proceeds repatriated by petroleum companies in any given month in excess of their surrender obligation could no longer be carried over to following months. Amounts repatriated by June 30, 1970 in excess of the surrender obligation could not be credited against the obligations arising from petroleum exports effected prior to June 30, 1970. Export proceeds from hydrocarbon products could no longer be retained in EFAC accounts. The Instruction also defined the methods by which repatriation had to be effected; in all cases, the proceeds had to be credited to dinar accounts with an authorized bank in Algeria.

July 1. Notice No. 63 of June 23 of the Ministry of Finance maintained the tourist allowance for residents traveling by sea or air at the equivalent of DA 700 a person a year (DA 350 for children under 15) but doubled the travel allocation (also available for tourist travel) for residents traveling over-land to the equivalent of DA 100 a person a year (DA 50 for children under 15). The additional travel allowance for residents traveling by sea or air to a country of the French Franc Area was reduced from the equivalent of DA 500 a person a trip (DA 250 for children under 15) to the equivalent of DA 200 a person a trip (DA 100 for children under 15), but was henceforth applicable to travel to all countries.

July 20. An Order of the Minister of Finance and Planning specified the conditions under which the Central Bank would authorize the transfer of the sales or liquidation proceeds of enterprises and shares or parts representing capital. The beneficiaries of transfers of this nature could only be physical or juridical persons of foreign nationality who had invested capital in enterprises that had been approved by virtue of the Investment Law (Ordinance No. 66-284 of September 15, 1966).

July 20. An Order issued by the Minister of Finance and Planning specified the conditions under which the Central Bank would authorize the transfer of profits accruing from capital invested in Algeria by physical or juridical persons of foreign nationality. The beneficiaries could only be such persons who had invested capital in enterprises that had been approved by virtue of the Investment Law (Ordinance No. 66-284 of September 15, 1966). The remittances could not exceed 15 per cent a year of the amount of the foreign participation (as defined in the Order), and could take place only once a year, after the close of the company’s fiscal year. The Central Bank’s approval would be required to remit eligible but untransferred profits in later years.

August 12. Notice No. 65 of the Ministry of Finance tightened the surrender requirements for export proceeds from commodities other than petroleum and petroleum products. Henceforth all export proceeds had to be repatriated immediately after the date on which payment fell due, i.e., the due date specified in the sales contract. This date could not be beyond 30 days (against 90 days previously) following shipment, except when prior authorization from the Central Bank had been obtained.

August 20. Imports from all sources of some 150 commodities or groups of commodities were made subject to quantitative restriction by an Order of August 18.

August 20. Instruction No. 21 of August 19 of the Ministry of Finance went into effect. Family remittances were suspended. Additional requirements had to be met to obtain foreign exchange for medical care abroad. Also, authorized banks were instructed to require additional documentation prior to granting foreign exchange to cover medical expenses abroad.

August 20. Notice No. 64 of August 19 of the Ministry of Finance suspended the tourist allocation of DA 700 a person a year and reduced the travel allocation to DA 100 a person a trip (DA 50 for children under 15). Algerian workers holding a card issued by ONAMO (Office National de la Main-d’Oeuvre) could obtain the equivalent of DA 200 a person a trip.

September 18. Notice No. 66 of September 16 of the Ministry of Finance reduced the travel allocation for residents traveling by means other than sea or air from the equivalent of DA 100 a person a trip to the equivalent of DA 100 a person a year (DA 50 for children under 15). The special regulations for Algerians working abroad were unchanged.

October 12. Two financial agreements were signed with Morocco, one of which provided that certain settlements between the two countries would henceforth be channeled through special accounts maintained with each other by the Bank of Morocco and the Central Bank of Algeria and denominated in Moroccan dirhams and Algerian dinars, respectively. The latter agreement came into force on November 1.

December 10. Two Orders of the Minister of Finance amended the two July 20 Orders (see above). The only changes were in the documentation requirements for applications to remit liquidation proceeds or profits.

December 18. Notice No. 68 of the Minister of Finance specified the conditions under which passages by air, sea, or rail could be settled on behalf of resident or nonresident travelers.

December 31. Ordinance No. 70-93 containing the budget was published. It provided for the elimination of the last remaining tariff preferences for goods of French origin, with effect from January 2, 1971. The import tariff would henceforth comprise only the minimum preferential tariff, for goods of EEC origin; the normal tariff, for goods originating in countries that accord Algeria most-favored-nation treatment; and the general tariff, with rates three times those of the normal tariff, for goods originating elsewhere (including Hong Kong and Japan).

Argentina

Exchange Rate System

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

All exchange transactions take place in the exchange market, in which the buying and selling rate on December 31, 1970 was $a 4.00 per US$1. The Central Bank of Argentina deals with the commercial banks at $a 4.00 per US$1, buying and selling.1 Exchange transactions between banks and individuals are subject to a tax of

of 1 per cent.

Forward exchange transactions may be concluded between individuals and authorized banks or among authorized banks at the fixed exchange rate of $a 4.00 per US$1, subject to freely agreed premiums or discounts. Forward exchange purchases by the public are restricted to those concluded as part of a swap transaction, or to cover import payments made under documentary credit, bank collection, or bank guarantee. Swap operations designed to finance traditional exports may be concluded direct by authorized institutions. Other operations, such as the financing of nontraditional exports, and financial loans to industrial or commercial enterprises must be submitted to the Central Bank for prior consideration. Forward exchange purchases covering import payments require a 40 per cent deposit in local currency for a period of 180 days; this deposit may not be financed by local banks. Forward exchange contracts connected with imports may be extended for a period of up to 180 days from the date of their original maturity; those corresponding to exports may be extended only once, for a period of 30 days (or, where shipment is unavoidably delayed, for the period of the delay). Such contracts may be settled through clearing in the exchange market. The Central Bank intervenes in the forward exchange market as a seller of U. S. dollars at a premium which at the end of 1970 was 6 per cent per annum.

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

Administration of Control

All exchange transactions must be carried out through banks and institutions authorized expressly for this purpose. The operations of exchange agencies and exchange houses have been suspended since October 1970.2

Prescription of Currency

Transactions with other countries must be settled in convertible currencies. Virtually all payments between Argentina and Bolivia, 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, within the framework of the LAFTA multilateral clearing system.

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.

Imports and Import Payments

Imports are free of import and exchange licensing; exchange to pay for them may be purchased in the exchange market. Goods imported by official agencies require approval by the Ministry of Economy and Labor if payment is extended over a period of more than 180 days. Furthermore, all public sector imports are screened by a special body, the Asesoría de Importaciones del Sector Oficial. Imports of some vehicles, tractors, and engines are temporarily prohibited. All maritime imports are subject to a tax of 4 per cent on the freight.

Import taxes include the following: a consular fee of 1½ per cent payable normally in foreign currency on most import invoices; statistical taxes of 1½ per cent or

of 1 per cent applicable to all imports; taxes ranging from 4 per cent to 10 per cent on imports of paper products, certain types of timber and timber products, and forest products; and taxes ranging from $a 0.02 to $a 0.2 a kilogram on imports of iron and steel for the Steel Program.

An advance import deposit of 40 per cent of the c. & f. value is required on many goods from all sources except when imported by the public sector, by some firms being established in the Province of Tucumán, by certain institutions, or according to the intended use of the goods; goods imported from LAFTA countries are exempt if the goods are included in Argentina’s concession lists (including the special lists for Bolivia, Ecuador, Paraguay, and Uruguay). The commodities that do not require an advance deposit include most raw materials and fuels, many capital goods, and many semimanufactured goods for the production of nontraditional exports. The deposit is payable in pesos and calculated at the current exchange rate in the exchange market. It must be lodged before any of the following actions can be undertaken: opening a letter of credit; withdrawing shipping documents from the intermediary bank; purchasing forward exchange; or clearing goods through customs. The deposit is automatically refunded after 180 days.

Payments for specified capital goods imported by private firms (with the exception mainly of those in lists applicable to LAFTA countries) when valued at over US$20,000 and purchased with foreign or domestic credit, must be made in installments over a period ranging from at least two years to at least five years after the date of shipment, depending on the total value of the goods. Payment in cash at the time of delivery is permitted, however, if the importer uses exclusively his own funds. The prior approval of the Central Bank is required when the terms of payment are not in accordance with the prescribed minimum terms or when the amount payable exceeds the equivalent of US$1 million. There are certain special arrangements relating to exemption from advance deposits for imports by automobile manufacturers; nevertheless, payments by the automotive industry may be made without any restrictions. Advance payments for imports other than capital goods are only permitted in exceptional circumstances.

Payments for Invisibles

The banks and institutions authorized to deal in foreign exchange are permitted to sell exchange for all categories of invisibles without limitation or, except in the following cases, documentary evidence. Remittances of profits and dividends require documentary evidence that all tax and social security obligations have been met. For loan repayments, a prescribed amortization schedule must exist, as evidenced by a domestic banking institution. Authorized institutions selling exchange for travel purposes must verify that the requested amounts are for legitimate travel purposes and the travel ticket must be shown.

Travelers may take out any amount in domestic banknotes and coins, except gold coins; no limitations are imposed on the amount of foreign banknotes which can be taken out as part of the exchange obtained for travel purposes.

Exports and Export Proceeds

Exports are generally free of direct controls but minimum export prices are established for many agricultural and livestock exports as a basis for the payment of duties and the surrender of export proceeds. Exporters of most traditional commodities are required to repatriate and sell in the exchange market the foreign exchange proceeds of their exports within 10 working days after shipment. Proceeds from nontraditional exports may be surrendered after the due date of payment, which is freely negotiated between the exporter and the buyer. The proceeds of exports to Chile (except those of nontraditional exports) must be collected within 90 days of the bill of lading and surrendered within 10 working days after the due date.

Some products are subject to export taxes (derechos de exportación) calculated on the basis of the f.o.b. sales value or on the index values fixed by the State Department of Commerce upon the proposal of the Advisory Commission on Export Values, on which the National Grain Board, the National Meat Board, the Secretariats of Agriculture, Commerce, and Finance, and the Central Bank are represented. The principal export taxes range from 5 per cent to 25 per cent. The tax must be paid before shipment of the merchandise or within the following 30 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 1.5 per cent tax, the proceeds of which are destined for the National Institute for Agricultural Technology, on exports of agricultural and livestock products.

Nontraditional exports receive incentives which take the form of (1) customs duty drawbacks, (2) rebates on internal taxes, specified as a portion of f.o.b. exports, (3) exemption from the sales tax in respect of exported commodities, and (4) specified deductions for income tax purposes, measured as a portion of export value.

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. This system provides financing for 80-90 per cent of their value, depending on the nature of the commodity or service, with terms of up to eight and one half years for capital goods, three years for durable and semidurable goods, and up to one and one half years for other goods. The same terms apply to the freight and insurance premiums involved, provided that Argentine means of transport and services are used. The National Export Credit Insurance Commission provides credit insurance for exports of capital goods and consumer durable goods.

Proceeds from Invisibles

Exchange derived from invisibles may be retained and used for authorized transactions. Travelers may bring in freely any amount in domestic or foreign banknotes and coins.

Capital

There are no limitations on inward capital transfers by residents or nonresidents. Outward capital transfers are restricted. 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 may be accepted in a convertible currency.

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 (see footnote 2) 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 coins are unrestricted and free of duty. Imports of gold bars are subject to the exchange regulations applicable to imports of other commodities; imports by industrial users are subject to a statistical duty of

of 1 per cent, and those by others 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 1970

January 1. A new monetary unit, the peso, replaced the “peso moneda nacional” at a ratio of $a 1 = M$N 100. No appreciation or depreciation was involved.

February 1. A reciprocal credit agreement with Uruguay came into force.

February 1. By virtue of Law No. 18526 of December 31, 1969, the stamp tax of

of 1 per cent on exchange transactions within Buenos Aires City between banks and individuals was replaced with a general tax at the same rate; it was applicable throughout Argentina.

February 6. Laws Nos. 18587 and 18588, and Decree No. 604, established a new system for the promotion of new industrial activities and for the expansion and improvement of existing industries. Import duties on specified capital goods were modified with effect from June 12, 1970, to abolish most of the special regimes that had allowed imports at rates of duty different from those in the customs tariff.

February 10. Decree No. 459 lowered the export tax on certain types of beef from 8 per cent to 6 per cent.

February 10. Decree No. 460 increased the tax rebate on exports of certain products from 12 per cent to 15 per cent of the f.o.b. value, and established a 5 per cent rebate for exports of specified canned meats and extracts.

February 20. The Central Bank by Circular No. R.C.384 instructed the authorized institutions with respect to the application of Law No. 18250 and Decree No. 5030/69, both concerning the obligation to transport imports in Argentine-flag vessels.

March 20. Central Bank Circular No. B720 amended Circular No. B503 of December 28, 1965 concerning the establishment of foreign banks in Argentina.

April 21. Decree No. 1625/70 established the implementing provisions for Decree-Law No. 18587 of February 6, and provided, inter alia, for preferential treatment for foreign capital in basic industries (such as oil, energy, and transportation) and for the establishment of industrial areas.

May 23. Imports of synthetic fertilizers were prohibited, except for use in the manufacture of drugs and medicinal products.

June 9. All exchange transactions were suspended by the Central Bank’s Telephone Communication No. 2394.

June 15-16. Decrees Nos. 28, 38, and 39 provided import duty concessions on certain materials required for steel and power production, and for the manufacture of fertilizers, medicines, and pesticides.

June 16. Decree No. 47 provided for restoration of the import duty concessions canceled by Law No. 18588 of February 6, 1970, provided that national production was insufficient.

June 18. The exchange market was reopened by Telephone Communication No. 2405 and the Central Bank of Argentina began to deal with commercial banks at a rate of $a 4.0 per US$1, buying and selling; previously the rate had been $a 3.5 per US$1, buying and selling.

June 18. The Central Bank by Circular No. R.C.386 informed the authorized institutions that it would deal with them in U.S. dollars, whenever they wished, at a quotation which it would announce daily and that could differ up to 1 per cent from the rate of $a 4 per U.S. dollar.

June 18. Telephone Communication No. 2406 established a charge of $a 0.02 per US$1 on U. S. banknotes sold by the Central Bank to authorized banks and exchange houses. These were authorized to charge their handling costs for such banknotes to their customers, but not more than $a 0.02 per US$1.

June 18. Law No. 18715 established a special tax on the net foreign exchange position of banks and exchange agencies at the close of business on June 8, 1970 of $a 0.50 per US$1 or its equivalent in other foreign currencies or gold coins held.

June 19. Telephone Communication No. 2407 established that foreign exchange acquired by authorized banks from exporters at exchange rates applicable before June 18, and corresponding to exports approved before June 18, had to be surrendered to the Central Bank at those earlier exchange rates. The Communication also permitted authorized banks to charge a commission of up to

of 1 per cent on such purchases from exporters.

June 27. Decree No. 52 established concessional import duties for ships, as provided for by Law No. 18587.

July 11. Decree No. 191 established new import duties on most goods. Duties of 15 per cent were reduced to zero and higher rates were reduced by 15 to 30 percentage points. Goods imported from LAFTA countries, when covered by complementarity agreements signed by Argentina, were subject to the concessionary rates agreed upon or those of Decree No. 191, whichever were lower.

July 15. Law No. 18718 introduced an additional tax of 12.5 per cent on exports. Subsequently, Decree No. 192 introduced various export taxes of up to 35 per cent.

September 10. Decree No. 908 provided that official c.i.f. import prices could be established when subsidized export prices of foreign suppliers threatened damage to Argentine industries.

September 10. Imports of specified used goods, including textile articles, electrical machinery (and spare parts), locomotives, and vehicles, were prohibited by Decree No. 909. Exemptions could be granted by the Secretariat of Industry and Internal Commerce.

September 10. Decree No. 910 provided for exemption from import duties on goods used in the iron and steel industry, subject to individual authorization by the Ministry of State for Industry and Internal Commerce.

September 10. Circular No. R.C.391 widened the scope of the financing system for promoted exports, as laid down in Circular No. R.C.378 of September 3, 1969.

September 16. Decree No. 2551 authorized the Secretariat of Foreign Trade and the State Petroleum Corporation (YPF) to establish an autonomous agency for the promotion of exports.

September 29. Decree No. 1208 provided for the reduction or elimination until May 31, 1971 of export duties on wool shipped from certain ports in Patagonia.

October 1. A reciprocal credit agreement with Venezuela was signed and came into effect immediately. Payments for petroleum and related products were not covered by the agreement.

October 8. Decree No. 1495 reduced or eliminated the export taxes on beef for a 30-day period; the reduction resulted in the freeing of one third of the varieties of beef previously subject to tax, and taxes of 5 per cent or 6 per cent on the remainder.

October 14. Decree No. 1711 suspended the provisions of Decree No. 7921/67 by which the prohibition on imports of heavy trucks and of long-distance buses and their chassis had been lifted in 1967. Goods shipped prior to October 14 that were either already in an Argentine port or were covered by an irrevocable letter of credit were exempted from the renewed prohibition.

October 15. The exchange market was closed by Telephone Communication No. 2423.

October 19. The Central Bank reduced the premium at which it sold U. S. dollars forward from 8 per cent to 6 per cent per annum for all maturities.

October 19. Telephone Communication No. 2428 allowed the partial resumption of exchange transactions. The Central Bank resumed dealings in foreign exchange at $a 4.0 per US$1, buying and selling, and operations in foreign exchange were resumed for the following transactions: (1) spot and forward operations between banks authorized to deal in exchange; (2) purchases of spot and forward exchange from customers from all transactions; (3) sales of spot exchange to customers for the following purposes: (a) import payments in respect of obligations due (including freight and insurance) only when covered by documentary credits or formalized by bills accepted or guaranteed with bank intervention, (b) payment of installments on imports of capital goods, and (c) payment of obligations due arising from credits granted by the IBRD, IDB, IFC, U. S. Export-Import Bank, and U. S. AID; (4) compensation of purchases of forward exchange under contracts related to exports under reciprocal credit agreements to LAFTA countries; and (5) liquidation at maturity of forward contracts entered into up to October 14, 1970. In addition, sales of spot exchange for the official sector and transactions with international organizations that were not covered by 3(c) above, required the prior approval of the Central Bank. Prior approval was also prescribed for financial transactions requiring forward cover. All other exchange operations remained suspended, and exchange houses and exchange agencies were not reopened.

October 21. Telephone Communication No. 2430 authorized the resumption of exchange transactions for the following: bank commissions and charges; consular fees; freight and travel fares; expenses incurred abroad by Argentine ships and airplanes; information services; interest due on foreign loans; and insurance, reinsurance, and claims paid by domestic insurance companies.

October 28. Telephone Communication No. 2435 allowed the resumption of exchange transactions for the following: accrued profits and dividends, provided that the firms concerned could document that they were current with their tax and social security contributions; repayment of foreign currency loans, when effected not more than five working days prior to the maturity date and provided that the proceeds of the loans had originally been sold in the exchange market and that there was a stipulated amortization schedule documented through or with the intervention of a domestic banking institution; remittances by embassies and members of the diplomatic corps; payments for the chartering of ships; copyrights; cable, telephone, and postal fees; fees and expenses related to certificates of birth, baptism, marriage, death, etc.; and registration abroad of patents and trademarks.

November 3. The October 8 reduction or elimination of export duties on meat was continued for a further period of one year by Decree No. 2183.

November 5. Telephone Communication No. 2439 permitted the following exchange transactions: (1) opening of documentary credits for the import of specified goods; and (2) sales of spot exchange for the following purposes: (a) clearing of purchase contracts for forward exchange at maturity; (b) interest and charges on documentary credits, bills, or collections in respect of imports; (c) reimbursement of ships’ excess expenditure; (d) membership subscriptions to international organizations; (e) registration fees for attendance at international conferences; and (f) attendance at scientific, cultural, artistic, and sporting events by foreign individuals and groups.

November 6. The list of permitted imports was issued for which, by virtue of Telephone Communication No. 2439, authorized banks could open letters of credit. It comprised mainly essential commodities. The list was revoked on December 2, 1970 by Telephone Communication No. 2450.

November 9. Telephone Communication No. 2440 permitted purchases of foreign exchange through authorized banks by persons traveling abroad, subject to stipulated conditions attesting to the bona fides of the transaction. The foreign exchange could not be purchased more than five working days prior to departure.

November 10. It was announced that the exemption of beef exports from export duty would be continued for a further 12 months.

November 10. Telephone Communication No. 2441 permitted sales of foreign exchange for the following: retirement payments and pensions to beneficiaries resident abroad; students’ expenses; purchases of medicines by individuals; subscriptions to newspapers and periodicals and purchases of books (only by private persons who were not importers); contributions to foreign social security institutions; remittances by public charitable agencies; salaries and fees of foreign personnel working under contract in Argentina; expenses for participation in international fairs; and premiums for insurance on imports and exports and on other goods, under contracts with local insurance companies.

November 17. Telephone Communication No. 2446 permitted exchange transactions for the following: family remittances; technical services; expenses of business representatives abroad; expenses of commercial advertising; royalties; and business commissions on imports and exports. The Communication also provided that, for remittances of profits, evidence of being current with respect to tax and social security obligations could be provided in the form of a declaration issued by a national chartered public accountant.

November 30. Telephone Communication No. 2449 permitted authorized banks to sell foreign exchange for repayment (up to five days before maturity) of foreign loans whose proceeds had been sold in the exchange market or that had been used abroad, provided that the existence of the debt could be certified by a national chartered public accountant; expenses of medical treatment abroad; payments by travel firms and travel agencies for services abroad; use of credit cards abroad; income from securities and other assets of holders abroad; transfer of bank balances held by banks and firms abroad and resulting from the sale of foreign currency in the exchange market; and adjustments for reduced f.o.b. value of exports.

December 2. Telephone Communication No. 2450 permitted the full resumption of exchange transactions by authorized banks in accordance with the general rules in force on October 14, 1970, with the following exceptions: Sales of exchange in connection with investments, placements, or deposits, whether within Argentina or abroad, required the prior approval of the Central Bank, which was granted restrictively. Moreover, the provisions governing remittances abroad of profits and dividends and loan repayments (Communications Nos. 2435, 2446, and 2449) and those related to travel abroad (Communication No. 2440) continued in effect. (The exchange houses and exchange agencies were not reopened until January 25, 1971.)

December 4. Decrees Nos. 2524 and 2525 established new import duties of 200 per cent on 160 tariff items (including foodstuffs, wines and spirits, cigarettes, leather goods, and textiles) and rescinded the import duty concessions established by Decrees Nos. 28, 38, 39, and 47. In addition, import duties on certain items previously subject to rates of duty of 35-110 per cent were made subject to rates of 50-140 per cent. Items subject to import duties of up to 25 per cent were not affected. The measure was to be effective for a period of 120 days, pending the preparation of a new customs tariff.

December 29. Law No. 18875 and its implementing Decree No. 2930 established certain provisions governing purchases by state agencies, state enterprises, and enterprises with government majority participation, guiding their purchases toward local industry.

December 31. The rate of income tax on profits, when reinvested in Argentine firms producing capital goods, was reduced by up to 6 per cent. The withholding tax on dividends remitted abroad was maintained at 12 per cent, except for stock dividends.

Australia 1

Exchange Rate System

The par value is 0.995310 gram of fine gold per Australian Dollar or $A 1 = US$1.12. Official rates are fixed for spot transactions in sterling: $A 2.1429 buying, and $A 2.1514 selling, per £ stg. 1. The rates for spot transactions in other currencies quoted by the authorized banks are based on the closing buying and selling rates of the previous day in London and New York. The rate for the U.S. dollar on December 31, 1970 was US$1.1175 buying, and US$1.1109 selling, per $A 1. Forward exchange cover may be arranged through the authorized banks for periods appropriate to the nature of the transaction in respect of most exchange risks arising out of trade transactions and transactions in invisibles of a noncapital nature.

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

All credits to the accounts of residents of countries outside the Sterling Area are subject to approval, which is granted in the same circumstances and subject to the same conditions as if a transfer to the country of residence of the account holder were involved. Transfers are allowed freely, on application, between accounts of nonresidents of the Sterling Area. Under current policy, the balance on an account held by a nonresident of the Sterling Area may be withdrawn in convertible currency. There are no blocked accounts containing funds ineligible for remittance overseas. Residents of Nauru, including those temporarily in Australia, may hold Nauru Accounts. Transfers from Nauru Accounts may be made for any purpose, including remittance overseas.

Imports and Import Payments

With the few exceptions mentioned below, goods may be imported freely without import licenses, and no restrictions are imposed on payments for imports, provided that the prescription of currency requirements are observed. Import licenses are required for unwrought, waste, and scrap aluminum and aluminum alloy (other than waste and scrap which is the produce of and shipped direct from New Zealand); used, secondhand, or disposals machinery or equipment and parts therefor (earthmoving or excavating vehicles, machinery or equipment; tractors, road rollers, or materials handling equipment); other vehicles (used or secondhand four-wheel drive vehicles, excluding public-service type passenger vehicles); and specified knitted garments (except when of New Zealand origin and shipped direct from that country). The licensing of the knitted goods is a temporary measure applied while the Tariff Board conducts inquiries into the needs of the local industries affected. In addition, import controls are maintained on certain goods, irrespective of origin, mainly for reasons of health, morals, or security, or to maintain quality standards. In accordance with Resolutions of December 16, 1966 and May 29, 1968 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 transfers to specified bodies in Viet-Nam and remittances to Rhodesia (except in certain circumstances), they are not restricted; the control operates primarily to prevent unauthorized capital transfers, although there are some restrictions maintained for security reasons. There is a basic exchange allowance of $A 4,000 in any 12 months for any kind of travel in any country; additional amounts may be obtained on application, provided that the exchange control is satisfied that the exchange is to be used for bona fide travel expenses and not for an unauthorized capital transfer. Limits are placed on remittances for family maintenance and gifts; however, applications for such transfers are treated liberally, and amounts beyond the normal limit for family maintenance are approved on application. Travelers who are not residents of Australia may take out any amount in foreign or domestic banknotes within 6 months of entry, provided that they brought the notes into Australia. Other travelers may take out up to $A 100 in Australian currency, without special authorization; of this amount, up to $A 4 may be in coins.

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. To assist supervision, there is a further condition that all shipping documents, bills of lading, etc., must be drawn to the order of and delivered to the Reserve Bank or a trading bank acting as its agent. The Customs (Prohibited Exports) Regulations prohibit the export of specified goods either absolutely or subject to prescribed conditions. The controls have been established for the following purposes: to ensure adequate supplies to meet Australia’s domestic requirements (e. g., copper and copper scrap, stainless steel scrap, and natural gas), to ensure adequate prices, to encourage the establishment of processing facilities (e.g., iron ore and wood chips), and to assist the orderly marketing of primary products. Exports to Rhodesia are prohibited in accordance with the UN Resolutions. To avoid the imposition of import quotas on beef and mutton by the United States, restraints are applied to exports of beef and mutton to that market.

Proceeds from Invisibles

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

Capital

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

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

Under the Government’s guidelines policy, all enterprises in which more than 25 per cent of the equity is held directly or indirectly by overseas interests are requested to consult the Reserve Bank in respect of proposals to borrow in Australia. The guidelines provide for reasonable access to Australian borrowings for financing normal requirements of funds for working capital and for approval to be readily given to borrowings to finance export transactions. The amount of local borrowings to finance capital investment permitted under the guidelines depends primarily on the amount of overseas funds invested in the enterprise and the share of the equity in the company held by Australians.

Foreign securities owned by Australian residents need not be surrendered. The export of securities and practically all transactions in foreign securities are subject to approval. Funds invested by residents of countries outside the Sterling Area in securities quoted on an Australian stock exchange can be repatriated under current policy in non-Sterling Area currency at official market rates of exchange.

Residents of Australia are permitted to sell in the investment currency market in the United Kingdom receipts in non-Sterling Area currencies that under the U.K. regulations are eligible for disposal in that market.

Gold

Residents must surrender to the Reserve Bank of Australia all gold coming into their possession with the exception of gold coins the gold content value of which does not exceed $A 50 and gold lawfully acquired for use in a profession or trade. Newly mined gold acquired by the Reserve Bank is made available at its official buying price of $A 31.25 a fine ounce to an association of gold producers for sale at free market prices to local industrial users or overseas purchasers. Certain domestic gold production is subsidized under the Gold-Mining Industry Assistance Act, 1954–70. Imports of gold are not restricted but imported gold becomes subject to delivery to the Reserve Bank. Exports of gold require the approval of the Reserve Bank. Gold jewelry is not subject to acquisition by the Reserve Bank and imports of such items are unrestricted. Exports of gold jewelry exceeding $A 250 in value require the issue of an export license. Travelers require an export license if taking out of Australia certain specified goods, including gold jewelry, in excess of a total value of $A 10,000 or when the gold content value of any one article exceeds $A 1,000.

Changes during 1970

January 1. Additional items were added to the list of imports from New Zealand attracting preferential rates of duty. A further extension of the list took effect from July 1.

February 26. Banks were informed that Nauru was regarded as a de facto member of the Sterling Area for purposes of the Banking (Foreign Exchange) Regulations and that residents of Nauru could open Nauru Accounts.

March 5. It was announced that reciprocal trade proposals between the Australian and New Zealand motor industries would be eligible for new concessions (waiver of import duty in both countries or acceptance of components in approved arrangements as “local content”).

March 6. The values beyond which the export by travelers of specified articles (including gold jewelry) requires an export license were raised from $A 250 to $A 1,000 for the gold content of any one article and from $A 2,000 to $A 10,000 for the total value of the articles.

March 12. A further extension took place of the range of goods from specified developing countries permitted to enter Australia at preferential rates of duty. The list was again extended on September 17 and, at the same time, a number of additional handicraft items from these countries were granted duty-free admission without quota limitation.

July 31. Banks were authorized to determine their own rates of exchange for transactions in sterling notes and coin. The Reserve Bank ceased to quote rates at which it would purchase sterling notes and silver coin from other banks.

November 2. With effect from July 1, the Gold-Mining Industry Assistance Act was extended without amendment for a further three years.

Austria *

Exchange Rate System

The par value is 0.0341796 gram of fine gold per Austrian Schilling or S 26.00 = US$1. The official limits for the U. S. dollar are S 25.80 buying, and S 26.20 selling, per US$1—rates at which the Austrian National Bank will buy or sell. The rate for the U. S. dollar fluctuates in the exchange market between these limits. Market rates for other currencies vary between limits which result from combining the official limits for the U. S. dollar maintained by Austria and such limits in force in the country of the other currency concerned. “Agreement dollars” are quoted at par with the U. S. dollar. Effective costs may deviate in switch transactions. Forward premiums and discounts are left to the interplay of market forces.

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

Administration of Control

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

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

Prescription of Currency

Settlements with the countries with which Austria maintains bilateral payments arrangements 1 are made through clearing accounts expressed in U. S. dollars. Settlements with all other countries may be made either in convertible currencies or through Free Schilling Accounts.

Nonresident Accounts

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

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

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

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

Imports and Import Payments

All commodities not included in the Annex to the Foreign Trade Law are free of import licensing and may be imported from any country without quantitative restriction. All goods included in the Annex require licenses. Most of these goods are free of quantitative restriction. The liberalization depends on the group of countries from which they are imported; for such liberalized goods, licenses are issued by the customs at the time of clearance.2 Nearly all imports from European OECD countries, their associated territories, and many other countries3 are liberalized. Imports from Canada and the United States and its territories are liberalized to the same degree as those from the European OECD countries, except that slaughtered poultry is subject to quantitative restriction when imported from Canada or the United States. Imports from three other countries 4 are treated in practically the same way as imports from European OECD countries. Many nonagricultural imports are admitted under an automatic licensing procedure when originating in Bulgaria, Czechoslovakia, Eastern Germany, Hungary, Poland, or Rumania; in practice, this is true also when they originate in the U. S. S. R.

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

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

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

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

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

Payments for imports from, and originating in, countries with which Austria makes settlements in convertible currencies do not require exchange licenses.5 Payments for imports from, or originating in, countries with which Austria maintains bilateral payments agreements require exchange licenses, which are granted without restriction if the payments are made in the appropriate bilateral currencies.

Payments for Invisibles

With few exceptions, residents are permitted to conclude transactions involving current invisibles with residents of countries with which Austria makes settlements in convertible currencies. Exceptions comprise transactions concerning transport,6 films, and insurance. For transactions in current invisibles that involve payments to residents of all other countries, individual licenses are required. The licenses are granted after account is taken of the terms of existing bilateral payments arrangements and other considerations, such as the principle of reciprocity and hardship cases; certain liabilities (e.g., freight payments, handling charges, commissions, etc.) are covered by general licenses.

Payments on account of authorized invisibles to residents of countries with which Austria makes settlements in convertible currencies may be made freely, provided that no capital transfer is involved. Payments up to S 1,000 to such countries may be made freely, at any time, and without indication of purpose; payments up to S 1,000 to clearing countries may be made without a special license if they relate to imports or specified services. All other payments to bilateral payments agreement countries for invisibles require special licenses.

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

Exports and Export Proceeds

Licenses for exports regulated under the Foreign Trade Law have to be obtained from the competent ministry. Goods exported under compensation arrangements are subject to licensing by the Federal Ministry of Trade, 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 must be declared. Export proceeds may either be surrendered or be deposited in accounts with authorized banks. Such deposits in convertible currencies may be used freely for authorized payments. Deposits in bilateral clearing currencies may be used in accordance with the terms of an individual payments license.

Proceeds from Invisibles

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

Capital

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

Residents are freely permitted to obtain from nonresidents loans and credits as follows: (1) commercial credits for a period of up to one year; (2) loans with maturities of five years or more, to be used for investment purposes (e.g., for expansion of production equipment); (3) loans to be used by enterprises in Austria in which the nonresidents participate; (4) loans secured by export claims; and (5) loans for a period of up to five years, to be used abroad for definite merchandise transactions. The short-term foreign assets and liabilities in convertible currencies of authorized banks are in practice not subject to limitation. A number of authorized banks are permitted to accept from abroad and to employ abroad funds in convertible currencies for a period of up to five years.

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

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

Residents are allowed to acquire participation rights in foreign companies, associations, and other enterprises, and to establish, acquire, or extend foreign agencies or individually owned firms; earnings accruing from such investment may be reinvested. Residents also are permitted to acquire real estate abroad (provided that it is intended for the personal use of the buyer within one year), to grant commercial or investment credits, and to grant credits secured by mortgages in Austria or abroad. Domestic insurance companies may conclude with nonresidents life insurance contracts in Austria.

Transactions and operations mentioned in the four preceding paragraphs are licensed upon documentation, provided that they are concluded with residents of countries with which Austria makes settlements in convertible currencies.

Residents are allowed to purchase from nonresidents, without restriction, foreign securities quoted on stock exchanges 7 and Austrian securities; for foreign securities and Austrian external bonds, the transactions must be carried out on a spot basis through authorized banks and, with certain exceptions (e.g., in the case of Austrian external bonds), the securities purchased must be kept with such banks. Payments for these purchases to residents of countries with which Austria makes settlements in convertible currencies may be made in those currencies, whereas payments to residents of countries with which Austria has bilateral payments agreements may be made only by crediting a Blocked Account. Residents may sell securities deposited in accordance with the aforementioned provision with Austrian authorized banks to nonresidents only on a spot basis against payment in convertible currencies and through authorized banks. The proceeds of the sale, as well as the foreign exchange obtained as a result of redemption of the foreign securities by the debtor, may be kept on account with an authorized bank.

Gold

Transactions in gold (excluding jewelry and medallions, which are considered jewelry) are governed by the Foreign Exchange Law. The Austrian 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 gold coins that are not legal tender on their own behalf or on their customers’ behalf; the prices are based on those for coins and unmanufactured gold in free markets abroad. The Mint releases certain types of gold coins to authorized credit institutions for resale to the public. 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.

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 for imports (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 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 1970

In addition to the measures listed below, further imports from specified Eastern European countries were liberalized during the year and many of the remaining import quotas for Eastern European countries were increased.

January 1. Imports from Poland of 157 items were liberalized.

February 16. The National Bank informed the credit institutions that it would again authorize purchases (restricted on September 18, 1969) by residents, on recognized foreign stock exchanges, of listed securities of a participating nature issued by foreign investment funds or similar institutions.

February 19. The National Bank suspended its quotation for Italian banknotes. The quotation was resumed on February 26.

June 18. The ceiling for export credit guarantees was raised from S 15 billion to S 25 billion.

June 24. It was announced that the temporary price-containment measures introduced on November 15, 1969 and December 1, 1969, most of which were to expire on June 30, 1970, would be continued during the second half of 1970. These measures had included the lowering of customs duties on some 70 tariff items, the reduction or elimination of import equalization levies on 7 tariff items, as well as more liberal licensing of specified durable consumer goods from Japan and certain Eastern European countries and the liberalization of certain Japanese items previously subject to quota. In addition to these measures, the following were to take effect from July 1, 1971: import duty reductions on another 40 tariff items and abolition of import equalization tax on 9 tariff items. Further increases in import quotas, particularly for Japanese commodities, also were announced.

June 26. The number of commodities subject to quota when of Japanese origin, which was last reduced on November 15, 1969 from 181 to 95, was further reduced to 80, with effect from July 1.

August 6. A new trade and payments agreement was signed with the U. S. S. R. The bilateral payments agreement would be terminated and settlements would take place in convertible currencies from January 1, 1971. Mutual trade would no longer be subject to agreed quotas.

September 15. A new trade and payments agreement was signed with Poland which provided for settlements in convertible currencies beginning January 1, 1972.

October 1. Antidumping ordinances covering plain woolen fabrics made of blended yarn, certain cotton yarns, and two other items were withdrawn. The only such ordinances which remained in effect covered certain printed cotton fabrics and certain garments; these would expire on March 31, 1971.

October 8. A new trade and payments agreement was signed with Bulgaria which provided for settlements in convertible currencies beginning January 1, 1972.

November 20. A new trade and payments agreement was signed with Czechoslovakia which provided for settlements in convertible currencies beginning January 1, 1972.

November 27. The tax law passed on this date provided that the 10 per cent purchase tax on automobiles and trucks would be abolished with effect from January 1, 1971.

November 30. It was announced that the temporary reductions in customs duties and import equalization levies would be extended until June 30, 1971 and that from January 1, 1971 they would be expanded to cover a total of 220 tariff items.

December 23. The trade agreement with Japan was extended; the agreed list of Japanese goods subject to quota in Austria was reduced to 62 items with effect from January 1, 1971.

Barbados 1

Exchange Rate System

No par value has been agreed with the Fund. Barbados is a participant in the East Caribbean Currency Agreement of 1965, which established the East Caribbean Currency Authority to issue and manage a common currency in its member countries.2 The Currency Authority maintains a fixed relationship for the East Caribbean dollar with sterling at the rate of EC$4.80 = £1, corresponding to EC$2 = US$1. The East Caribbean dollar is freely convertible into sterling at that rate, subject to banking commissions.

The East Caribbean Currency Authority is authorized to levy a commission charge of up to 1 per cent on inward and outward transfers of sterling. On December 31, 1970 the commission charges in transactions with authorized banks were

of 1 per cent on inward transfers and ⅜ of 1 per cent on outward transfers. The authorized banks apply the same commission charges in dealings in sterling with their customers, although they may levy an additional charge on mail transfers and drafts. The East Caribbean Currency Authority maintains fixed buying and selling rates at ⅛ of 1 per cent either side of parity for the Guyana dollar, the Jamaica dollar, and the Trinidad and Tobago dollar. The authorized banks apply commission charges for these currencies of
of 1 per cent, buying and selling. Exchange rates for convertible non-Sterling Area currencies are based on the daily buying and selling rates in the London market.

Under an arrangement with the central banks of Guyana, Jamaica, and Trinidad and Tobago, the East Caribbean Currency Authority purchases at par notes and coins issued by the monetary authorities of the countries concerned and repatriates the currency in return for reciprocity of treatment with respect to collections of East Caribbean dollars.

Administration of Control

Exchange control is administered by the Minister of Finance, operating as the Exchange Control Authority, which delegates to authorized dealers the authority to approve normal import payments and the allocation of foreign exchange for certain other current payments. The exchange control system provides that foreign exchange should normally be surrendered to an authorized dealer. Trade controls are administered by the Ministry of Trade and Tourism.

Prescription of Currency

Barbados is a member of the Sterling Area and maintains prescription of currency requirements similar to those of the United Kingdom. Settlements with residents of other parts of the Sterling Area3 may be made in any Sterling Area currency. Authorized payments to residents of countries outside the Sterling Area other than Rhodesia may be made in any non-Sterling Area currency or by crediting an External Account in East Caribbean dollars. Receipts from residents of countries outside the Sterling Area other than Rhodesia may be received to the debit of an External Account or in any foreign currency.

Nonresident Accounts

Residents of other Sterling Area countries may maintain accounts in East Caribbean dollars in Barbados and no distinction is made between these accounts and accounts maintained in East Caribbean dollars by residents of Barbados.

With the permission of the Exchange Control Authority, authorized banks may maintain Foreign Currency Accounts and External Accounts in the names of residents of non-Sterling Area countries. Residents of the Sterling Area may also hold Foreign Currency Accounts. Permission to open Foreign Currency Accounts, which are maintained in non-Sterling Area 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, with exchange control approval, for nonresidents of the Sterling Area and are maintained in East Caribbean dollars. They may be credited with proceeds from the sale of foreign currencies or gold and with transfers from other External Accounts. Other credits require individual approval. They may be debited for payments to other residents of the Sterling Area, for transfers to other External Accounts, and, in some cases, for the purchase of non-Sterling Area currencies. Other debits require individual approval.

The Exchange Control Act, 1967 empowers the Exchange Control Authority to require certain payments in favor of residents of countries outside the Sterling Area which are ineligible for transfer to be credited to Blocked Accounts. Amounts standing to the credit of Blocked Accounts may not be withdrawn without approval, other than for the purchase of approved securities. However, in view of the United Kingdom’s decision in 1967 to dispense with Blocked Accounts, these provisions of the act have not been invoked.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited and imports originating in mainland China, the CMEA countries, North Korea, Japan, and Portugal require individual licenses. Imports from Japan are kept under review in order to prevent a widening of the trade imbalance with that country and to protect certain local industries. Certain imports are prohibited or are subject to discretionary licensing irrespective of origin. These include goods which compete with domestic products, such as milk, live poultry, sugar, beverages, and certain items of clothing. Special licensing arrangements apply to goods originating in other countries of the Caribbean Free Trade Association, of which Barbados is a member. Imports affected by these requirements include pork, eggs, fruits, vegetables, and nuts, all of which are licensed to conform with the terms of the protocol laying down the agricultural marketing arrangements for the Caribbean Free Trade Agreement. Individual licenses are required for imports of commodities subject to international commodity agreements, including wheat, rice (which is imported only from Guyana in terms of the Barbados-Guyana Rice Agreement), and commodities subject to the provisions of the Oil and Fats Agreement between the Governments of Barbados, Guyana, Grenada, St. Lucia, St. Vincent, Trinidad and Tobago, and Dominica. All imports not referred to previously are on open general license.

Payments for authorized imports are permitted upon application and submission of documentary evidence (relevant invoices or customs warrants) to authorized dealers.

Payments for Invisibles

Payments for invisibles originating in other Sterling Area countries may be made freely in any Sterling Area currency. Payments for invisibles originating in countries outside the Sterling Area require the approval of the authorities. Except for transactions involving residents of Rhodesia, the following applies. 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. These include foreign travel, for which up to EC$ 1,000 a person may be allocated for each travel year, expenses of education abroad (EC$2,500 a person a year), and subscriptions to newspapers, magazines, etc. 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.

Residents of Barbados and other Sterling Area countries may take out unlimited amounts in travelers checks denominated in East Caribbean dollars or other Sterling Area currencies for encashment only in Sterling Area countries. Residents may take out notes and coins up to the value of EC$100 in the currencies of Sterling Area countries and EC$ 1,000 in the currencies of non-Sterling Area countries. Residents of non-Sterling Area countries may take out any notes and coins which they brought into Barbados.

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited and licenses are required for the export of goods to mainland China, the CMEA countries, North Korea, Tibet, and North Viet-Nam. Specific licenses are required for the export of certain goods to any country; these goods include rice, sugar, and turtle shells. Certain goods, including rum, molasses, and confectionery, require licenses when exported to non-Sterling Area countries, and licenses are also required for the export of specified goods to any country that is not a member of the Caribbean Free Trade Association. These goods include coconuts and coconut oil, lard, and margarine. All other goods may be exported without license. Exports are supervised by the Exchange Control Authority to ensure that proceeds in non-Sterling Area currencies are surrendered within six months from the date of shipment.

Proceeds from Invisibles

Proceeds from invisibles received in Sterling Area currencies may be retained but those obtained in non-Sterling Area currencies must be sold to an authorized dealer. Travelers to Barbados may bring in freely notes and coins denominated in East Caribbean dollars, other Sterling Area currencies, or non-Sterling Area currencies. Resident travelers are required to sell their holdings of non-Sterling Area currencies to an authorized dealer upon return to Barbados.

Capital

There are no restrictions on capital transfers to other parts of the Sterling Area by residents of Barbados, and residents of other Sterling Area countries may invest freely in Barbados.

Direct investments in non-Sterling Area countries by residents of Barbados require exchange control approval; when permission is granted, such investments must be channeled through the investment currency market in the United Kingdom. The purchase by residents of Barbados of non-Sterling Area securities and of real estate for private purposes in non-Sterling Area countries is not normally permitted. When permission is granted, however, the purchase must be financed through the investment currency market in the United Kingdom. Certificates of title to non-Sterling Area securities held by residents of Barbados 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 residents of non-Sterling Area countries 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 up to EC$500 a year may be transferred, with exchange control approval, to residents of countries outside the Sterling Area.

Direct investment in Barbados by residents of countries outside the Sterling Area 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 Exchange Control Authority.

The issuance and transfer to residents of countries outside the Sterling Area of securities registered in Barbados require exchange control approval, which is freely given on condition that an adequate amount of non-Sterling Area 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 non-Sterling Area currency sources. Residents of countries outside the Sterling Area may acquire in Barbados real estate for private purposes with funds from non-Sterling Area currency sources or a combination of local and non-Sterling Area currency sources. Proceeds from the realization of such investments equivalent to the amount of non-Sterling Area currency brought in may be repatriated freely. Capital sums realized in excess of this amount may be repatriated freely on the basis of interest 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 EC$24,000 a year.

Gold

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 and exports of gold by residents are permitted for industrial purposes and are exempted from customs duties, charges, and other taxes. Licenses to import and export gold are issued by the Ministry of Trade and Tourism. Official institutions in Barbados do not purchase gold.

Changes during 1970

January 1. British Caribbean Currency Board coins became the liability of the East Caribbean Currency Authority, which took over the assets and liabilities of the Coin Continuation Board as prescribed in the British Caribbean Currency Agreement of 1964.

February 2. The arrangement whereby the East Caribbean Currency Authority and the central banks of Guyana, Jamaica, and Trinidad and Tobago returned to each other the collection of each other’s notes and coins was extended to include the buying and selling of each other’s currency through bank transfers.

March 1. The amount of foreign exchange which could be provided for the transfer of cash gifts to residents of countries outside the Sterling Area was increased from EC$240 to EC$500.

March 1. The amount of foreign exchange which could be provided by authorized dealers for travel outside the Sterling Area was raised from EC$850 to EC$ 1,000 a person a year.

March 1. The value of Sterling Area notes and coins permitted to be exported by travelers was increased from EC$72 to EC$100.

Belgium-Luxembourg *

Exchange Rate System

The par values are 0.0177734 gram of fine gold per Belgian Franc and per Luxembourg Franc or BF 50.00 = US$1 and Lux F 50.00 = US$1. There are two spot exchange markets—the official (réglementé or regulated) and the free.

In the official exchange market, only authorized banks may carry out exchange transactions permitted in that market.1 The spot exchange rate for the U. S. dollar fluctuates within official limits of BF 49.625 buying, and BF 50.375 selling, per US$1. The rates for the other convertible currencies fluctuate between limits which result from combining the official limits for the U. S. dollar maintained by Belgium-Luxembourg and such limits in force in the country of the other currency concerned; the rate of the Congo zaïre fluctuates between limits of 1 per cent either side of BF 100, i.e., between BF 99.25 buying, and BF 100.75 selling, per Z 1. Most exchange transactions are settled through the official market. For all 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 banknotes) may be bought and sold at freely fluctuating rates. Convertible currencies acquired through the free market may be sold in the official market, but no other direct connection between the two markets exists. On December 31, 1970, the free market rates between banks for the U. S. dollar were BF 49.69 buying, and BF 49.71 selling, per US$1.

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

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. Nonbank residents may not acquire convertible currencies in the official spot market until a foreign payment is due. Nonbank residents may make forward purchases of convertible currencies in the official market through authorized banks, provided that the currencies thus acquired are used for the settlement of obligations within five working days from delivery; exchange not used within that period must be resold in the official market. Any resident or nonresident, banks included, may deal freely in any currency in the free market. Exchange rates in the forward market are in principle left to the interplay of market forces.

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

Exchange Control Territory

There is no exchange control between Belgium and Luxembourg (the Belgian-Luxembourg Economic Union—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, 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 countries (see footnote 2) 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 administration expenses, income on securities, loans, etc., rents, operating profits, 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, there is a choice between the official and the free market for convertible currencies received from transactions in Lists C and D or paid for transactions in Lists A, B, and C; such settlements with the convertible area if made in Belgian or Luxembourg francs can also be settled through a Financial or a Convertible Account. All payments to countries in the convertible area, and all receipts from such countries for transactions included in Lists C and D, may also be effected in domestic or foreign banknotes.

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

Nonresident Accounts

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

1. Convertible Accounts. Balances on these accounts are equivalent to currencies negotiated on the official market, and these accounts may be opened in the name of any nonresident.4 They are not related to any country or monetary area. They may be used for settlements which either must or may be made through the official market, and may be credited with proceeds from the sale by a nonresident of convertible currencies in the official market to authorized banks in Belgium-Luxembourg. Balances on Convertible Accounts may be transferred freely to any nonresident account or be converted into any currency in the official or the free market. Mail credits on Convertible Accounts are subject to ceilings set by the IBLC; other advances are subject to authorization.

2. Financial Accounts. These accounts may be opened only for residents in convertible area countries,5 and they are not related to any country or monetary area. They may be used for settlements which either must or may be made through the free market, and may be credited with proceeds from the sale by a nonresident of gold or any currency in the free market and of convertible currencies in the official market. Domestic banknotes and proceeds from the sale in the free market of foreign banknotes deposited with authorized banks by foreign travelers in Belgium-Luxembourg or by persons residing abroad may be credited freely to Financial Accounts. Transfers between Financial Accounts are free. Balances on these accounts may be used to purchase gold or any currency negotiated on the free market.

Summary of Permissible Methods of Settlement for Foreign Payments
Transaction

List
Country

Group
Foreign

Currency
Exchange

Market
Nonresident

Account

in Francs
Outward Payments
A, B, and CConvertibleAnyOfficial or freeAny
DConvertibleAnyFreeFinancial
A, B, C, and DBilateralBilateral3
Inward Payments
A and BConvertibleConvertibleOfficialConvertible
C and DConvertibleConvertible OtherOfficial or free Free} Convertible

or Financial
A, B, C, and DBilateralConvertibleOfficialConvertible or Bilateral3

3. Bilateral Accounts. These accounts may be opened for residents of bilateral countries (see footnote 2), and they are related to the country of residence of the account holder. They are used for settlements with bilateral countries, and may be credited with proceeds from the sale by a nonresident of convertible currencies in the official market. Balances on Bilateral Accounts may be transferred to other Bilateral Accounts related to the same country. Transfers may be made freely between Bilateral Accounts related to Burundi, the Democratic Republic of Congo, and Rwanda. In practice, the authorities permit the conversion of balances on Bilateral Accounts of the central banks of these three countries into foreign currencies 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, mainland China, Czechoslovakia, Eastern Germany, Hong Kong, Hungary, Japan, North Korea, Outer Mongolia, Poland, Rumania, the U.S.S.R., and North Viet-Nam,6 (2) a number of imports from all other countries except Luxembourg.7 The commodities for which individual licenses are required include many textile products, certain agricultural products and foodstuffs, and coal and kerosene. All other commodities, which constitute about four fifths of total imports, are free of license and quantitative restriction; only a simple form completed by the importer giving notification of the payment (payment declaration) is required when payment is made through an authorized bank. Many 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 variable 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.

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

Payments for Invisibles

Payments to convertible area countries for transactions included in Lists A, B, and C may be made through the official exchange market or by crediting Belgian or Luxembourg francs to a Convertible Account. Supporting documents must in that case be presented to an authorized bank; 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 all invisibles (including those in List D) may be made through the free market, by crediting Belgian or Luxembourg francs to a Financial Account, or in domestic or foreign banknotes. Payments to bilateral countries (see footnote 2) must be made by crediting Belgian or Luxembourg francs to a Bilateral Account related to the country concerned; however, special regulations apply to settlements with the Democratic Republic of Congo. 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 (1) all exports to Albania, Bulgaria, mainland China, Czechoslovakia, Eastern Germany, Hungary, North Korea, Outer Mongolia, Poland, Rumania, the U. S. S. R., and North Viet-Nam and (2) specified exports to all other countries except Luxembourg.8 All other exports are free of license; only a simple form completed by the exporter giving notification of the export is required.

No exchange control documentation is required for exports not exceeding BF 10,000 in value. The authorized bank is required to make sure that export proceeds are received in accordance with the 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, 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. Payments for exports to bilateral countries may not be received more than three months before the date foreseen for exportation; proceeds from transit transactions must be collected within three months from the date of payment to the foreign supplier.

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. Receipts in convertible currencies from other transactions (Lists C and D) with countries of the convertible area may be retained or sold in the official or the free market. Receipts in all other currencies may be retained or sold in the free market. Proceeds from transactions included in Lists C and D from convertible area countries may also be collected in domestic or foreign banknotes. Foreign and domestic banknotes may be imported freely.

Capital

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

The external position of authorized banks is subject to ceilings (1) on the net long spot position in foreign currencies relating to the official market and (2) on mail credits on Convertible Accounts.9

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 may 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 on imports for industrial or handicraft purposes. Licenses are required for imports of semiprocessed gold; these are issued to professional users, who are authorized to make payment through the official market.10

Changes during 1970

During the year, certain exchange control formalities and procedures were eased. On various occasions additional imports were liberalized bilaterally when originating in specified Eastern European countries.

January 1. The tax refunds granted in Belgium on certain exports were reduced by one percentage point, and the level of export tax exemptions was decreased by 0.5 per cent of the value of the exported goods.

January 12. A value-added tax was introduced in Luxembourg. The general rate was 8 per cent and the reduced rate 4 per cent.

March 16. The resources of Créditexport were raised from BF 15 billion to BF 18 billion. On December 22 they were further increased to BF 21 billion.

March 26. The credit ceilings for end-March and end-June 1970, which had become inoperative owing to a marked contraction in demand for short-term bank credit, were abolished. New credit ceilings were set for end-September and these no longer covered the used amount of outstanding credits granted through Credit-export. Export credits extended through Créditexport with a maturity of more than one year and less than two years were excluded from the ceiling on rediscounts with the National Bank of Belgium. The banks’ visa and rediscount line at the central bank was to be reduced by September 30, in two stages, to 9 per cent of their average domestic currency assets.

May 1. Luxembourg liberalized imports of all commodities listed in the annex to the GATT waiver decision of 1955 covering Luxembourg’s agricultural and horticultural import restrictions.

May 20. The October 1, 1969 ceiling on advances (in practice mail credits) granted by authorized banks on Convertible Accounts was raised and made equal to the ceiling on their spot balances in official market currencies.

June 1. The National Bank no longer gave its visa to bills representing exports payable within 120 days to EEC countries, but only its certification (which does not constitute a formal commitment to rediscount bills). The certification was made optional, as an alternative to the visa, for other exports in two stages, on June 10 and August 17. From August 17, only exports financed at medium term by Créditexport (irrespective of country of destination) did not have this option, these being subject to visa in all cases.

June 23. The measure of August 7, 1969, which had required exchange control approval by the IBLC for import payments made more than one month in advance of importation was revoked, and such payments could again be made freely up to three months before importation.

July 1. The formalities for payments of expenses related to imports, exports, and transit trade were simplified.

July 31. A Royal Decree of July 20 was published which established the rates at which the value-added tax to be introduced in Belgium would be applied to different commodities. The value-added tax came into force on January 1, 1971.

November 16. The Congo zaïre was added to the list of currencies that are officially quoted on the Brussels Bourse. Settlements with the Democratic Republic of Congo could henceforth be made either, as previously, through Bilateral Accounts in Belgium or through Convertible Accounts in zaïres in Congo.

November 16. Authorized banks were granted a general license to effect specified transactions in zaïres. They could freely purchase zaïres: (1) from residents of Congo, against Belgian or Luxembourg francs to be credited to a foreign account classified as “bilateral-Congo” or to an “assimilated” resident account; (2) from residents of Belgium or Luxembourg who had received the zaïres from a debtor resident in Congo, subject to submission of appropriate documentation concerning the nature of the underlying transactions; and (3) from other authorized banks. Banks could freely use the zaïres thus acquired for the following purposes: (1) sales to residents of Congo for Belgian or Luxembourg francs to the debit of a foreign account classified as “bilateral-Congo” or of a Convertible Account; (2) payments for the account of residents of Belgium or Luxembourg to residents of Congo, subject to compliance with standard formalities for import and transit trade transactions or otherwise subject to presentation in writing of indications as to the nature of the underlying transaction; and (3) sales to other authorized banks. The existing regulations concerning settlements with Congo remained in effect.

November 26. Belgium ratified the agreement signed on April 29, 1969 with Luxembourg and the Netherlands concerning the unification of the Benelux customs territory. Luxembourg ratified on December 28. The agreement came into force on February 1, 1971.

December 18. By virtue of a Royal Decree of November 6, a large number of the remaining import and export licensing requirements were abolished in trade with the Netherlands. (Some further simplification of formalities in intra-Benelux trade took place on February 1, 1971.)

December 30. A law was enacted which amended the charter of the Office National du Ducroire and enabled it to cover the political and transfer risk of certain new Belgian investments abroad. (A Royal Decree implementing the law was issued on February 8, 1971.)

December 31. A law of December 23 and a Royal Decree of December 24 were published which provided for the introduction on January 1, 1971 of a temporary export tax.

Bolivia

Exchange Rate System

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

For operational purposes, the free market is divided into two sectors: the public sector and the private sector. The Monetary Department of the Central Bank of Bolivia operates in the public sector, buying foreign exchange from the Government, the official enterprises, including the Bolivian Mining Corporation (COMIBOL), and private export firms, and selling foreign exchange to the Banking Department of the Central Bank, the banks, and the Government and its official agencies. The exchange rate of the Monetary Department of the Central Bank on December 31, 1970 was $b 11.875 buying, and $b 11.885 selling, per US$1. All sales of foreign exchange are subject to a 1.6 per cent exchange tax and a 2 per mill stamp tax.

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

Prescription of Currency

Certain settlements with Hungary and Poland are channeled through special accounts. Otherwise, there are no prescription of currency requirements. Settlements are usually made in U. S. dollars or other convertible currencies. Payments between Bolivia and Argentina, Chile, Colombia, Mexico, and Peru 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; they 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, raw cotton, and petroleum and petroleum products. The import of cigarettes, cement, and certain other locally produced goods is prohibited. All other goods may be imported freely. Exchange to pay for imports may be purchased in the free market; commercial banks make exchange available the first business day after receipt of the application. All foreign credits, including suppliers’ credits, are subject to authorization by the Stabilization and Development Council.

Most private sector imports are subject to a customs surcharge of 10 per cent ad valorem.

Payments for Invisibles

Payments for invisibles may be made freely through the free market; commercial banks make exchange available the first business day after receipt of the application. Buyers of foreign exchange in excess of US$100, however, must indicate the purpose of their purchases. Furthermore, private enterprises are required to deposit in banks, for a minimum period of one year, dividends declared and profits accrued (net of income taxes); however, this requirement does not apply to the distribution of dividends and profits up to $b 20,000 per beneficiary and the payment of profits and dividends to nonresident beneficiaries is not prohibited. 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 subject to licensing. 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. The marketing of minerals is a state monopoly; in practice, 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 sold in the free market.

Capital

Outward capital transfers by residents or nonresidents are free of control and may be made through the free market; inward capital transfers also may be made through that market. Commercial banks make exchange available the first business day after receipt of the application. Buyers of foreign exchange in excess of US$100 must indicate the purpose of the purchase. All foreign credits, including suppliers’ credits, to government agencies and autonomous entities, and official guarantees of such credits, are subject to prior authorization by the Stabilization and Development Council.

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law of October 19, 1965, which guarantees the free convertibility and repatriation of profits and amortized capital. Companies established before the passage of this law may also benefit from its provisions. The law is administered by the Institute for the Promotion of Investment in Bolivia (INPIBOL). Investments in petroleum and mining are governed by the Petroleum Code and the Mining Code.

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. The Central Bank purchases gold from COMIBOL and one large mine, while the Mining Bank buys from the smaller producers on behalf of the Central Bank; the Central Bank’s purchases as well as those of the Mining Bank are made at the equivalent of US$35 an ounce. 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, hold, and sell gold in any form other than bars in Bolivia. Exports and imports of gold other than gold jewelry are not normally permitted.

Changes during 1970

May 15. A trade and payments agreement providing for settlements through special accounts was signed with Hungary. It came into force on the same date.

June 25. The requirement introduced in October 1969 that all private mining companies constitute, for a minimum period of one year, noninterest-bearing deposits equivalent of 1.5 per cent to 3 per cent of their export proceeds was eliminated by Supreme Decree No. 9286, and a procedure was introduced for the prompt liquidation of existing deposits.

The obligation for all private firms of depositing dividends and profits for a minimum period of one year was relaxed by the same Decree, which authorized private firms to distribute dividends and profits up to $b 20,000 for each beneficiary.

August 5. The prohibition on imports of wool and some other goods was lifted.

October 29. Decree-Law No. 09428 provided for the creation of a state bank, the Banco del Estado, which would take over the Central Bank’s commercial banking activities.

November 20. A trade and payments agreement providing for settlements through special accounts was signed with Poland. The agreement came into force on the same date.

Botswana

Exchange and Trade System

Botswana’s currency is the South African Rand, the par value of which is 1.24414 grams of fine gold per rand or R 1 = US$1.40. Exchange rates are based on South Africa’s fixed rates for sterling against rand and the London market rates for sterling against other currencies.

Botswana is part of the Sterling Area and is regarded as forming part of the South African exchange control territory.1 The Ministry of Finance and Development Planning controls all external currency transactions. Transfers of funds within the Sterling Area are normally approved if the funds were generated in Botswana and the transferor is a bona fide resident of Botswana; where the export of funds to a country outside the Sterling Area is concerned, the approval is given in appropriate cases in agreement with the South African Reserve Bank. Inward capital transfers require exchange control approval, but certain types of such transfers are freely permitted by open general licenses. Botswana is a member of a customs union with Lesotho, South Africa, and Swaziland, and there are no import restrictions on goods of South African origin. 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 1970

March 1. A revised Customs Union Agreement with Lesotho, South Africa, and Swaziland came into force, replacing that of 1910.

March 1. Imports of beer, tobacco, and cigarettes from Rhodesia were prohibited.

Brazil

Exchange System

On July 14, 1948, a par value for the Brazilian Cruzeiro was established by Brazil with the Fund. However, exchange transactions no longer take place at rates based on that par value. Brazil follows 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 exchange in Rio de Janeiro, 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 foreign exchange from the banks and to sell exchange to the banks on an adequate basis, for approved transactions; such purchases and sales are made at the official rate. On December 31, 1970, the buying and selling rates quoted by the monetary authorities to the public were Cr$4.920 and Cr$4.950 per US$1, respectively; those quoted by the authorized banks for transactions other than in banknotes or travelers checks were approximately the same (see Table of Exchange Rates, below). Exchange rates for other currencies (including “agreement currencies” used for settlements with bilateral agreement countries) are based on the U. S. dollar rates in Brazil and the dollar quotations for such currencies in international markets. 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: (a) Special regulations apply to coffee exports (see section on Exports and Export Proceeds, below). (b) A 15 per cent contribution (“contribution quota” or quota de contribuição) is levied on proceeds from exports of cocoa beans and cocoa paste. (c) A 5 per cent contribution is levied on proceeds from exports of cocoa derivatives.

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, from 1963 onward, 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 large proportion of all exchange transactions. The following arrangements assure the Bank of Brazil of a large portion of the country’s foreign exchange receipts: (1) Petrobrás surrenders its entire foreign exchange proceeds from certain exports of petroleum. (2) Proceeds from exports of iron ore by the Vale do Rio Doce Company are surrendered to the Bank of Brazil, although there is no legal requirement that receipts from these exports be negotiated with or transferred to the Bank. All public sector agencies must carry out their exchange operations through the Bank of Brazil. Furthermore, exporters in regions not served by banks other than the Bank of Brazil sell their exchange proceeds to the Bank. The Bank of Brazil sells foreign exchange for the requirements of the Government at the exchange rate prevailing on the date when a 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. Moreover, the Bank of Brazil handles for the account of the Central Bank all exchange transactions in bilateral currencies (either direct or by transferring exchange to authorized banks or vice versa) and exchange transactions related to imports under U. S. aid. Finally, the Bank of Brazil, operating for the account of the Central Bank, supplies 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 50 per cent of the exchange sold the previous day by the bank concerned to its customers.

All free market transactions in foreign exchange other than those undertaken by the Bank of Brazil are effected direct through authorized banks. They may not maintain an oversold position in excess of US$500,000 on any working day; 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. 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 Ministers of Finance and Planning, 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. The Foreign Trade Department 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 under the Ministry 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 the National Council of Foreign Trade. The CPA also decides on changes in customs duties under the provisions of existing legislation.

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. These accounts are maintained with Bulgaria, Eastern Germany, Greece, Hungary, Israel, Poland, Rumania, and Yugoslavia. There is a reciprocal credit agreement between the Central Bank of Brazil and the Central Bank of Iceland.

On the basis of provisions for the settlement of outstanding balances or transactions under the terminated bilateral agreement with the U. S. S. R., a few payments with that country are still settled in agreement dollars. All trade with Bolivia, except Brazilian exports of coffee and cocoa, is settled in cruzeiros under a border trade agreement. Settlements with other countries with which Brazil has no payments agreements or arrangements are made in U. S. dollars or other convertible currencies. Reciprocal credit agreements have been signed with Argentina, Chile, Mexico, and Peru, but those with Argentina and Chile have not yet come into operation.

Imports and Import Payments

Special arrangements described below apply to imports of petroleum and petroleum products. The import of recreational boats of a value over US$3,500 and of commodities originating in or shipped from Cuba and Rhodesia is prohibited. 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, certain educational material, parts and accessories (valued up to the equivalent of US$2,000) for machinery, instruments, ships and aircraft, 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. As a rule, import certificates are issued freely and without undue delay; they are valid for 180 days. 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 imports for which tariff concessions are being sought, goods to be brought in with foreign financing with terms between 180 and 360 days, and used instruments, machinery, and equipment.

The following rules apply with respect to the closing of exchange contracts for payment for imports. As a general rule, imports may be cleared through customs before an exchange contract is closed. However, the maximum period for which payments for imports may be delayed must not exceed 180 days from the date of shipment. This period may be extended to 360 days in exceptional circumstances at the discretion of CACEX. Financing arrangements with credit terms exceeding 360 days in amounts over US$500,000 require the prior approval of the Central Bank. Any bona fide interest involved in the above credit arrangements is approved freely. Spot 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 within 2 working days. Forward contracts, for up to 180 days, may be closed when a letter of credit is being opened, or to pay for goods already shipped. Letters of credit must be opened within 5 working days from the date of the 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.

Special procedures are applicable to certain imports of petroleum and petroleum products and of wheat. For petroleum and specified petroleum by-products, Petrobrás concludes a “global foreign exchange contract” with the Bank of Brazil once every four months for its estimated requirements. The contract is concluded at the official market rate prevailing 10 days prior to the closing of the 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 “global contract” at the exchange rate at which the Central Bank sells foreign exchange to commercial banks; the rate applicable is again the one prevailing 10 days prior to the conclusion of the “global contract.” Individual exchange contracts for petroleum shipments made during the life of the global contract are then closed at the exchange rate on which the latter is based. Payment by Petrobrás against such contracts is made in the following manner: 30 per cent of the value of an individual contract is deposited 15 days from the date of shipment, and the remaining 70 per cent 110 days after shipment. The liquidation of each individual contract 110 days after shipment is accompanied by the liquidation, up to an equivalent value, of the exchange contract signed by the Bank of Brazil with the Central Bank; the liquidation of this latter exchange contract also takes place at the exchange rate at which the contract was originally signed.

Certain imports are subject to customs surcharges imposed by Decree-Law No. 333 or Decree-Law No. 398.1

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 an internal Central Bank measure of September 19, 1965, on remittances of all royalties and technical assistance fees (see below). 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, which authorizes 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: (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 name of the clients, are submitted daily to the Central Bank.

Remittances abroad of foreign capital, income from foreign investments and reinvestments, and remittances in respect of royalties and technical assistance are governed by Decree No. 55762 of February 17, 1965, which contains the regulations implementing the 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). Remittances are normally authorized in the currency of registration. Remittances of interest on loans and credits and of related amortization payments are permitted freely in accordance with the terms stipulated in the respective contract and recorded in the Certificate of Registration. A progressive supplementary income tax is levied on such remittances of earnings on foreign capital if their average over a three-year period exceeds 12 per cent of the registered capital and reinvestments. For foreign capital that produces goods or services for luxury consumption, remittances of profits are limited to 8 per cent per annum of registered capital. Remittances of royalties are not permitted by a branch or subsidiary established in Brazil to its head office abroad when at least 50 per cent of the local firm’s voting capital is directly or indirectly held by the foreign principal firm or when the majority of the firm’s capital in Brazil belongs to the recipients of the royalties abroad. Moreover, by virtue of an internal Central Bank measure of September 19, 1965, remittances of all technical assistance fees (either with or without the use of trademarks and patents) are allowed when remuneration for such services does not exceed, as a rule, 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

Under the provisions of Law No. 5025 of June 10, 1966, exports are free of licensing. Accordingly, exports are grouped into the following three categories: (1) free exports, (2) exports subject to control, and (3) prohibited exports. The first category includes the large majority of exports. The second category is limited to those goods that are considered to require control in the national interest. The commodities included in the third category are exceptional cases regulated by specific laws. Exports of coffee are subject to authorization by the Brazilian Coffee Institute.

The Brazilian Coffee Institute does not grant the authorization to export coffee unless the sale contract is based on a price per pound that is at least equal to the minimum registration price (in U. S. dollars per pound, f.o.b.) fixed from time to time by the Institute. The minimum registration price varies with the quality of the coffee and the port of shipment. Exporters of coffee are required to surrender without compensation a portion (“contribution quota”) of their foreign exchange receipts;2 the cruzeiro equivalent of this portion is transferred to a Coffee Defense Fund. For the export proceeds in excess of the contribution quota, exporters receive (1) payment of a fixed cruzeiro amount per bag3 determined from time to time by the Brazilian Coffee Institute and (2) payment of the full cruzeiro equivalent at the free market rate of any foreign exchange received in excess of the minimum registration price. Thus, the effective exchange rate for coffee exports depends on (i) the cruzeiro payment per bag, (ii) the minimum registration price, (iii) the actual price received (f.o.b. Brazil, in U. S. dollars per pound), and (iv) the free market rate. Based on payments per bag of coffee4 of Cr$172.20, Cr$161.30. Cr$155.80, Cr$139.30, and Cr$131.00 for different grades and ports of shipment, and corresponding minimum registration prices per pound of US$0.51, US$0.51, US$0.50, US$0.47, and US$0.455, respectively, prevailing on December 31, 1970, and on the assumption that the foreign price obtained by the exporter was equal to the minimum registration price, the effective rates for proceeds from coffee exports on that date were Cr$2.558, Cr$2.396, Cr$2.361, Cr$2.245, and Cr$2.181 per US$1. During 1970, coffee exports were occasionally permitted to be made at a negotiated discount on the world market price.

Proceeds of exports of soluble coffee are not subject to the contribution quota and the exporter receives his full proceeds converted at the prevailing free market rate. Exports of soluble coffee to the United States, however, are subject to an export tax expressed in cruzeiros and equivalent to US$0.13 a pound.

In accordance with the provisions of various Resolutions of the Brazilian Coffee Institute, a price guarantee system for exports of Brazilian coffee is maintained. Under these provisions a foreign importer of Brazilian coffee is entitled to compensation from the Institute, under specified conditions, for any reduction in the price of Brazilian coffee below the level at which the importer’s purchase took place. For any shipment date, the guarantee period at present is 60 days. The compensation to be received by the foreign importer is to equal the largest difference between (1) the average price of Santos 4 ex dock New York prevailing during 9 market days, of which the fifth day is the date of export registration at the Brazilian Coffee Institute, and (2) the price for this coffee calculated on the basis of its moving average for periods of 10 consecutive market days in the period starting on the date of shipment and ending on the day when the respective guarantee period terminates. The compensation takes the form of a credit that the importer may use in payment for new direct purchases of coffee from Brazil. The credits must be used within 90 days from the date of issue.

The proceeds from all other exports are also sold at freely negotiated exchange rates, but exporters of cocoa beans and cocoa paste are required to surrender without compensation 15 per cent of their exchange proceeds; and exporters of cocoa derivatives (butter, cake, and powder) are required to surrender without compensation 5 per cent of exchange proceeds. The cruzeiro equivalent of these deductions is used to finance a program of price support and plantation improvement for cocoa.

CACEX may, through the Fund for Export Financing (FINEX), finance exports of consumer durable goods and capital goods against payment at medium term and long term, provided that the suppliers’ credit does not exceed 80 per cent of the invoiced value. Credits granted for more than one year may be refinanced by CACEX for the full amount payable, provided that the exporter has given the necessary guarantees and that the maturity of the loan is considered compatible with the value of the exports and the terms for suppliers’ credits prevailing in world markets.

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, sometimes in the form of tax credits.

Proceeds from Invisibles

Exchange proceeds from current invisibles are 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 covered by Central Bank Resolution No. 63 or SUMOC Instruction No. 289 (see below) are subject to ceilings. Other financial loans in foreign currency require the prior approval of the Central Bank when they involve borrowing by private entities from private sources. The prior approval of CEMPEX is required for borrowing by the public sector and, when the foreign funds originate with official financial institutions, for borrowing by the private sector. Moreover, import financing with credit terms exceeding 360 days in amounts over US$500,000 requires the prior approval of the Central Bank. Otherwise, inward transfers are unrestricted and free of control.

For the purpose of repatriation and the remittance of income, however, foreign capital and the reinvestment of profits on foreign capital must be registered with FIRCE. Foreign capital is defined as (1) goods, machinery, and equipment which have entered the country without 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 is classified, for purposes of registration, as direct investments or loans, whether imported in the form of money or goods, and it includes reinvested profits from foreign capital. Direct investment is defined as that foreign capital which constitutes part of corporate capital and participates directly in the risk inherent in an economic undertaking. Foreign capital that is not part of the corporate capital of any enterprise and 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 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.

For financed 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 country of the lender, that the amortization schedule is not disproportionately heavy in the early stages of repayment, and 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 were earned, or appeared on the balance sheet in the case of a company, and the date of their reinvestment.

To facilitate the supply of working capital by foreign investors in Brazil, SUMOC Instruction No. 289, as amended, provides for the entry of short-term foreign capital either through the Bank of Brazil or any other authorized bank, subject to the prior authorization of the Central Bank. Approvals are limited to the amount of such loan transactions that mature during any given month. Central Bank approval guarantees the seller of the foreign exchange automatic registration at FIRCE for the purposes of the Foreign Investment Law, and the right of repurchase of the same amount free of any restrictions, guarantee deposits, or financial charges that may exist. The repurchase must be a spot transaction in the free market with the Bank of Brazil or any other authorized bank and does not involve an exchange rate guarantee; the repurchase rights may be exercised in whole or in part after 180 days, but will expire after 360 days.

Moreover, to facilitate the use of foreign credits by Brazilian enterprises, Central Bank Resolution No. 63, as amended, authorizes private commercial and investment banks to take up foreign credits for relending to the domestic private sector for the purpose of financing fixed or working capital. The certificate or registration of the loan for the purposes of the Foreign Investment Law is furnished by FIRCE upon application. The 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 assume the exchange risk involved in these transactions; moreover, new transactions are limited to amounts that will not cause the level of maturities falling due in any one month to rise above US$25 million.

Other transfers to foreign countries require authorization by GECAM, which considers applications on their merits. Exchange transactions concerning private capital are effected through an authorized bank or the Bank of Brazil at the prevailing market rate.

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 stipulates 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., at US$35 an ounce; the other 80 per cent would remain at the free disposal of the person concerned. This provision has never been enforced, however, 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 8 per cent, a turnover tax of 17 per cent, and a consumption tax of 18 per cent. The import of gold is subject to the issuance of an import certificate by CACEX and is 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.

Table of Exchange Rates5(as at December 31, 1970)
(Cruzeiros per U.S. dollar)
BuyingSelling
2.181-2.558 (Calculated on the Basis of Official Market Rate, Listed Cruzeiro Payment a Bag, and Minimum Registration Price)6
Coffee exports effected at a price equal to the minimum registration price, for payment at sight.
4.182 (Official Market Rate less 15% Contribution Quota)
Exports of cocoa beans and cocoa paste.
4.674 (Official Market Rate less 5% Contribution Quota)7
Exports of cocoa derivatives.
4.920 (“Manual Marker” Rate)4.950 (“Manual Marker” Rate)
Foreign banknotes and travelers checks.Foreign banknotes and travelers checks.
4.920 (Official Market Rate)4.950 (Official Market Rate)
All other export proceeds.8 Other receipts.Imports. Invisibles.9 Capital.

Changes during 1970

During 1970 the fixed cruzeiro payment per bag (132 pounds) of the various grades of coffee was increased on three occasions (March 1, March 23, and November 25); in addition, the cruzeiro payment was augmented by an export bonus of Cr$6.20 a bag for coffee shipped between November 1, 1970 and February 28, 1971. The minimum registration prices were increased on eleven occasions, on the first day of each month between January and November. The effective exchange rates applicable to proceeds from coffee exports at the prevailing minimum registration prices were changed accordingly. Also, during 1970 the price guarantee system for coffee exports was extended from month to month, thus ensuring foreign importers, under certain conditions, of a compensation for any reduction during specified guarantee periods in the price of Santos 4 ex dock New York below the level at which the export was registered. Certain coffee sales were allowed to be made below world market prices, but such sales were discontinued early in 1971.

January 15. An agreement was reached among the Secretaries of Finance of the States and the Federal District to grant firms exporting their manufactured products, in addition to the exemption from the state value-added tax (ICM) from which such exports already benefited, a credit in respect of the above tax. The credit was to be equivalent in value to the one granted to exports of manufactures in respect of the tax on industrialized products (IPI), and, as in the latter case, was not to exceed 15 per cent of the f.o.b. value of the exported commodity.

January 30. Central Bank Resolution No. 133 provided that foreign capital entering Brazil in accordance with SUMOC Instruction 289 could be sold also to any authorized bank, which was then required to surrender such foreign exchange immediately to the Central Bank. Previously, foreign exchange arising from loans contracted abroad under the provisions of the above instruction could be sold only to the Bank of Brazil.

February 4. Decree No. 66175 abolished the requirement of an import visa from the Brazilian consular authorities abroad on commercial invoices for shipments of imports effective March 7, 1970.

February 4. The buying and selling rates of the monetary authorities were changed from NCr$4.325 and NCr$4.350 per US$1 to NCr$4.380 and NCr$4.410 per US$1, respectively.

February 18. The ceiling on commercial banks’ rediscounts for the financing of the production of manufactures for export was raised from 30 per cent to 40 per cent of the ordinary rediscount facilities.

February 26. IBC Resolution No. 490 discontinued the quota system for exports of coffee to “traditional markets” that was introduced by Resolution No. 479 of October 17, 1969.

March 30. The buying and selling rates of the monetary authorities were changed from NCr$4.380 and NCr$4.410 per US$1 to NCr$4.460 and NCr$4.490 per US$1, respectively.

March 31. Central Bank Resolution No. 144 provided that, effective May 15, 1970, the monetary unit introduced on February 13, 1967 would cease to be referred to as the “new cruzeiro.” It was henceforth to be called the “cruzeiro.”

April 20. Order No. GB-101 of the Minister of Finance revoked the import prohibition for new automobiles valued at over US$3,500.

May 18. The buying and selling rates of the monetary authorities were changed from Cr$4.460 and Cr$4.490 per US$1 to Cr$4.530 and Cr$4.560 per US$1, respectively.

June 26. The reciprocal credit agreement with Peru was put into effect.

July 1. The reciprocal credit agreement with Mexico was put into effect.

July 6. CPA Resolution No. 824 re-established minimum import values for customs valuation purposes for which such values had been fixed on a temporary basis by CACEX, subject to the approval of the CPA. It reduced considerably the number of imports for which minimum values had been fixed by CACEX and lowered in a number of cases the minimum values applied. Three groups of imports were distinguished: (1) those for which minimum import values were fixed for an indefinite period of time with a view to correcting irregularities in international price quotations (e.g., caustic soda, dyes, whiskey, steel plates, cameras, electric valves); (2) those for which minimum import values were established for a period of 180 days to determine whether price discrepancies were due to dumping practices or whether domestic costs were too high; and (3) those for which minimum import values were reduced (mainly dyes).

July 10. Decree-Law No. 1.111 withdrew the power previously held by CACEX to establish new minimum import values. Existing minimum import values consolidated on July 6 (see above) were maintained, however. The decree also empowered the CPA to establish reference prices for the purpose of computing ad valorem duties on imports that undergo considerable price fluctuations as between various sources. The reference price was to be calculated on the basis of the normal wholesale price of the given commodity in the exporting country, plus insurance and freight charges and minus any export rebates. Should such information not be available, the reference price could also be fixed on the basis of the c.i.f. import prices of a given commodity over the nearest six months; the reference price determined in this manner could never exceed the highest c.i.f. import price calculated in respect of the country of origin of a given import during the above six-month period. The customs duty then levied was to be a combination of a specific rate (which consisted of the difference between the reference price and the c.i.f. import price) and the prevailing ad valorem rate, applied to the reference price. These arrangements would not be applicable to imports from LAFTA countries.

July 10. The buying and selling rates of the monetary authorities were changed from Cr$4.530 and Cr$4.560 per US$1 to Cr$4.590 and Cr$4.620 per US$1, respectively.

July 24. The buying and selling rates of the monetary authorities were changed from Cr$4.590 and Cr$4.620 per US$1 to Cr$4.620 and Cr$4.650 per US$1, respectively.

August 10. Decree-Law No. 1118 provided additional tax incentives for exports of manufactured goods.

August 18. CONCEX Resolution No. 60 made certain changes designed to simplify administrative procedures governing imports. The requirement of an import license was discontinued. Broadly, the following groups of imports were established: (1) those which no longer required an import certificate; (2) those which continued to be subject to an import certificate; and (3) those which were prohibited by legislation. In addition, for certain imports, to be set forth by CACEX, the import certificate could be obtained after their disembarkation in Brazil. A number of imports required the prior approval of CACEX; they included those for which tariff concessions were being sought, goods to be brought in under foreign financing, and used instruments, equipment, and machinery.

August 18. CACEX Announcement No. 308 regulated the provisions of CONCEX Resolution No. 60 (see above). It listed imports for which an import certificate was no longer required, imports for which a certificate could be obtained after their unloading in Brazil, and imports which were prohibited by law (originating in or shipped from Cuba and Rhodesia).

August 18. Central Bank Resolution No. 151 eliminated the requirement that an exchange contract be concluded for certain consumer goods (listed in the Annex to Decree-Law No. 398 of December 30, 1968) and of automobiles, light utility trucks, and station wagons prior to the issue of the import certificate.

August 18. GECAM Announcement No. 155 stipulated that the maximum period (free of special approval) for payment of imports for which no import certificate was required would be 180 days from the date of shipment.

August 21. CACEX Announcement No. 310 provided that requests for payment terms beyond 180 days and up to 360 days from the date of embarkation of the import from abroad had to be presented to CACEX together with the relevant applications for the import certificate. Such requests were to be approved only for imports of raw materials, spare parts for direct use by the importer, and capital goods which were not produced domestically. Interest on such financing was to be computed only from the 181st day counting from the date of embarkation. In exceptional cases, CACEX could also approve payment terms up to 360 days for other commodities which were not produced domestically, provided there was no interest payment involved.

August 27. Central Bank Resolution No. 154 reduced from 70 per cent to 40 per cent the proportion of the exporters’ share of exchange proceeds from coffee exports that authorized banks had to surrender to the Central Bank.

August 27. FIRCE Announcement No. 17 regulated certain procedures governing import financing. Financing arrangements with credit terms exceeding 360 days in amounts over US$500,000 required the prior approval of the Central Bank, which considered applications on the basis of the foreign indebtedness policy established by the National Monetary Council. If approved, the applicant had 90 days within which to submit the application for Central Bank registration for the purpose of remittances of the relevant interest and amortization payments. It was further provided that the nonfinanced portion of the contract, i.e., the part to be liquidated prior to shipment of the goods, could not exceed 20 per cent of the total value of the financing. Moreover, repayments could not be disproportionately heavy in the early stages of the amortization.

August 27. FIRCE Announcement No. 18 contained new regulations governing foreign financial loans. Henceforth, all such loans had to have specified maturities and, as in the case of import financing (see above), repayments could not be disproportionately heavy in the early stages of the amortization.

August 27. GECAM Announcement No. 156 provided that, effective September 11, 1970 minimum maturities for loans brought in under SUMOC Instruction No. 289 were to be extended from 60 to 180 days. Maximum maturities remained unchanged at 360 days.

September 10. Central Bank Resolution No. 158 provided that foreign exchange transactions taking place in trading centers with operating stock exchanges had to be channeled obligatorily through authorized brokerage companies. Exempt from this provision were exchange transactions valued at less than the equivalent of US$1,000, transactions in the manual market, including travelers checks, interbank transactions, and operations involving government agencies. Brokerage fees were to be calculated on a sliding scale, on the respective equivalents in cruzeiros, as follows: up to US$500,000,

of 1 per cent; from US$500,000 up to US$1 million, ⅛ of 1 per cent; and over US$1 million,
of 1 per cent.

September 10. Central Bank Resolution No. 159 exempted exports of cocoa derivatives equivalent of up to 300,000 bags of cocoa beans from the contribution quota.

September 15. Ministerial Order No. GB-254 exempted from the tax on industrial products (IPI), manufactures sold by industrial establishments, against payment by travelers checks, to persons domiciled abroad who are traveling in Brazil. The exemption was subject, inter alia, to the presentation of a passport as proof that the person is in transit in Brazil and to the completion of specified tax forms, copies of which had to be forwarded to the Federal Revenue Agencies. The travelers checks received by the industrial establishments had to be surrendered to any authorized bank within 15 days of the issue of the tax forms.

September 18. The buying and selling rates of the monetary authorities were changed from Cr$4.620 and Cr$4.650 per US$1 to Cr$4.690 and Cr$4.720 per US$1, respectively.

September 23. CONCEX Resolution No. 64 provided that imports of used machinery, equipment, and instruments were to be permitted only under the following conditions: that similar machinery and equipment was not manufactured domestically, that the goods were designed for the exclusive use of the importer, and that in the case of imports of used precision instruments and machine tools the items not be older than five years.

September 30. CACEX Announcement No. 316 consolidated, with minor revisions, the existing provisions determining the circumstances in which the use of Brazilian vessels was mandatory for importers.

October 1. The bilateral payments arrangements with Yugoslavia were revised and the swing credit was increased from US$2 million to US$6 million.

October 1. Revised payments arrangements with Iceland entered into force. A credit agreement between the Central Banks of Iceland and Brazil, replacing the payments agreement of September 1, 1968, provided for settlements on a U. S. dollar basis. Previously, settlements were channeled through accounts denominated in pounds sterling.

October 26. IBC Resolution No. 506 modified the method of calculating the compensation to be received by a foreign importer under the price guarantee system for Brazilian coffee exports. The compensation was to be the largest difference between (1) the average price of Santos 4 ex dock New York prevailing during nine market days, of which the fifth day was to be the date of export registration at the Brazilian Coffee Institute, and (2) the price for this coffee calculated on the basis of a moving average for a period of ten consecutive market days in the period starting on the date of shipment and ending on the thirtieth day after shipment. Previously, the price of Santos 4 under (1) above used for the calculation was the one prevailing on the date of export registration at the Brazilian Coffee Institute.

November 1. A temporary export bonus of Cr$6.20 a bag was granted on coffee shipped between this date and February 28, 1971.

November 4. The buying and selling rates of the monetary authorities were changed from Cr$4.690 and Cr$4.720 per US$1, to Cr$4.780 and Cr$4.810 per US$1, respectively.

November 18. The buying and selling rates of the monetary authorities were changed from Cr$4.780 and Cr$4.810 per US$1, to Cr$4.830 and Cr$4.860 per US$1, respectively.

November 24. IBC Resolution No. 508 changed the guarantee period applicable to the price guarantee system for exports of Brazilian coffee (see October 26, above) from 30 days to 60 days, starting from the date of shipment.

November 25. GECAM Announcement No. 165 provided that foreign exchange in payment for the cost of any freight and insurance relating to imports would be sold henceforth on the basis of appropriate documentation, i.e., bill of lading, insurance policy or insurance certificate, etc. Import certificates would be issued by CACEX on an f.o.b. basis. Previously, import certificates could be issued for the c.i.f. value of imports and foreign exchange could be sold on that basis.

December 22. The buying and selling rates of the monetary authorities were changed from Cr$4.830 and Cr$4.860 per US$1 to Cr$4.920 and Cr$4.950 per US$1, respectively.

Burma

Exchange Rate System

The par value is 0.186621 gram of fine gold per Burmese Kyat or K 4.76190 = US$1. The buying and selling rates for sterling of the People’s Bank of Burma, the sole authorized dealer in foreign exchange, are 1s. 9⅛d., and 1s. 8⅞d., respectively, per K 1. The Bank’s buying and selling rates for other currencies are based on the kyat-sterling rates and the London market rates for the currency concerned.

Administration of Control

Exchange control is administered by the Exchange Control Board, in accordance with instructions from the Ministry of Finance and Revenue, through the Exchange Control Department of the People’s Bank of Burma. Exports are handled by the Myanma Export-Import Corporation (MEIC or Trade Corporation No. 22). 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 and imports are made in accordance with an annual foreign exchange budget drawn up by the Ministry of Finance and Revenue.

Prescription of Currency

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. Consumer goods imports are severely restricted. 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 People’s Bank of Burma.

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-to-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. 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 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. 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

All exports are effected by the MEIC. There is a list of prohibited exports: iron and steel, brass, copper and aluminum and scraps thereof, foreign manufactures, and commodities of domestic origin which it is desired to conserve for domestic requirements. All exports to 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 People’s Bank of Burma within six months from the date of shipment. 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 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. However, 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 1970

February 1. The State Commercial Bank, which was the sole authorized dealer in foreign exchange, was taken over by the People’s Bank of Burma. This completed the unification of the banking system.

August 11. The reconversion of kyats by departing nonresident travelers ceased to be limited to one fourth of the amount of foreign currency previously converted into kyats.

Burundi

Exchange Rate System

The par value is 0.0101562 gram of fine gold per Burundi Franc or FBu 87.50 = US$1. The exchange rates for the U. S. dollar quoted by the Bank of the Republic of Burundi are fixed at FBu 87.0625 buying, and FBu 87.9375 selling, per US$1. The Bank quotes buying and selling rates for the Belgian franc based on the fixed rates for the U. S. dollar and the official market rate for U. S. dollars in Brussels; the Bank also quotes buying and selling rates for other specified currencies 1 which are based on its quoted rates for the Belgian franc and the official market rates for the currencies concerned in Brussels, or, in the case of the Tanzania shilling, those for sterling. 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 certain other currencies.2 The official rates for the Belgian franc on December 31, 1970 were FBu 175 buying, and FBu 176.76 selling, per BF 100.

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

Outgoing payments may be made in any currency; 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 payment 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 exchange that is received from abroad. They may be debited freely for (1) conversion into Burundi francs required to pay any expenses in Burundi and (2) payments abroad for travel and representation or for the purchase price of foreign goods. These accounts cannot bear interest and must not be overdrawn; the related bank charges and commissions may be settled in Burundi francs.

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are prohibited. All imports except trade samples and merchandise not intended for sale and valued up to FBu 20,000 require licenses; these are issued freely, except for certain used clothing. Applications for licenses 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 seven months starting at the end of the month following that of validation; in special cases, extensions may be granted by the central bank. The number and date of expiration 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.

Advance deposits calculated on the c.i.f. value are required for certain luxury goods from importers whose outstanding exchange commitments against import licenses are the equivalent of FBu 100,000 or over. 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 application is approved; it is released when the import payment is made.

Payments for Invisibles

All payments for invisibles require approval. Transfers of earnings of foreign nationals are freely permitted upon proof of payment of taxes, up to 20-65 per cent of 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 their full net profits after taxes, or, if the stockholders are resident foreign nationals, two thirds of profits after taxes. 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 is permitted after payment of taxes and deduction of normal maintenance expenses; resident owners may remit two thirds of such income. Residents of Burundi nationality may purchase reasonable amounts of exchange for foreign travel; they may take out this exchange and up to FBu 2,000 in Burundi banknotes. In addition, residents may freely purchase foreign travel tickets up to certain limits against payment in Burundi francs.

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are prohibited. All exports valued at over FBu 3,000 are subject to a prior declaration entitled Declaration of Collection of Foreign Exchange. The Declarations must be presented for certification by the central bank through an authorized bank, with the exception of those for the principal export commodities (coffee, cotton, and hides), which may be certified by authorized banks. 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. 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 Minister of Planning is charged with examining requests for priority status and granting the necessary authorization.

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

Gold

Dealings in gold coins must be carried out through the central bank. All other private dealing in gold is prohibited. The central bank purchases unrefined, newly mined gold from domestic producers at FBu 100.00 a gram (corresponding to US$35.546 a troy ounce). 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 1970

April 21. The Burundi franc was pegged to the U. S. dollar, while previously the Bank of the Republic of Burundi had maintained fixed buying and selling rates for the Belgian franc. The spread between parity and buying and selling rates for transactions with the public was increased from 0.40 per cent to 0.50 per cent, and that for dealings with commercial banks from 0.25 per cent to 0.3125 per cent.

September 3. The buying price for newly mined gold from domestic producers was increased from FBu 95.00 to FBu 100.00 a gram.

December 7. The Tanzania shilling was included in the list of currencies for which buying and selling rates are fixed by the Bank of the Republic of Burundi. Previously, the rates for that currency were freely agreed by the commercial banks.

Cameroon

Exchange System

No par value for the currency of Cameroon has been established with the Fund. The unit of currency is the CFA Franc, which is officially maintained at the rate of CFAF 1 = 0.02 French franc, giving the relationship CFAF 277.710 = US$1.1 Exchange transactions in French francs between the Cameroonian agency of the Banque Centrale des Etats de l’Afrique Equatoriale et du Cameroun (BCEAEC) and commercial banks in Cameroon take place at the fixed rate of CFAF 1 = F 0.02. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and in principle include a commission.

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

Administration of Control

Exchange control is administered by the Sub-Directorate of Financial Operations in the Directorate of Economic Controls, 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. All exchange transactions relating to foreign countries must be effected through authorized intermediaries, i.e., the Postal Administration and authorized banks. Import and export licenses are issued by the Ministry of Commerce.

Prescription of Currency

Cameroon is an Operations Account country of the French Franc Area, since the BCEAEC maintains an Operations Account with the French Treasury; settlements with France, 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.2 Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries—provided that the currencies are quoted on the Paris exchange market—or in French francs through Foreign Accounts in Francs. All settlements between Cameroon and 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 prohibited.

Imports and Import Payments

Imports from Portugal, Rhodesia, and South Africa are prohibited. The import from all sources outside the Central African Customs and Economic Union of certain goods (including flour, rice, pharmaceutical products, and matches) requires a prior authorization (autorisation préalable); when these goods are imported from countries other than France or Operations Account countries of the French Franc Area, they require in addition an import license. Other imports from France and from member states and associated states of the EEC may be made freely, and the former do not require a license. Some commodities are liberalized from all sources. Moreover, imports from any country made by industrialists for use in their own enterprises are also liberalized. Licenses for liberalized commodities are issued without restriction. All other imports are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by the Ministry of Commerce and are discussed in a joint French-Cameroonian Committee. The allocations of the program are subsequently subdivided into quotas for West and East Cameroon.

On licenses issued under the import program, goods originating in any country other than France, an Operations Account country of the French Franc Area, or an EEC country may be imported. However, there is a separate quota for textiles from Asian countries.

Import licenses for imports outside the import program, e.g., for gifts, items sent as guarantees, publicity articles, and supplies for foreign religious missions, may be approved, provided that the importer undertakes not to sell the goods and only to use them for his personal requirements.

All import transactions relating to foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 25,000. Import licenses entitle 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, 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 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 when the basic transaction has been approved. For tourist travel, residents traveling to countries other than France, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 100,000 a person a year; any foreign exchange remaining after return to Cameroon must be surrendered. For business travel to foreign countries, there is an allocation of the equivalent of CFAF 10,000 a day, subject to a maximum of CFAF 300,000 a trip. The transfer of rent from real property owned in Cameroon by foreign nationals is limited to 50 per cent of the income declared for taxation purposes. 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. 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 foreign countries may take out up to a maximum of CFAF 10,000 in BCEAEC banknotes, French banknotes, and banknotes issued by other Operations Account countries; if they avail themselves of this facility, their foreign exchange allocation is reduced correspondingly. Travelers to other countries may take out any amount in BCEAEC banknotes.

Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry.

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are prohibited. Export transactions relating to foreign countries must be domiciled with an authorized bank. Exports to countries in the French Franc Area are free of license. Proceeds from exports to foreign countries must be collected within a month 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, 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 BCEAEC, 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, 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 foreign countries 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 and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), 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. 68/DF/460, 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 abroad3 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 investments in Cameroon 4 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: (a) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (b) 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; (c) loans contracted by registered banks and credit institutions; and (d) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one borrower, their duration does not exceed two years, and the rate of interest does not exceed 6 per cent a year.

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: (a) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (b) 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 (c) loans contracted by registered banks and credit institutions.

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.

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. 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 1970

January 6. Certain cooperation agreements were signed with Equatorial Guinea.

June 12. Decree No. 70-DF-273 shifted the administration of exchange control and of the controls over inward and outward investment from the Ministry of Commerce to the Ministry of Finance.

June 23. Decree No. 70-DF-327 created in the Ministry of Finance a Directorate of Economic Controls with a Sub-Directorate of Financial Operations, which in turn comprised an Exchange Control Bureau.

Canada

Exchange Rate System

The par value is 0.822021 gram of fine gold per Canadian Dollar or Can$1 = US$0.925. Since May 31, 1970, however, the authorities have not maintained the exchange rate of the Canadian dollar within margins 1 per cent either side of the par value, and therefore all transactions, for the time being, take place at a fluctuating exchange rate. The free market rate for the U. S. dollar on December 31, 1970 was about Can$1.01 per US$1. Canada has no exchange restrictions on foreign payments. On March 25, 1952, Canada notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Prescription of Currency

No prescription of currency requirements are in force. 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 a few agricultural items, including certain cereals, for gasoline and natural gas, and for material and equipment for the production or use of atomic energy. For some of the agricultural items, such as most 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 of exports is not required, and exchange receipts are freely disposable. For supply reasons, the export of a few commodities to all destinations is under export control. For security reasons, the export of certain specified commodities to all destinations except the United States is under export control. All exports to CMEA countries and mainland China are subject to control, although certain nonstrategic goods of Canadian origin may be exported to these destinations under general 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. Individual travelers leaving Canada may not take out more than Can$5 in silver coins.

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents. Certain guidelines issued in 1968 apply to chartered banks and other financial institutions with respect to their foreign assets and liabilities and to companies incorporated in Canada with respect to transfers of capital to overseas countries.

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. Under the Emergency Gold Mining Assistance Act of 1948, all mines receiving subsidies are required to sell their newly mined gold to the Royal Canadian Mint. After refining, this gold is disposed of in the free market to established wholesale dealers by the Bank of Canada, acting as agent for the Government. Exports of gold are subject to the following conditions: (1) exports to CMEA countries and mainland China are included among those subject to control and require a license from the Department of Industry, Trade and Commerce; (2) gold not of Canadian origin may only be re-exported to a country other than the United States when covered by a permit issued by the Minister of Industry, Trade and Commerce under the authority of the Export and Import Permits Act; (3) owing to the general embargo on trade with Rhodesia, 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.

Changes during 1970

January 26. The Bank of Canada requested a number of financial institutions (investment dealers and trust companies) not to frustrate the effect of the temporary ceiling on chartered banks’ foreign currency swap deposits by arranging similar transactions in other ways, such as the splitting of transactions by having one institution take the foreign currency deposit and another arrange the forward cover.

March 30. The Bank of Canada withdrew its request to chartered banks of July 16, 1969 to regard the existing level of their foreign currency swap deposits as a temporary ceiling. The related requests to other financial institutions also were withdrawn. The amount of the aggregate ceilings had been Can$ 1,720 million.

May 7. Imports of gasoline into Eastern Canada from offshore points were made subject to import licenses in order to control the movement of imported gasoline into the area west of the Ottawa valley.

May 31. The Minister of Finance announced that, for the time being, Canada would not maintain the exchange rate of the Canadian dollar within the existing margins.

August 14. Import control was extended to additional dairy products, including all types of cheese, dry whole milk, evaporated and condensed milk, and animal feeds containing more than 40 per cent of nonfat milk solids. Import permits would not normally be issued, except for natural cheese.

August 17. All applications to import gasoline required approval by the National Energy Board, which would decide whether such imports would be consistent with the development and utilization of Canadian indigenous oil resources.

November 2. Restrictions on nickel exports were withdrawn and the embargo on shipments of nickel scrap was lifted. Exports remained subject to formal control authority, but export licenses were issued freely.

November 27. The Minister of Industry, Trade and Commerce announced that a temporary program of subsidies to the shipbuilding industry would be established for a period of 18 months to June 30, 1972.

December 31. The Emergency Gold Mining Act was extended to June 30, 1973 without change in the formula for computing the amount of assistance payable. An amendment prohibited the payment of assistance to lode gold mines which were not in production as of August 7, 1970.

Central African Republic

Exchange System

No par value for the currency of the Central African Republic has been established with the Fund. The unit of currency is the CFA Franc, which is officially maintained at the rate of CFAF 1 = 0.02 French franc, giving the relationship CFAF 277.710 = US$1.1 Exchange transactions in French francs between the Banque Centrale des Etats de l’Afrique Equatoriale et du Cameroun (BCEAEC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission charges. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission.

An exchange tax of 2½ per cent (subject to a minimum of CFAF 500) is levied on most exchange transactions with, and payments to, countries other than France, Monaco, and the Operations Account countries. In addition to payments to the countries mentioned, the following are exempt: (1) transactions of less than CFAF 12,500; (2) all operations relating to foreign exchange receipts; (3) foreign currency allowances for travel to countries other than France, Monaco, or the Operations Account countries; (4) government expenditures in countries other than France, Monaco, or the Operations Account countries; (5) transactions of international organizations and embassies; and (6) transactions carried out with the member countries of the EEC.

With the exception of those relating to gold, the Central African Republic’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, Chad, the People’s Republic of the Congo, Dahomey, Gabon, Ivory Coast, the Malagasy Republic, Mali, Mauritania, Niger, Senegal, Togo, and Upper Volta). Hence, all payments to these countries may be made freely. All other countries, except the Central African Republic itself, are considered foreign countries, and in principle financial relations only with foreign countries are subject to exchange control.

Administration of Control

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 Republic, 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 BCEAEC,2 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 Ministry of Mines and Geology.

Prescription of Currency

The Central African Republic is an Operations Account country of the French Franc Area, since the BCEAEC maintains an Operations Account with the French Treasury; settlements with France, 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—provided that the currencies are quoted on the Paris exchange market—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 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 prohibited.4

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are suspended. The import from all countries of enameled household utensils and of textiles of qualities also produced domestically is prohibited, as is the import from Chad of beer and certain soft drinks. The import of many foodstuffs from all sources is not authorized unless local production of these commodities is inadequate. Imports of butter and cheese from all sources, and imports of certain types of footwear and paints not originating in a member country of the UDEAC, may be made only in given ratios to purchases of the local product, and imports of alcoholic beverages from all sources require an import authorization from the Ministry of the Interior, for health reasons. 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 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, but are not normally restricted or subject to quota, import licenses being required for statistical purposes only.

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, 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, 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 foreign exchange in excess of the equivalent of CFAF 5,000 remaining after return to the Central African Republic 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 Republic 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 BCEAEC 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 BCEAEC 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 BCEAEC 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. The National Marketing Office for Agricultural Products has a monopoly over the export of agricultural products.

Proceeds from exports to foreign countries must be collected and repatriated within one month from the due date; the latter generally must fall within 180 days of shipment. 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, 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, 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 BCEAEC, 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 Republic and France, 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.

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 Republic; 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 Republic, the control measures do not apply to relations with France and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad5 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 Republic 6 must be declared 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 the Central African Republic 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 Republic. Both the making and the liquidating of direct investments, whether Central African Republic investments abroad or foreign investments in the Central African Republic, 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 Republic 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 Republic Government and (2) shares similar to securities whose issuing, advertising, or offering for sale in the Central African Republic 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 Republic, or by branches or subsidiaries in the Central African Republic 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 Republic 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, whether public or private persons, whose normal residence or registered office is in the Central African Republic, or by branches or subsidiaries in the Central African Republic 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 Republic are granted, under certain conditions, reduced duties and taxes on the import of specified equipment; in addition, certain enterprises receive exemption from direct taxes on specified income.

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

Requests for approval for preferential treatment must be submitted to the Minister of 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 Republic. 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.

Changes during 1970

August 28. Decree No. 70-234 prohibited imports of tape recorders, record players, and portable radios from all sources. The ban was lifted on December 9 by Decree No. 70-378.

August 30. Ordinance No. 70-48 created the Office national de commercialisation des produits agricoles. It was given a monopoly over the marketing, at home and abroad, of all agricultural products.

December 1. All imports from and exports to Portugal, Rhodesia, and South Africa were suspended by Letter No. 743/MT of September 28, 1970.

Ceylon

Exchange Rate System

The par value is 0.149297 gram of fine gold per Ceylon Rupee or Cey Rs 5.95237 = US$1. Another effective exchange rate of Cey Rs 9.23 per US$1 arises from transactions in Foreign Exchange Entitlement Certificates (henceforth called certificates), which exporters of nontraditional exports (i.e., exports other than tea, rubber, and major coconut products but including instant tea) and most other earners or recipients of foreign exchange are entitled to receive upon surrender of foreign exchange earned. Nonresident travelers when converting foreign exchange into Ceylon rupees at the official rate may also receive either corresponding certificates or their cash value in rupees. The certificates are denominated in Ceylon rupees and are issued with a face value equivalent at the official rate to the foreign exchange surrendered; they are transferable within 30 days of the date of issue and may also be surrendered to the monetary authorities for encashment at a price of Cey Rs 55 per Cey Rs 100 in certificates. Additional certificates are sold by the Central Bank of Ceylon upon demand and at the same price; such certificates are not transferable. Certificates with a face value corresponding at the official rate to the amount of foreign exchange required must be surrendered when purchasing foreign exchange for payments in respect of most imports and most invisibles. The Central Bank deals in certificates for up to four months forward, at Cey Rs 56 selling and Cey Rs 54 buying per Cey Rs 100 certificate; transactions are permitted only when relating to anticipated genuine payments and receipts in foreign exchange to which the certificate requirements or privileges are applicable.

The par value rate is applicable to receipts from major exports and to payments for most food items, fertilizers, drugs, and certain other imports (mainly of government corporations producing essential goods, small industries, and research institutes), as well as some invisibles.

Exchange rates for currencies other than sterling are based on the fixed sterling–Ceylon rupee rate (Cey Rs 14.29 = £1) and the rates for the currencies concerned against sterling in London.

Administration of Control

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

Prescription of Currency

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

Settlements with nine countries with which Ceylon has bilateral payments agreements,1 with the United Arab Republic, and (for certain transactions only) with Pakistan must be made through the relevant special accounts. Payments to all other countries except Rhodesia may be made by crediting sterling or Ceylon rupees to a sterling External Account or an External Rupee Account, or in the currency of the creditor country. Receipts from all other countries except Rhodesia may be accepted in sterling or Ceylon rupees from a sterling External Account or an External Rupee Account, in any specified currency,2 other than a Sterling Area currency, or in any nonspecified, non-Sterling Area currency marketable in the United Kingdom, i.e., freely exchangeable for sterling. Transactions involving deviations from the general regulations require the prior approval of the Controller of Exchange. Special regulations apply to settlements with Rhodesia.

Nonresident Accounts

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

Blocked Accounts are used for holding funds that may not be transferred abroad and that are owned by nonresidents, repatriates, and emigrants. Such funds, unless they originate from payments for imports, may be used for investment in Ceylon in prescribed securities. Proceeds from the liquidation of such investments must be credited to Blocked Accounts. Also retained in Blocked Accounts is a proportion of local currency earnings, derived from exhibition of foreign-owned films, if the takings exceed the amount specified in the import license; such retained funds may be used by the owner for making films in Ceylon.

Imports and Import Payments

All imports of goods originating in or shipped from Rhodesia are prohibited. Except for imports by the Food Commissioner’s Department and certain minor imports (such as trade samples, gifts, and books up to specified amounts), all imports require individual licenses.

All imports are subject to quota restrictions. They are divided into two groups—the A category and the B category. Imports in the A category broadly comprise basic necessities, fertilizers, certain specified imports of government departments and government corporations, books and periodicals, and two-wheeled tractors. The B category includes all remaining imports. The value and composition of imports are established by an annual import program. Imports of many nonessential or locally produced items are either prohibited or considerably restricted.

The right to import is restricted to government-sponsored corporations and registered importers, although private individuals are allowed to import certain commodities for their own use, subject to special authorization. Imports of specified commodities 3 are restricted to government or state corporations, the Cooperative Wholesale Establishment, or Lanka Salu Sala Ltd.; these are referred to as “reserved items.” In order to allocate foreign exchange, applicants for import licenses are divided into three groups: (1) actual users of industrial raw materials, machinery, etc., (2) those who import other goods for their own use and not for resale, and (3) established importers who import goods for trading purposes.

An authorized dealer may approve an application to remit foreign exchange or to credit a nonresident account when the applicant furnishes, or undertakes to furnish, evidence of importation and the cost of the goods together with a valid importer’s copy and an exchange control copy of the import license. Payment for imports in the B category requires, in addition to the rupee equivalent of the foreign exchange involved, surrender of certificates with a face value equal to the rupee payment; imports in the A category do not require the surrender of certificates. Import licenses exceeding Cey Rs 50,000 for imports of raw materials are subject to a minimum deferred payment term. Letters of credit against such licenses may be opened provided that drafts are drawn payable not earlier than six months after the shipment. A downpayment of 25 per cent or 50 per cent is mandatory on opening letters of credit for the import of truck chassis, but the establishment of a letter of credit is not prescribed.

Payments for Invisibles

All payments for invisibles require exchange control permission and, with certain exceptions, require surrender of certificates corresponding to the full amount of the foreign payment. Exempt from surrender of certificates are (1) certain official and semiofficial travel expenditures abroad,4 (2) expenditures for certain approved courses of study abroad, (3) remittances abroad by nonnationals for family maintenance, (4) expenditures for approved pilgrimages, (5) certain provident fund contributions and life insurance premiums, (6) pensions and the final remittance, on retirement, of provident and pension funds, (7) expenditures of foreign embassies, official international organizations, and foreign diplomatic personnel, and (8) other expenditures abroad specifically exempted from the certificate surrender requirement by the Controller of Exchange.

The remittance of life insurance premiums on policies in foreign currencies purchased by nonnationals residing temporarily in Ceylon is permitted, and such policies are considered as part of the assets available to them on retirement.

Foreign exchange for personal travel abroad is only granted for furloughs of nonnationals. Business travel is generally limited to travel for the promotion of traditional and industrial exports and of tourism, and exchange up to a maximum of £ stg. 10 a day for a maximum period of 21 days is allowed in such cases.

Exchange for educational expenses is made available only for certain courses of study that will be of positive value to the country and that are not available in Ceylon. For study in educational institutions in “Asian group” countries,5 exchange up to a maximum of Cey Rs 350 a month is allowed. For study in the United Kingdom, foreign exchange is made available at £ stg. 45 a month for undergraduate studies, and £ stg. 60 a month for postgraduate studies, plus actual fees and cost of books. For study in educational institutions elsewhere (other than the United States and Canada), the maximum allowable is £ stg. 53 for undergraduate and £ stg. 70 for postgraduate studies; the maximum for the United States and Canada are US$225 and US$240 for undergraduate and postgraduate studies, respectively.

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

Indian and Pakistani nationals are permitted to remit for family maintenance a maximum of Cey Rs 750 a month or one third of their gross monthly income, whichever is less. Other foreign nationals are permitted to remit £ stg. 85 a month for a wife, £ stg. 60 for a child going to school, £ stg. 25 for other children, and £ stg. 45 a month less monthly income abroad for an employed child, up to a maximum of two thirds of the gross monthly income when dependents are direct ones. For other dependents, this ceiling is one third of the gross monthly income. When the amount claimed on this basis exceeds one third of the gross monthly income, the excess will be treated as an anticipatory transfer to be set off against the amount the repatriate is entitled to remit upon departure. Temporary residents on short-term contracts are allowed to remit up to two thirds of their gross monthly income. Ceylonese nationals are not granted exchange for family remittances.

Commissions up to 5 per cent of the c.i.f. value are allowed on export orders secured through agents abroad. No remittances for insurance on exports are permitted; these must be covered with the Insurance Corporation of Ceylon.

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

Exports and Export Proceeds

All exports to Rhodesia are prohibited. Permits issued by the Controller of Exchange are required for all commercial exports. The export of some items is banned, and that of certain others requires export licenses issued by the relevant government agency. Rubber exports to mainland China, Poland, Rumania, and the U. S. S. R. are under state trading. Re-exports of nonmonetary gold, silver, and diamonds are allowed only in special circumstances.

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

Exporters of all goods other than tea (excluding instant tea), rubber, coconut oil, copra, dessicated coconut, and fresh coconuts are entitled to receive certificates with a face value in Ceylon rupees equal to the f.o.b. value of exports, upon surrender to an authorized bank of the foreign exchange actually earned. Exporters can use these certificates as supporting documents when buying foreign exchange for payment of imports, or for other payments abroad, which require the surrender of certificates. Certificates are freely transferable within 30 days from the date of issue; they have to be surrendered to the monetary authorities or an authorized bank before the expiry of that period. Certificates are not transferable thereafter, but the holders can use them when making foreign exchange payments within seven months from the date of issue; at the end of the seven-month period, the validity of the certificate lapses. Exporters of precious stones receive, in addition to certificates as indicated above, licenses to import raw materials (other than gold) for the jewelry industry corresponding to 25 per cent of their export receipts.

Proceeds from Invisibles

Foreign exchange proceeds from invisibles must be surrendered. Receipts under the following headings entitle the recipient to obtain certificates with a face value equivalent to the value of the foreign exchange surrendered to an authorized bank: (1) travel receipts; (2) insurance receipts; (3) investment income; (4) private transfers and donations; and (5) miscellaneous other inward remittances as determined, on a case-by-case basis, by the Controller of Exchange. Nonresident travelers are eligible to receive certificates corresponding to the amount of foreign exchange converted with authorized dealers; alternatively, the latter may pay the traveler, in addition to the rupee equivalent of the foreign exchange sold, the cash value of the certificate.

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

Capital

Investments of foreign capital are permitted in projects which are specifically approved by the Government, or, where the capital is drawn from a Blocked Account in Ceylon, in shares of public companies incorporated in Ceylon; capital transfers for direct investment in Ceylon are entitled to receive certificates upon conversion of the foreign exchange into rupees. Proceeds from the sale or liquidation of investments in approved projects may be repatriated, along with capital appreciation; transfers require surrender of certificates. Proceeds from the sale or liquidation of investments not approved by the Government may not be transferred abroad, but they may be reinvested in prescribed Ceylonese securities; the current income thereon may be remitted abroad.

New foreign investments in Ceylon that are considered and approved by the Foreign Investment Approval Committee of the Ministry of Planning and Employment are also granted special facilities in respect of remittances and taxation. Investments abroad by residents are not normally permitted.

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

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

Repatriates leaving Ceylon for residence in the country of their permanent domicile are permitted, at the time of their departure, to transfer assets representing their retirement funds and a reasonable amount of savings up to a maximum of Cey Rs 75,000 for Indian and Pakistani nationals and Cey Rs 150,000 for other nationals. However, for persons other than Indian and Pakistani nationals who prior to 1965 had already accumulated amounts in retirement funds in excess of Cey Rs 150,000, special provision is made for transfers of amounts up to Cey Rs 250,000. For persons who have been in business in Ceylon, the capital they originally brought into the country plus a reasonable amount of savings are allowed to be transferred, subject to the above limits. Transfer of personal assets and of income thereon requires surrender of certificates; exempt are (1) balances on provident and pension funds held abroad and representing contributions in respect of contractual obligations entered into before May 6, 1968, (2) provident and pension funds held in rupees in Ceylon, and (3) the value of insurance policies held abroad and taken out before May 6, 1968. Special provisions, governed by an agreement between Ceylon and India, apply to Indian families returning to India.

Gold

Imports and exports of gold in any form 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. The People’s Bank is the sole importer of gold. It sells gold in small quantities to licensed craftsmen and jewelers at the equivalent of US$83 an ounce. Small quantities are also sold to hospitals. Commercial imports of jewelry and of other articles containing gold are severely restricted.

Changes during 1970

During the year, part of the profits and dividends that had accumulated during the 1964-68 transfer moratorium were released for transfer overseas.

January 6. Exports of pallets used in the export of tea qualified for Foreign Exchange Entitlement Certificates.

January 13. The license fee on imports under loan or aid agreements was raised from 20 per cent to 35 per cent.

May 29. All applications for establishment of letters of credit in respect of imports under open general license became subject to the approval of the Controller of Exchange. Since the opening of a letter of credit for such imports was mandatory, this action was tantamount to a suspension of the open general license. Commercial banks were informed that until further notice the sale of exchange certificates, spot as well as forward, should be suspended, except where certificates were required to retire maturing import bills or to remit foreign exchange against permits issued by the Controller of Exchange. By the end of the year this instruction had not been revoked.

June. The allocation of exchange for pilgrimages was suspended.

July 1. All c.i.f. exports were required to be insured with the Insurance Corporation of Ceylon; previously, this requirement applied only to tea shipped to London auctions.

August 4. The open general license for imports, which had been applicable mainly to industrial raw materials and spare parts, was withdrawn. Henceforth all imports required a specific import license and the goods previously on open general license became subject to quotas. Subsequently, substantial reductions were made in the exchange allocations for imports and extensive use was made of short-term import credits.

September 6. The issuance of import licenses exceeding Cey Rs 50,000 for imports of raw materials and packing materials by the private sector became subject to a minimum deferred payment term of six months. Letters of credit up to twelve months were permitted against such licenses, provided that drafts were made payable not earlier than six months after shipment of the goods. Authorized dealers were allowed to enter into forward exchange contracts against such credits for twelve months.

September 21. The bilateral payments agreement with North Korea was terminated.

October 26. A new customs tariff went into effect. It involved a simplification and rationalization of the tariff structure and provided for six basic rates of import duty. All commodities were distributed over the six rate bands according to consideration of essentiality, industrial protection, and revenue.

October 27. All foreign payments of the Ceylon Transport Board, the Ceylon Electricity Board, and the Sri Lanka Sugar Corporation, and all payments for imports of sugar and corn, ceased to be exempt from the requirement to surrender Foreign Exchange Entitlement Certificates. However, this requirement was removed from payments for imports of books and periodicals, two-wheeled tractors, implements and spare parts, and raw cotton and cotton yarn. The net effect of these changes was a widening of the certificate market.

October 27. An amnesty was announced under which the repatriation before March 31, 1971 of funds held overseas without exchange control permission by residents would be free of both income tax and exchange control inquiries. The certificate rate of exchange would not be applicable to the foreign exchange surrendered. Subsequently, however, it was decided that such exchange would qualify for exchange certificates.

October 27. It was announced that Ceylonese nationals employed abroad and remitting funds to Ceylon would be able to convert these at the certificate rate and have the rupee proceeds credited to special accounts which would be exempt from income tax. The arrangement came into force on February 6, 1971.

October 30. Exporters were required to arrange for bills of lading for commercial exports to be made out only to the order of an authorized dealer in Ceylon, for delivery of such documents direct by the shipping agent. Perishable goods and shipments of the Government of Ceylon were exempt.

November 1. All applications for export of crepe rubber required the prior approval of the Controller of Foreign Exchange.

December 1. All special facilities granted to sterling plantation companies for the export of tea to London auctions were withdrawn. The export proceeds became subject to the normal collection and surrender requirements, i.e., the proceeds of sale had to be remitted to Ceylon within ten days of receipt by the principal from the broker but not later than four months from the date of export from Ceylon.

December 23. Banks were instructed to refer to the Exchange Controller for his prior approval all applications for remittances of dividends declared for an accounting year ending in 1971 to nonresident shareholders in public limited liability companies registered in Ceylon. The requirement also applied to the crediting of nonresident accounts of shareholders with such dividends.

December 24. The State Trading Corporations Act was passed. It empowered the Government to establish corporations for the purpose of engaging in import and export trade and in the domestic distribution of goods, whether wholesale or retail. (In January 1971, the Sri Lanka State Trading (General) Corporation was formed by Act of Parliament No. 33/1970 to engage, eventually as a monopoly, in the import of hardware, base metals, tires and tubes, automobile spare parts, raw materials and packaging materials for industrial use, drugs and pharmaceuticals, and building materials. The corporation also is authorized to engage in export trade. Lanka Salu Sala was renamed Sri Lanka Trading Corporation (Textiles) and the Cooperative Wholesale Establishment was renamed Sri Lanka Trading Corporation (Subsidiary Foods). On March 9, 1971, legislation for the establishment of a state-owned shipping firm, the Ceylon Shipping Corporation, was passed.)

Chad

Exchange System

No par value for the currency of Chad has been established with the Fund. The unit of currency is the CFA Franc, which is officially maintained at the rate of CFAF 1 = 0.02 French franc, giving the relationship CFAF 277.710 = US$1.1 Exchange transactions in French francs between the Chadian agency of the Banque Centrale des Etats de l’Afrique Equatoriale et du Cameroun (BCEAEC) and commercial banks in Chad take place at the fixed rate of CFAF 1 = F 0.02, free of commission. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission.

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) the other countries whose bank of issue is linked with the French Treasury by an Operations Account (Cameroon, the Central African Republic, the People’s Republic of the Congo, Dahomey, Gabon, Ivory Coast, the Malagasy Republic, Mali, Mauritania, 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.

Administration of Control

The Directorate-General of the Budget and the Public Accounts in the Ministry of Economy, Finance, and Transportation 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 administered by the Minister of Economy, Finance, and Transportation, who has largely delegated his approval authority to the Directorate-General mentioned above and 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, Finance, and Transportation.

Prescription of Currency

Chad is an Operations Account country of the French Franc Area, since the BCEAEC maintains an Operations Account with the French Treasury; settlements with France, 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 U. S. S. R. are made through special accounts established in accordance with a payments agreement. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries—provided that the currencies are quoted on the Paris exchange market—or in French francs through Foreign Accounts in Francs.

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 prohibited.2

Imports and Import Payments

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 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 a joint French-Chadian Committee.

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. Imports from Rhodesia and South Africa are prohibited.

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 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 Directorate-General of the Budget and the Public Accounts.

Payments for Invisibles

Payments for invisibles to France, 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. For tourist travel, residents traveling to countries other than France, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 100,000 a person 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 300,000 a person a trip; the Directorate-General of the Budget and the Public Accounts may issue exceptional allocations in excess of CFAF 300,000. 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 BCEAEC banknotes. Travelers to other countries may take out any amount in BCEAEC 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 BCEAEC 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.

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, 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 BCEAEC, 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, 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.

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 and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad3 require the prior approval of the Minister of Economy, Finance, and Transportation, 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 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 Chad4 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 Chad must also be declared 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 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 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 Chad 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 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. 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 of Finance 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. 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 of Finance 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.

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 Economy, who, after examining the documents, transmits them to the Investment Commission. After an opinion has been given by that Commission, the project is submitted to the Council of Ministers.

Gold

Chad has issued a gold coin of CFAF 10,000 which is legal tender. Ordinance No. 3/PR/TP of February 10, 1968 (ratified by Law No. 23 of June 4, 1968), in conjunction with the 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 on the advice of the Minister of Mines. Imports and exports of gold, whether unworked or refined, require prior authorization by the Directorate-General of the Budget and the Public Accounts and by the Directorate of Mines and Geology as well as the visa of the Directorate of Foreign Trade. 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 diamonds are usually made by approved Offices for Purchases, Sales, Imports, and Exports (BAVIE). Unworked gold may be exported only to France. Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1970

May 25. A gold coin with a face value of CFAF 10,000 was issued, which was legal tender.

Chile

Exchange Rate System

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

There are two exchange markets: the official market (known as the banking market) and the brokers’ market. Only the Central Bank, the Banco del Estado, authorized commercial banks, and other persons or entities authorized by the Central Bank may operate in these markets; brokers are not at present permitted to operate in either market. In principle, the rates of exchange in both markets are fluctuating rates, but in practice the rates are set by the Central Bank and have been adjusted from time to time.1 Outward transfers through both markets are controlled. Through the banking market pass government transactions, proceeds from exports, sales of exchange by the large mining companies, receipts from a few invisibles, and payments for imports and for some commercial invisibles. Most invisibles and most capital transactions pass through the brokers’ market. In general, capital transactions are entitled to the same exchange market treatment on exit as on entry. However, the servicing and withdrawal of some capital received through the brokers’ market may be effected through the banking market. Transactions in the banking market are for both spot and forward delivery at the same exchange rate; for imports of most commodities, forward exchange purchases are mandatory and export proceeds may be sold forward. For both types of transaction, settlement in escudos is effected at the time the exchange contract is negotiated. Transactions in the brokers’ market are for spot delivery only. There is some restriction on the availability of exchange in that the Central Bank sells exchange to the commercial banks only for forward delivery (56 days on December 31, 1970).

On December 31, 1970, the exchange rate in the banking market was E° 12.21 buying, and E° 12.23 selling, per US$1; the rate in the brokers’ market was E° 14.33 buying, and E° 14.35 selling, per US$1. Purchases of exchange in the brokers’ market by nonbanks for payments and remittances that may be effected without specific authorization (in the form of a solicitud de giro) by the Central Bank are subject to a 15.15 per cent exchange tax;2 this tax is also applied to the retransfer of all foreign capital and to the interest and profits thereon. Purchases of exchange in the brokers’ market for remittances subject to prior authorization are subject to an exchange tax of 0.15 per cent.

Administration of Control

The Foreign Trade Department and the Department of International Transactions of the Central Bank of Chile 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 Copper Corporation, which is supervised by the Central Bank and the Superintendency of Banks. Imports for the public sector are supervised by the interministerial Import Committee for the Public Sector, on which the Central Bank is also represented.

Prescription of Currency

The proceeds of exports by the large copper companies must be received in U. S. dollars or other currencies specifically authorized by the Copper Corporation; these companies must pay their taxes and cover the local costs of their production in U. S. dollars. Settlements with Argentina, Bolivia, Colombia, Mexico, Paraguay, Peru, Uruguay, and Venezuela 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. All other transactions with other countries may be settled in any currency, provided that import payments are made in the currency of the contract, irrespective of the country of origin of the goods. Certain payments and transfers to South Africa are prohibited.

Imports and Import Payments

Imports from Rhodesia are prohibited.

All imports, except those of the large mining companies and imports of defense materials, must be registered with the Central Bank. There is a List of Permitted Imports; commodities not appearing on it are prohibited unless imported (for some of these goods) through a “free port” zone (see below) or unless on Chile’s National List negotiated within LAFTA, when such goods may be imported from within the area. Certain other commodities may be considered as effectively prohibited for private importation since, although on the List of Permitted Imports, they are subject to an advance deposit requirement of 10,000 per cent unless they are imported by public sector agencies, or are on the National List and originate in a LAFTA country; the Executive Committee of the Central Bank, however, may grant specific exemptions. Goods not on the permitted list may freely be imported by private persons, provided that the value of each shipment does not exceed US$100 (Decree No. 681 of September 2, 1965 and C. B. Circular No. 1234 of August 22, 1969). Goods may normally be imported in any amount. The Central Bank, however, is empowered to reject import applications (registrations), except those for goods covered by special laws, for any item on the permitted list if the total value of applications for imports in the previous month exceeds by more than 5 per cent the average monthly registrations for imports during the past 12 months; when applications are so rejected, the Central Bank must reject registration for all commodities listed under the same customs tariff heading. This power has not been invoked since January 1966. Imports of goods not on the permitted list that are imported into “free port” zones, such as Arica, Magallanes, Aysén, and Chiloé, 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.

Importers may not purchase exchange until the goods have been shipped. For specified commodities, importers must, within 50 days after shipment, purchase forward exchange corresponding to the full registered value of the import against immediate cash payment in local currency; this requirement now applies to about 80 per cent of private sector imports. For supplementary lists of imports there are extended mandatory exchange cover periods of 120, 240, and 360 days.

Imports are subject to a registration tax of 3 per cent on the c.i.f. value.

Payments for Invisibles

All payments for invisibles are subject to exchange control. Payment through the banking market is permitted for a few commercial invisibles; all other invisibles are settled through the brokers’ market. Payments through the brokers’ market may be effected up to established limits for the following purposes: for tourist travel (in addition to fares; all limits 3 are per person per journey, with a 30-day waiting period between trips; the allocations for children under seven are half the amounts listed below and all allocations are subject to tax at a rate of 15.15 per cent) the equivalent of US$100 for travel to destinations within 500 kilometers of the Chilean border, subject to a maximum of US$25 a day; the equivalent of US$300 for travel to other parts of Latin America (defined as including the Bahama Islands, Curaçao, Jamaica, and Puerto Rico), with a maximum of US$30 a day; the equivalent of US$480 for travel to Canada and the United States, with a maximum of US$30 a day; the equivalent of US$720 for travel to countries outside the Western Hemisphere, with a maximum of US$30 a day; for family remittances US$100 a month for each beneficiary, with an annual maximum of US$600 per beneficiary; for purchases of books US$50 a person a month; for subscriptions to periodicals US$200 a person a year; and for student registration fees US$50 a person a year. Banks may sell up to US$1,200 a person a year for payment of insurance premiums contracted prior to November 20, 1970 in foreign currency with national insurance companies or foreign companies authorized to operate in Chile. Transfers of other insurance premiums require the approval of the Central Bank, which acts on the advice of the Superintendent of Insurance. Payments for medicine and pharmaceutical products may only be made provided that the product in question is not available in Chile. Transfers in excess of these limits, and those in respect of other transactions, require the prior authorization of the Central Bank. All purchases of exchange in the brokers’ market, except those for which the Central Bank has approved a transfer application (solicitud de giro), are subject to a tax of 15.15 per cent;4 the only documentation required for such invisibles that are neither covered by the approval authority delegated to authorized 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 E° 360 a trip. Resident travelers may take out 20 per cent of their travel allocation in Chilean banknotes. The export of Chilean banknotes by nonresident travelers is prohibited.

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. Additionally, exports of some items are prohibited or are subject to quota irrespective of destination.

All exports must be registered with the Foreign Trade Department of the Central Bank and the sale proceeds of exports other than those of the large mining companies are subject to surrender requirements. The large mining companies sell exchange to the Central Bank only to the extent needed to meet their local requirements to cover costs of production and tax liabilities.

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. Export proceeds sold on a spot basis must be transferred to the Central Bank; other proceeds may be sold forward between 60 days before shipment and 10 days before expiration of the obligatory surrender period.

By virtue of Law No. 16528 of 1966, many minor exports receive refunds of taxes and other charges included in their cost of production; these refunds amount to up to 30 per cent of the f.o.b. or c.i.f. value of such exports, depending on the product.

Proceeds from Invisibles

Receipts of exchange from news and communications agencies fees, from specified transactions by national insurance companies, from commissions, from reimbursements of insurance claims, and from credit granted in foreign currency by the commercial banks must be sold in the banking market. Exchange received in payment for personal services rendered by residents must be surrendered at the brokers’ market rate; however, foreign nationals who have been resident in Chile less than two years may retain 50 per cent of such remittances in foreign currency accounts with the Banco del Estado. Exchange derived from other invisibles, including tourism, may be sold in the brokers’ market or retained.5 Travelers may bring in any amount in domestic or foreign banknotes.

Capital

Capital may be brought into Chile through either exchange market; no capital can flow out freely through either market. Normally, capital is subject to the same exchange market treatment on exit as on entry; this policy applies also to remittances of dividends and profits on the capital.

Foreign capital may enter Chile under one of three different arrangements, depending on the purpose and the type of the investment.6

(1) Article 14 of Decree 1272 (September 7, 1962) stipulates that capital brought into the country in the form of foreign exchange (aporte de capital) may be sold freely in the brokers’ market through authorized banks when the investor (individual or corporation, national or foreign) has registered with the Central Bank.

Such capital may only be repatriated through the brokers’ market with the prior approval of the Central Bank given on a carta petición. The same is true for the transfer of interest and profits on such capital. All capital repatriation under Article 14 of the above Decree is therefore subject to the 15.15 per cent exchange tax.7 Repatriation is only allowed in accordance with the amortization schedule established upon registration.

(2) According to Article 16 of the above Decree, the investor may enter into a loan agreement with a Chilean individual or corporation, or into an agreement with a national enterprise with a view to capital participation. In these cases, the investor has an option between the banking market and the brokers’ market; the Central Bank guarantees access to the exchange market chosen for the entry of the capital, both for the servicing of loans and the re-export of capital, and for the remittance of interest and profits. The guarantee is given subject to certain conditions, one of which is a minimum investment period of 3 years. As an application and extension of Article 16, the Executive Committee of the Central Bank on November 3, 1963 took a decision to create an additional regime to further foreign investment in Chilean export industries. Under this regime, capital brought in for the promotion of exports of agricultural, industrial, and mining products may be sold in the brokers’ market, while its repatriation may take place in the banking market, provided that the amount repatriated is financed from the increase in the volume of exports resulting from the investment. The regime is implemented through individual investment agreements in accordance with Article 16. Repatriation of the invested capital may start 2 years after entry and may amount to 12½ per cent annually of the invested capital. In addition, the remittance of interest or profits is permitted annually up to 7 per cent of the invested capital. The repayment of capital, and the transfer of interest or profits thereon, may be effected through the banking market, provided that the amount does not exceed 50 per cent of the amount of exchange resulting from the volume increase in exports. If this criterion prevents the transfer of the full amount of amortization, interest, and profits through the banking market, the transfers may be completed through the brokers’ market. The above privileges are only granted to firms that will not purchase foreign exchange in the banking market to acquire abroad any machinery, equipment, or capital goods on a cash payment basis. In a further extension of the regime under Article 16, on June 2, 1966, the Central Bank announced that it would guarantee the foreign exchange for repatriation of, and earnings on, imported capital, provided that certain conditions were met. These were that (a) the investment must be deemed to be of importance to the Chilean economy; (b) it must amount to at least US$100,000 or the equivalent in other currencies; (c) the capital must remain in the country for at least 3 years, and subsequent repatriation must not be more than 20 per cent a year, on a noncumulative basis; (d) the exchange must be sold in the banking market; and (e) the interest rate on credit to Chilean firms must not be higher than that in the domestic market.

(3) The most important law governing foreign investment is Decree-Law 258 of 1960, which establishes a regime both for foreign exchange transfers and long-term capital investment. A Foreign Investment Committee studies the proposal and the Ministry of Economy approves by decree the particular investment; the Committee establishes both guarantees regarding withdrawal of capital and remittances of interest and profits and may also give special guarantees regarding exemption from payment of certain import surcharges, customs duties, and taxes. Such privileges may be granted for a period of 10 years, with extension to 20 years in special cases. Remittances are effected in the same market (normally the banking market) through which the capital was brought in, and the investor has the right to use the exchange resulting from the export proceeds of his investment.

Gold

Chile has issued four gold coins, which are legal tender. Newly mined gold is purchased from the producers at an average price equivalent to US$42 an ounce by ENAMI (Empresa Nacional de Minería), which, after refining, sells it at US$35 an ounce to the Central Bank. The latter has this gold coined at the Mint. The Central Bank makes gold available to industrial users in the form of Chilean gold coins at the equivalent of US$50.97 per ounce. The Central Bank has exclusive power to purchase, sell, negotiate, or transfer gold in any form for any purpose, except in the form of jewelry. All import and export of gold contained in minerals is subject to special authorization by the Central Bank. Gold bars are imported and exported only by the Central Bank. The import of gold coins and of gold dust, gold leaf, and gold wire for industrial use is subject to a 10,000 per cent advance deposit requirement; the import of gold coins is not normally permitted.

Changes during 1970

The comprehensive program of import liberalization begun in 1969 was continued in the first half of 1970. All prior import deposit requirements were abolished except that of 10,000 per cent, and the list of permitted imports was further extended. The forward delivery period for foreign exchange to cover import payments was reduced from 68 days to 56 days. In the second half of the year, the policy of periodic exchange rate adjustments was discontinued. Most of the limits on exchange allocations for travel expenditure and other payments for invisibles were lowered, devices to discourage capital flight were introduced, certain capital payments became subject to prior authorization, and the surrender of certain receipts from invisibles became mandatory.

January 1. Purchases of exchange in the brokers’ market for remittances subject to prior authorization, and all sales of exchange in the brokers’ market, became subject to a tax of 0.15 per cent (Law No. 17250 and Circular No. 930 of the Superintendent of Banks).

January 1. Law No. 17267 of December 23, 1969 increased the special tax on purchases of exchange from 10 per cent to 15 per cent. As a result, and taking into account the new 0.15 per cent tax introduced on January 1, the tax on purchases of exchange in the brokers’ market for remittances that could be made without specific Central Bank authorization (in the form of a solicitud de giro) was increased from 10 per cent to 15.15 per cent (i.e., 15 per cent plus 0.15 per cent).

January 6. A Presidential Decree provided for the gradual elimination of virtually all import restrictions.

January 9. The selling rates in the banking and brokers’ market were depreciated from E° 9.98 to E° 10.18 and from E° 11.52 to E° 11.75, respectively, per US$1.

January 22. Exporters of unrefined copper were granted access to the brokers’ market, by means of a solicitud de giro, for the purchase of foreign exchange to be used in payment of the export tax established in Article 134 of Law No. 15.575 of May 15, 1964.

January 22. The Foreign Trade Department of the Central Bank issued rules for paying commissions for activities connected with foreign trade.

January 29. A wide range of goods were added to the permitted import list; they were exempt from advance import deposit requirements.

January 30. The selling rates in the banking and brokers’ markets were depreciated to E° 10.28 and E° 11.90, respectively, per US$1.

February 12. The selling rates in the banking and brokers’ markets were depreciated to E° 10.48 and E° 11.90, respectively, per US$1.

February 18. All products of the automobile industry became ineligible for preshipment export credits.

February 27. The selling rates in the banking and brokers’ markets were depreciated to E° 10.65 and E° 12.35, respectively, per US$1.

February 27. The Central Bank’s forward delivery period for foreign exchange was reduced from 68 days to 67 days.

March 2. A range of goods were added to the permitted import list and were exempt from advance deposit requirements.

March 11. The selling rates in the banking and brokers’ markets were depreciated to E° 10.83 and E° 12.60, respectively, per US$1.

March 11. The Central Bank’s forward delivery period for foreign exchange was reduced to 66 days.

March 12. Many items on the list of permitted imports became exempt from advance deposit requirements.

March 26. The selling rates in the banking and brokers’ markets were depreciated to E° 11.03 and E° 12.85, respectively, per US$1.

March 26. The Central Bank’s forward delivery period for foreign exchange was reduced to 65 days.

April. Four gold coins were issued, which were legal tender.

April 15. The selling rates in the banking and brokers’ markets were depreciated to E° 11.23 and E° 13.10, respectively, per US$1.

May 5. The selling rates in the banking and brokers’ markets were depreciated to E° 11.43 and E° 13.35, respectively, per US$1.

May 7. The extraordinary credit under the reciprocal credit agreement with the Central Bank of Argentina was extended until December 31, 1970.

May 13. Foreign currency capital imports falling under Article 14 of Decree No. 1272 which were converted into domestic currency after May 14, 1970 had to remain in the country for a minimum period of 18 months (previously 12 months) in order to be exempt from the 15.15 per cent remittance tax upon repatriation.

May 13. A large number of goods on the list of permitted imports became exempt from advance deposit requirements.

May 18. The advance deposit requirement for all items on the list of permitted imports previously subject to a 15 per cent deposit was revoked.

May 27. Central Bank Circular No. 1379 revised its decisions of May 8, 1963 and May 16, 1963 concerning gold transactions. The exclusive power of the Central Bank of Chile to purchase, sell, negotiate, or transfer gold coins or gold bars for any purpose was extended to include gold in coin blanks or in any other form of metal or fine gold, except in jewelry. Previously, the import of gold coins and the import for industrial use of gold dust, gold leaf, and gold wire was free of quantitative restrictions.

May 27. The selling rates in the banking and brokers’ markets were depreciated to E° 11.63 and E° 13.60, respectively, per US$1.

June 3. The Central Bank announced that it would henceforth in all duly justified cases authorize the sale of exchange in the brokers’ market for travel and medicines in excess of the established quotas. The limit on the amount of foreign exchange for monthly family assistance available without prior Central Bank authorization was raised from US$200 to US$250 a person. The quota of US$100 a person a month for the purchase of books could be accumulated for three months before being used.

June 11. The selling rates in the banking and brokers’ markets were depreciated to E° 11.83 and E° 13.85, respectively, per US$1.

June 18. A number of items were added to the list of permitted imports; they were exempt from advance deposits.

July 6. A large range of imports originating in Bolivia, Colombia, Ecuador, or Peru were exempted from advance deposit requirements.

July 7. The selling rates in the banking and brokers’ markets were depreciated to E° 12.03 and E° 14.10, respectively, per US$1.

July 23. The operational rules for the issue of tax drawback certificates for certain exports were revised.

July 28. The selling rates in the banking and brokers’ markets were depreciated to E° 12.23 and E° 14.35, respectively, per US$1. There were no further adjustments in 1970.

July 29. The Central Bank’s forward delivery period for foreign exchange was reduced from 65 days to 56 days. There were no further reductions in 1970.

July 30. All advance import deposit requirements, except the 10,000 per cent category, were eliminated.

August 12. Decree No. 1821 modified the application of Article 2 of Law No. 14824 concerning imports into Arica. Only specified classes of goods remained exempt from import duties and taxes when imported into Arica for local use. The freedom to import into Arica any commodity not on the permitted list was maintained, however. The Central Bank later issued Circulars Nos. 1448 and 1465 regarding requirements that importers in Arica had to meet.

August 18. Decree No. 741 added a wide range of goods to the list of permitted imports. As a result, virtually the only items not on the list were automobiles, television and radio receivers, cigarettes, gems, jewelry, spirits, carpets, and toys.

September 7. The Central Bank announced that it would no longer authorize sales of exchange to travelers in excess of the established limits (see June 3, above). A 50 per cent tax was introduced by Decree No. 2030 on amounts of exchange in excess of these limits to be sold under pending authorizations.

September 7. The Central Bank indicated informally to the commercial banks that all sales of exchange for repatriation of capital under Article 14 of Decree-Law No. 1272 of September 7, 1962 would henceforth require Central Bank authorization in the form of a solicitud de giro, irrespective of the period during which the capital had remained in the country. A side effect of this measure was to exempt all capital repatriation from payment of the 15 per cent remittance tax. Previously, authorized banks could freely sell foreign exchange in the brokers’ market for such repatriation, provided that the inflow had been registered with the Central Bank.

September 21. The reciprocal lines of credit with the Central Bank of Brazil were extended to September 10, 1972.

September 25. Copper exported in processed or semi-processed form became eligible for forward sales of exchange to the Central Bank.

October 1. Twenty-one items were added to the list of permitted imports and six items were removed from it.

October 1. Residents could not make additional purchases of foreign exchange for travel unless 30 days had elapsed since the date of the last purchase. Exemptions could be granted in duly justified cases.

October 16. The limits on the sale of exchange for travel (a person a trip every 30 days) were reduced from US$100 to US$50 for travel within 500 kilometers of the Chilean border; from US$360 to US$150 (US$200 for Mexico) for travel in other parts of Latin America; and from US$720 to US$200 for travel to Florida in the United States. The limits on the sale of exchange for other purposes remained unchanged.

October 19. The travel allocations, which previously had been available irrespective of the traveler’s age, were reduced by 50 per cent for children under seven.

October 21. A limit of US$150 (a person a trip every 30 days) on the sale of foreign exchange for travel to the Bahama Islands was set; previously, the standard allocation of US$720 applicable to travel outside Latin America had been available.

October 30. Law No. 17382 established a tax of 8 per cent on the customs value of goods imported through Chiloé. The law also created new import privileges for the provinces of Chiloé, Aysén, and Magallanes. The law came into force on January 1, 1971.

October 31. Law No. 17389 permitted imports into Africa, free of advance deposits and provided that no payment in foreign exchange took place, of prohibited imports up to US$100 (c.i.f.), when made by private persons who had been resident in the Department for at least three years. Each person was allowed two such shipments a year, subject to a single tax of 25 per cent.

November 12. A number of items were added to the list of permitted imports.

November 19. The prohibition on direct or indirect trade with Cuba was revoked.

November 20. The Central Bank terminated the system introduced on June 26, 1967 whereby importers entering into forward exchange contracts at the time of import registration could at maturity obtain exchange which was cheaper by an amount equivalent to 5 per cent interest for the duration of the forward contract.

November 20. The Central Bank revised the limits on the sale of exchange not requiring its prior authorization. The exchange allocation for travel to destinations within 500 kilometers of the Chilean border was raised to US$100, with a maximum of US$25 a day; the allocation for travel to other parts of Latin America (defined as including the Bahama Islands, Curaçao, Jamaica, and Puerto Rico) was raised to US$300, with a maximum of US$30 a day. The allocation for travel to the United States and Canada was reduced from US$720 to US$480, with a maximum of US$30 a day. The allocation for countries outside the Western Hemisphere remained at US$720, but also became subject to a limit of US$30 a day. All travel allocations were on a per adult per journey basis; however, travelers had to wait 30 days between trips before taking up another allocation, unless the nature of the trip justified an exemption from this rule. The exchange allocation for family maintenance was reduced from US$250 to US$100 a month for each beneficiary, with an annual maximum of US$600 for each beneficiary. The allocation for purchases of books was reduced to US$50 a person a month and could no longer be accumulated for three months. The allocations for subscriptions to periodicals and for student registration fees remained at US$200 and US$50, respectively, a person a year. The allocation for purchases of medicines was reduced from US$100 to US$50 a person a month. Banks could sell up to US$1,200 a person a year for the purpose of paying insurance premiums contracted prior to November 20, 1970 in foreign currency with national insurance companies or foreign companies authorized to operate in Chile; for all other exchange allocations for payments of insurance premiums the approval of the Superintendency of Insurance was required.

The export of Chilean banknotes by resident travelers was limited to 20 per cent of their travel allocation. No provision was made for exports of Chilean banknotes by nonresident travelers, and such exports were de facto prohibited.

November 27. The Ministry of Finance announced that the private banks and the largest copper mines would be nationalized. State enterprises would be placed in charge of imports of food, raw materials, and manufactured goods. The State would centralize all future foreign borrowing and control all future foreign investment. The escudo would no longer be periodically depreciated. Exchange controls would be reinforced and additional facilities would be created for exporters.

December 2. The Central Bank made all capital repatriation under Article 14 of Decree-Law 1272 of September 7, 1962 subject to prior authorization in the form of a carta petición. As a result, all capital repatriations under Article 14, irrespective of the period during which the capital had remained in the country, became subject to the remittance tax of 15 per cent. Repatriation would only be allowed in accordance with the time schedule established upon registration.

December 3. An advance import deposit of 10,000 per cent was required for refined sugar, cigars, pipe tobacco, tinplate, commerical aviation aircraft, and certain rayon yarn and fiber.

December 10. Circular No. 956 of the Superintendent of Banks prohibited the opening of letters of credit for imports of books and periodicals.

December 11. Central Bank Circular No. 1463 made merchant ships, fishing vessels, and navigation equipment subject to a 10,000 per cent advance import deposit.

December 14. With effect from January 1, 1971, contracts denominated in foreign currencies for personal services rendered by Chilean nationals or by foreign nationals who had been in Chile for a cumulative period of more than two years had to be paid in escudos at the brokers’ market rate. Foreign nationals who had been resident in Chile less than two years could receive remuneration in foreign currency, provided that the beneficiary sold in the brokers’ market each month 50 per cent of his receipts and provided that the foreign currency was deposited with the Banco del Estado; such deposits could only be used to make remittances abroad or to sell foreign exchange in the brokers’ market. The Central Bank was authorized to grant exemptions. This regulation was complementary to Law No. 15192.

December 28. Central Bank Circular No. 1471 established that no automobiles valued at over US$2,500 (c.i.f.) could be imported for private use.

December 29. Central Bank Circular No. 1473 established that, in addition to the large copper mining companies, any other company entitled to the privilege of partial surrender of its export proceeds was debarred from access to the banking futures market for the partial sale of its proceeds. Consequently, they all had to cover their local currency requirements by spot sales of foreign currency in the banking market.

December 30. Plans for the rationalization of the automobile industry were announced. All production would be concentrated in three companies, each with government participation.

Republic of China

Exchange Rate System

The par value is 0.0222168 gram of fine gold per New Taiwan Dollar or NT$1 = US$0.025. The official buying and selling rates for the U. S. dollar are NT$40.00 and NT$40.10, respectively. Buying and selling rates for certain other currencies are also officially fixed, on the basis of the buying and selling rates for the U. S. dollar and the par values of the currencies concerned.1 Currencies for which rates are not officially fixed may be accepted by appointed banks, and the rates are calculated in accordance with the foreign market quotations.2 With certain exceptions, earners of foreign exchange must sell it at these rates to banks appointed by the Central Bank of China. There is no exchange market. The commercial banks cover their exchange business at the end of each day with the Central Bank.

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 of China. 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 of China 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 authorized 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 licenses. By delegation, the Application Receipt and Dispatch Center at the Board of Foreign Trade screens applications for import licenses and issues the licenses. Export applications are screened, and export permits issued, by the Bank of China, the Bank of Communications, the Farmers’ Bank of China, the Bank of Taiwan, and the Central Trust of China. Most foreign exchange transactions are conducted through authorized banks.

Prescription of Currency

Export receipts must be obtained in Australian dollars, deutsche mark, French francs, Hong Kong dollars, Malaysian dollars, pounds sterling, Swiss francs, or U. S. dollars.3 Also, these are the foreign currencies that may be used by residents of other countries to finance investments in the Republic of China. The currency and method for making payments to residents of foreign countries are not prescribed.

Nonresident Accounts

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

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

Residents may maintain accounts in 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 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 are subdivided into interest-bearing time deposits and passbook accounts (which do not bear interest).

Imports and Import Payments4

Most imports require individual licenses. For virtually all 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. Appointed banks have authority to screen import applications for certain daily necessities and to make the necessary foreign exchange available; these goods do not require an import license. Imports normally must be settled on a sight letter of credit basis. Exchange settlement corresponding to 25 per cent of the f.o.b. or c. & f. value of imports (20 per cent for raw cotton financed under the U. S. P. L. 480 program) must be made within 28 days of approval of the license for all imports not taking place on a deferred payment or consignment basis, i.e., for all imports under letter of credit. Provided that the foregoing requirement of a so-called performance deposit has been met, the holder of an import license is entitled to obtain the necessary foreign exchange from an appointed bank. Imports from communist countries are prohibited. The Chinese authorities license and check imports from Hong Kong in order to induce importers to obtain certain imports direct from the country of production and to control effectively imports from mainland China; for similar reasons, certain commodities are not permitted to be imported from Hong Kong and Macao. Certain commodities which still can be financed with U. S. aid funds (including P.L. 480 funds) can be imported only from the United States.

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 and a number of luxury goods and less essential items, such as certain Chinese luxury foods, cigarettes, cigars, liquor, jewelry, certain medicines, tea, sugar (and its substitutes), and molasses. Liquor and cigarettes are imported by a government monopoly organization, which is also responsible for domestic distribution of these commodities. The controlled list contains three types of goods: some consumer luxury items,5 certain goods that are also produced locally of good quality and in sufficient quantity to meet domestic demand and whose ex-factory prices are not more than 10 per cent higher than the landed, duty-paid prices of comparable imported goods; and goods subject to regulation and allocation. The first two types are licensed restrictively;6 goods of the third type are often imported by government agencies, which offer them for sale either by allocation or by auction. Imports on the permissible list are licensed liberally and can be made by both end-users and traders. The importation of items on the controlled list is permitted only to factories and end-users. Of 11,575 classified import items, 209 are prohibited, 4,127 are controlled, and 7,239 are permissible.

Special regulations apply to 13 commodities normally imported in bulk shipments and imports of which exceed 40,000 metric tons a year.7 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. Commercial imports handled by government trading agencies include chemical fertilizers, tinplate, crude oil, and automobiles. 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 and be registered by the Taiwan Provincial Department of Reconstruction or the Reconstruction Department of Taipei City; the firms must be operating in accordance with certain laws and have a minimum capital of NT$200,000 and an “export record” equivalent to more than US$50,000 for the last two years. Traders licensed to operate on a commission basis may act only as agents for traders or foreign suppliers. They also must be approved 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). In certain manufacturing industries, a stipulated minimum ratio of the value of the manufactured product must be met by use of domestic resources.

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.

With the exception of machinery and equipment imported by a productive enterprise for its own use, imports from all sources are subject to an import surcharge equivalent to 30 per cent of the applicable customs duty, depending on the commodity; this surcharge is 20 per cent on raw materials imported for processing for export, and is refunded upon exportation. In addition to the 30 per cent surcharge, many raw materials imported for domestic use rather than export processing are also subject to an additional surcharge of 30 per cent of the applicable customs duty.

Payments for Invisibles

All payments for invisibles require approval from the Central Bank of China. 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 make outward transfers up to the equivalent of US$50 for any purpose other than import payments, types of transfer that are subject to quota or percentage ceiling, or the accumulation of funds abroad; applications for such personal remittances are approved automatically.8

Foreign exchange for payments for certain other invisibles is allocated only up to established limits or on a percentage basis. Foreign technicians are allowed to remit to their dependents abroad up to 70 per cent of their basic monthly salary (bonuses, profit shares, overtime pay, and insurance payments are excluded); remittances of larger amounts require special approval. Employees of the Government or of educational institutions may remit to their dependents in Hong Kong or Macao up to HK$150 a month. Membership fees of foreign institutions and certain payments for news services, books, and magazines (personal subscriptions for reference purposes) are approved up to certain limits. Receipts from local subscriptions to, and sales of, imported newspapers and periodicals are remittable up to certain limits. Up to 70 per cent of the net amount of motion-picture film rental and of foreign entertainers’ earnings may be transferred abroad; the remainder is to be used for local expenses and investment in the Republic of China. The full amount of tuition and living expenses during the first academic year of students studying abroad may be remitted. Residents are granted an exchange allowance equivalent to US$300 a trip (US$150 for each accompanying dependent under the age of 12) for any approved type of travel. For business travel, an allowance equivalent to US$700 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$ 1,000 in domestic banknotes and coins and the equivalent of US$400 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 Proceeds9

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. The export of a few foodstuffs also is restricted. There are ceilings on the export of cotton textiles to Canada, Italy, the United Kingdom, the United States, and the Federal Republic of Germany. Floor prices are established for exports of canned pineapple and citronella oil.10 The Board of Foreign Trade is empowered to authorize exports at prices below the floor price.

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, defense surcharge on import duties, harbor dues, and commodity tax. Some preferential treatment is accorded to payers of income tax related to the production of goods for export, provided that the taxpayers submit satisfactory proof of such exports; complete exemption from the tax is not granted, however.

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$100 may be sent abroad. When leaving the Republic of China, tourists are allowed to take out domestic products valued up to US$100 without providing evidence that they have surrendered foreign exchange.

Under the rules laid down in 1956 to promote industrial exports, export manufacturers may register part of the foreign exchange derived from processed exports with the Board of Foreign Trade. Foreign exchange thus registered may be used for the import of raw materials, supplies, and machinery and equipment needed by the industry concerned; the exchange may not be transferred to other persons or firms. The registered foreign exchange scheme entitles manufacturers to import for their own use, through a more convenient procedure, commodities on the controlled list, and on rare occasions commodities on the prohibited import list. The scheme is also extended to domestic producers of raw materials required by the same export processing industries.11

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 Central Bank of China, must be surrendered to the banks, but earnings from private investments abroad that have not been financed by outward remittances may be retained. Private inward remittances may be retained by the recipients for deposit on a foreign exchange account, from which they may be transferred freely.

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

Capital

Investments by 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 the Statute for Encouragement of Investment,12 enacted in 1960 and revised in 1965, new foreign investments approved by the authorities are guaranteed (1) unrestricted transfer of net annual profits or earned interest; (2) repatriation of capital, including reinvested earnings, 2 years after completion of the investment plan, at an annual rate not exceeding 15 per cent, calculated in relation to the originally invested funds; (3) the right to re-export invested capital in its original form; (4) favorable treatment in respect of rezoning and requisition of agricultural land for industrial use; (5) certain benefits with respect to business income tax and import duties; and (6) compensation for expropriation where the foreign investment constitutes less than 51 per cent, and immunity from expropriation for 20 years where the foreign investment constitutes at least 51 per cent, of the total investment. In addition, foreign investments are granted 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. Portfolio investment abroad by residents who are private persons is not normally permitted.

Chinese nationals who wish to emigrate, and foreign persons who had 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. 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.

Gold

Residents may hold gold in any form, but they may sell it only to the Central Bank of China, at the official price of NT$448.00 per 10 grams of fine gold (equivalent to US$35 per troy ounce). They may not use it as collateral for loans. Producers of gold must surrender their output to the Central Trust of China to have its fineness reduced to 0.875. Gold of this fineness is then auctioned to registered goldsmiths,13 who are permitted to sell only ornamental gold of a fineness less than 0.875. Gold not disposed of by auction is transferred to the Central Bank at the above official price. Travelers may bring in any amount of gold. 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.

Changes during 1970

January 1. The interest rates on foreign currency time deposits were increased. They were reduced on February 1, 1971.

January 22. The amount of foreign currency banknotes and coins which resident travelers were permitted to take out of the country was raised from the equivalent of US$200 to US$400. The conversion of local currency into foreign currency by departing nonresident travelers ceased to be limited to the equivalent of US$200.

February 4. Chassis for automobiles weighing 3½ tons or less were shifted from the Permissible Import List to the Controlled Import List.

April 9. An additional import surcharge of 30 per cent of the applicable import duty was imposed on most raw materials.

May 1. Residents were permitted to make outward remittances up to US$50 at any time for any purpose (other than import payments, the accumulation of balances abroad, or transfers subject to special limitation).

May 21. Exports of Chinese books and periodicals were exempted from the requirements for exchange settlement.

May 28. Guidelines for the acceleration of China’s industrial development were approved by the Cabinet. Priorities were established for the types of inward direct investment to be approved in future which involved a tightening of the existing approval criteria.

June 2. The official quotation for the Canadian dollar was suspended.

June 30. Some 116 items were shifted from the Controlled Import List to the Permissible Import List. In following months, additional items were shifted in the same manner.

July 1. The 3 per cent export surcharge on bananas, mushrooms, and asparagus was eliminated.

July 16. Measures for the promotion of foreign trade were approved by the Cabinet. A semiofficial trading company and joint government and private export associations would be set up; the Government would simplify export and import procedures and help domestic industries to improve the quality of their products; the scope of export insurance would be expanded and customs procedures simplified. The nation’s shipping service would be strengthened.

July 23. The Government announced the abolition of the transferability of exchange entitlements under the registered foreign exchange scheme, retroactive to July 1.

July 24. Private factories were permitted to import machinery and equipment on a D/P or D/A basis (previously, they could import only industrial raw materials on D/P or D/A terms). Registered importers were allowed to import chemicals and machinery on a D/P basis (previously, only end-users could import such items on D/P or D/A terms).

September 1. Simplified procedures were introduced for applications for foreign exchange to effect installment payments for imports purchased on deferred payment terms.

September 3. Legislation was enacted governing the exploration and drilling for oil and gas in China’s territorial waters and the adjacent continental shelf.

September 4. An initial par value of NT$1 = US$0.025 was established. No depreciation or appreciation was involved.

September 13. A minimum deposit of 10 per cent was required when opening postdated letters of credit for imports.

September 13. Inward remittances of revolving funds for industrial and mining enterprises were no longer permitted.

October 12. The appointed banks were permitted to screen import applications for certain consumer goods (such as dairy produce, canned and preserved food, biscuits, watches, and clocks) without submission of import license applications to the Board of Foreign Trade by the importers concerned; they were also permitted to make available the foreign exchange required to pay for these imports. Previously, most of these commodities were subject to import restrictions, and all required an individual import license.

November 1. The period within which exchange settlement must take place for imports under letter of credit was lengthened from 14 days to 28 days after approval of the import license.

November 20. An amendment to the Regulations Governing the Import of Staple Goods went into effect which provided that purchases of certain staples from abroad were to be entrusted to public and private trade agencies for joint procurement. The amendment was applied to wheat, barley, corn, soybeans, sulphur, and certain other commodities.

November 23. The official quotation for the Italian lira was discontinued.

December 1. The regulations subjecting the importation of gold for investment, educational purposes, and so forth, to Central Bank approval were revoked.

December 31. The US$2,400 limit on the allocation of exchange to students abroad for tuition and living expenses during the first academic year was lifted.

December 31. The Statute for Encouragement of Investment expired.

Colombia

Exchange Rate System

On December 17, 1948, a par value for the Colombian Peso was established by Colombia with the Fund. However, exchange transactions no longer take place at rates based on that par value. All exchange transactions are effected through the Bank of the Republic or the authorized banks in the official market—the exchange certificate market, in which the rate fluctuates. On December 31, 1970 the average selling rate in the certificate market was Col$19.13 per US$1. The peso equivalent of the Government’s exchange receipts from the export tax on coffee is credited to the Treasury’s Special Exchange Account at the central bank’s accounting rate of Col$ 18.50 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. 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, 1970, the fluctuating buying rate for proceeds from coffee exports (after taking into account a 20 per cent exchange tax) was Col$15.27 per US$1, and that for most other exports about Col$21.63 per US$1. All imports are paid for at the certificate market rate. In principle, all payments and receipts in respect of current invisibles and capital also take place at that rate but different effective rates arise from the application of advance deposit requirements on exchange purchased for foreign travel and of advance payments deposits for purchases of exchange for many other purposes. A fixed rate of Col$9 per US$1 applies to certain petroleum transactions.

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 de divisas); the Bank’s 1 per mill commission on outward remittances is charged. These warrants, which are expressed in U. S. dollars, are nonnegotiable but may be exchanged, provided that the holder presents an exchange license, for exchange certificates (for the same amount of foreign currency and free of charge); such exchange must take place between 45 and 180 days after the date of issue. Within the period mentioned, 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 held for more than 180 days but less than two years may be resold to the Bank at the certificate market rate ruling 180 days after issue; they become null and void two years after issue. Foreign payments made with certificate exchange that has been acquired against warrants are exempt from the 95 per cent advance payments deposit that must otherwise be lodged for many types of outward transfers. Within the 180-day validity period, warrants may also be used to purchase exchange for travel purposes, free from the normal requirement of a local currency guarantee deposit.1

Administration of Control

All imports and exports require prior registration at the 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, certain payments for current transactions, when made by the Bank of the Republic on behalf of 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. The Institute of Foreign Trade, 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 and patents. The Superintendency of Exchange Control, which is an autonomous agency reporting direct to the Presidency of the Republic, enforces control and supervision over exchange transactions and is responsible for applying penalties for violation of the exchange regulations currently in force.

Prescription of Currency

Payments and receipts related to international transactions are normally effected in U. S. dollars. Settlements with Eastern Germany, Hungary, Poland, Spain, and Rumania for commercial transactions must be made through clearing accounts in accordance with the provisions of the relevant bilateral payments agreements. The National Federation of Coffee Growers has concluded payments agreements with Bulgaria and Yugoslavia.

Payments between Colombia and Argentina, Bolivia, Chile, Ecuador, Mexico, Peru, Uruguay, and Venezuela are made through accounts maintained within the framework of the LAFTA multilateral clearing system, and settlements with the Dominican Republic are also made through special accounts.

Nonresident Accounts

Credit establishments are authorized to receive short-term deposits in foreign currency from physical or juridical persons not resident in Colombia, and 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 prior authorization from the Exchange Office.

Imports and Import Payments

Imports are classified as follows: goods whose import is prohibited; goods whose import is subject to prior licensing by the Institute of Foreign Trade; and goods that may be imported freely without license. In this last category, there is a global free list applicable to all countries and a National Free List applicable to LAFTA countries only; the latter contains all commodities that are on the global free list as well as some additional ones. These liberalized imports corresponded to about 20 per cent of 1970 reimbursable imports;2 they comprise mainly certain raw materials and some types of machinery. All import registrations by public sector agencies are screened by the Institute of Foreign Trade to determine whether local substitutes are available. The prohibited list comprises mainly such items as arms and habit-forming drugs, certain foodstuffs, such as corn and milk, certain textiles and garments, jewelry, and a number of other consumer goods; imports of certain goods on this list may be licensed from time to time.

Prior registration of the import transaction at the Institute of Foreign Trade is required for all imports other than those with an f.o.b. value of less than US$20 (or US$40 for books and pharmaceuticals). The charge for import registration is Col$ 100.00 (in some cases Col$5.00) plus a consular invoice tax of 1 per cent. Advance import deposits in Colombian currency must be made with the Bank of the Republic before import registration is permitted; the deposit is returned 90 days after the goods have cleared customs. The advance import deposit is payable at one of many rates, depending on the type of goods; those important in practice are the rates of 1, 5, 10, 30, 70, and 130 per cent.

The following imports are exempt from prior deposits: nonreimbursable imports;2 imports brought into Colombia under special import-export arrangements (Vallejo Plan); goods included in the Colombian National List and the special lists granting concessions to LAFTA countries; goods financed with credits having a maturity of at least 40 years;3 noncommercial capital goods and components imported by the Government, Departments, municipalities, official undertakings, semiofficial bodies, and public service agencies, and noncommercial goods when intended for mineral exploration or exploitation; goods imported by the National Federation of Coffee Growers for its own use; goods exempt by virtue of an international agreement; capital goods, components, and raw materials imported by firms sponsored and supported by the Government, and firms holding foreign commitments backed by the Government; machinery and equipment coming under the tariff headings for the basic industries; goods of prime necessity imported by the Institute of Agricultural Marketing (IDEMA); most imports by universities and other nonprofitmaking educational institutions; scientific and literary books, newspapers, and reviews that made a contribution to the culture of the Colombian people, together with capital goods for the production of such items; and sacramental wine. The advance deposit is calculated on the f.o.b. value of the goods, at the average selling rate for exchange certificates for the previous month.

A prior exchange license is required for all payments for imports, except when they are made by the Bank of the Republic on behalf of credit institutions; 4 licenses are granted by the Exchange Office, provided that it is satisfied that the goods have been cleared through customs and that payment is due. At least 20 days prior to filing an application for an exchange license, the importer must provide a peso advance deposit equivalent to 95 per cent of the exchange requested, calculated at a rate announced monthly by the Ministry of Finance on the basis of the average exchange certificate price for the preceding month. Exempt are import payments by the Government, Departments, municipalities, and official agencies, and payments for imports financed with foreign credits extended to the Bank of the Republic, goods for general consumption imported by the Institute of Agricultural Marketing, payment for the crude oil acquired by the national petroleum company (Empresa Colombiana de Petróleos—Ecopetrol) for refining in Colombia, imports financed by U. S. AID credits, imports for which payment is made within 30 days of shipment, and payments made by letters of credit charged to the bilateral accounts maintained with certain European countries.

Import duties are calculated at the effective exchange rate applicable to the advance surrender of export proceeds from commodities other than coffee. In addition to customs duties, there is an ad valorem tax on imports equal to 3 per cent of the c.i.f. value. Of the amounts collected, 50 per cent goes to the Export Promotion Fund, while the remaining 50 per cent goes to the National Coffee Fund. Exempt from this tax are imports by public entities, goods of LAFTA origin, and imports under the Vallejo Plan.

Importers of goods financed by the U. S. AID are required to ship at least 50 per cent of the total volume of shipments on Colombian flag ships.

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 the monthly allowances of students studying abroad with government support. No advance payment deposit is required for invisibles, except for travel allowances, for which a 50 per cent prior deposit in local currency is required unless the foreign exchange is purchased with exchange warrants,5 and for payments of interest on certain loans, for which the prescribed deposit is 95 per cent. Payments for travel abroad are limited to US$30 a person a day, not to exceed US$1,350 a person a year; this limit may be raised to US$70 a day and US$6,300 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$120 to US$200 a month, depending on the cost of living in the country concerned. 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.

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 Colombian products may be made freely, except when the law provides otherwise. There is a list of exports that are either prohibited or are subject to special requirements. Prior application for registration 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, the exporter must provide either a personal guarantee in pesos (but without depositing any funds) corresponding to the full export value or a bank guarantee (usually for 30 per cent of the same value), to ensure that the proceeds will be surrendered to the Bank of the Republic. The periods for surrendering export proceeds are as follows: (1) for coffee exports, within 20 days from the date of registration of the sales contract, if the contract is used with shipping documents inside the country, and within 10 days from the date of the bill of lading if the contract is used with that document; (2) for banana exports, 60 per cent of the value must be surrendered within 10 days following the registration of the export, and the remaining 40 per cent within 60 days after the registration; and (3) for other exports, generally within 90 days from the same date.

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 old foreign debts 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.

On surrendering their export proceeds to the Bank of the Republic, exporters of commodities other than coffee, petroleum and petroleum products, and cattle hides receive tax credit certificates in an amount of 15 per cent of the total earnings surrendered, converted at the exchange rate used for import deposits. These certificates, which are freely negotiable and are quoted on the stock exchange, are accepted at par by tax offices nine months after issuance for the payment of income tax, additional taxes, customs duties, and sales taxes. At the end of 1970, certificates just issued were quoted at a discount of about 9.5 per cent; hence the effective exchange rate was about Col$21.63 per US$1.

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 5 days to 10 days, after which they must be surrendered to the central bank at 90 per cent of the lowest certificate rate quoted by the Bank in the preceding week.

The surrender price for exports other than coffee varies with fluctuations in prices in the world market. Coffee exports are subject to the following additional regulations: (1) A minimum surrender price (reintegro) is fixed, after deduction for freight and insurance, at US$76.00 6 per 70-kilogram bag. (2) Exporters pay a tax in foreign exchange at the rate of 20 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. The Special Exchange Account is credited at the Bank of the Republic’s accounting rate of Col$18.50 per US$1. (3) Exporters must either surrender in kind to the National Federation of Coffee Growers and without payment the equivalent of 25½ per cent of the volume of excelso coffee that they wish to export (retención) or pay the Federation the peso equivalent. (4) Exports of coffee are subject to an additional tax of 6 per cent ad valorem (pasilla tax); the tax must be paid, either in kind or in pesos, to the Federation. (5) A committee composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation establishes domestic buying prices for the various grades, expressed in pesos per arroba of 12.5 kilograms. (6) Whenever the domestic support price, net of taxes and freight, exceeds a level corresponding to a spot New York price of US$0.57 a pound, the excess (net of taxes and levies) is shared among producer, Coffee Fund, and local producers’ committees at a ratio of 35:30:35; in that event, the retención is to be increased and the proceeds of the increase are paid to the Coffee Fund and the producers’ committees.

Anticipated export proceeds from coffee may be provisionally surrendered in advance of actual surrender (when prefinanced by foreign buyers) provided that the latter takes place within 120 days of the provisional surrender, at a provisional exchange rate of Col$ 15.50 per US$1.7 Advance surrender of anticipated export proceeds from products other than coffee may be made at the average rate of exchange certificates for the previous month, as determined by the Ministry of Finance, provided that the actual surrender takes place within 12 months of the provisional surrender, or within 24 months if the export value exceeds US$500,000. The payment to the exporter is subsequently adjusted for the effective exchange rate applicable on the day of actual surrender.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered; they are converted at the certificate market buying rate.

Capital

All inward and outward capital transfers are effected at the certificate market rate.

All foreign investment in Colombia, all new foreign loans,8 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.9 Capital imports in amounts of US$100,000 or more and capital imported for petroleum exploration or exploitation, or for other mineral exploration, 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 Petroleum. Capital registration entitles the investor to export profits and to repatriate capital at the certificate market rate on certain conditions specified in Monetary Board Resolution No. 9 of 1968.10 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, provided that the additional remittances do not exceed 3 per cent a year. New investments may be granted exemptions from import duty and from advance deposit and import license requirements. Capital invested in the petroleum industry is subject to special rules and to contractual provisions.

Foreign loans contracted by private Colombian individuals or firms are generally subject to a minimum maturity of 180 days 11 and to maximum interest rates of 9 per cent for loans of up to one year’s maturity and 9½ per cent for loans of longer maturity, but exceptions may be made when contracts provide for the periodic revision of the rate of interest.

Contracts involving royalties, commissions, trademarks, 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 not only the interest, profits, commissions, and royalties but also the proceeds of the sale or liquidation of the principal investment at the prevailing certificate market rate. Exports of capital by residents are restricted and such exports by private individuals are not normally permitted.

A peso advance deposit corresponding to 95 per cent of the exchange requested is required for repayments of principal and payment of interest on certain private loans and on private suppliers’ credits.

Gold

Physical 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 the gold produced in the country at US$35 an ounce and is empowered to pay up to 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 the small 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 15 per cent of the value of the gold sold. The certificates held by the small producers are bought by the Bank of the Republic in Colombian pesos at their nominal value. When the Bank sells newly mined gold abroad at market prices in excess of US$35 an ounce, it reimburses the producer for the difference.

The Bank of the Republic makes domestic sales of gold for industrial use either direct or through the Colombian Mining Association, on presentation of licenses issued by the Superintendency of Exchange Control, at a price equivalent to the average quotation in the free external gold markets during the previous month plus a sales tax of 15 per cent; this price is translated into pesos at the prevailing selling rate of exchange certificates on the date of sale. The Bank’s exports of gold are made at world market prices and the excess over its purchase price of US$35 is paid out to the producers who have supplied the gold. Imports of gold also 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.

Table of Exchange Rates(as of December 31, 1970)
(pesos per U.S. dollar)
BuyingSelling
9.00 (Fixed Rate)
15.27 (Certificate Market Rate less 20% Exchange Tax. Fluctuating Rate)Purchases of crude oil from foreign-owned companies in Colombia for domestic refining.16
Coffee exports.12
18.50 (Accounting Rate of Bank of the Republic) Conversion of Government’s receipts from exchange tax on coffee exports.18.50 (Accounting Rate of Bank of the Republic) Government’s purchases of exchange for servicing of public debt, diplomatic expenses, etc.
19.09 (Certificate Market Rate, Fluctuating Rate) Net proceeds from exports of crude oil and petroleum derivatives (Article 158 of Decree-Law No. 444).13 Exports of cattle hides. Exports from free ports. All receipts from invisibles and capital transfers.19.13 (Certificate Market Rate, Fluctuating Rate) All other transactions.17
21.90 (Average Certificate Market Rate of Previous Month plus 15% Tax Credit Certificates, Fluctuating Rate)
All other exports.12, 14, 15

Changes during 1970

During the year, the advance import deposit requirements were reduced for about 140 tariff positions representing some 8.4 per cent of 1969 imports. The import free list was expanded by about 115 tariff items representing some 8.7 per cent of 1969 imports to cover about 25 per cent of reimbursable 1970 imports, and about 75 tariff positions were removed from the prohibited list. Import licensing became more liberal and reimbursable import registrations increased by 23 per cent over the 1969 level. The minimum surrender price for coffee exports was reduced in stages from US$83.60 to US$76.00. The selling rate in the certificate exchange market was gradually depreciated from Col$17.93 to Col$19.13 per US$1.

January 1. A reciprocal credit agreement with Uruguay entered into force.

January 2. A reciprocal credit agreement with the Dominican Republic was signed and came into force immediately.

January 14. Decree No. 039 established foreign exchange and customs regulations for free trade zones.

January 28. The Exchange Office was permitted, when necessary in individual cases, to increase the monthly allowance of US$450 for staff training courses abroad. (Monetary Board Resolution No. 5.)

January 29. The minimum surrender price for coffee exports was raised from US$83.60 to US$85.00 per 70-kilogram bag (Resolution No. 6).

February 18. Resolution No. 10 authorized the Bank of the Republic to increase its foreign currency time deposits with commercial banks in Colombia from 10 per cent to 20 per cent of each bank’s short-term liabilities payable in foreign currency.

March 16. The import free list, comprising about 100 tariff items, was expanded by 51 tariff items, consisting mainly of spare parts for automotive vehicles and aircraft, certain industrial raw materials and capital goods, and scientific and medical equipment. The 1969 import value of these items was 5.6 per cent of total reimbursable imports.

March 18. Service payments on loans to finance certain investment projects of economic or social importance were exempted from the requirement of the 95 per cent advance payments deposit (Resolution No. 21).

March 25. The retention quota for coffee exports was increased from 25 per cent to 25½ per cent (Decree No. 457 of March 24).

April 1. Commercial banks in cities where Exchange Offices were located were authorized to sell directly to customers without prior approval by an Exchange Office, travel exchange up to the generally applicable limits of US$30 a person a day and US$1,350 a person a year; the 50 per cent local currency deposit had to be collected by the bank selling the foreign exchange. The Exchange Office in Bogotá was to determine periodic ceilings for these delegated transactions (Resolution No. 19 of March 18).

April 7. Thirty-five tariff items were shifted from the prohibited import list to the list of goods subject to import license.

April 8. Commercial banks in cities where Exchange Offices were located were authorized without prior approval by an Exchange Office to transfer monthly allowances and certain other payments to students supported by the Colombian Institute for Technical Specialization Abroad. The Exchange Office in Bogotá was to determine periodic ceilings for these delegated transactions (Resolution No. 24).

April 8. The Private Investment Fund was permitted to provide financing for enterprises of a multinational character, subject to the judgment of the Bank of the Republic that national participation was beneficial to Colombia (Resolution No. 25).

April 14. All import taxes (other than the consular invoice tax) and all advance import deposits were abolished in trade between Colombia and Chile and Peru for goods included in a Common List of 169 tariff items. Similar but shorter lists went into effect for trade with Bolivia and Ecuador (Decree No. 536-bis of April 13).

May 13. The Bank of the Republic was authorized by Monetary Board Resolution No. 33 to sell directly or through credit institutions nontransferable exchange warrants (títulos de divisas), which 60 days after issue (but not later than 180 days after issue) could be converted into exchange certificates, subject to presentation of an exchange license. Remittances abroad with exchange certificates acquired by conversion of exchange warrants were exempt from the 95 per cent advance payments deposit. Initially, the Monetary Board authorized the issue of warrants up to US$5 million; later in the year, a further issue of up to US$5 million was authorized.

May 27. Resolution No. 37 modified the surrender and registration requirements for coffee exports. The maximum surrender period, however, remained unchanged at 20 days after export registration.

June 10. The minimum length of time during which exchange warrants must be held before resale or reconversion into exchange certificates was reduced from 60 to 45 days (Resolution No. 39).

June 23. The Bank of the Republic terminated the special financing arrangements that had been introduced in 1967 to facilitate imports from payments agreement countries. (Circular No. 2784.)

July 7. Decree No. 1095 created industrial and commercial free zones in Buenaventura and Palmaseca.

August 5. Resolution No. 52 reformulated, with some changes, the surrender requirement for export proceeds (other than those from coffee) and the facilities for advance surrender. Export proceeds were to be surrendered to the Bank of the Republic within 90 days from the date of export registration, with minor exceptions, for all commodities other than coffee and bananas. For exports of bananas, 60 per cent of the proceeds were to be surrendered within 10 days of registration and the remainder within 60 days of registration.

August 5. Resolution No. 50 authorized the Bank of the Republic to contract the minting of gold coins commemorating the Sixth Pan American Games, up to an amount of 1,200 kilograms of fine gold. The coins were issued on May 10, 1971.

August 5. The monthly increase in acceptance credits, refinanced credits, and foreign sight credits in the balance sheets of all financial institutions was limited during the period July 31–December 31, 1970 to 1 per cent for each type of credit (Resolution No. 53).

August 5. The advance exchange surrenders made by the National Coffee Growers Federation between September 28, 1964 and November 25, 1967 henceforth were considered definitely surrendered at the rate of Col$ 15.50 = US$1, insofar as they had not yet been settled (Resolution No. 54).

August 26. Special reductions in advance import deposits for certain types of capital goods were abolished (Resolution No. 55).

August 26. The 95 per cent advance payments deposit ceased to be required for import payments made within 30 days of shipment (Resolution No. 56).

August 26. The August 5 limitation on the monthly growth in specified types of credit henceforth was applied only where the combined increase in all these credits, for a single institution, exceeded US$1 million (Resolution No. 57).

September 1. The Bank of the Republic was authorized, without obtaining prior exchange licenses from the Exchange Office, to make payments abroad for a number of important categories of current transactions on behalf of the credit institutions. Each bank would be assigned a monthly exchange budget for these transactions. The Bogotá Exchange Office would grant the Bank of the Republic an exchange license covering the global amount of these budgets. Banks were obliged to submit documentary evidence of the transactions and to obtain retroactive exchange control approval. The regular advance payments deposits were required (Resolution No. 58 of August 26).

September 2. Resolution No. 61 reissued in consolidated form and without change the principal regulations concerning the allocation of foreign exchange for travel purposes.

September 9. The Agrarian Marketing Institute was exempted from the advance payments deposit for imports related to goods for general consumption (Resolution No. 62).

September 22. Thirty-nine items were shifted from the prohibited import list to the list of goods subject to import license. (Import Board Resolution No. 22.)

September 23. The import free list was increased by 63 tariff items, accounting for 3.1 per cent of total reimbursable imports in 1969. Virtually all types of books were included, as were radios, television receivers, certain office machinery, and certain parts for airborne and automotive vehicles.

October 7. Several categories of current payments were added to those which the Bank of the Republic, without prior exchange license, could make on behalf of the credit institutions (Resolution No. 68).

October 14. Letters of credit opened to finance imports by decentralized public enterprises and organizations were excluded from the limit on increases in foreign liabilities of financial institutions.

October 14. The requirement of an exchange license was eliminated for import payments (and related expenses) under letters of credit of banking institutions established in LAFTA countries with which the Bank of the Republic maintained reciprocal credit agreements (Resolution No. 69).

October 15. The waiting period before tax credit certificates granted on minor exports could be utilized was reduced from 12 months to 9 months.

October 21. The Bank of the Republic was authorized to make available to the Export Promotion Fund Col$140 million for credit operations in domestic currency; US$7 million for credit operations in foreign currency; and US$4 million for loans to the Agrarian Marketing Institute for the prefinancing of cotton and cattle exports (Resolution No. 73). On February 24, 1971, the amount for foreign exchange credits was increased to US$15 million and the terms of the export credits were fixed at ten years maximum maturity and 8 per cent minimum interest rate.

October 28. Resolution No. 74 created certain facilities for the transfer of pensions and social security payments by persons residing in Colombia but transferring their residence outside the country.

November 25. New loans to be taken up abroad after January 1, 1971 became subject to a minimum maturity of 180 days and to maximum interest rates of 8¼ per cent (previously 10¼ per cent) for loans of up to one year’s maturity or 8½ per cent (previously 10½ per cent) for loans of longer maturity. (Resolution No. 79.)

November 25. Exchange warrants could be used to purchase exchange for travel purposes; travel exchange so acquired was exempt from the 50 per cent local currency deposit. The measure enabled travelers to purchase foreign exchange 45 days before departure, at the exchange rate prevailing at the time of purchase. (Resolution No. 80.)

November 26. The minimum surrender price for coffee exports was reduced from US$85.00 to US$80.00 per 70-kilogram bag. On December 2, it was further reduced to US$76.00. (Resolutions Nos. 81 and 83.)

December 16. The maximum interest rates on loans contracted abroad after January 1, 1971 were raised to 9 per cent for loans of up to one year’s maturity and 9½ per cent for loans with maturities in excess of one year. (Resolution No. 88.)

December 16. The accounting rate for the Bank of the Republic’s international reserves was changed from Col$17.60 to Col$18.50 per U.S. dollar. (Resolution No. 93.)

Democratic Republic of Congo

Exchange Rate System

The par value is 1.77734 grams of fine gold per Zaïre, or Z 1 = US$2. The National Bank of Congo (the central bank) maintains an official rate of exchange for the Belgian franc based on the rate for the zaïre quoted in the official exchange market in Brussels. The buying and selling rates for currencies other than the Belgian franc are based on the official market rates in Brussels for the zaïre and these other currencies. Forward exchange transactions are prohibited.

Administration of Control

The National Bank of Congo has regulatory authority over all foreign trade and payments. Specifically, the Bank has discretionary power to authorize payments and receipts in foreign exchange by residents of the Democratic Republic, and to permit the importation, exportation, and transit of goods.

Prescription of Currency

Payments from nonresidents must be received in listed convertible currencies.1 Special authorization for the acceptance of other currencies may only be given in respect of currencies that can be exchanged freely without a discount. Payments to nonresidents must be made in the listed currencies.

Nonresident Accounts

There are three categories of nonresident accounts: Nonresident Accounts in Zaïres and Nonresident Foreign Currency Accounts.

Nonresident Accounts in Zaïres may only be debited for settlements in the Democratic Republic.

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

Nonresident Convertible Accounts in Zaïres may be freely credited with payments that are transferable abroad and debited for conversion into foreign currency or for any payments in Congo.

Imports and Import Payments

The importation of a number of goods is prohibited on grounds of public policy; these are mainly arms, ammunition, narcotics, and juke boxes. Import licenses are only required for a few goods on a list A (jewelry, precious stones, and precious metals). The National Bank has issued a general import and payments license which for all other goods guarantees the availability of foreign exchange when payments fall due, provided that the importer files an import declaration with his bank following the actual placing of the order.

Applications for import licenses, whether requiring foreign exchange or not, are made initially to authorized banks in Kinshasa. Applications are forwarded to the National Bank after certification. After approval of the application by the National Bank, which is given in the form of a visa, the import license application is returned to the authorized bank for validation.

Import licenses are validated by the authorized banks without undue delay and remain valid for customs clearance during a period of six months starting from the first day of the month following that in which validation by the commercial bank takes place. Foreign exchange is made available for all licensed imports, the validated license constituting at the same time an exchange license; for payments purposes, the license remains valid as long as the relevant payments have not been completed. The counterpart of the value of goods imported under the Belgian food aid program and the U.S. import support program and the agricultural aid program must be deposited within 180 days after their shipment.

Payments for Invisibles

Policy related to payments for invisibles is formulated by the National Bank. Certain payments are subject to authorization by the National Bank, which is given or refused on a nondiscriminatory basis; the approval authority for other current payments has been delegated to the authorized banks. The Bank will not authorize exchange for the payment of commissions in favor of shippers or purchasing agents or, except for imports payable on arrival, for insurance on imports. All other payments for services performed by nonresidents are in principle authorized. Transfers abroad of salaries of foreign nationals are freely authorized, provided that at least Z 100 a month is deducted for local living expenses and that all taxes have been paid. Transfers in respect of certain administrative expenses abroad by enterprises, interest on private loans, and certain portions of insurance premiums are, as a rule, authorized. Net profits of firms with foreign capital participation are transferable up to an amount proportionate to that participation.

Fares for travel abroad may be paid in the Democratic Republic in local currency; for resident foreign nationals, however, the fare must not exceed the price of a return trip by a direct route to the country of their origin. Congolese nationals traveling abroad may buy foreign exchange in amounts depending on the duration of the journey, up to the equivalent of Z 400 a trip; applications exceeding this amount are subject to individual approval by the National Bank.

There are no limitations on the amount of domestic or foreign banknotes that travelers may take out.

Exports and Export Proceeds

All exports require individual licenses, with the exception of exports covered by the general licenses granted to Gecomin and Metalkat, the principal mining companies. Banks are normally authorized to grant licenses to exporters who submit a declaration in which they undertake to collect the exchange proceeds. The declaration must specify the nature of the merchandise to be exported, the price, and the currency in which payment is to be received. Export licenses are normally valid for three months; within this period, the proceeds must be received and surrendered. Most exports of minerals are subject to special regulations to take into account the time required for processing abroad. For mineral products, a provisional payment of about 70 per cent of the shipment’s estimated value has to be surrendered within 8 days after shipment. For diamond exports, two thirds of the value established at a preliminary examination in the Democratic Republic must be surrendered before the shipment is dispatched. Export proceeds from coffee must be surrendered within 45 days after shipment. Receipts from other agricultural exports must generally be repatriated within three months of shipment. The export proceeds of Gecomin must be surrendered to the National Bank.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered. There are no limitations on the import of domestic or foreign banknotes by travelers.

Capital

The repatriation of new foreign capital brought in under the provisions of the Investment Code (Ordinance-Law No. 69-032 of June 26, 1969) is guaranteed, as is the transfer of profits and dividends on such capital. With minor exceptions, other transfers abroad of capital owned by residents or nonresidents are not permitted. The sale of real estate located in the Democratic Republic can only be made to the Congolese Government, against payment in zaïres; gratuitous transfers of real estate are subject to approval by executive ordinance. When the local currency part is paid by the debtor, amortization on foreign loans can be transferred in accordance with the terms of contracts that the National Bank has endorsed to guarantee the availability of exchange for such transfers. The foreign currency assets of the authorized banks are not permitted to exceed their short-term liabilities in foreign currencies.

Gold

Residents other than the monetary authorities, producers of gold, and industrial users are not allowed to purchase, hold, or sell gold in any form other than jewelry, at home or abroad. The import and export of gold in any form, except jewelry constituting the personal effects of a traveler, require the prior approval of the National Bank; licenses for imports are not normally issued. Producers are required to sell 10 per cent of their production at the official price of US$35 an ounce to the National Bank.

Changes during 1970

January 2. All imports were required to be shipped to the order of an authorized bank and the latter had to submit proof of customs entry to the National Bank within 90 days of shipment.

January 9. Circular No. 127 provided that the local currency counterpart for imports under the U. S. agricultural aid program must be deposited within 180 days (previously 120 days) after shipment. On January 29, Circular No. 128 was issued with similar provisions in respect of Belgian food aid.

January 10. Importers no longer had to make a local currency deposit corresponding to the f.o.b. value of the goods when presenting for validation import licenses for goods subject to full or partial payment upon shipment.

June 25. Circular No. 129 revoked the import license requirement for goods on List B of Circular No. 124, which had been applicable to certain types of machinery and vehicles only when valued at over Z 10,000.

June 25. Circular No. 129 provided that profits and dividends relating to 1969 could be transferred. Rents could also be transferred, provided that all taxes had been paid.

June. It was announced that after the end of 1970 foreign firms would no longer be permitted to sell their goods in Congo through intermediaries. Initially, this was applied to automobiles only.

July 1. Interest on documentary credits relating to imports on deferred payment terms could be transferred only after submission of an interest statement provided by the bank granting the credit.

September 2. An initial par value for the zaïre of Z 1 = US$2 was established. No appreciation or depreciation of the currency was involved.

November 16. The zaïre was officially quoted in Brussels and the National Bank of Congo ceased to maintain a fixed official buying and selling rate of Z 1 = BF 100 for the Belgian franc.

November. A new category of nonresident accounts was created, Nonresident Convertible Accounts in Zaïres.

People’s Republic of the Congo

Exchange System

No par value 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, which is officially maintained at the rate CFAF 1 = 0.02 French franc, giving the relationship CFAF 277.710 = US$1.1 Exchange transactions in French francs between the Banque Centrale des Etats de l’Afrique Equatoriale et du Cameroun (BCEAEC) and commercial banks take place at the rate of CFAF 1 = F 0.02 free of commission charges. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission. All purchases of foreign currency and all amounts credited to Foreign Accounts in Francs are subject to a commission which is payable to the Office of Foreign Financial Relations.

With the exception of those relating to gold, the exchange control measures of Congo do not apply to (1) France and its Overseas Departments and Territories (except the French Territory of the Afars and 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 Republic, Chad, Dahomey, Gabon, Ivory Coast, the Malagasy Republic, Mali, Mauritania, Niger, Senegal, Togo, and Upper Volta). Hence, all payments to these countries may be made freely. All other countries, except Congo itself, are considered foreign countries, and in principle financial relations only with foreign countries are subject to exchange control.

Administration of Control

The Office of Foreign Financial Relations in the Ministry of Finance and the Budget 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 and the Budget, who has delegated his approval authority to the Office of Foreign Financial Relations and 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 Economic Affairs, except those for gold, which are granted by the Office of Foreign Financial Relations.

Prescription of Currency

The People’s Republic of the Congo is an Operations Account country of the French Franc Area, since the BCEAEC maintains an Operations Account with the French Treasury; settlements with France, 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 mainland 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—provided that the currencies are quoted on the Paris exchange market—or in French francs through Foreign Accounts in Francs. All payments to Portugal require the prior approval of the Ministry of Finance and the Budget. 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 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 prohibited.3

Imports and Import Payments

Imports of virtually all commodities from countries in the French Franc Area and from EEC countries other than France may be made freely. All imports of Portuguese or 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 OFNACOM (Office National du Commerce) or BCCO (Bureau pour la Création, le Contrôle et l’Orientation des Entreprises et Exploitations d’Etat). The quotas for non-EEC countries may be used to import goods originating in any country outside the French Franc Area. Licenses for liberalized commodities originating in EEC countries other than France are issued automatically. Imports of certain products from non-EEC countries outside the French Franc Area are subject to special ceilings. Furthermore, imports of certain products from some low-wage countries of the Far East are limited by a special ceiling.

Imports from non-UDEAC countries of certain goods are not permitted unless the importer also buys a certain quantity of the local product (jumelage).

The National Trading Office has a monopoly over certain imports, including hardware, rice, and salted fish from all sources, certain cotton piece goods from Japan, and certain other textiles from mainland China.

All import transactions relating to foreign countries must be domiciled with an authorized bank. Licenses for imports from foreign countries require the visa of the Foreign Trade Bureau and that of the Office of Foreign 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, 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, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 150,000 a person a trip (CFAF 75,000 for children under ten), which may be taken up twice a year; any foreign exchange remaining after return to Congo in excess of CFAF 5,000 must be surrendered. For business travel to 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 zaïre 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. Resident and nonresident travelers going to foreign countries may take out up to a maximum of CFAF 25,000 in BCEAEC 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 BCEAEC banknotes.

Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry or, if no declaration was made, up to the equivalent of CFAF 25,000, as well as any foreign means of payment obtained from an authorized bank to the debit of a Foreign Account in Francs or a Foreign Currency Account; they may reconvert up to CFAF 25,000 in BCEAEC banknotes into foreign currency.

Exports and Export Proceeds

Exports to Rhodesia are prohibited. With the exception of cotton and minerals, exports to countries in the French Franc Area may be made freely; exports to all destinations of coffee, cacao, palm oil, groundnuts, bananas, cotton, gold, and diamonds are subject to individual license. All other exports are free of individual license. Certain agricultural commodities are exported by an official agency, the National Marketing Office for Agricultural Products (Office National de Commercialisation des Produits Agricoles, or ONCPA).

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 received in currencies other than those of France or another Operations Account country must be surrendered within a month of the due date. All export transactions relating to foreign countries must be domiciled with an authorized bank.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France, 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 a month of the due date. Resident and nonresident travelers may bring in any amount of banknotes and coins issued by the BCEAEC, 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. Capital movements between Congo and France, 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 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. With the exception of those over the sale or introduction of foreign securities in Congo, the control measures do not apply to France and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), 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 Minister of Finance and the Budget, 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 Congo 5 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 Congo 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 Congo. 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. 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 Congo 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 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 and the Budget. 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 Congo 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.

Lending by residents to nonresidents requires prior authorization by the Minister of Finance and the Budget. 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.

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

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

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

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 in Congo gold in the form of coins, art objects, or jewelry, but they require the prior authorization of the Minister of Finance and the Budget 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 BCEAEC 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. The agency SOGAREM has a monopoly over the export of newly mined gold.

Changes during 1970

April 18. Order No. 1273 liberalized imports of groundnut oil.

June 5. Circular No. 068 was issued concerning the domiciliation in exceptional cases with an authorized bank in France for imports from and exports to countries outside the French Franc Area.

August 24. Circular No. 100 established that authorized banks could, subject to prior authorization by the Office of Foreign Financial Relations, credit nonresident accounts held by their foreign correspondents with the amount of banknotes issued by the BCEAEC when mailed direct to the BCEAEC.

August 24. Circular No. 101 revoked Circular No. 163 of June 6, 1969, which had subjected to control the authorized banks’ position in foreign currencies and in CFA francs in foreign accounts.

September 9. Order No. 3789 modified certain regulations set forth in Order No. 354 of February 14, 1969.

The amount of BCEAEC banknotes that resident and nonresident travelers leaving for a foreign country could take out was increased from CFAF 10,000 to CFAF 25,000. The exchange allocation for tourist travel was increased from the equivalent of CFAF 100,000 a person a year to CFAF 150,000 (CFAF 75,000 for children under ten) a person a trip, within a limit of two trips a year. To obtain the allocation, residents were required to present only an attestation, the carnet de change being abolished. Henceforth the entire allocation could be taken out in foreign banknotes. The special allocation for business travel was increased from the equivalent of CFAF 10,000 a day (subject to a maximum of CFAF 300,000 a trip) to CFAF 20,000 a day (subject to a maximum of CFAF 400,000 a trip). Upon their return, resident travelers had to surrender any remaining foreign currencies in excess of CFAF 5,000.

September 9. Circular No. 110 provided the following. Authorized banks were obliged to apply for an authorization from the Office of External Financial Relations before making any payment to foreign countries. Such payments, when relating to goods imported from foreign countries, were conditional to the importer’s having obtained an import license, having domiciled it with an authorized bank, and having it visaed by the Foreign Trade Office and the Office of External Financial Relations. Nonresident travelers on leaving the Congo were authorized to take out any remaining foreign means of payment that they had previously brought in, either in the form in which they had imported them, or in the form resulting from their exchange in Congo, through the intermediary of an authorized bank, as well as any foreign means of payment acquired from an authorized bank to the debit of a Foreign Account in Francs or a Foreign Currency Account. Nonresident travelers could exchange at an authorized bank any CFA francs they held, up to CFAF 25,000, for foreign banknotes, provided they could show they had acquired the CFA francs after entry by the sale of foreign exchange or to the debit of a Foreign Account in Francs. The use of credit cards abroad by residents was prohibited. The Minister of Finance and the Budget would specify by circular the conditions under which zaïre banknotes could be acquired by travelers going to Kinshasa and requesting no foreign means of payment other than zaïres.

September 9. Order No. 3788 provided that nonresident accounts opened in the names of correspondents abroad of authorized banks could be credited with BCEAEC banknotes under conditions to be specified by circular by the Minister of Finance and the Budget.

September 9. Circular No. 109 was issued containing procedural details concerning Suspense Accounts (comptes d’attente) and suspense dossiers opened or to be opened for nonresidents.

Costa Rica

Exchange Rate System

The par value is 0.134139 gram of fine gold per Costa Rican Colón or ¢ 6.625 = US$1. The Central Bank of Costa Rica buys exchange derived from exports and other exchange tendered to it at a fixed rate of ¢ 6.62 per US$1. Exchange may be purchased freely by the public in a market in which the Central Bank maintains the rate at ¢ 6.65 per US$1. Costa Rica has no exchange restrictions on current or capital payments.

Costa Rica accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February 1, 1965.

Administration of Control

The controls over export receipts are operated by the Central Bank. Purchases and sales of exchange are made through the Central Bank or through commercial banks acting as its agents.

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 invisibles may be made in Costa Rican colones through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries; the documents must be expressed in colones and require approval by the Central Bank, which is given for payments for all imports of Central American origin and for all current invisibles and capital transfers. The central banks of these four countries may also engage in transactions in Costa Rican notes and coins, up to the equivalent of US$40,000 a month for Nicaragua and up to the equivalent of US$10,000 a month for each of the other countries. Payments to Mexico in respect of trade and invisibles may also be made in Costa Rican colones through the clearinghouse, in accordance with the Agreement on Clearing and Reciprocal Credits between the Bank of Mexico and the member banks of the clearinghouse; the documents must be expressed in colones and require the prior approval of the Central Bank. There are no transactions with Mexico in Costa Rican notes and coins.

Imports and Import Payments

Imports from South Africa are prohibited. There is no system of import licensing and all payments may be made freely. A few imports, however, are made on a barter basis; these require a barter license (licencia de trueque) issued by the Ministry of Industry and Commerce.1

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 Central American Common Market; and (2) a sales tax with a range of 5-25 per cent ad valorem, from which certain essential items are exempt. Furthermore, most imports originating outside the Central American Common Market are subject to an import surcharge of 30 per cent of the applicable import duty.

Payments for Invisibles

Payments for invisibles are not controlled, and exchange may be purchased freely. All passages for foreign travel are subject to a tax of 5 per cent.

Exports and Export Proceeds

Exports to South Africa are prohibited. The Central Bank supervises exports to assure a supply of exchange to the market. Export licenses from the Central Bank are necessary for the physical exportation of merchandise, and the license is granted if the exporter agrees to surrender the exchange proceeds; the Bank may require the exporter to provide a guarantee in this respect. In addition to the export license issued by the Central Bank, other export licenses are required as follows: (1) strategic materials, such as armaments, munitions, scrap iron, and scraps of nonferrous base metals, require export licenses from the Ministry of Industry and Commerce; (2) sugar requires an export license from the Ministry of Industry and Commerce in order that shipments under the sugar quotas may be controlled; (3) lumber and root of ipecacuanha require export licenses from the Institute for Lands and Colonization; (4) beans, rice, potatoes, onions, cotton, meat, and purebred and other cattle require export licenses from the National Council of Production; (5) airplanes require export licenses from the Civil Aviation Board; (6) Indian art objects made of gold, stone, or clay require export licenses from the National Museum; (7) tobacco requires an export license from the Tobacco Defense Board; (8) certain livestock and animals and plants of forest origin require a permit from the Ministry of Agriculture and Livestock; and (9) coffee requires a sales contract approved by the Coffee Office, in order to control exports under the coffee quotas, and 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.

The exchange proceeds of all exports must be surrendered within 60 days of exportation 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 calculated by deducting from their gross export proceeds (1) profits obtained during the year from their transactions in Costa Rica; (2) a sum equivalent to the depreciation on their investments in Costa Rica that is acceptable to the U. S. Internal Revenue Service; (3) the export tax on bananas payable in foreign currency; and (4) the cost of imports made during the year that were necessary for their normal business in Costa Rica. There are export taxes on bananas, sugar, and coffee.

Proceeds from Invisibles

Exchange receipts from invisibles may be retained or sold freely.

Capital

Inward and outward transfers of capital may be made freely by residents and nonresidents. The Organic Law 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.

Gold

Only the Central Bank is permitted to purchase or sell gold. Any physical or juridical person who has or acquires gold coins or gold bars must sell these to the Central Bank within 60 days from the date on which they became his property; exempt are small amounts in coin collections, jewelry, or family keepsakes. Imports and exports of gold are made only by the Central Bank. The Central Bank does not supply gold to artistic or professional users.

Changes during 1970

March 5. A swap agreement was signed by the central banks of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Venezuela. The swap facility was for the equivalent of US$5 million.

June 26. A trade agreement was signed with the U. S. S. R. It went into force on November 22. Payments would take place in convertible currencies; trade would, to the extent possible, be balanced.

August 12. Decree No. 4628 exempted exports of goods and services from the sales tax.

September 1. As provided by the Protocol of San José, an import surcharge of 30 per cent of the applicable import duty was imposed on most goods imported from outside the Central American Common Market.

October 29. Law No. 4646 empowered the Central Bank to regulate imports and exchange transactions when the balance of payments was under pressure. In particular, the Central Bank was authorized to impose controls on the value and volume of imports, and to fix import prices. (These powers were additional to those in the Central Bank’s charter enabling it to restrict the use of official market exchange to the payment of essential imports, and to permit the operation of a free exchange market for the payment of nonessential imports.)

Cyprus

Exchange Rate System

The par value is 2.13281 grams of fine gold per Cyprus Pound or £C 1 = US$2.40. Exchange rates are based on the fixed rate for sterling, with which the Cyprus pound is at par, and London market rates for sterling against other currencies. The rate for the U. S. dollar on December 31, 1970 was US$2.39⅛ buying, and US$2.38¾ selling, per £C 1.

Administration of Control

Exchange controls are administered by the Central Bank of Cyprus 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 banks. 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

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

Nonresident Accounts

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

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

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, but cannot be credited to the Blocked Account. 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 of up to £C 1,000, as well as a further amount of up to £C 5,000 in any calendar year, provided that the amount applied for in respect of the latter release represents the proceeds of redemption or sale of securities that were held for account of the nonresident beneficiary for a continuous period of at least four years.2

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, mainland China, Czechoslovakia, Eastern Germany, Hungary, North Korea, Poland, Rumania, Tibet, the U. S. S. R., and North Viet-Nam. Certain goods may not be imported freely (some agricultural and textile products, footwear, metal manufactures, and industrial machinery); for a few of these items, no licenses are granted, while for most of them licenses are granted liberally. Imports from Bulgaria, Czechoslovakia, Eastern Germany, Hungary, Poland, Rumania, and the U. S. S. R. are permitted in accordance with the terms of bilateral trade and payments agreements. With respect to Albania, mainland China, North Korea, Mongolia, Tibet, and North 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 up to £C 10 in value (not to be sold), for returned goods, or for certain special import transactions.

Payments for all permitted imports may be made freely, but the authorized dealers’ authority to effect payment without reference to the Central Bank is for advance payments in respect of imports from countries outside the Sterling Area limited to the equivalent of £C 100.

Payments for Invisibles

Payments for invisibles to residents of other Sterling Area countries may be made freely. All remittances to countries outside the Sterling Area require the approval of the exchange control authorities. Profits, dividends, and interest from 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, mainly for the purpose of preventing illicit capital outflow. For study abroad, the lower limit is £C 500 a year, and the upper limit is £C 1,700 a year; the amount allowed depends on the cost of living in the country concerned—e.g., for study in countries in the Middle East, £C 550; in the United States and Canada, £C 1,700; in other countries, £C 1,050. Higher amounts for student allowances may be granted on production of documentary evidence. For tourist travel, the limit is £C 250 a person annually; for business travel £ C 10 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 £ stg. 50. 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. Exports to Sterling Area countries, with minor exceptions, are free from licensing, irrespective of their amount; exports to other countries are free from licensing when the f.o.b. value does not exceed £C 75. Goods destined for countries outside the Sterling Area are subject to a further control to ensure repatriation of the sales proceeds in an appropriate manner (see section on Prescription of Currency, above). Export proceeds in non-Sterling Area currencies must be surrendered within one month of receipt.

Proceeds from Invisibles

Receipts from invisibles in non-Sterling Area currencies 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 Cyprus currency notes.

Capital

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

Foreign investments in Cyprus by residents of countries outside the Sterling Area require the prior approval of the exchange control authorities. In considering 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. Foreign investment involving participation in domestic industries not exceeding 49 per cent of the share capital is normally approved; participation above this limit may be permitted in exceptional circumstances. Proceeds from the liquidation of approved foreign investments may be repatriated in full at any time, after payment of any charges and taxes due.

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

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

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 1970

During the year, in order to clear away a large number of Blocked Accounts, holders of such Accounts were freely permitted to convert any balance up to £C 1,000.

July 1. The additional allocation for business travel outside the Sterling Area was raised from £C 5–25 a day to £C 10–40 a day.

Dahomey

Exchange System

No par value for the currency of Dahomey has been established with the Fund. The unit of currency is the CFA Franc, which is officially maintained at the rate of CFAF 1 = 0.02 French franc, giving the relationship CFAF 277.710 = US$1.1 Exchange transactions in French francs 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, free of commission charges. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission. The domestic negotiation of the currencies of Portugal, Rhodesia, and South Africa is prohibited.

Dahomey’s exchange control measures do not apply to relations with (1) France and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas) and Monaco; (2) the other member countries of the West African Monetary Union (Ivory Coast, Mauritania, Niger, Senegal, Togo, and Upper Volta); and (3) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Cameroon, Central African Republic, Chad, the People’s Republic of the Congo, Gabon, the Malagasy Republic, and Mali). Hence, all payments to these countries may be made freely. All other countries, except Dahomey itself, are considered foreign countries, and in principle financial relations only with foreign countries are subject to exchange control. For the purpose of certain capital controls, however, the countries listed above are also considered foreign countries.

Administration of Control

Exchange control is administered by the Directorate-General of Economic Affairs in the Ministry of Economy and Planning, which also supervises borrowing abroad, the issuing, advertising, or offering for sale of foreign securities in Dahomey, inward direct investment, all investment in foreign countries, and the solicitation of funds in Dahomey for placement in foreign countries. The BCEAO is authorized to collect, either direct or through the intermediary of the banks and the Postal Administration, 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-General of Economic Affairs in the Ministry of Economy and Planning, except those for gold, which are granted by the Minister of Economy and Planning personally. Exports of diamonds require the prior approval of the Directorate of Mines. There are three special offices for the import and export of precious metals and precious mineral materials. Import certificates for liberalized commodities from OECD countries other than Japan are made out by the importer himself and approved by the Directorate-General of Economic Affairs.

Prescription of Currency

Dahomey is an Operations Account country of the French Franc Area, since the BCEAO maintains an Operations Account with the French Treasury; settlements with France (including its Overseas Departments and Territories, except the French Territory of the Afars and the Issas), 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—provided that the currencies are quoted on the Paris exchange market—or in French francs through Foreign Accounts in Francs.2 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.

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. Imports of all other goods from countries in the French Franc Area may be made freely without an import license. Imports of all other goods from 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 from OECD countries, all imports from Japan, and all imports from non-OECD countries are subject to licensing; they are admitted in accordance with an annual import program, which is determined each year in a joint French-Dahomean Committee, as provided for by the Economic Cooperation Agreement with France. Under this program, a global quota is established for imports from all countries outside the French Franc Area except EEC countries. (In 1970, however, no global quota was formally established.) Certain French textiles processed in foreign countries are licensed separately.

All imports from foreign countries when valued at more than CFAF 20,000 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 eight days 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, 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-General of Economic Affairs. 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, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 75,000 a year for each person (CFAF 37,500 for children under ten); any foreign exchange remaining after return to Dahomey must be surrendered. For business travel, there is a special allocation of the equivalent of CFAF 10,000 a day, subject to a maximum of CFAF 100,000 a trip, for travel to specified countries3 or CFAF 15,000 a day, subject to a maximum of CFAF 150,000, for travel to any other foreign country. The transfer of the entire net salary of a foreigner working in Dahomey 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 BCEAO banknotes, French banknotes, and banknotes issued by other Operations Account countries. Travelers to other countries 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. Resident travelers must have their purchases and sales of foreign currency marked in a personal foreign exchange booklet (carnet de change).

Nonresident travelers may take out any unutilized foreign banknotes and coins up to the amount declared by them on entry or the equivalent of CFAF 25,000 if they have made no declaration, subject to adjustment for amounts exchanged for CFA francs or obtained by exchange of foreign currency.

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 over CFAF 50,000. Exports to all countries are free of license, except those of gold and diamonds, but require an export application visaed by the Directorate-General of Economic Affairs. Exports of gold require the prior approval of the Minister of Finance personally, and those of diamonds must be authorized by the Directorate of Mines. Export proceeds received in currencies other than those of France or another Operations Account country must normally be collected within 180 days of the arrival of the commodities at their destination and surrendered by sale on the foreign exchange market within two months of collection.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France, 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 within eight days surrender any foreign banknotes and foreign currency travelers checks in excess of CFAF 5,000 they bring in and, if they are travelers checks representing the unutilized portion of an exchange allocation, they must have their travel exchange booklet marked accordingly by the authorized bank to which the foreign currency is sold.

Capital

Transfers of capital between Dahomey and Portugal, Rhodesia, and South Africa are prohibited. Capital movements between Dahomey and France, 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 Dahomey; 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 and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), 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, Monaco, and the Operations Account countries.

All investment abroad by residents of Dahomey requires prior authorization by the Minister of Economy and Planning.4 Foreign direct investments in Dahomey5 must be declared to the Minister of Economy and Planning 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 Dahomean investments abroad or foreign investments in Dahomey, must be reported to the Minister of Economy and Planning 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 Dahomey requires prior authorization by the Minister of Economy and Planning. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Dahomean Government, and (2) shares similar to securities whose issuing, advertising, or offering for sale in Dahomey has previously been authorized.

Borrowing by residents from nonresidents requires prior authorization by the Minister of Economy and Planning. 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 to finance transit trade, or by any type of firm to finance imports or 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 authorization by the Minister of Economy and Planning.

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

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Dahomey. Imports and exports of gold from or to any other country require prior authorization by the Minister of Economy and Planning, 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 the Minister. Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1970

June 15. Order No. 702/MF was issued. The exchange allowances for tourist and business travel to foreign countries were maintained unchanged. The use of credit cards abroad was prohibited. Residents going abroad for less than 24 hours could not take out more than CFAF 2,500 in banknotes issued by the Bank of France or any institute of issue maintaining an Operations Account with the French Treasury. Returning residents were required to sell to an authorized bank within 8 days any remaining foreign banknotes or travelers checks in excess of CFAF 5,000 (previously all remaining foreign exchange). Nonresident travelers could upon departure, without formalities, take out foreign banknotes up to CFAF 25,000 (previously CFAF 50,000); or, subject to submission of documents, higher amounts if declared upon entry or acquired by debit to a Foreign Account in Francs or a Foreign Account in Foreign Currency or by conversion of foreign means of payments established in their names abroad. New definitions of resident and nonresident travelers were provided.

June 15. Circular No. 44 increased the exchange allocation for tourist travel to foreign countries from the equivalent of CFAF 50,000 a person a year to CFAF 75,000 a person a year (from CFAF 25,000 to CFAF 37,500 for children under ten).

June 15. Circular No. 45 was issued concerning the application of Decree No. 69-297 of December 2, 1969. Among other things, it listed borrowings exempt from prior authorization as follows: (1) Loans taken up by authorized banks. (2) Loans meeting the following conditions: (a) the amount of the loan must be realized immediately by sale of foreign currency on the exchange market or by debit to a Foreign Account in Francs; (b) the annual interest rate must not exceed the normal market rate; (c) the total amount of loans exempt from approval contracted by the same borrower and not yet repaid, including the new transaction, must not exceed CFAF 50 million; and (d) the contract or exchange of letters must be submitted to the authorized bank. (3) Certain borrowings to finance operations abroad or imports and exports.

The repayment of loans not constituting a direct investment required the special authorization of the Minister of Economy and Planning if the loan itself had been subject to such approval, but was exempt if the loan had been exempt from special authorization. The repayment of all loans contracted before the publication of Decree No. 69-297 also required such special authorization.

There were special provisions concerning the extension of existing borrowings and concerning advance repayment.

August 31. Circular No. 008 was issued concerning the domiciliation in France by traders resident in Dahomey, of imports of merchandise shipped direct from a foreign country to Dahomey or from Dahomey to foreign countries. Such domiciliation, although now possible, was to remain exceptional.

August 31. Order No. 009 specified the countries to which the CFAF 10,000 a day allocation for business travel would apply. There was no change from the previous listing.

August 31. Order No. 010 provided that Foreign Accounts in Francs opened in the names of foreign correspondents of authorized banks could be credited with BCEAO banknotes, French banknotes, and banknotes of any other institute of issue maintaining an Operations Account with the French Treasury, in circumstances to be announced by circular.

August 31. Circular No. 009 provided that Foreign Accounts in Francs could be credited with BCEAO banknotes mailed direct to the BCEAO agency in Cotonou by the foreign correspondents of authorized banks.

October 12. The BCEAO issued Instruction No. 5 to banks. The banks’ reporting requirements with respect to their external claims and liabilities, as laid down in Instructions Nos. 1, 3, and 4 of 1969, were revoked.

October 14. Order No. 021 prohibited the import of cement from all sources.

Denmark

Exchange Rate System

The par value is 0.118489 gram of fine gold per Danish Krone or DKr 7.50000 = US$1. The official limits for the U. S. dollar are DKr 7.44375 buying, and DKr 7.55625 selling, per US$1, at which rates the exchange authorities stand ready to intervene; the rate for the U. S. dollar fluctuates in the exchange market between these limits. Market rates are quoted daily for the 16 currencies that are used most often.1 Authorized exchange dealers may engage in arbitrage both spot and forward for up to 12 months with one another and with their foreign correspondents in all currencies, including Danish kroner (other than Danish kroner on East German accounts). Forward premiums and discounts are left to the interplay of market forces. Forward transactions with residents 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.

Pursuant to UN Security Council Resolution No. 253 (1968), restrictions for security reasons are applied to virtually all payments and transfers to, or for the benefit of, Rhodesia, and to certain receipts from Rhodesia.

Denmark 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 Denmark, Greenland, and the Faroe Islands; the latter has its own currency, however.

Administration of Control

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

Prescription of Currency

Payments to or from foreign countries may be made in any foreign currency or in Danish kroner. The only exceptions to this rule are that payments to Eastern Germany must be settled through inconvertible krone accounts and that virtually all payments in favor of residents of Rhodesia must be credited to a Capital Account. Payments from Eastern Germany are normally settled through inconvertible krone accounts, but may also be settled otherwise.

Nonresident Accounts

Nonresident krone accounts are convertible. The only exceptions are Capital Accounts and Foreign Accounts, which play an insignificant part in foreign settlements and East German accounts.

Krone accounts may be opened by authorized banks for foreign banks, insurance companies, and shipping lines. They may also be opened for other nonresidents, if it is agreed with the account holder that amounts in excess of DKr 75,000 (on all krone accounts together that are held by one nonresident) are to be transferred abroad automatically at the end of each quarter; this limitation is not applicable to persons who are or have been of Danish nationality.

Capital Accounts are kept for nonresidents by authorized exchange dealers for holding capital, income from capital, pensions, and other funds owned by or accruing to Danish emigrants, to the extent that the amounts exceed the exchange allowance of DKr 40,000 available to each person during the first year after emigration. Certain payments to residents may be made freely from these accounts and one year after emigration the balances are made convertible. Capital accounts are also kept for residents of Rhodesia; balances in these accounts are inconvertible.

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

Imports and Import Payments

Most commodities are liberalized and free of licensing from all sources. The import licensing system is based on three negative lists and three country lists. Commodities listed in Annex 1A to Executive Order No. 584 (as amended) of the Minister of Commerce require a license irrespective of country of purchase or origin. All commodities require a license when purchased from or originating in countries or territories listed in Annex 2 III (Albania, mainland China, the Republic of China, Eastern Germany, North Korea, Mongolia, Rhodesia, and North Viet-Nam).

Goods listed in Annex 1C require a license when purchased from or originating in countries of Annex 2 II (Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, and the U. S. S. R.) or Annex 2 III (see above). Goods specified in Annex 1B require a license when purchased from or originating in countries of Annex 2 I (Japan, the Republic of Korea, and the Ryukyu Islands) or Annexes 2 II and 2 III (see above).

With these exceptions, imports are free of license, provided that for the countries of Annexes 2 I and 2 II the country of origin and the country of purchase are identical. Imports originating or purchased in Rhodesia are not being licensed. Some of the goods in the three commodity lists are subject to global or bilateral quotas, but most are being licensed automatically when originating or purchased in countries of Annex 2 II. Only cut flowers are imported under licenses which apply to a specific country. Imports of bread grain, feedgrain, and certain grain products are subject to equalization charges representing the difference between specified minimum import prices and the lowest prices payable for grain c.i.f. Danish ports.

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 two years from the end of the month in which the goods were cleared through customs, or within five years for imports of ships, aircraft, large machines, and major plants, provided that payments of debts are not made more than 14 days before the day stipulated as the latest in the contract (or before the latest customary date in the trade). However, commercial credits with the latest day of payment within 90 days from inward clearance can be paid at any time within that period if any savings are achieved as a result. The authorized exchange dealer may make payment before clearance of the goods, provided that the probable date of clearance lies within two weeks from the date of payment. For ships, aircraft, heavy machinery, and major installations, advance payments cannot be made more than 14 days before the date stipulated as the latest permissible date in the contract, and not more than one year before the expected inward clearance of the goods (or the recording in a Danish ship register). Documentary credits for imports may be established up to 90 days (180 days for specified Far Eastern countries) before the expected date of inward clearance. All other advance payments for imports require prior approval by the National Bank; they are approved when the payment is genuine and in accordance with the traditions of the trade.

Payments for Invisibles

The National Bank has delegated to authorized exchange dealers the authority to permit payments by residents for most invisibles to be made freely,2 provided that payments of debts are not made more than 14 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 Bank required. Transfers of up to DKr 2,000 for any permitted purpose may be made without delivery of forms. Foreign exchange for travel is allocated freely and may be obtained for travel to any country, but not earlier than two weeks before the trip if the amount applied for exceeds the equivalent of DKr 2,000. Foreign exchange in banknotes and coins may be purchased from agencies or individuals other than the authorized exchange dealers, provided that the amount does not exceed DKr 2,000 for each transaction.

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

Exports and Export Proceeds

Exports 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.

Exports to any country of major agricultural and fishery products require export licenses issued by the Ministry of Agriculture or the Ministry of Fisheries. Exports of poultry, bacon, and cheese to the United Kingdom are licensed up to annual quotas and exports of pigs and pork to EEC countries are subject to export levies. Exports of other agricultural products are permitted freely to all countries except Rhodesia. Exports of all products to CMEA countries and specified Far Eastern countries and exports of a few industrial products to all other countries require licenses issued by the Ministry of Commerce, the primary purposes of the regulations being to safeguard the fulfillment of bilateral obligations, to avoid excessive credits to importing countries, and to serve strategic purposes.

Export proceeds must be transferred to Denmark without undue delay unless the National Bank permits otherwise. However, this obligation does not apply to amounts which are to be used within three months to settle or to offset the cost of certain commercial expenses. Foreign exchange receipts must be offered for sale to the National Bank or to an authorized exchange dealer without undue delay, except that an individual resident may hold foreign banknotes and coins not exceeding DKr 2,000 in value.

Proceeds from Invisibles

Foreign exchange derived from invisibles must be transferred to Denmark, unless the National Bank permits otherwise, and offered for sale to the Bank or to an authorized exchange dealer without undue delay, with exceptions similar to those that apply to export proceeds (see section on Exports and Export Proceeds, above).

Travelers may bring in any amount of Danish banknotes and coins, foreign banknotes, and other Danish or foreign means of payment.

Capital

Residents have an obligation to repatriate proceeds realized from the sale or liquidation of assets abroad. Transfers abroad may be made by residents to pay interest on, or to redeem upon maturity, or to repurchase the transferor’s own bonds (insofar as bonds wholly or partly denominated in foreign currencies are concerned, only to the extent necessary for current amortization purposes), 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 repatriated a corresponding amount within the last 12 months from the sale of foreign securities to a nonresident. The National Bank has granted a general permission to authorized exchange dealers to make transfers abroad, within certain limits, for account of their resident customers in connection with direct investments or with the private acquisition of real estate abroad. The authority is limited to DKr 40,000 a year for each foreign enterprise for direct investments and to DKr 40,000 a person for private acquisition of real estate. Permission from the National Bank is required for most other transfers abroad of a capital nature by residents. Direct investments abroad by residents are normally approved, but portfolio investment abroad is generally not allowed. Loans and credits involving nonresidents and made in connection with commercial transactions are normally permitted, subject to certain limitations. Under a voluntary agreement with the National Bank, authorized banks deposit in a special account with the National Bank the counterpart of any increase in their net foreign liabilities.

Danish emigrants are granted an exchange allowance of up to DKr 40,000 for each person during the first year after emigration. Funds exceeding this amount must be credited to a Capital Account in the name of the owner and may be transferred abroad one year after emigration.

Direct investment in Denmark by nonresidents may be made without any special license if the transaction concerns industry, commerce, handicrafts, hotel business, or transportation, and if the investment does not increase total direct foreign investment in the enterprise concerned by more than DKr 40,000 in each calendar year. Other direct investment by nonresidents requires permission from the Ministry of Commerce, which is granted liberally in accordance with Denmark’s obligations as a member of the Organization for Economic Cooperation and Development. The purchase by a nonresident of real property in Denmark usually requires a special license from the Ministry of Justice. A nonresident who is or has been a Danish national may freely purchase or subscribe to securities expressed solely in Danish kroner which do not represent direct investment. Other nonresidents may purchase or subscribe to bonds that are quoted daily and are expressed solely in Danish kroner, when the funds have been obtained from the liquidation of investments in Denmark.3 They may purchase or subscribe to shares that are quoted daily, are expressed solely in Danish kroner, and do not represent direct investment when the funds have been obtained from the liquidation of Danish shares, or when the acquisition is made on the basis of subscription rights to shares. Nonresidents may grant credits within certain limits to residents to finance purchases of commodities abroad and to finance the granting of credits for exports. They may, further, grant loans of DKr 100,000 to DKr 1 million per borrower in a calendar year to finance the borrower’s own enterprise in the fields of agriculture, industry, trade, handicrafts, hotel business, or transportation, provided that the activity in question does not exclusively or essentially consist in financing, trading in real estate, or building and construction activities, and provided that the maturity is at least five years. Finally, they may grant loans up to DKr 200,000 per borrower in a calendar year to subsidiary companies, branches, and the like, and 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 Danish nationals are permitted freely, irrespective of when and how the original investment was acquired. Interest and repayment of principal on authorized loans, credits, and deposits received from persons and firms who are nonresidents at the time of receipt may be paid freely, with the proviso that loans and credits obtained from a nonresident must not be amortized or repaid in full more than 14 days before the amortization payment or repayment is due, or before the customary date in the trade; commercial credits for which the latest permissible date of payment under the contract lies within 90 days from inward clearance may be repaid at any time within that period if it results in any savings.

Inheritances and gifts to relatives may normally be transferred to any country without limitation. Individual payments above DKr 2,000 as gifts to persons other than relatives require approval from the National Bank. Such approval is normally given for bona fide gifts.

Imports and exports of securities are subject to regulations, the details of which are established by the National Bank, or, when exports of specified multiple currency Danish bonds are concerned, by the Ministry of the Interior. 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 certain exceptions, 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 concerning emigrants are not circumvented.

Gold

Residents may freely buy, hold, and sell gold coins in Denmark. 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 1970

January 1. Executive Order No. 584 governing commodity imports came into effect (subsequently amended by Executive Orders No. 92 of March 18, 1970 and No. 297 of June 22, 1970). The import licensing system was reorganized on the basis of three negative lists and three country lists. The Free List Area system was discontinued, under which all imports from countries outside the Area required an import license while most imports from countries inside the Area were free of license; the three new country lists comprised the 16 countries that as of December 31, 1969 were not included in the Free List Area (plus the Ryukyu Islands). The changeover resulted in additional import liberalization, particularly for commodities originating in CMEA countries; commodities liberalized for all sources, either on January 1 or later in 1970, included raw coffee, roasted coffee, and wines.

January 21. The regulations of June 9, 1969 concerning prepayments of debts, etc., were modified as follows. (1) Documentary credits for imports from specified Far Eastern countries could be established up to 180 days (previously 90 days) before the expected date of inward clearance (or, in the case of transit trade, of taking delivery). (2) Residents were again permitted to transfer funds to their bank or Giro accounts abroad, provided that amounts so transferred were used immediately for permitted payments. (3) Discounting in Denmark by authorized banks’ foreign correspondents of bills drawn by residents was again permitted, up to specified limits.

January 21. The ceiling of DKr 200,000 up to which exchange dealers could freely make payments related to transit trade with Eastern European countries was revoked.

May 21. The rate of the value-added tax for imports was increased from 9 per cent to 15 per cent. (The rate of value-added tax on domestic transactions was raised from 12.5 per cent to 15 per cent with effect from July 1.)

June 12. Regulations were issued for hotels and similar establishments with a view to their giving guests a better exchange rate than previously when exchanging foreign currency.

July 1. The existing import embargo on grains for feed use was extended to corn.

Dominican Republic

Exchange Rate System

The par value is 0.888671 gram of fine gold per Dominican Peso or RD$1.00 = US$1. Exchange transactions in U.S. dollars between the Central Bank of the Dominican Republic and other banks take place at the par value, plus a commission of

of 1 per cent. Exchange transactions by commercial banks with the public also take place at the par value, subject to banking commissions of ¼ of 1 per cent buying and ½ of 1 per cent selling. 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. The commercial banks are required to transfer to the Central Bank all exchange purchased. There is a tolerated parallel exchange market.

On August 1, 1953, the Dominican Republic notified the Fund that it accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange and trade control policy is made by the Monetary Board. Foreign exchange control is administered by the Central Bank. The Monetary Board establishes import quotas, which are administered and controlled by the Foreign Exchange Department of the Central Bank.

Prescription of Currency

Imports from the United States that are financed by the U. S. AID must be effected under special letters of credit. Certain import commissions must be paid in local currency only. Settlements with Colombia and Venezuela may be effected through special accounts established under reciprocal credit agreements:1 payments in respect of oil imports, however, may not be made through these accounts. 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 some 80 categories of goods, including automobiles with an f.o.b. value in excess of RD$2,000, are prohibited. Imports of certain other commodities are restricted by 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. All payments for imports require the approval of the Central Bank, except those made with the importer’s own exchange.

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 alcoholic beverages, Venetian blinds, some perfumes and cosmetics, electric ovens, freezers and refrigerators, record players, and certain construction materials. Some 20 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 and the importer (where necessary in accordance with Decree No. 239) prepays import duties and surcharges to the customs, 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 bank 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. Importers of most commodities subject to the prepaid letter of credit obligation are also required to prepay to the customs 80 per cent of the estimated value of customs duties and surcharges on the goods prior to the opening of the letter of credit.

In principle, exchange for import payments is made available within not more than five working days from the receipt of the application, but since May 1966 there have been delays in the provision of exchange.

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 20 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 5 per cent. Certain foodstuffs are exempt from import taxes and others are relieved under special arrangements in times of seasonal shortage.

Payments for Invisibles

All payments for invisibles require the prior approval of the Central Bank, which is only given after careful examination of the application and if the transaction is considered genuine. The allocation of foreign exchange for travel, family remittances by Dominican nationals, medical expenses abroad, and insurance other than insurance on merchandise imports is suspended.2 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.

Nonresidents working in the Dominican Republic may remit up to 60 per cent of their salaries abroad for any purpose. For students pursuing approved courses, exchange requests for monthly maintenance allowances are approved up to US$150 for studies in Latin America, Puerto Rico, and Spain, and up to US$200 for studies in the United States (except Puerto Rico), Canada, and other European countries.3 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 on foreign investments made on or before October 6, 1970 are in principle approved on presentation of a balance sheet which has been agreed with the tax authorities, provided that taxes due on these earnings have been paid, including an 18 per cent tax on dividends remitted or credited to nonresidents; in some cases the transfer may have to be effected in monthly or quarterly installments. Profits on foreign investments made after October 6, 1970 may be remitted, subject to the flat 18 per cent tax, provided that a certificate of the Central Bank is presented certifying the genuine nature of the foreign investment and provided that the investment has been registered at the Central Bank. Remittances of profits on foreign investments made after October 6, 1970 without such certification are taxed at the complementary income tax rate or at 18 per cent, whichever is higher. (The applicable complementary tax rate rises progressively and is 70 per cent for dividend or profit income in excess of RD$900,000.)

In principle, exchange for payments for invisibles is made available within five days from receipt of the application, but there have been delays.

Travelers may take out foreign currency notes up to the amount of any travel allocation they have obtained. Travelers are not permitted to take with them any domestic currency.

Exports and Export Proceeds

Export licenses are required for sugar, in connection with the operation of export quotas established under the International Sugar Agreement, and for 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 published by the Central Bank. 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. Exporters may not extend credit for more than 90 days from the date of embarkation without authorization by the Central Bank.

Proceeds from Invisibles

The foreign exchange proceeds from invisibles are subject to surrender requirements and must be surrendered to the Central Bank through the commercial banks. The import of Dominican banknotes and coins is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. Inward capital remittances must be registered with the Central Bank and must be converted into pesos at that Bank. 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 1970

January 1. The system of import controls established in 1967 was further extended until June 30, 1970 by virtue of Decree No. 4457 of December 1, 1969. Importers of items under quota would in 1970 receive foreign exchange allocations equivalent to 60 per cent of their imports of these items during the base period (the 12 months prior to July 10, 1967).

January 1. A reciprocal credit agreement with Venezuela went into operation. The agreement had formally entered into force on July 1, 1968.

January 2. A reciprocal credit agreement between the Central Banks of the Dominican Republic and Colombia was signed and came into force immediately.

January 13. Law No. 545 extended for one year the 20 per cent internal consumption tax levied on most imported commodities.

February 2. Imports of jeeps ceased to be subject to quota.

March 6. Letters of credit opened to cover imports into the industrial free zones, or to cover imports of insecticides and the like no longer were required to be prepaid.

April 1. Law No. 554 abolished the advance import deposit requirements. Previously, advance deposits of 10, 20, or 40 per cent of the f.o.b. value were required for many goods unless they were paid for with the importer’s own foreign exchange.

April 10. Imports of motorcycles for government use ceased to be subject to quotas.

May 29. Imports of wooden construction frames, paints, and staining materials were made subject to quota and to the prepaid letter of credit requirement.

June 11. The importation of whitewall tires ceased to be prohibited. Imports of fertilizers could be paid for by regular rather than prepaid letters of credit.

July 1. Decree No. 5133 of June 18, 1970 extended the system of import controls until June 30, 1971. Allocations remained at 60 per cent.

July 3. Decree No. 5176 exempted automobiles valued at RD$2,000 or less from the tax of RD$700 per unit imported.

July 27. Law No. 597 provided that exporters could be reimbursed for 95 per cent of the amount of tariffs and import surcharges paid on raw materials and semifinished goods incorporated in manufactured export products. Similarly, 95 per cent could be refunded of any internal taxes paid on the sale and production of manufactured goods subsequently exported.

October 6. Law No. 30, which amended the Income Tax Law No. 5911 of May 22, 1962, provided that profits resulting from foreign investments made after October 6, 1970 could be remitted, subject to a flat 18 per cent tax, provided that a certificate of the Central Bank was presented certifying the genuine nature of the investment and provided that the investment had been registered with the Central Bank. Remittances of profits on foreign investments made after October 6, 1970 without such certification would be taxed at the complementary income tax rate or at 18 per cent, whichever was higher.

December 29. Law No. 76 extended for another year the internal consumption tax of 20 per cent levied on most imports.

Ecuador

Exchange Rate System

The par value is 0.0355468 gram of fine gold per Ecuadoran Sucre or S/ 25.00 = US$1. The Central Bank maintains official rates of S/ 24.75 buying and S/ 25.25 selling per U.S. dollar which apply to all exchange transactions. Ecuador 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 extensive powers with respect to import policy. The unified exchange market is under the control and supervision of the Central Bank of Ecuador. The Central Bank also issues import and export licenses, registers foreign capital, and approves sales of exchange for transactions in invisibles where the amount of exchange requested exceeds the norms established for sales by commercial banks acting as its agents. Exports of coffee to “new markets,” however, require the prior authorization of the Ministry of Industry and Commerce. Imports which enter as part of a direct investment and imports by foreign enterprises which have contracts with the Government require a permit from the Finance Ministry as well as from the Central Bank in lieu of an import license.

Prescription of Currency

Most settlements with Bulgaria, Eastern Germany, Hungary, Poland, and Rumania must take place through bilateral accounts. Payments between Ecuador and Colombia, Mexico, and Peru 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. 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 and semiessential goods, and List II, consisting of less essential and luxury goods. All goods not included in these two lists are prohibited, except books, newspapers, periodicals, and printed or recorded music, which may be imported freely without a license. Prior import licenses are required for all permitted imports, with the exceptions specified below. Medicine and spare parts for machinery and automotive vehicles are free of license when valued at US$100 or less. 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 advance deposits and additional import taxes have been paid and that the required prepayments of import duties have been made. The licenses automatically entitle the holders to obtain exchange at the official rate to cover the c.i.f. value of the imports upon presentation of the shipping documents; advance payments for imports are generally prohibited. For some goods, import licenses are issued which do not entitle the importer to foreign exchange at the official rate (“no exchange licenses,” licencias sin divisas, or permisos de importación no reembolsables); these are issued for gifts, direct investment in the form of machinery and equipment financed by the investor, and for goods financed from the proceeds of certain loans from international agencies. Imports which enter the country as part of a direct investment and imports by foreign enterprises which have contracts with the Government (mainly petroleum and mining enterprises) require an authorization from the Ministry of Finance and the Central Bank instead of an import license. The Monetary Board is authorized to shift items between Lists I and II and to prohibit the import of goods or lift import prohibitions when the economic situation of the country and the balance of payments situation so require.

The advance deposit requirement applies to most public and private imports financed with official exchange. The main exceptions are imports under the agricultural surplus agreements with the United States, grants from foreign governments and organizations, imports of certain goods to be used for the construction and equipment of hotels, all imports from Paraguay, imports of capital goods financed by international organizations or by suppliers’ credit for at least one year after arrival, imports of medical supplies and equipment made by official health or social service institutions, imports by the universities and polytechnical schools, and imports of machinery, equipment, and materials needed for public works. The advance deposit must be made in sucres by the importer when applying for an import license; the importer must at the same time lodge with the Central Bank a prepayment in local currency of the import duty. The rates for the advance import deposits are determined in accordance with the type of good imported and the terms of payment. There are five categories of imports, one in List I and four in List II, and seven ranges of payments terms, giving a possible total of 35 advance deposit rates. They range from 2.56 per cent to 328.05 per cent of the c.i.f. value, but for imports by the Government or by official agencies they cannot exceed 100 per cent of the c.i.f. value. At the end of December 1970 the advance deposit rates for imports to be paid within 90 days were 38.4 per cent for List I goods and from 97.20 per cent to 328.05 per cent for List II goods. In August 1970 the Government announced that prior import deposit rates would be reduced quarterly in a schedule designed to lead to the elimination of advance deposit requirements on List I imports by June 30, 1971 and on List II imports by September 30, 1972. The prescribed prepayment of import duty is 100 per cent for both List I and List II commodities. Advance deposits are released pari passu with the making of import payments. That part of the deposits which exceeds 100 per cent of the c.i.f. value is released at the time of customs clearance. List II goods are subject to an additional duty of 20 per cent of the c.i.f. import value; this duty replaced the monetary stabilization surcharges in effect prior to August 16, 1970. Exempt from this duty are (a) imports financed with foreign loans to the National and Municipal Governments; (b) imports of petroleum and exploration equipment financed from their own resources by companies who have contracts with the Government; and (c) imports of agricultural, stock-raising, fishing, and industrial equipment by the National Development Bank. Certain goods on List II are subject to an additional import tax of 10 per cent or 15 per cent of the c.i.f. value, payable in sucres; the others are exempt. Also exempt from this tax are diplomatic imports and imports financed by foreign governments or international organizations. Imports of crude petroleum receive a subsidy of S/ 7.07 per U.S. dollar invoiced on import documents. The subsidy is received in the form of a tax credit certificate issued by the Finance Ministry on the basis of documentation approved by the Ministry of Industry and Commerce that the import was effected, without relation to the import payment.

Payments for Invisibles

Exchange may be acquired without limit for any payments for bona fide transactions in invisibles; no exchange license is required. Commercial banks, acting as agents for the Central Bank of Ecuador are authorized to sell exchange for travel, studies abroad, for payments for medical services abroad, and for royalty payments; for other transactions in invisibles, including remittances of profit and interest payments, exchange can be acquired only from the Exchange Department of the Central Bank of Ecuador. Commercial banks may sell, without prior approval of the Central Bank, the following amounts for transactions in invisibles: (1) for travel, up to US$45 a person a day for up to 30 days a year; (2) for medical expenses abroad in advance of actual documentation of expenses incurred, up to US$2,000; (3) for study abroad, up to US$450 a month. For amounts exceeding these norms, prior approval of the Exchange Department of the Central Bank is required. There are no quantitative limits imposed by the Central Bank for any bona fide current transactions. There are no norms for amounts which can be acquired without prior approval for royalty payments; the applicable amount is specified in the royalty agreement, which must be registered with the Central Bank.

For nonbusiness travel, persons are required to sign a contract with the Central Bank (or its agents) in which they promise to give proof of the number of days they were outside the country and to return any unutilized foreign exchange, within 30 days after reentry. For business travel, the contract obliges the traveler to document his expenses and return any unused exchange within 60 days from the date of return. Where travelers have utilized the excess exchange without justification, the Central Bank is authorized to impose a fine of up to 50 per cent of the amount not justified. For sales of exchange for medical expenses abroad on an advance basis of up to US$2,000, the individual must sign a contract affirming that the actual medical expenses will be documented. For advance sales greater than US$2,000, which require prior approval of the Central Bank, the latter requires in addition that the party present some form of guarantee that the unutilized exchange will be resold to the Central Bank. In most instances a personal guarantee will fulfill this requirement. If the actual value of documented medical expenses exceeds the advance purchase, the Central Bank will authorize its agents, without limit, to sell the exchange necessary to make up the difference. Residents traveling abroad must pay a tax of S/ 400 for each exit visa, starting from the second visa in their passports. Tickets for foreign travel are taxed at the rate of 8 per cent on tickets for departure from Ecuador and 4 per cent on tickets for the return trip to Ecuador.

For other transactions in invisibles, such as remittances of profits, interest payments on foreign debt, family remittances, payments of membership fees in professional societies abroad, etc., exchange can only be acquired from the Exchange Department of the Central Bank of Ecuador. Regarding profits remittances, the certificate of registry of the investment entitles the foreign investor to purchase amounts of exchange necessary to remit current profits on the registered investment. To establish the bona fide nature of the transaction the investor must document the amount of dividend declared by the enterprise and the amount of the income tax on the profits. Companies under Ecuadoran law retain the amount of the income tax and make payments on behalf of the shareholders. The investor has a right to distribute and remit profits in an amount equal to the profits on which the income tax was paid. An investor may remit profits accumulated from previous years for a registered investment on the basis of a schedule agreed with the Central Bank. For foreign exchange loans a registration certificate, which is received on the basis of documentation that the foreign exchange proceeds were sold to the Central Bank, entitles its holder to remit freely the interest, commission, and other charges and the amortization payments specified in the loan contract. For suppliers’ credit or similar credit for financing imports, the import permit entitles its holder to purchase exchange in an amount and on terms specified by the importer at the time of the application for the import permit.

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 bank guarantee. No surrender is required for exports effected under licensed barter transactions. Reference prices are established for exports of bananas to help ensure full surrender of the exchange proceeds. The reference prices are changed periodically in light of prevailing prices in major markets. Most exports are subject to export taxes, payable at the time the export license is received. During 1970 a system of ad valorem taxes on the f.o.b. export value was instituted which affects about 90 per cent of exports by value. The rates are 5 per cent for exports by firms governed by the Industrial Development Law; 10 per cent for exports of bananas and shrimp; and 15 per cent for all other exports, except those specifically exempted. A small part of exports exempted from the ad valorem export taxes receive a subsidy based on the f.o.b. value at rates ranging from 2 per cent to 7 per cent. All exports of bananas are subject to certain additional specific taxes, except those carried out through ports in Esmeraldas Province. The subsidy is received in the form of a tax credit certificate on the basis of customs documentation. There are other export taxes in addition to those mentioned above.

Proceeds from Invisibles

All receipts from invisibles have to be sold to the Central Bank or its agents at the official rate.

Capital

All foreign investment in Ecuador must be registered with the Central Bank. 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 of Ecuador. For foreign capital entering in the form of machinery and equipment, the investor must document that the merchandise has been nationalized 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 (Finance, Industry and Commerce, or Agriculture) 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 request for registration 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 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 must be registered with the Exchange Department of the Central Bank of Ecuador. Among the documentation required for registration is proof that the proceeds of the loan were sold to the Central Bank or its agents. 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 payment, 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 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 investments registered on a provisional basis, only current profits may be repatriated.

Companies or individuals residing in Ecuador, with the exception of authorized financial agents of the Central Bank of Ecuador and companies engaged in international transportation, are forbidden to maintain foreign exchange holdings, including foreign currency deposits in Ecuador or abroad. Residents who are private individuals are not normally granted foreign exchange to purchase securities or real estate abroad. Institutions which operate as financial agents of the Central Bank are authorized to maintain accounts with correspondent banks abroad in convertible currencies for an amount and on terms which are stipulated in the contract of each such institution with the Central Bank of Ecuador.

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 and are free of advance deposit. Imports of nonmonetary gold in bars may be made either by the Central Bank or any other resident and are treated as List II imports subject to advance deposit. Gold bars are exempt from import duty, while that on semiworked gold is 75 per cent ad valorem.

Changes during 1970

January 1. Decision No. 8133 of the Ministry of Industry and Commerce of December 31, 1969 went into effect. The payment to be made by sugar producers exporting under the U. S. preferential quota was set at 8 per cent of the f.o.b. value.

January 20. Decree No. 47 authorized the Minister of Agriculture to restrict (temporarily or indefinitely) the importation of dairy products whenever it was determined that domestic production was adversely affected by imports.

January 23. The proportion of customs duties which must be prepaid was increased from 15 per cent to 40 per cent for List I imports, and from 70 per cent to 80 per cent for List II imports.

January 27. The 4 per cent tax on freight charges for imports was eliminated and replaced with taxes on gross receipts earned in Ecuador by air and maritime companies.

January 28. Interministerial Decision No. 48 introduced a box with an officially assumed weight of 26 pounds for exports of bananas to Japan only.

February 5. Decision No. 015 of the Ministry of Finance provided that oil companies signing a contract of association with the Government could amortize their investments and exploration expenditures in the first few years of exploitation.

February 18. Decree No. 113 charged the Central Bank with the issuance of import licenses to firms covered by the Industrial Promotion Law.

March 5. The rates for prior import deposits were increased as a result of a decline in Ecuador’s foreign reserves, to which the rates had been tied by Monetary Board Regulation No. 544 of October 1969. The rates for List I imports ranged from 35 per cent on imports for which foreign payment was due within 90 days, down to 3.5 per cent on imports payable within 2-5 years. The rates for List II ranged from 250 per cent on “category d” imports for which foreign payment would be made within 90 days, down to 7 per cent for “category a” imports with foreign financing of 2-5 years.

April 1. The rates for prior import deposits were raised, with the new range from 60 per cent down to 4 per cent for List I imports and from 405 per cent down to 8 per cent for List II imports.

May 12. The rate of the stabilization surcharges levied on the c.i.f. value of imports was increased to 20 per cent for List I imports and to 38 per cent, 43 per cent, 45 per cent, and 55 per cent for List II, categories a, b, c, and d, respectively (Decree No. 469). Previously the rate was 11 per cent for List I and a uniform rate of 22 per cent for all categories of List II.

June 22. All foreign exchange transactions, including those formerly conducted in the free exchange market, were placed under the supervision of the Central Bank of Ecuador by Decree No. 5. Both exchange markets were closed.

June 29. Bank and nonbank residents were required to sell to the Central Bank by July 15 all foreign currency they held at home or abroad, at the average rate of exchange that had prevailed on June 19 in the former free exchange market, i.e., S/ 21.54 per U.S. dollar.

June 29. Supreme Decree No. 24 established an Exchange Committee empowered to regulate and supervise exchange transactions conducted in the former free exchange market and to fix the buying and selling rates for exchange for that group of transactions.

June 29. The exchange tax of ½ per cent on purchases and sales of exchange for transactions conducted in the former free exchange market was abolished by Decree No. 24.

July 3. The Exchange Committee announced a number of restrictions on sales of exchange for transactions effected in the former free exchange market, including: (1) a limit on sales of exchange for travel of US$30 a person a day, up to a maximum of US$400 in any 12-month period; and (2) a requirement of a 50 per cent guarantee deposit for exchange purchased for medical payments abroad prior to actual documentation of the expenditure.

July 4. The Government assumed control of sugar exports to the United States.

July 5. The Exchange Committee fixed the exchange rates for transactions conducted in the former free exchange market at S/ 22.77 buying, and S/ 23.23 selling, effective when the exchange markets were reopened on July 6, 1970.

July 6. Decree No. 47 introduced an exchange reform and the exchange markets were reopened. Major features of the reform were as follows: (1) Total banana export proceeds must be sold to the Central Bank, whereas previously only an amount corresponding to the minimum surrender price had to be sold to it; for amounts in excess of the minimum surrender price, the exporter henceforth received the more favorable rate accorded to transactions conducted in the former free exchange market; (2) Proceeds from all other exports except coffee, cacao, and sugar received the rate for exchange sales in the former free exchange market; (3) Taxes were imposed on the f.o.b. export value at rates of 7 per cent for bananas and 15 per cent for other exports, except coffee, cacao, and sugar; (4) List II imports were transferred to the former free exchange market; and (5) The stabilization surcharge on the c.i.f. value of List II imports was reduced to 20 per cent for categories a, b, and c and to 30 per cent for category d.

July 15. The Monetary Board was reorganized and its membership reduced from nine to seven persons, of which four were representatives of the executive branch of the Government and three were representatives of private sector banks and business groups.

July 16. The rate of the ad valorem export taxes adopted on July 6 was reduced to 3 per cent for bananas and to 7 per cent for minor exports.

July 24. A reciprocal credit agreement was signed with Mexico. It came into operation on August 24.

July 31. Decree No. 177-B shifted crude petroleum from Import List II to List I.

August 16. Monetary Board Regulation No. 550 provided that the advance import deposit requirements would be gradually eliminated, by quarterly reduction. The first reduction went into effect on August 17, for the period to September 30.

August 17. By Decree No. 239 of August 16 the official and former free exchange markets were unified and a single fixed exchange rate of S/ 25.00 per US$1 was established.

The stabilization surcharges on List I and List II imports were eliminated; the surcharge on List II imports was replaced by a uniform 20 per cent additional ad valorem import duty levied on the c.i.f. value.

New ad valorem taxes on the f.o.b. value of exports were adopted as follows: (a) 5 per cent for exports by firms governed by the Industrial Development Law; (b) 10 per cent for exports of bananas and shrimp; and (c) 15 per cent for all other exports not specifically exempted. Approximately 90 per cent of exports (by value) were subjected to these taxes. The taxes were payable when the export permit was received.

Certain exports exempted from the new ad valorem export taxes were granted a subsidy based on f.o.b. value, at rates ranging from 2 per cent to 7 per cent. The subsidy was received in the form of a tax credit certificate issued on the basis of customs documentation.

All restrictions on current payments and transfers were abolished but specific provisions covering sales of exchange for invisibles and foreign borrowing and direct foreign investment were to be formulated by the Monetary Board.

The prepayment of import duties, requisite for obtaining an import license, was increased to 100 per cent.

August 17. The par value was changed from S/ 18.00 = US$1 to S/ 25.00 = US$1.

August 17. Monetary Board Regulation No. 551 of August 16 established the Central Bank’s buying and selling rate for the U. S. dollar in dealings with the public at S/ 24.75 and S/ 25.25, respectively.

August 28. The Monetary Board authorized the Central Bank of Ecuador to sell exchange freely for payment for imports valued at US$100 f.o.b. or less; these did not require an import license.

August 28. Monetary Board Resolution No. 556 implemented the August 16 exchange reform measures with respect to sales of exchange for travel, medical payments abroad, and study abroad. Key provisions were as follows: (1) for personal travel, each person could purchase without prior approval up to US$45 a day for up to 30 days a year; additional amounts could be purchased if the bona fide nature of the purchase could be documented to the Central Bank; (2) for business travel, additional exchange to that specified in (1) could be purchased as necessary, with the prior approval of the Central Bank or its agents; (3) for medical expenses abroad, up to US$2,000 could be purchased on an advance basis, with additional amounts requiring approval; the Central Bank was authorized to sell any amount documented as bona fide expenditure for medical services abroad; (4) students abroad were entitled to purchase up to US$450 a month, plus additional amounts if accompanied by dependents, as justified by the cost of living in the country of study; (5) no norms were established for other invisibles, the Central Bank being authorized to sell necessary amounts for purposes documented as bona fide current transactions; and (6) persons denied exchange in the amounts requested by the Exchange Department of the Central Bank could challenge the decision by appeal to the Management of the Central Bank, and if necessary, to the Monetary Board. All royalty contracts concluded before June 22, 1970 had to be registered with the Central Bank and all new royalty contracts required its prior approval.

August 28. Monetary Board Resolution No. 555 was published which established the norms for registration, service, and amortization of direct foreign investment and foreign debt. Major provisions were as follows: (1) all foreign investment in Ecuador must be registered with the Central Bank; (2) the certificate of registration would enable the holder to purchase at the official selling rate sufficient amounts to remit current profits and, on the basis of a schedule agreed with the Central Bank, profits accumulated in previous years; (3) pending completion of the registration process current (but not accumulated) profits could be remitted; (4) foreign investors could purchase exchange to repatriate all or part of their capital according to a schedule approved by the Central Bank, but not until at least five years from the date on which the capital was registered; (5) foreign exchange loans must be registered and the registration certificate would enable its holder to remit freely the interest, commission, other charges, and amortization payments specified in the loan contract; (6) for suppliers’ credits and similar credits, the import license would entitle its holder to purchase exchange in an amount and on terms specified by the importer at the time of application for the import license.

August 28. Monetary Board Resolution No. 559 authorized the Central Bank to sell foreign exchange, at the exchange rate ruling on the day of sale, for imports valued at US$100 f.o.b. or less; no import license was required. (In June, such imports, which could be freely made, without license, provided that payment took place through the free market, had been suspended.)

September 21. The following List II imports were exempted from the additional 20 per cent ad valorem duty: (1) imports financed with foreign loans granted to the National and Municipal Governments; (2) imports of petroleum and exploration equipment financed from their own resources by companies who had contracts from the Government; and (3) imports of agricultural, stock-raising, fishing, and industrial equipment by the National Development Bank.

September 25. Books, newspapers, periodicals, and printed music, all of which formerly could be imported without an import license, henceforth required an import license.

September 30. The second stage of the phased reduction of prior import deposits announced on August 16, 1970 was effected.

September 30. Books, newspapers, periodicals, and printed music were exempted from prior import deposit requirements by Monetary Board Regulation No. 564.

October 13. Decree No. 496 of September 21 abolished the tax exemption for exports of coffee to Annex B countries. (The Decree was revoked on February 3, 1971 by Decree No. 153.)

October 29. Commercial banks were authorized to sell foreign exchange for travel, studies abroad, and medical treatment abroad under norms previously established by the Monetary Board. Banks also were authorized to sell exchange for payment of royalties abroad; all royalty contracts must be registered with the Foreign Exchange Department of the Central Bank.

October 29. Official agencies, foreign embassies and consulates, and international organizations were permitted to maintain accounts in foreign currency with commercial banks in Ecuador.

November 10. Monetary Board Resolution No. 566 was issued concerning the transfer to Ecuadoran nationals resident abroad of pensions and similar income. The Central Bank was also authorized to sell exchange for family remittances.

November 26. Decree No. 847 restricted the facility of importing goods valued at up to US$100 without an import license to medicines and spare parts for machinery, tractors, and automobiles, trucks, and buses.

November 27. Decree No. 876 regulated the export tax on bananas.

December 10. Monetary Board Resolution No. 567 exempted from advance deposits imports of equipment and materials for road-building and maintenance, when effected by the Ministry of Public Works or other official agencies.

December 23. Monetary Board Resolution No. 568 provided that any physical or juridical person receiving a commission in foreign currency had to sell the exchange to the Central Bank or its agents within ten working days of receipt.

December 23. Monetary Board Resolution No. 569 established procedures for imports and exports under barter transactions (trueque). Licenses were to be issued by the Central Bank after individual authorization by the Monetary Board; export proceeds were exempt from surrender and import licenses were exempt from advance deposits.

December 23. Monetary Board Resolution No. 570 authorized the sale to international shipping and airline companies of the foreign exchange necessary to remit abroad their local currency receipts from passages and freight.

El Salvador

Exchange Rate System

The par value is 0.355468 gram of fine gold per Salvadoran Colón or ¢ 2.50 = US$1. The rates of the Central Reserve Bank of El Salvador for transactions with the public are ¢ 2.49 buying, and ¢ 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

of 1 per cent is applicable to all sales of exchange as well as drafts and other documents embodying a right to exchange; on amounts below ¢ 100,000 the tax is levied at fixed amounts that may be slightly in excess of
of 1 per cent.

On November 6, 1946, El Salvador notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control authority is exercised by the Central Reserve Bank through its Exchange Control Department. Authority to approve certain payments is delegated to the commercial banks. Exchange licenses for imports are issued by the Exchange Control Department. 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 Finance.

Prescription of Currency

Payments to Costa Rica, Guatemala, Honduras, and Nicaragua in respect of trade and specified invisibles are 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 also settled through the clearinghouse. 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 be authorized to hold nonresident accounts in U. S. dollars with authorized banks, provided that such accounts are credited with foreign exchange received from abroad. The accounts of nonresidents may be utilized freely, but the commercial banks must make periodic reports to the Central Reserve Bank of the movements on such accounts. The maximum balance which may be held on these accounts is fixed by the Exchange Control Department.

Imports and Import Payments

Imports from all countries except those of the Central American Common Market must be registered with the Central Reserve Bank before orders are placed. Import licenses are required for airplanes, firearms, ammunition, military equipment, dynamite, liquors, cotton for industrial use, jute sacks, skins, leather, some chemical and pharmaceutical products, coffee for seeding, sugar, and saccharin. Payments and transfers abroad require exchange licenses, which are granted freely, provided that the terms of payment do not exceed certain maxima (counted from the date of entry of the merchandise into a customs warehouse): (1) Imports of raw materials for industry, iron and steel products for the construction industry, various spare parts, greases, and lubricants are authorized by the Exchange Control Department when the terms of payment do not exceed three years.1 (2) Imports of staple food products, medicinal products, and medical and surgical supplies must be paid for within 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 and technical books, fertilizers, and insecticides. A prior import deposit in local currency, equivalent to 100 per cent of the c.i.f. value, is applied to specified nonessential food products, confectionery, alcoholic beverages, tobacco products, perfumes, cosmetics, watches, and jewelry. All goods not mentioned previously in this paragraph may be imported only against payment before customs clearance.

The commercial banks are authorized to provide exchange for import payments not exceeding US$6,000 for imports from Central American countries and US$2,000 for imports from all other countries; larger amounts have to be approved by the Central Reserve Bank. When suppliers abroad request payment in advance for commodities valued at over US$200, a prior deposit of 25 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. These regulations are also applicable to goods imported from other countries of the Central American Common Market. Guarantee deposits are refunded when the goods arrive in the country, provided that payment in full has been made to the exporter.

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.

Payments for Invisibles

Payments for current invisibles require exchange licenses, which are granted freely for most items, although for certain payments only up to specified limits. Permission to purchase exchange for travel outside the Central American area (interpreted to mean the Central American Common Market) for tourism, business, or health reasons is granted by the Exchange Control Department up to the equivalent of US$400 a person a trip, on the basis of US$50 a person a day (US$200 for children under 15 on the basis of US$25 a day); for amounts in excess of US$400 a person a trip, up to US$1,500 (for amounts in excess of US$200, up to US$750, for children under 15), a 20 per cent guarantee deposit in local currency must be lodged with the Central Reserve Bank, which is released upon the traveler’s return.3 The Department also generally authorizes transfers of up to US$150 a month to each adult Salvadoran with permanent residence abroad; larger amounts may be authorized when the need therefor is shown. Students also are allowed US$150 a month, in addition to an installation allowance, tuition, and other expenses.

For nationals traveling to Central American countries, the commercial banks have been delegated authority to provide exchange as follows: for travel to Costa Rica, Honduras, and Nicaragua, the equivalent of ¢ 500 a trip in Costa Rican colones, lempiras, or córdobas; for travel to Guatemala, Guatemalan currency notes up to Q 1,000 a trip, or a cashier’s check in Salvadoran colones up to the equivalent of ¢ 2,500 a trip (for payment in Guatemala through the Cámara de Compensación Centroamericana). Requests for larger amounts must be submitted to the Central Reserve Bank.

Insurance and reinsurance premiums may be paid for 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 ¢ 200 in domestic notes and coins. This limit is subject to modification, however, to facilitate border trade with other Central American countries.

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 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 are subject to an 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 ¢ 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. Payments abroad representing capital movements require exchange licenses; such licenses are not granted for resident-owned capital except for investments in Costa Rica, Guatemala, Honduras, and Nicaragua. The entry of capital in the form of foreign investment may 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 that have been approved by and registered with the Exchange Control Department. The Central Reserve Bank controls the short-term foreign liabilities of the commercial banks through a system of individual quotas.

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 share-holding 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

Residents may hold and acquire gold coins in El Salvador 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, 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 not normally granted except 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 a jewelers’ cooperative acting on behalf of its members and other users.

Changes during 1970

June 2. A commercial treaty with Panama was signed providing for the exchange of specified commodities either duty-free or at preferential tariff rates.

June 23. With effect from July 1, the maximum exchange allocation for tourist, business, or health travel outside the Central American area was increased from US$1,400 to US$1,500 a person a trip (from US$700 to US$750 for children); the daily allowance was increased from US$40 to US$50 a person (from US$20 to US$25 for children). The guarantee deposit prescribed on purchases of foreign exchange in excess of US$400 for tourist and business travel (in excess of US$200 for children) was reduced from 100 per cent to 20 per cent, i.e., the percentage normally required for health travel.

September 9. The stamp tax was increased from 1 per mil to 1 per cent, except on sales of foreign exchange.

September 9. The 30 per cent import surcharge established under the Protocol of San José was extended to raw materials and semimanufactured products.

October 30. Decree No. 37 amended Article 40 of the Regulations for the Law Controlling International Transfers. The amendment entered into force on November 3. Among the changes resulting from the amendment was the abolition of the 10 per cent ceiling on the transfer of profits of foreign enterprises, insofar as they are engaged in industrial, agricultural, mining, or tourist operations.

Equatorial Guinea

Exchange and Trade System

The currency of Equatorial Guinea is the Equatorial Guinean Peseta which is issued by the Central Bank of the Republic of Equatorial Guinea and is defined as equivalent to 0.0126953 gram of fine gold, corresponding to Ptas EG 70.00 = US$1. The Spanish peseta, which previously was legal tender, is being withdrawn from circulation. No par value has been established for the Equatorial Guinean peseta. The currency is at par with the Spanish peseta. Rates for other currencies are based on those in the Madrid exchange market.

All settlements between Equatorial Guinea and foreign countries are subject to exchange control. Settlements with Spain are made through clearing accounts and settlements with other countries may be made in convertible currencies. Exchange transactions must be carried out through authorized banks. All payments and transfers to foreign countries require the prior approval of the Central Bank, and all receipts in foreign currencies must be surrendered to the Central Bank. All imports and exports require individual or global licenses issued by the Directorate-General of Foreign Commerce in the Ministry of Commerce; import licenses also require the approval of the Central Bank.

Foreign investments in Equatorial Guinea are governed by the General Law on Foreign Investments in Equatorial Guinea.

Changes during 1970

October 27. Law No. 1/1970 introduced a special tax of 35 per cent on income from Guinean sources remitted abroad and on profits remitted abroad (17½ per cent when at least half of the income or profits is reinvested in the country). It also established a tax of 25 per cent on payments to nonresidents in respect of royalties when remitted abroad.

Ethiopia

Exchange Rate System

The par value is 0.355468 gram of fine gold per Ethiopian Dollar or Eth$2.50 = US$1. The official rates are Eth$2.475 buying, and Eth$2.525 selling, per US$1.

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 of Ethiopia. All payments abroad require licenses issued by the Exchange Controller, whose office is a department of the National Bank; all exports are licensed by the Exchange Controller to ensure the surrender of the foreign exchange proceeds.

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 hold nonresident accounts either in Ethiopian dollars or in foreign currencies at authorized banks. Balances in these accounts may be freely transferred abroad. Transfers between nonresident accounts require prior approval, except those between foreign currency accounts.

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are prohibited. No import licenses are required. However, payments abroad for imports require exchange licenses; these licenses are granted freely in the currency appropriate to the country of origin, or in any convertible currency that may be requested, but advance payment for imports is not permitted. Goods ordered through a third country must be supported by evidence of original cost. Payment is normally authorized by letter of credit, mail transfer, telegraphic transfer, or cash against documents at sight or on an acceptance basis; 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 nationals may remit up to 35 per cent of their salaries or annual income net of taxes, provided that they have resided in Ethiopia for less than six years; this time limit does not apply to foreign nationals who are in contractual service with the Ethiopian Government, with an autonomous government organization, or with certain private institutions, and who have an employment contract specifically entitling them to remit a stated percentage of their earnings. Ineligible persons may apply for exchange to meet expenses for maintenance of bona fide dependents, education of children, medical care, and premiums on insurance policies taken out before April 2, 1962. Subject to proper provision having been made for local taxation and for a reserve prescribed by the Commercial Code, foreign companies may remit dividends on their invested and reinvested capital in any currency.

Persons traveling abroad are allowed foreign exchange equivalent to Eth$75 a day for a maximum period of six weeks in any one calendar year if the journey is made for business purposes, and up to the equivalent of Eth$600 a year for persons 16 years of age or over and Eth$420 a year for those under 16 if the journey is made for pleasure. Travelers may take with them a maximum of Eth$100 in Ethiopian banknotes.

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are prohibited. All commodities require export licenses. When applying for a license, an exporter must specify the goods to be exported, the destination, and the value. The granting of the license by the Exchange Controller enables the goods to pass through customs. The licensing system is used to ensure that foreign exchange receipts are surrendered to the National Bank of Ethiopia within six months and that export proceeds are received in an appropriate currency (see section on Prescription of Currency, above).

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Persons may bring in a maximum of Eth$100 in Ethiopian banknotes. Foreign exchange need not be declared by travelers on entry, and its re-export is freely permitted.

Capital

All receipts of capital in the form of foreign exchange must be surrendered. There is no discrimination regarding the currencies in which foreign investments are accepted. Special concessions are made to approved new enterprises financed by domestic or foreign capital; these concessions include exemption from taxes for a period of five years, admission of all imports of machinery free of duty, and a guarantee of permission to foreign investors to remit abroad earned profits after taxation. Upon liquidation, transfer of the entire imported capital and reinvested profits is permitted in any currency. Transfers of emigrants’ allowances, legacies, and savings of foreign employees upon retirement are permitted up to the equivalent of Eth$70,000 in foreign currency. Sums in excess of this amount are authorized up to a total of Eth$70,000 in any subsequent 12-month period. Authorized banks may freely place their funds abroad, except on fixed-term deposit.

Gold

Residents may hold and acquire in Ethiopia gold coins of a special commemorative issue, as provided in Legal Notice No. 318 of 1966; such coins are offered for sale by the Commercial Bank of Ethiopia to residents and nonresidents and may be exported by travelers. The ownership of personal jewelry and articles of adornment of which gold or platinum forms a part also is permitted. Unless specifically authorized by the Minister of Finance, the possession or custody, in a quantity in excess of 10 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 mined gold is sold by the Treasury to the National Bank at a price slightly below US$35 an ounce. Imports and exports of gold in any form other than jewelry require exchange licenses issued by or on behalf of the Ministry of Finance. Such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users; those for the import of gold for industrial purposes are issued to registered importers by the National Bank on behalf of the Ministry of Finance.

Changes during 1970

February 1. The advance import deposit requirement of 25 per cent of the c.i.f. value was removed and those goods previously subject to it could be paid for by clean transfer (mail or telegraphic), letter of credit, or cash against documents at sight.

Finland

Exchange Rate System

The par value is 0.211590 gram of fine gold per Finnish Markka or Fmk 4.19997 = US$1. The official buying and selling rates for the U. S. dollar vary within 1 per cent on either side of the par value. Market rates for certain other currencies 1 vary between limits which result from combining the official limits for the U. S. dollar maintained by Finland and such limits in force in the country of the other currency concerned. Forward premiums and discounts are left to the interplay of market forces. Official fixed buying and selling rates are applied to the U. S. S. R. ruble and the U. S. dollar when used as a unit of account on bilateral clearing accounts. Authorized banks may deal among themselves, with their Finnish customers, and with foreign authorized banks in U. S. dollars and other convertible or externally convertible currencies. Forward transactions may be concluded freely for periods not exceeding 12 months; forward transactions with residents must have a commercial basis.

Administration of Control

The Bank of Finland operates the exchange control system, delegating authority to the authorized exchange dealers (mainly commercial banks). Import and export licensing is administered by an office subordinate to the Ministry of 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 countries2 and the convertible currency countries (all others). Settlements with the bilateral countries must be made in the currency of the agreement or in Finnish markkaa through Restricted Accounts. Settlements with the convertible currency countries may be made in any convertible currency or through Convertible Accounts. One half of the proceeds from exports to Colombia is set off against Finland’s bilateral debtor balance.

Nonresident Accounts

There are four categories of nonresident accounts: Foreign Exchange Accounts, Convertible Markka Accounts, Restricted Markka Accounts, and Capital Accounts.

1. Foreign Exchange Accounts are held by nonresidents in convertible or bilateral currencies.3 These accounts may be credited with amounts received in the currency in which the account is kept; with payments authorized to be made in the currency in which the account is kept; and with interest accrued on such accounts. They may be debited for transfers to Capital Accounts; for payments to residents of Finland; and for withdrawals in Finnish currency. If the account is held in a convertible currency, it may also be debited for transfers to other Foreign Exchange Accounts in any convertible currency and for transfers abroad or withdrawals in any convertible currency. If the account is held in a bilateral currency, it may be debited for transfers to other Foreign Exchange Accounts in the same currency and for transfers to the respective bilateral country.

2. Convertible Markka Accounts may be credited with the equivalent in Finnish markkaa of convertible currencies sold to an authorized bank; with authorized remittances from residents of Finland to residents of convertible currency countries; with transfers from other Convertible Markka Accounts; with the value of Finnish banknotes received by an authorized bank from a bank in a convertible currency country; and with interest accrued on the account. They may be debited for authorized payments in Finland, including the purchase of foreign exchange; for remittances abroad; and for transfers to other Convertible Markka, Restricted Markka, or Capital Accounts.

3. Restricted Markka Accounts are held by residents of countries with which Finland has bilateral payments agreements (see footnote 2). They may be credited with the proceeds from the sale of U. S. dollars, the currencies listed in footnote 1, or the currency of the country of the account holder; with transfers from another Restricted Markka Account of the same country; with authorized remittances payable to the country of the account holder; with the value of Finnish banknotes received by an authorized bank from a bank in the country of the account holder; and with interest accrued on the account. They may be debited for authorized payments in Finland in accordance with the relevant payments agreement; for transfers to other Restricted Markka Accounts related to the country of the account holder; for transfers to the country of the account holder; and for transfers to Capital Accounts.

4. Capital Accounts comprise all other nonresident accounts. They may be credited with funds available for credit to a Foreign Exchange Account, a Convertible Markka Account, or a Restricted Markka Account; with proceeds from the sale to a resident of any asset held by a nonresident; with interest on the account; with income from nonresident-held assets administered by the account-holding bank; and with sums obtained from the redemption of bonds and debentures. Capital Accounts may be debited for noncommercial current expenses in Finland of and for account of the account holder and for investment in shares and in those bonds and debentures that are denominated in Finnish markkaa, provided that the securities are quoted on the stock exchange and are purchased by a bank on behalf of the holder. The Bank of Finland normally 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 agreements4), provided that the goods are purchased from and originate in that area. 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 certain value quotas for specified commodity groups; no industrial goods are restricted by global quotas. The total value of the global quotas for 1970 amounted to some 0.5 per cent of total 1970 imports. All remaining goods require an individual license when imported from the multilateral area and are set out in a negative list, the discretionary licensing list, which comprises only agricultural commodities and petroleum products. The only commodities still subject to quantitative restriction for the multilateral area are certain agricultural commodities, certain fuels, certain fertilizers, and gold and silver.

Import licenses are not required for most commodities originating in and shipped from the U. S. S. R., and for many commodities originating in and shipped from the other bilateral countries; all commodities liberalized for import from the bilateral area are among those already liberalized for import from the multilateral area. Other imports from the bilateral countries are admitted under licenses 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 sole agency for the import of wheat, rye, barley, oats, and products of these grains for human consumption. There is a state monopoly also for imports of alcoholic beverages.

Exchange is granted without delay for all permitted imports on presentation of an application form, the import license if required, and the original commercial invoice, provided that the goods are already in the country or there is sufficient evidence to guarantee their importation. About one fourth of total imports, mainly specified consumer goods and all types of motor vehicles, must be paid for in cash before customs clearance or before the goods are placed in a public or private bonded warehouse or entered in a free port in Finland. Payment for other imports must be made within six months after the arrival of goods in the country. For imports on credit of over six months, the credit must be authorized by the Bank of Finland. Such credit is approved provided that it is considered normal in the traditions of the trade.

Payments for Invisibles

With the exception of premiums payable to foreign life insurance companies, payments and transfers in respect of current invisibles to countries who are members of the International Monetary Fund 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 other transactions, 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.

A Finnish resident going abroad (except for border travel) may purchase from commercial banks foreign exchange equivalent to Fmk 3,000 a trip. A traveler going to Denmark, Norway, or Sweden may withdraw on a savings account passbook issued by a Finnish monetary institution up to Fmk 500 during one journey, provided that the utilized amount of his travel allocation does not exceed a total of Fmk 3,000. 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; resident travelers to neighboring countries making frequent trips to destinations not located beyond any municipality adjoining Finland’s land boundary may take out foreign or domestic currency, or any combination of these, up to Fmk 200 a person a trip. 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 metal scrap. Exports of other goods require only an export control declaration, which is approved automatically by the Licensing Office except in a few specified cases. Certain exports to countries not in the multilateral area are restricted. Foreign exchange acquired through commodity exports must be surrendered to the Bank of Finland or an authorized exchange dealer. However, exporters are permitted to keep a part of their export proceeds in foreign exchange accounts with Finnish banks or with banks abroad. The accounts may be used by the exporter to pay for expenses related to exports and for authorized imports of raw materials intended for his own production. The Bank of Finland may at any time claim the accounts against payment at the official rate.

Proceeds from Invisibles

With the exception of freight earnings, foreign exchange receipts derived from current invisibles do not have to be surrendered. The authorized exchange dealers and shipping firms are allowed to maintain working balances in foreign exchange, under the supervision of the Bank of Finland. 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 transferable without limitation and, subject to certain conditions, are generally transferred automatically up to Fmk 100,000 for each beneficiary. 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. Generally, the Bank of Finland will grant foreign exchange for this purpose.

Nonresidents may purchase through an authorized bank, against convertible or externally convertible currencies or by debiting a Convertible Markka 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 or an externally convertible currency. No permission is needed for the acquisition with funds classified as Capital Accounts of shares, bonds, and debentures quoted on the stock exchange, but proceeds from the sale of such securities may not be repatriated without the permission of the Bank of Finland. Any other transactions in, and the export of, securities involving nonresident interests require approval. If the securities were acquired with convertible foreign exchange or with markkaa from a Convertible Markka Account, approval for their export can be obtained freely. The import of securities is unrestricted.

The regulations concerning foreign 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 capital of an enterprise require, in certain cases, the approval of the State Council. This approval, when required, is usually granted liberally. The primary reason for the 20 per cent limit is concern for the protection of natural resources, mainly forests. Direct foreign investment in the forest and mining industries 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 abroad must be surrendered. Outward transfers of capital by residents require individual approval; investment by residents in foreign securities or real estate is rarely permitted. For direct investment abroad, approval is granted on the merits of each case.

Finnish emigrants are granted an exchange allowance of up to Fmk 50,000 a person, in addition to the basic tourist travel allowance.

Gold

Residents may freely hold, buy, and sell gold in any form at home. 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. Commercial imports of articles containing gold require licenses issued by the Licensing Office; for most such articles, these 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 1970

January 1. The import regulations for 1970 entered into force. The amount of the global quota program for 1970 was practically unchanged from 1969 and there was no change in the composition of the global quotas.

February 2. The margins on either side of the par value within which the official buying and selling rates for the U. S. dollar may vary were increased from ¾ of 1 per cent to 1 per cent.

June 1. Residents traveling to Denmark, Norway, or Sweden could henceforth withdraw on a savings account passbook issued by a Finnish monetary institution up to Fmk 500 during one journey, provided that the utilized amount of his travel allocation did not exceed the equivalent of Fmk 3,000.

July 6. Installment credit terms were tightened on the purchase of imported passenger cars, delivery trucks, television sets, refrigerators, deep freezers, and washing machines.

August 3. A person who had continuously resided abroad during the last calendar year and continued to do so could henceforth transfer abroad his assets held in Finland in one lump sum, subject to the prior approval of the Bank of Finland. The Bank of Finland, as a general rule, would grant foreign exchange for this purpose. Previously, such assets could be transferred in specified installments within a three-year period.

November 3. About 25 per cent of total imports, mainly specified consumer goods and all types of motor vehicles, were required to be paid for in cash before customs clearance or before the goods were placed in a public or private bonded warehouse or entered in a free port in Finland. The regulations were slightly modified on November 30 and December 16.

December 30. The Law on the Regulation of Foreign Exchange was extended, with a minor amendment, to the end of 1972.

France

Exchange Rate System

The par value is 0.160000 gram of fine gold per French Franc or F 5.55419 = US$1. Market rates for spot exchange transactions in U. S. dollars are maintained between official limits of F 5.5125 buying, and F 5.5960 selling, per US$1. Market rates for Western European currencies and a few other currencies fluctuate between limits which result from combining the official limits for the U. S. dollar maintained by France and such limits in force in the country of the other currency concerned. Forward exchange transactions take place at freely negotiated rates, i.e., without any official intervention in the market. Authorized banks in France and in Monaco, which may also act on behalf of banks established abroad or in Operations Account countries (see section on Exchange Control Territory, below), are permitted to deal spot or forward in the exchange market in France. Authorized banks may also deal with the correspondents in foreign markets in all currencies. However, restrictions have been imposed on the credit in francs that banks may grant to nonresidents, and each bank’s foreign exchange position is subject to limitation. Residents other than banks may conclude forward exchange contracts in respect of imports only for specified commodities, but forward sales of foreign currency are free.

There is also a market in which foreign exchange representing mainly the proceeds from the sale abroad by residents of certain French securities held abroad and of certain foreign securities may be negotiated at freely determined rates. These funds are available for the purchase abroad of French and foreign securities. The exchange rate in this market was about F 6.00 per U. S. dollar on December 31, 1970.

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

Exchange Control Territory

The 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, and Réunion), and five of the six Overseas Territories (Comoro Islands, St. Pierre and Miquelon, New Caledonia, Wallis and Futuna Islands, and French Polynesia). No exchange control is applied in relation to the Principality of Monaco or the Operations Account countries (Cameroon, the Central African Republic, Chad, the People’s Republic of the Congo, Dahomey, Gabon, Ivory Coast, the Malagasy Republic, Mali, Mauritania, Niger, Senegal, Togo, and Upper Volta);1 payments between France and these countries are free of restriction. All other countries are considered foreign countries for exchange control purposes; 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, however, the Operations Account countries are also considered foreign countries.2

Certain controls that are independent of the exchange control regulations are maintained over inward and outward direct investment and over borrowing abroad; these do not apply to relations with the Operations Account countries or Monaco. Privileged treatment in respect of trade transactions is accorded to (1) the Operations Account countries and (2) Algeria, Guinea, the Khmer Republic, Laos, Morocco, Tunisia, North Viet-Nam, Republic of Viet-Nam, and the Condominium of the New Hebrides.3

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. 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 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 established by the Directorate of Foreign Economic Relations; 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.4 Settlements with all other countries may be made in any of the currencies of those countries, or through nonresident Foreign Accounts in Francs (see section on Nonresident Accounts, below).

Nonresident Accounts

A nonresident account in francs may be 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 on nonresident-held franc accounts are subject to general or specific permission; overdrafts corresponding to normal mail delays that are granted by authorized banks to their foreign correspondents are covered by a general permission.

Foreign Accounts in Francs may be freely credited with the following: (1) The franc proceeds of the sale of foreign currencies on the French exchange market by a nonresident. (2) The franc proceeds of the sale of foreign banknotes to an authorized bank by a nonresident, provided that a customs declaration evidencing their importation is submitted; foreign banknotes are defined as excluding those issued by an institute of issue that maintains an Operations Account with the French Treasury. (3) The franc equivalent of an authorized bank’s arbitrage in foreign currencies on a foreign market, provided that the regulations of the country concerned allow the transaction. (4) Transfers from another Foreign Account in Francs. (5) Amounts resulting from French securities held in a foreign dossier (interest, dividends, liquidation proceeds, etc.). (6) Interest, dividends, and amortization on foreign securities held in a foreign dossier (but not the proceeds of their sale on the French securities market). (7) The proceeds of the liquidation by a nonresident of a direct investment, provided that the liquidation itself has taken place in accordance with the relevant provisions (those of Decree No. 67-78 of January 27, 1967, as amended on March 21, 1969). (8) The proceeds of the sale, through the intermediary of a notary public, of real estate belonging to a nonresident. These accounts may also be credited with any authorized payment by a resident to a foreign country. They may not be credited with banknotes of institutes of issue which maintain an Operations Account with the French Treasury; however, they may be credited with French banknotes mailed to the Main Office of the Bank of France by an authorized bank’s foreign correspondent.5

Foreign Accounts in Francs may be freely debited for the following: (1) The purchase by a nonresident of any foreign currency on the French exchange market. (2) The purchase by a nonresident of foreign banknotes from an authorized bank. (3) The equivalent in francs of arbitrage abroad in foreign currencies by an authorized bank, provided that the regulations of the country concerned allow the transaction. (4) Transfers to another Foreign Account in Francs. (5) Any payment 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.

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, Finland, the United States, and Yugoslavia; (2) 49 specified countries;6 (3) the Eastern European countries (Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, and the U. S. S. R.) and mainland China; and (4) Eastern Germany. Imports from all countries of certain agricultural items and certain raw materials are free of quantitative restrictions. Commodities that may be imported free of quantitative restrictions from one group of countries include all the commodities that may be freely imported from the next group of countries plus some other specified commodities. Goods covered by the import liberalization arrangements applicable to one country may be imported freely from another country, provided that the country of origin and the country of shipment both benefit from the 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 about 50 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 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 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 now of very slight importance.

Import transactions relating to foreign countries and exceeding F 2,500 in value 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. Unless advance payments have been authorized, the importer can buy his foreign exchange (1) if a documentary credit7 is opened, when he submits proof that the commodities will be shipped to France within eight days, or (2) if the goods have been imported, upon submission of the customs declaration, but at the earliest eight days before the import payment falls due. The import payment itself can be made (1) if a documentary credit has been opened, upon receipt of advice from the bank’s foreign correspondent bank that the shipping documents (showing direct shipment either to the French customs territory or to a nearby port, such as Antwerp or Rotterdam) have been submitted to it; (2) if a draft accompanied by shipping documents (effet documentaire, remise documentaire) is presented to the authorized bank, when the bank has verified that the documents cover the goods concerned and that they have been shipped (to the customs territory or a neighboring port); (3) in case of imports of raw materials by importers holding a special authorization from the Customs Administration, as soon as the importer presents the bill of lading to his bank of domiciliation; or (4) in all other cases, if the importer submits the customs declaration (unless he already did so when purchasing his foreign currency). Advance payments for imports require a special authorization from the Customs Administration which must be submitted to the authorized bank before it can make the corresponding payment.

Forward cover for import payments can be obtained only for the import of specified raw materials and specified foodstuffs (unroasted coffee, corn, rice, etc.) Forward cover can only be taken in the currency of invoicing prescribed in the commercial contract and cannot exceed a period of one month or, for some commodities, three months. The foreign currency may be purchased at the time of domiciliation.

Payments for Invisibles

The allocation of exchange for travel to foreign countries is restricted. Payments for other current invisibles to foreign countries are controlled but not restricted.

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 other payments for invisibles are referred to the Bank of France to prevent unauthorized capital transfers. Any resident may freely and at any time make remittances abroad up to the equivalent of F 300 a person without indicating their purpose, provided that the transfers do not constitute installments of payments exceeding F 300, are not for purposes subject to special allocation, and do not serve to accumulate funds abroad.

Payments which may be authorized without limitation include those related to approved trade transactions; to income accruing to nonresidents in the form of profits, dividends, and royalties; to banking commissions, patent fees, and specified categories of taxes; to specified insurance payments; to fees to medical doctors, lawyers, etc.; to alimony in accordance with court decisions; and to net salaries 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 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 1,500 8 a person (F 750 9 for children under ten), which may be taken up twice in a calendar year for two separate trips. The allocation for business travel is the equivalent of F 400 a person a day, subject to a maximum of F 4,000 a trip. Applications for exchange in excess of the basic allowance for business travel are approved very liberally by the Bank of France. Any unutilized foreign currency in excess of the equivalent of F 100 must be surrendered upon return to France. Applications for travel exchange cannot be submitted earlier than one month before departure. The use of credit cards abroad is prohibited.10 All fares for trips starting in France may be paid in francs in France.

Resident travelers going to foreign countries may take out F 500 in French banknotes, or F 50 if they go abroad for less than 24 hours. These banknotes may be spent abroad. Nonresident travelers may take out F 500 in French banknotes and may reconvert into foreign currency any French banknotes up to F 500 obtained by the conversion 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 1,500 in foreign notes and coins when acquired against a tourist travel allocation, or, if they are leaving on a business trip, the equivalent of F 500 in foreign banknotes and F 3,500 in checks or travelers checks. Nonresident travelers may not, in principle, take out more than the equivalent of F 500 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 reconversions 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, 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 500, these exports may be permitted without any formality, subject to certain exceptions. Regardless of their value, exports through compensation transactions with certain countries,11 require licenses if the commodities are those for which export licenses are required.

Exports to foreign countries are subject to exchange control. The repatriation12 and, where appropriate, the surrender of proceeds from exports to foreign countries is required, normally within one month of the date on which the payment falls due. The due date of the commercial contract cannot, except with special authorization, be more than 180 days after arrival of the goods at their destination. Such proceeds must not be received in French 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 relating to foreign countries and valued at F 5,000 13 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.

Certain goods purchased in France by persons not normally residing in France are considered as exports even when paid for in French francs, and are exempt from taxes.

Holders of exporters’ cards, which are issued to enterprises that export a certain percentage of their production, are entitled to obtain every year import licenses for any commodity still subject to quota and related to their export activity, up to a value corresponding to 10 per cent of their export proceeds in foreign currencies received in the previous year.

Proceeds from Invisibles

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. 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, Malagasy 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.

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. 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 (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 not normally permitted to purchase real estate abroad for personal use. The transfer abroad of nonresident-owned funds in France, including the sales proceeds of capital assets, is not restricted; as an exception, although nonresident-owned foreign securities may be exported, they cannot be sold in France. 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 securities held under a foreign dossier can be sold in France and their proceeds can be transferred abroad, but foreign securities held under a foreign dossier can only be exported.

Foreign securities held in France by residents must be deposited with a qualified bank or broker. 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.

The exportation for the account of residents of French securities held in France is prohibited. French or foreign securities held abroad by residents under the control of an authorized bank prior to November 25, 1968, and foreign securities held in France and deposited prior to January 15, 1969, can be dealt with in one of the following ways: (1) they may be kept abroad; (2) they may be sold abroad, in which case the sales proceeds must, within a month of receipt, either be sold on the French exchange market or be used—either by the seller himself or, through the intermediary of an authorized bank, by another resident—to purchase French or foreign securities abroad; and (3) they may be imported through the intermediary of an authorized bank.

Purchases of French or foreign securities abroad by residents cannot be financed with foreign currency acquired on the French exchange market but are freely permitted under the following arrangement. The foreign currency received by a resident from the sale abroad of (1) French or foreign securities held abroad under the control of an authorized bank prior to November 25, 1968, or (2) foreign securities held in France and deposited prior to January 15, 1969, as well as any foreign exchange held by a resident and deposited prior to that date (provided that it was not subject to surrender), may be sold freely to other residents for the purchase of French or foreign securities abroad. The foreign exchange involved is unofficially referred to as devises-titres (security currency). Purchases may be made freely, and the French or foreign securities thus acquired may be imported, but foreign securities must be placed under the control of an authorized bank. The foreign exchange resulting from amortization of foreign securities is available for the same purpose as that resulting from the sale abroad of French or foreign securities. French securities held abroad by nonresidents cannot be sold on the French stock market; however, if such securities are not quoted on any foreign stock exchange, they may be deposited in a nonresident dossier, subject to prior approval by the Bank of France, and may then be sold freely against French francs.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad, over capital issues on the French market, and over inward and outward direct investment, but 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 control measures do not apply to relations with countries whose bank of issue is linked with the French Treasury by an Operations Account.

Foreign direct investments in France and French direct investments abroad require prior declaration to the Minister of Economy and Finance.14 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. 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. Unless the amount involved is less 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. The liquidation of French investments abroad requires prior declaration, and postponement may be requested by the Minister during two months after the declaration.

French direct investment abroad must in many cases be financed abroad, and foreign direct investment in France must generally be financed in part with an inflow of foreign exchange.

Foreign issues on the French capital market remain subject to prior authorization by the Minister of Economy and Finance.15 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 are, in principle, exempt from this authorization: (1) loans constituting a direct investment, which are subject to prior declaration, as indicated above, and whose postponement may be requested by the Minister up to two months after receipt of the declaration; (2) borrowing by industrial firms for the execution of works abroad; (3) borrowing by any type of firm to finance imports or exports; (4) loans related to certain international merchanting transactions; (5) loans contracted by banks expressly permitted to borrow abroad (these include all authorized banks); and (6) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed F 2 million for any one borrower, provided that the interest rate is a “normal” market rate, that the borrowing is not for the purpose of a direct investment, and that the foreign exchange proceeds are surrendered. However, since July 24, 1970 borrowing in francs has been subject to closer scrutiny to prevent excessive interest rates in the Euro-franc market, and the exemptions under (2), (3), (4), and (6) have in practice been limited to certain borrowing in foreign currency where the countervalue in francs is not made available to the borrower or where repayment is scheduled to take place after at least one year.

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 and is restricted. Nonresidents are not permitted to borrow in France to acquire a dwelling, except for personal residence, in which case the total of such credit cannot exceed 50 per cent of the purchase price. With minor exceptions, all overdrafts on Foreign Accounts in Francs and all advances to nonresidents require prior approval. The Bank of France has imposed limits on the foreign exchange positions16 of the authorized banks and on their claims in francs on foreign countries. Banks are prohibited from making, extending, or renewing the following loans in French francs: loans to foreign banking correspondents to finance transactions between foreign countries, loans to other nonresident customers for operations not linked to French exports, and loans to foreign correspondents or customers in the form of swaps against foreign currencies. Nonresidents are free to subscribe to French short-term securities.

Gold

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. 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 of gold objects (other than medals, coins and bars, but including both personal and other jewelry) whose combined weight does not exceed 500 grams; and (4) collectors’ items of gold and gold antiques that are exported under “02 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, is subject to both the regular import and export licensing arrangements and to licensing by the Bank of France.

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 1970

January 1. By virtue of Law No. 69-1161, the rates of value-added tax were changed to 7.5, 17.6, 23, and 33⅓ per cent.

January 1. Payment for exports to Andorra could be received only in foreign currency or by debit to a Foreign Account in Francs.

January 29. The National Credit Council announced that henceforth the claims of the authorized banks on their agencies abroad would be taken into account in calculating the mandatory reserve ratio.

February 9. Trade arrangements for 1970 were agreed with Japan. They provided for further import liberalization.

February 12. The Bank of France reminded authorized banks that “back-to-back” borrowing and lending arrangements with nonresident companies were subject to the prior declaration and prior approval procedures for inward and outward direct investment.

February 19. The preferential rediscount rate for medium-term export credits (in excess of 18 months) was eliminated in respect of sales to EEC countries but continued for sales to non-EEC countries.

February 19. The Minister of Finance announced that measures in the field of export credit, exchange control, customs control, and outward direct investment would soon be taken in order to promote the development of industries manufacturing for export. In addition to those specified in chronological order below, specific measures already approved by the Government included the raising of the export credit insurance ceiling for some countries and a review of the facilities for long-term export credit.

March 1. In accordance with EEC Council Decision No. 2513/69, quantitative restrictions on the import of a number of agricultural products from all sources were eliminated. The measure was extended to additional agricultural items on June 23.

March 3. The President made a policy statement concerning the types of direct investments that U.S. companies would be permitted to make in France. This statement indicated some relaxation of the approval criteria.

March 4. The Bank of France exempted from the credit ceilings, retroactive to February 3, foreign currency loans granted to residents for purposes of financing investment or settling local expenses abroad, provided that authorization for the transaction was granted by the Ministry of Economy and Finance.

March 6. A quota of 7.4 million hectoliters for the rest of the year was announced for imports of wine from Algeria. It was also announced that during the same period approximately 2 million hectoliters of wine could be imported from Morocco and Tunisia.

March 12. The authorized banks were reminded that merchants resident in France could not normally domicile with an authorized bank in France any direct import or export transactions taking place between an Operations Account country and a country outside the French Franc Area. Domiciliation in France would only be permitted if the merchant had obtained prior permission to that effect from the authorities of the Operations Account country concerned.

March 16. The Bank of France informed the commercial banks of a relaxation of credit restrictions in the case of export financing granted to industrial firms. With effect from February 3, 1970, credits mobilizing short-term claims on foreign countries could increase by 1½ per cent each month without such increase counting for purposes of the general ceilings placed on the growth of credits to the economy.

April 1. Proceeds from exports to foreign countries had to be recorded on a “surrender notice” (attestation de rapatriement) issued to the exporter by the bank receiving the payment and to be transmitted to the bank of domiciliation.

April 7. Exporters were permitted to use the foreign currency proceeds from their exports to make payments abroad in respect of commercial debts that had fallen due (import payments and incidental charges), provided that the surrender period for the foreign currency had not expired. Where appropriate, the currency held could first be sold for another foreign currency. The transactions (referred to as marchés d’application) had to take place through authorized banks.

April 13. The minimum value of export transactions subject to domiciliation requirements was raised from F 1,000 to F 5,000.

April 14. Further imports from Eastern Germany were liberalized.

April 16. The Prime Minister stated that future applications for inward direct investments would be processed quickly. He also indicated certain basic requirements that such investments had to meet.

April 26. The prior approval of the Customs Administration ceased to be required for forward purchases of foreign currency by importers. Such purchases could be made at the time of domiciliation, provided that the payment was in accordance with the terms of the commercial contract.

April 30. The banks’ compulsory U.S. dollar deposits with the Bank of France were reduced from 100 per cent to 50 per cent of the excess of their net foreign currency positions (position en devises) over the limits laid down in the circular of January 20, 1969.

May 1. The basic tourist travel allocation was increased from F 1,000 to F 1,500 a person a year (from F 500 to F 750 for children under ten). Henceforth, it could be taken up entirely in foreign banknotes; previously, only half the basic allocation could be in foreign banknotes.

May 4. The minimum value of import transactions subject to domiciliation was raised from F 250 to F 2,500. New regulations about import payments went into effect. Domiciliation normally had to take place before customs clearance, and the import must be effected within three months after domiciliation (except for capital goods). The transfer abroad could, for imports of raw materials, also be made (in cases where no documentary credit was opened and no remise documentaire was received from abroad) as soon as the importer himself presented the bill of lading to his bank of domiciliation.

May 12. The Minister of Finance announced an early relaxation of exchange control over current payments and outward direct investment but stated that exchange control over capital movements could not for the time being be abolished.

May 26. Decree No. 70-441 and an implementing Order were issued concerning the acquisition and cession of intellectual property rights between France and foreign countries. Decree No. 67-82 on this subject was revoked. All contracts or changes in contracts had to be notified to the Minister of Industrial and Scientific Development within a month after signature. Previously, notification was required two months before a contract entered into force, and the Minister had to give the resident party concerned his opinion on it within 40 days of receipt.

June 24. Banks and certain other residents could again grant credit in French francs to nonresidents for the purchase of a single dwelling for personal use in France. The total of such credit to be granted by the seller and a bank was limited, however, to 50 per cent of the purchase price.

July 1. In a general revision of credit ceilings, that on the growth of short-term rediscountable export credits was raised from 1½ per cent a month, applicable in the first half of 1970, to 2 per cent a month for the second half.

July 1. The requirement that authorized banks with net foreign currency positions (position en devises) above certain limits make U.S. dollar deposits with the Bank of France was terminated. The foreign currency positions of the banks ceased to be subject to control and the latter became free to reduce their net liabilities abroad. The foreign exchange position (position de change) remained subject to control.

July 16. The import and export of specified iron and steel products in intra-EEC trade was freed from license. The measure was extended to certain other iron and steel products on August 29.

July 22. Certain import liberalization measures taken in 1969 and 1970 were extended to the Overseas Departments.

July 24. A circular was issued modifying that of March 21, 1969 concerning borrowing abroad. Certain existing exemptions from prior approval for nonbank residents, which made no reference to the currency of the contract, henceforth were limited to borrowings denominated in foreign currency, and most of these exemptions no longer were applicable, in case of borrowing of foreign currency for conversion into francs through the French exchange market, if the contract either provided for the possibility of advance repayment or did not provide for a period of at least one year between each installment of the borrowing and the corresponding repayment. The effect was that prior authorization was required for all borrowing of French francs from nonresidents and that borrowing of foreign currency for conversion into French francs was only exempt from prior approval if repayment was stipulated for at least a year after the date of the contract. It was announced that borrowing in francs would be watched closely to prevent excessive interest rates in the Euro-franc market but would not be prohibited.

August 3. Nonresident accounts at authorized banks in the names of their foreign correspondents could henceforth be credited again with French banknotes (including those circulating in the Overseas Departments and Territories) mailed direct to the main office of the Bank of France by those correspondents. The Bank of France resumed purchasing at the official exchange rate French banknotes presented by foreign central banks and commercial banks wishing to convert them into foreign currency.

August 4. The basic exchange allowance for tourist travel abroad of F 1,500 a person a year (F 750 for children under 10) could henceforth be taken up twice, i.e., for two trips in a calendar year. The basic exchange allowance for business travel abroad was increased from F 200 to F 300 a person a day (with a maximum of F 2,000 or F 3,000 a trip), depending on destination, to F 400 a person a day, irrespective of destination, with a maximum of F 4,000 per trip. The amount up to which residents could make remittances abroad without indicating their purpose was increased from the equivalent of F 250 a person a year to F 300 a person without restriction as to time; the amounts so transferred no longer were deducted from the basic tourist travel allowance, and a resident could utilize the F 300 facility as often as he wished, provided that it was not used to pay in installments amounts larger than F 300 or to accumulate funds abroad. The amount in French banknotes that residents and nonresidents traveling to foreign countries could take out was increased from F 200 to F 500 a person a trip, but the limit of F 50 for residents going abroad for less than 24 hours was maintained. The foreign exchange booklet (carnet de change), in which exchange allocations for all foreign travel and for family remittances had to be registered, was discontinued; residents of French nationality could henceforth purchase travel exchange upon production of their identity card, as previously subject to the signing of a declaration (attestation) for the records of the bank selling the exchange and for customs purposes, and provided that in case of tourist travel the purchase was made not more than one month before departure. The amount in foreign banknotes that residents on business trips could take out, as part of their exchange allocation, was increased from the equivalent of F 250 to F 500.

August 4. The administrative treatment of applications to make transfers for authorized direct investment in foreign countries became more liberal. For petroleum and mining exploration and production, the percentage that could be transferred abroad was increased from 50 per cent to 66.6 per cent of expenditures, while that for which foreign financing had to be found was reduced correspondingly. For commercial investments (for the marketing and after-sale servicing of manufactured products only), the transfer authorization remained virtually automatic for annual programs of up to F 2.5 million but would henceforth be granted liberally, on the merits of the case, for larger investments; the processing period for applications for approval to make commercial investments was in practice reduced to one month (although the statutory two-month period for screening by the Treasury was maintained). Whereas in the case of industrial investments the transfer for an entire program (covering all foreign countries) previously was authorized only if the program did not exceed F 2.5 million and was limited to F 1.25 million in other cases, the transfer of F 2.5 million would now be allowed for operations amounting to, or exceeding, that sum; the balance would have to be financed by borrowing foreign currency abroad for a period of at least five years.

August 29. The 1955 requirement of an “autorisation d’expédition” for exports to North Viet-Nam was abolished.

September 1. The special import tax (taxe parafiscale) on textile products ceased to be levied when the products concerned originated in, or had been cleared through customs in, member countries of the EEC.

September 1. New regulations concerning petroleum and petroleum products went into effect, within the framework of the law of March 30, 1928. The principal changes were the following. The quotas fixed for the domestic sale of finished products by individual firms were raised by 7.5 per cent. The obligation for distributing companies of covering 90 per cent of their requirements by purchases from domestic refineries was abolished. The import regime for gasoline was liberalized somewhat, and import restrictions on certain minor petroleum derivatives were eliminated. Many formalities were simplified.

September 6. A consolidation of the existing import liberalization lists was issued, which included all recent liberalization measures but did not involve additional import liberalization.

September 8. An Order was issued modifying the Order of January 27, 1969 concerning the implementation of Decree No. 67-78. The application of the foreign investment controls was delegated to the Bank of France insofar as they related to investment in French firms mainly engaged in real estate business and to borrowing abroad by such firms.

(A circular of September 8 amended accordingly the circular of March 21, 1969 concerning inward and outward direct investment. It also revoked a circular of June 13, 1969 concerning the liquidation of direct investments in France, without abolishing the facility provided for by that circular, and amended a circular of October 15, 1969 concerning the granting of guarantees between residents and nonresidents. Another circular of September 8 amended accordingly the circular of March 21, 1969 concerning borrowing abroad.)

September 9. The special exchange allocation for the participation in certain international conventions was increased to the equivalent of F 200 a person a day (subject to a maximum of F 2,000 per trip), irrespective of the country concerned, from F 100 or F 150 a day, depending on the country.

September 15. A circular was issued authorizing certain residents to purchase and sell futures on commodity markets abroad. Such dealing in futures was only permitted in respect of actual imports of raw materials for their own use by processing manufacturers recognized as such by the Customs Administration. Previously, dealing in futures on foreign terminal markets was freely permitted only to transit traders (merchanting houses), and such transactions were subject to specific approval, normally granted restrictively, in all other cases.

September. COFACE undertook to guarantee new “commercial investments” in foreign countries other than member states of the EEC. Such guarantees were made available to manufacturing firms presenting a project for additional exports, providing that the project was accepted by the DREE.

October 15. The Government undertook to provide investment guarantees covering new private direct investments in French-speaking African countries and the Malagasy Republic. The regulations went into effect on January 13, 1971. They covered also certain expansion of existing investments but were not applicable to petroleum or agricultural investment nor to real estate operations or financial operations. The guarantees would be issued by the CCCE and covered by a counterguarantee of the Treasury.

October 22. Special facilities were introduced for French exporters wishing to undertake market research in Canada or the United States.

October 23. The direct control of bank credit (encadrement du crédit) was abolished.

October 29. The special deductions from the tourist travel allowance if a cruise was made on a foreign-owned ship were terminated.

December 4. It was announced that with effect from January 1, 1971 the facilities for commercial and industrial investment abroad would be improved. The amount up to which a firm could make transfers for these purposes without requiring individual authorization was to be raised from F 2.5 million to F 5 million a year. In addition, firms repatriating in 1970 over F 5 million in profits and royalties from their foreign branches and affiliates could dispose of the amount so repatriated for purposes of financing their foreign affiliates.

December 4. The Minister of Finance announced certain improvements in export credit facilities. Such credit would in future be available for the entire export claim instead of, as previously, the portion covered by COFACE. The total cost of the credit to the foreign buyer (taux de sortie) would be made as favorable as that of the credit offered by France’s competitors.

December 17. Customs Decision No. 68-696 was amended to make the controls over the import and export of gold applicable also to gold medals.

December 31. The existing preferential import taxation for Algerian, Moroccan, and Tunisian wine was terminated.

Gabon

Exchange System

No par value for the currency of Gabon has been established with the Fund. The unit of currency is the CFA Franc, which is officially maintained at the rate of CFAF 1 = 0.02 French franc, giving the relationship CFAF 277.710 = US$1.1 Exchange transactions in French francs between the Gabonese agency of the Banque Centrale des Etats de l’Afrique Equatoriale et du Cameroun (BCEAEC) and commercial banks in Gabon take place at the fixed rate of CFAF 1 = F 0.02, free of commission. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission.

With the exception of those relating to gold, Gabon’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) the other countries whose bank of issue is linked with the French Treasury by an Operations Account (Cameroon, the Central African Republic, Chad, the People’s Republic of the Congo, Dahomey, Ivory Coast, the Malagasy Republic, Mali, Mauritania, Niger, Senegal, Togo, and Upper Volta). Hence, all payments to these countries may be made freely. All other countries, except Gabon itself are considered foreign countries, and in principle financial relations only with foreign countries are subject to exchange control.

Administration of Control

The Office of Foreign Financial Relations in the Ministry of Finance and the Budget supervises borrowing and lending abroad, the issuing, advertising, or sale of foreign securities in Gabon, and inward and outward direct investment. Exchange control is administered by the Minister of Finance and the Budget, who has delegated his approval authority for current payments to the authorized banks and that with respect to the external position of the banks to the BCEAEC. All exchange transactions relating to foreign countries must be effected through authorized intermediaries, i.e., the Postal Administration and authorized banks. Import and export licenses are issued by the Foreign Trade Office in the Ministry of National Economy, Trade, Industry, and Development.

Prescription of Currency

Gabon is an Operations Account country of the French Franc Area, since the BCEAEC maintains an Operations Account with the French Treasury; settlements with France, 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—provided that the currencies are quoted on the Paris exchange market—or in French francs through Foreign Accounts in Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BCEAEC banknotes may be credited to Foreign Accounts in Francs when they have been mailed direct to the BCEAEC agency in Libreville by authorized banks’ foreign correspondents. Otherwise, the crediting to nonresident accounts of BCEAEC banknotes, French banknotes, or banknotes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited.

Imports and Import Payments

Some imports are prohibited for security or health reasons. Imports of cement from all sources require special authorization. All other imports from countries in the French Franc Area and from member countries of the EEC 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 a joint French-Gabonese Committee. A special licensing procedure is applicable to the import of petroleum products.

Global quotas are established for imports from all non-EEC countries outside the French Franc Area. The global quotas may be used to import goods originating in any of these countries. A few commodities in the program are subject to ceilings for all non-EEC countries outside the French Franc Area.

All import transactions 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.

Payments for Invisibles

Payments for invisibles to France, 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. For tourist travel, residents traveling to countries other than France, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 150,000 a person a year (CFAF 75,000 for children under ten); any foreign exchange remaining after return to Gabon must be surrendered. For business travel to foreign countries, there is a special allocation of the equivalent of CFAF 20,000 a day, subject to a maximum of CFAF 300,000 a trip; the Minister of Finance and the Budget may issue exceptional allocations in excess of CFAF 300,000. Tourist and business travel allocations may not be combined. Travelers going to foreign countries may take out up to a maximum of CFAF 25,000 in BCEAEC banknotes; the amount taken out is not deducted from the travel allocation. Travelers to other countries may take out any amount in BCEAEC banknotes.

Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry. Gabonese nationals traveling abroad must lodge a deposit (repatriation guarantee) with the Treasury; exempt are persons traveling on official business, government-sponsored students, and persons taking up salaried professional employment abroad.

Exports and Export Proceeds

Exports to countries in the French Franc Area are free of license. Exports to other countries of rice, corn, tobacco, cotton, diamonds, and mining products (except sodium carbonate, manganese, and crude petroleum) require licenses. Gold and uranium may be exported only to France. Exporters may obtain import licenses for additional quantities of commodities included in the import program and essential to their export activities, up to an amount corresponding to 10 per cent of the total value of their exports during the preceding year.

Export transactions relating to foreign countries must be domiciled with an authorized bank. 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 one month of the due date.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France, 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 a month of the due date. Resident and nonresident travelers may bring in any amount of banknotes and coins issued by the BCEAEC, 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 Gabon and France, 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 Gabon by residents or nonresidents must be deposited with authorized banks in Gabon.

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 Gabon; 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 Gabon, the control measures do not apply to France and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad 2 must be declared to the Ministry of Finance and the Budget, 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 declaration to the Ministry 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 Gabon3 must be declared to the Minister, 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 Gabon must also be declared to the Ministry unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in Gabon. Both the making and the liquidation of direct investments, whether these are Gabonese investments abroad or foreign investments in Gabon, 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 Gabon requires prior authorization by the Minister of Finance and the Budget. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Gabonese Government and (2) shares similar to securities whose issue, advertising, or offering for sale in Gabon has previously been authorized.

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in Gabon, or by branches or subsidiaries in Gabon of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance and the Budget. 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 Gabon 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 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 5 million or less.

Lending abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in Gabon, or by branches or subsidiaries in Gabon of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance and the Budget. The following are, however, exempt from this authorization: (1) loans granted by registered banks; (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 Office of Foreign Financial Relations within 20 days of the operation, except when the total outstanding amount of all loans granted abroad by the lender does not exceed CFAF 5 million.

Under the Investment Code of December 4, 1961, as amended on March 23, 1967, any enterprise to be established in Gabon, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specified income.

The Code provides for five categories of treatment. Three of these apply to enterprises established in Gabon and whose activity is limited to the national territory of Gabon (categories IA, IB, and II, according to the economic importance of the enterprise). The other types of treatment apply to enterprises established in Gabon whose market includes the territory of two or more states of the Central African Customs and Economic Union—UDEAC—(categories III and IV, depending on the importance of the enterprise). Preferential treatments IA and IB are granted for a period of up to 10 years. Preferential treatment II is reserved for enterprises of prime importance to the country’s economic development and involving exceptionally high investments; it provides for stabilization of their fiscal charges for up to 25 years. Preferential treatment III includes special import privileges and treatment IV includes, in addition to the privileges mentioned above, the advantage of a founding agreement (convention d’établissement).

Requests for approval for preferential treatment must be submitted to the Minister of National Economy, Trade, Industry, and Development, who, after examining the documents, transmits them to the Investment Commission. After an opinion has been given by that Commission, the project is submitted to the Council of Ministers. Preferential treatments IA, IB, and II are granted by decree issued by the Council of Ministers. Preferential treatments III and IV are granted by a certification of the UDEAC upon the recommendation of the Council of Ministers.

In addition to fiscal privileges, eligible companies may receive protection against foreign competition and may be given priority in the allocation of imports, or public credit, and of government contracts. Non-Gabonese firms or individuals are not permitted to own land in Gabon.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Gabon. Imports and exports of gold require prior authorization by the Minister of Finance and the Budget, which is seldom granted. 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). Unworked gold may be exported only to France. Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1970

January 1. Law No. 9/69 of December 11, 1969 came into force. It imposed a 5 per cent ad valorem supplementary tax (taxe complémentaire) on imports, but a large number of exemptions were set forth in Order No. 120 of December 30, 1969, which also took effect on January 1, 1970.

January 23. All firms operating in Gabon were required to establish an office in Gabon. The ruling was reconfirmed by the President on August 19.

April 13. Circular No. 1212 was issued concerning the domiciliation in France, by traders resident in Gabon, of imports and exports of merchandise shipped directly from a foreign country to Gabon or from Gabon to a foreign country. Such domiciliation, although now possible, was to remain exceptional and required the approval of the Minister of Finance.

June 24. Order No. 6/MINECO stipulated that all imports of cement required authorization by the Directorate of Economic Affairs.

September 1. Non-Gabonese firms or individuals no longer were permitted to own land in Gabon.

October 16. Decree No. 979 amended Decree No. 149 of February 17, 1969. The amount up to which payments to foreign countries could be made freely for any purpose was increased from CFAF 12,500 to CFAF 15,000. The amount of BCEAEC banknotes that travelers to foreign countries could take out was increased from CFAF 10,000 to CFAF 25,000 a person a trip, and the amount of such banknotes taken out was no longer deducted from the travel allocation. The basic exchange allowance for tourist travel to foreign countries was increased from the equivalent of CFAF 100,000 a person a year to the equivalent of CFAF 150,000 a person a year; the portion that could be taken up in foreign banknotes remained at CFAF 50,000. The basic allocation for business travel remained unchanged, but the portion that could be taken out in foreign banknotes was raised from CFAF 10,000 to CFAF 25,000. Nonresident accounts in the name of foreign correspondents of authorized banks could again be credited with BCEAEC banknotes, provided that these were mailed direct to the BCEAEC in Libreville.

The Gambia

Exchange Rate System

The par value is 2.13281 grams of fine gold per Gambian Pound or £G 1 = US$2.40. The currency-issuing authority is the Gambian Currency Board. In practice, the Board deals only in sterling and charges a commission of

of 1 per cent for buying, or ⅜ of 1 per cent for selling, based on the fixed rate of £ stg. 1 = £G1. The commercial banks deal with customers for spot transactions in sterling at rates within 1 per cent of the par value and in other currencies at rates determined by the prevailing market rate in London for the currency concerned against sterling.

Administration of Control

Exchange control policy is made by the Ministry of Finance. The commercial banks may authorize sales on currencies of countries outside the Sterling Area for permitted imports from outside the Area and, up to the amount of the basic travel allowance, for travel outside the Sterling Area. All other sales of non-Sterling Area currencies are subject to the authorization of the Ministry of Finance, which is also responsible for the issue of import and export licenses.

Prescription of Currency

The Gambia is a member of the Sterling Area, and settlements with other Sterling Area countries may be made and received freely in sterling or in any other Sterling Area currency. Settlements with countries outside the Sterling Area may be made and received in any non-Sterling Area currency other than Rhodesian currency.

Nonresident Accounts

While there is legal provision for the commercial banks in The Gambia to maintain designated nonresident accounts (including Blocked Accounts) for residents of countries outside the Sterling Area, in fact all accounts are maintained as resident accounts irrespective of the residential status of the account holder. Consequently, nonresident account holders may freely use their accounts for settlements within The Gambia and the Sterling Area, but settlements outside the Area are subject to the same controls as apply to residents of The Gambia; there are no restrictions on credits to such accounts.

Imports and Import Payments

The import of certain specified goods is prohibited from all sources, predominantly on social, health, and moral grounds. The import from any country of rice and wheat flour is subject to specific licensing in order to ensure the adequacy of such imports and their fair domestic pricing; the import of rice is in the hands of a consortium of import trading companies under the control of the Government and acting on its behalf. All other imports are freely permitted under an Open General License if imported from the following countries, but are subject to specific licensing if imported from other countries: (1) all countries within the Sterling Area; (2) Austria, Belgium, Canada, Denmark, France, the Federal Republic of Germany, Greece, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, and the United States, together with the overseas territories of these countries; and (3) Argentina, Brazil, Chile, Iran, Iraq, Lebanon, Mali, Morocco, Paraguay, Peru, Senegal, the Syrian Arab Republic, Thailand, the United Arab Republic, Uruguay, Venezuela, and Yugoslavia.

Imports from Sterling Area countries may be paid for freely in Gambian pounds or in any currency of the Sterling Area. Settlement for imports from outside the Sterling Area requires exchange control authorization, which is freely given without evidence of importation for any commodity that is covered by a valid specific import license or that does not require a specific license; payment may be effected in any non-Sterling Area currency other than Rhodesian currency.

Payments for Invisibles

Payments to Sterling Area countries may be made freely. The commercial banks may authorize payments for invisibles in currencies of countries outside the Sterling Area for transactions related to external trade when such payments are properly due outside the Area. They may also authorize a basic exchange allowance of the equivalent of £G 300 a person a trip for residents for travel outside the Sterling Area; of this amount, £ G 25 may be taken in currency notes of countries outside the Sterling Area. The basic allowance may be accumulated up to three years. Applications for permission to effect other payments for invisibles in currencies of countries outside the Sterling Area are dealt with administratively but liberally by the Ministry of Finance. Irrespective of destination, each traveler leaving The Gambia may take out £G 15 in Gambian currency notes. Visitors to The Gambia may also take out with them on departure any other currency notes declared by them when entering the country.

Exports and Export Proceeds

Because of needs for local consumption, the export to any destination of charcoal, firewood, and crustaceans is subject to specific licensing, as is the export of all goods to Bulgaria, mainland China, Czechoslovakia, Eastern Germany, Hungary, Poland, Rumania, the U. S. S. R., and Yugoslavia. The export of all other goods to any other destination is freely permitted under Open General License. Payment for exports to countries outside the Sterling Area must be received within six months from the date of export in a non-Sterling Area currency other than Rhodesian currency or in a Sterling Area currency from the account of a nonresident of the Sterling Area, i.e., from an External Account held anywhere in the Sterling Area or from an account held in The Gambia.

Proceeds from invisibles

Receipts from invisibles in currencies of countries outside the Sterling Area must be offered for sale to the commercial banks. There is no restriction on the import of Gambian or other currency notes.

Capital

Inward transfers of capital are not controlled. Outward transfers may be effected freely to countries within the Sterling Area but are subject to control to countries outside the Area. At the time of making investments in The Gambia, nonresident investors may apply for an undertaking as to the authorization of applications for the subsequent remittance of profits and repatriation of capital. All other applications to transfer capital outside the Sterling Area are dealt with administratively by the Ministry of Finance. Loans and advances by the commercial banks to nonresidents are subject to the authorization of the Ministry of Finance; such authorization is normally given freely for the purpose of providing working capital to companies registered outside The Gambia for their operations in The Gambia.

Gold

The import of gold coins minted in the United Kingdom requires licensing by the Ministry of Finance; otherwise, gold coins and bullion may be imported freely. All internal dealings in gold and the export of gold require the permission of the Ministry of Finance. Neither the Gambian Currency Board nor the commercial banks deal in gold.

Changes during 1970

February 2. The basic exchange allowance for travel outside the Sterling Area was increased from £G 50 a person a calendar year to £G 300 a person a trip.

July 7, August 3, and September 1. The Government offered special incentives for foreign investment in specified activities. Investments granted a “development certificate” would qualify for a five-year tax holiday, for certain exemptions from import duty, and for a guarantee in respect of the repatriation of profits and capital.

July 23. The Currency (Amendment) Act 1969 came into operation. The par value of the Gambian pound was henceforth defined in terms of gold only. The Currency Board was authorized to buy and sell any “convertible external currency” against Gambian pounds at rates which do not differ from parity by more than the margins prescribed by the International Monetary Fund. Previously, the Board was statutorily required to issue and redeem currency against sterling at rates not differing from parity by more than ¾ of 1 per cent.

Federal Republic of Germany

Exchange System

The par value is 0.242806 gram of fine gold per Deutsche Mark or DM 3.66 = US$1. The official limits established by the Deutsche Bundesbank for its dealings with banks are DM 3.63 buying, and DM 3.69 selling, per US$1. For banks’ transactions with their customers, these rates are considered as middle rates which can be exceeded by buying or selling margins. The rate for the U. S. dollar fluctuates in the exchange market between these margins.1 Market rates for certain other currencies vary between limits which result from combining the official limits for the U. S. dollar maintained by Germany 2 and such limits in force in the country of the other currency concerned. Fourteen other currencies are also admitted to market quotations in Germany. Premiums and discounts on forward exchange transactions are normally left to the interplay of market forces.

In accordance with international understandings, there is an almost total prohibition of payments and transfers to Rhodesia and of trade and capital transactions involving Rhodesia. Otherwise, there are no restrictions on payments, no restrictions on foreign exchange dealings by residents or nonresidents, and no prescription of currency requirements. Residents are not required to repatriate or surrender their foreign exchange earnings or holdings, which may be held in Germany or abroad at the choice of the holder. Accounts in deutsche mark or in any foreign currency may be held in Germany by any nonresident. Balances on nonresident accounts may be transferred freely to any type of resident or nonresident account and used for any payment in Germany or abroad, including the purchase of any foreign currency or gold, minted or in bars; these accounts may be credited freely with any payment.

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

Administration of Control

The administration of control in Germany in respect of imports and exports of goods and services is operated by the Federal Ministry of Economics, the Federal Ministry of Transportation, the Federal Office for Trade and Industry (Bundesamt für gewerbliche Wirtschaft), the Federal Office for Food and Forestry (Bundesamt für Ernährung und Forstwirtschaft), Import and Storage Agencies (Einfuhr- und Vorratsstellen), and the Ministries of Economics of the Laender. The Deutsche Bundesbank is primarily the authority that would be in charge of any exchange controls that might concern capital transactions. All banks in Germany are permitted to carry out foreign exchange transactions. A voluntary coordinating body within the banking system, the Central Capital Market Committee, formulates recommendations with regard to the timing and the terms of bond issues.

Imports and Import Payments

Out of a total of some 8,300 statistical items, about 7,600 may be imported free of license from all countries in country lists A and B of the Foreign Trade Law, and 4,760 of the latter items may also be imported free of license from countries in list C.3 Imports not covered by the preceding sentence require licenses, unless they fall under the liberalization measures mentioned in the following paragraph.

In addition, 285 items are liberalized when originating in European OECD countries and their associated or dependent territories. Certain solid fuels are liberalized only when purchased and imported from other member countries of the European Coal and Steel Community; imports of coal from other sources are limited to a global quota. Furthermore, licenses are issued automatically and without restriction as to quantity or country for some 1,500 items that are covered by the Common Agricultural Policy of the EEC. The remaining some 520 items (603 statistical positions) covered by that Policy do not require a license when imported from countries in country lists A, B, or C. When imported from non-EEC countries, however, most commodities covered by the Common Agricultural Policy of the EEC are subject to variable import levies which have replaced all previous barriers to imports. Many agricultural imports, whether covered by EEC regulations or not, are subject to German Marketing Laws; about half of these items may be imported free of license from list A and list B countries.

De facto liberalization is extended to certain commodities (1,527 statistical items) when originating in and purchased in Bulgaria, Czechoslovakia, Hungary, Poland, or Rumania. Under these arrangements, import licenses are issued automatically upon application, provided that domestic production and prices are not affected adversely (AMLA 4 procedure).

Imports not subject to licensing require only an import declaration stamped by the Deutsche Bundesbank, which serves as documentation. For imports still subject to quantitative restriction (with certain exceptions, such as books, maps, etc., and small parcels through the post), an individual import license is required. Applications are normally invited by tender (Ausschreibung) published in the Federal Official Gazette. Import licenses may be allocated to importers either on a first-come, first-served basis, or on the basis of the total value of applications in relation to the quotas established for specified commodities. Some tenders are permanently open (AMLA procedure).

For manufactured goods, the period of validity of the license is usually six months, but it may be extended in certain cases (e.g., heavy machinery) to a period necessary for the production of the goods. For agricultural products the usual period is also six months; however, for seasonal imports, it may be shorter.

Payments for imports are free, even if the underlying import transaction is still restricted. Commodity futures may be dealt in freely. Transit trade transactions may, in principle, be carried out freely; but when they involve countries in list C, they are subject to license.

Payments for Invisibles

All payments for invisibles may be made freely without individual license, except to Rhodesia. German and foreign notes and coins and other means of payment may be exported freely.

The following transactions—but not the related payments—between residents and nonresidents are subject to restriction: the chartering of foreign ships from residents of specified countries; the use of foreign boats in certain inland waterways traffic; transactions with specified countries (which do not grant reciprocal treatment) for hull and marine liability insurance and aviation insurance, except passenger accident insurance; the production of motion pictures in association with nonresidents; and certain contracts with nonresidents pertaining to motion-picture films.5

Exports and Export Proceeds

With few exceptions, export transactions may be carried out freely. For all goods, an export notification, for statistical purposes, is required. Certain exports—mostly strategic goods and agricultural commodities subject to EEC regulations—are subject to individual licensing. The customs authorities exercise control over export declarations and also check to see whether a license is required.

Foreign exchange proceeds from exports do not have to be declared or surrendered, and they may be used for all payments. Both claims that have been overdue for more than three months and prepayments must be reported, for statistical purposes, when they exceed DM 10,000.

Proceeds from Invisibles

With few exceptions, services performed for nonresidents do not require licenses. However, licenses are required for transactions related to specific sea services, and for technical assistance through the delivery to residents of list C countries (see footnote 3) of constructional drawings, materials, and instructions for manufacture, insofar as such assistance is for the production of goods whose export requires a license.

There are no restrictions on the receipt of payments for services rendered to nonresidents. However, receipts exceeding DM 500 on account of such services have to be reported.

German and foreign notes and coins and other means of payment may be imported freely.

Capital

Residents and nonresidents may import or export capital freely without a license, except to Rhodesia. Foreign and international bond issues on the German capital market do not require official approval. However, a system of voluntary coordination of banks is operated by the Central Capital Market Committee. Securities of all types may be imported or exported freely. There are no limitations on the disposal of legacies located in Germany and inherited by nonresidents, or on legacies located abroad and inherited by residents.

Gold

Residents may freely hold gold in any form at home and abroad and may negotiate gold in any form with residents or nonresidents at home and abroad. There is a free gold market in Frankfurt. Imports require a license from the Federal Office for Trade and Industry when the gold is purchased in or originates in Rhodesia. With this exception, imports and exports by residents and nonresidents of gold in any form are unrestricted and free of license; a customs declaration, however, is required. Imports of unworked gold and gold alloys are free of customs duty but are subject to value-added tax at a rate of 11 per cent. Imports of monetary gold by the Bundesbank and imports of gold coins that are legal tender, including sovereigns, are exempt from this tax and from customs duty; imports of other gold coins are subject to value-added tax at a rate of 5.5 per cent. Domestic purchases of gold (alloys and coins that are not legal tender) are subject to value-added tax at a rate of 11 per cent. Commercial imports and exports of articles containing gold are subject to the general foreign trade regulations and in most cases are liberalized.

Changes during 1970

January 26. The Capital Market Committee decided to advise against early further issues of deutsche mark bond issues by nonresidents. In April, foreign issues were resumed when the Committee suggested a monthly level of about DM 200 million. In September, the Committee recommended an informal ceiling of DM 300 million a month on deutsche mark bond issues by nonresidents and international companies.

February 9. The 1970 duty-free quota for imports of hard coal from non-EEC countries was set at 7.2 million metric tons, as against a basic annual quota of 6 million tons.

February 11. The maximum political risk insurance coverage for capital investment abroad, especially in developing countries, was raised from 90 per cent to 95 per cent of the capital invested. In addition, premium charges were reduced from 0.8 per cent to 0.5 per cent per annum. Coverage was extended to equity capital acquired via reinvestment of freely transferable profits up to the equivalent of 50 per cent of the capital investment initially insured.

March 6. The Bundesbank imposed, with effect from April 1, an additional minimum reserve requirement of 30 per cent on any increase in banks’ liabilities to nonresidents over the level of March 6 or the average level for February 7, 15, 23, and 28, 1970. (A 100 per cent minimum reserve ratio on additions to German banks’ liabilities to nonresidents had been abolished in November 1969, when the minimum reserve ratios to be maintained by banks on existing liabilities to nonresidents were brought back in line with those against liabilities to residents.)

April 7. The self-restraint program for imports of heavy heating oil was relaxed. On December 10, it was decided to suspend the program for 1971.

April 25. Additional imports from Poland were de facto liberalized. On May 23, the commodities concerned were added to the list of goods that were de facto liberalized when originating in and purchased in Bulgaria, Czechoslovakia, Hungary, and Rumania. The latter action increased from 4,447 to 5,684 the number of statistical positions that were de facto liberalized for import from these countries. On August 22, 4,157 of these statistical positions were formally liberalized and became free of import license for the countries mentioned as well as all other countries of country list C (see below).

May 13. The Bundesbank announced that it would, with effect from June 1, cut the rediscount quotas of credit institutions insofar as they circumvented the additional reserve requirement of March 6 by certain “en pension” transactions with nonresidents or increased their liabilities in respect of the endorsement of bills discounted abroad.

June 9. Imports of coke from Western non-EEC countries were exempted from licensing. (Since June 28, 1969 all applications to import coke from countries other than Rhodesia had been granted.)

June 15. The Bundesbank began interventions in the forward market in the form of outright sales of forward deutsche mark.

July 1. The minimum reserve requirements on banks’ liabilities to residents and nonresidents were increased by 15 per cent of the existing ratios. The 30 per cent additional reserve requirement on increases in liabilities to nonresidents remained unchanged.

August 12. The Bundesbank decided to increase the banks’ minimum reserve requirements with effect from September 1. Increases in liabilities to residents and nonresidents over the April–June 1970 average would be subject to an additional reserve requirement of 40 per cent for sight and time deposits and 20 per cent for savings deposits; total minimum reserves, however, were not to exceed 30 per cent for sight deposits, 20 per cent for time deposits, and 10 per cent for savings deposits. The 30 per cent additional reserve requirement on increases in liabilities to nonresidents would be abolished on August 31.

August 22. Imports of commodities falling under 4,760 statistical positions were formally liberalized, i.e., permitted without an import license, when originating in or purchased in any of the countries of list C (Albania, Bulgaria, mainland China, Cuba, Czechoslovakia, Hungary, North Korea, Mongolia, Poland, Rumania, the U. S. S. R., and North Viet-Nam). Country of purchase and of origin did not have to be identical. Included were 520 commodities (603 statistical positions) covered by the EEC’s Common Agricultural Policy. All of the other commodities had previously been de facto liberalized when originating in and purchased in Bulgaria, Czechoslovakia, Hungary, Poland, and Rumania. The liberalized commodities would be subject to observation of prices. Procedures for this observation were announced on October 23.

August 22. The licensing requirements for exports of less important strategic goods were eased.

September 9. When selling domestic money market paper issued by the Federal Government, the Railroads Administration, or the Postal Administration to German credit institutions, the Bundesbank required them to undertake not to sell such paper to nonresidents or to use it as collateral for “en pension” borrowing from nonresidents.

October 21. The reserve requirements were extended to certain previously exempt bank liabilities. The existing exemption from reserve requirements for liabilities resulting from credits that customers obtained abroad through the mediation of a bank was narrowed in scope. For liabilities resulting from interest arbitrage transactions, the exemption from reserve requirements was henceforth restricted to those in which only foreign currencies were involved, in which currencies were not changed, and in which borrower, lender, and bank were in no way affiliated.

November 17. The Bundesbank took the following decisions. The general minimum reserve requirements of September 1 on increases in banks’ liabilities to residents and nonresidents would be abolished on November 30. The minimum reserve requirements on existing liabilities to residents and nonresidents were increased by 15 per cent with effect from December 1. The additional reserve requirement of 30 per cent on increases in liabilities to nonresidents, which had been abolished on August 31, was reimposed with effect from December 1. The base for the calculation of the 30 per cent reserve on increases in banks’ liabilities to nonresidents was changed to the average level of external liabilities between October 16 and November 15; previously, the base had been the average level in the second quarter.

Ghana

Exchange Rate System

The par value is 0.870897 gram of fine gold per Ghanaian New Cedi or N¢ 1 = US$0.98. Exchange rates are based on the fixed rate for sterling, which is N¢ 1 = £0 8s. 2d. The Bank of Ghana quotes rates for the pound sterling and certain other currencies; it deals in sterling at the fixed rate plus or minus a foreign exchange commission of ½ of 1 per cent. For other currencies, the commercial banks in Accra base their rates on the current London market rates plus or minus the exchange charge of ½ of 1 per cent levied on sterling transactions and a brokerage fee of ⅛ of 1 per cent. The authorized banks may arrange exchanges of Ghanaian currency for any foreign currency and engage in arbitrage in all currencies, spot or forward, but they do not maintain foreign exchange balances, receiving their requirements from the Bank of Ghana on a day-to-day basis.

Administration of Control

A committee under the chairmanship of the Governor of the Bank of Ghana is responsible for drawing up an annual foreign exchange budget. This committee also prepares the minimum “desirable” import program based on estimated national requirements and a reduced “operational” import program based upon the known available foreign exchange resources. The overall import plan must correspond to the import ceiling set by the committee in its reduced program. If additional foreign aid not taken into account in the original foreign exchange budget is received, import licenses are issued for the gap between the minimum program and the reduced program. The Controller of Imports and Exports at the Ministry of Trade is empowered, on behalf of the Ministry of Trade, to prohibit or regulate the import and export of all goods. Open general licenses, other import licenses, and other export licenses are granted by the Controller of Imports and Exports.

Applications by the industrial sector and certain state agencies for individual import licenses must be channeled through the appropriate ministry or government agency for endorsement. Applications that have been endorsed by the competent ministry or agency are then forwarded to the Controller of Imports and Exports at the Ministry of Trade. Applications by the commercial houses for the import of consumer and investment goods are submitted direct to the Ministry of Trade.

The Exchange Control Department of the Bank of Ghana administers the allocation of exchange for payments for invisibles and capital. Permitted foreign exchange transactions must be made through authorized banks. All contracts providing for the payment of any money by the Government require the approval of the Finance Board.

Prescription of Currency

Ghana is a member of the Sterling Area and has prescription of currency requirements similar to those of the United Kingdom. Settlements between residents of Ghana and residents of other Sterling Area countries may be made in new cedis through Sterling Area Accounts, in sterling, or in other Sterling Area currencies. Authorized payments, including payments for imports, by residents of Ghana to residents of countries outside the Sterling Area other than Rhodesia may be made in new cedis to the credit of a Foreign Account, in sterling to the credit of an External Account, or in any non-Sterling Area currency. Receipts from residents of countries outside the Sterling Area other than Rhodesia may be obtained in new cedis from a Foreign Account, in sterling from an External Account, or in any non-Sterling Area currency. However, settlements related to transactions covered by bilateral trade and payments agreements are made through clearing accounts maintained by the Bank of Ghana and/or the central or state banks of the countries concerned.1

Nonresident Accounts

Accounts in new cedis held by residents of countries within the Sterling Area other than Ghana are designated Sterling Area Accounts. These accounts may be credited with authorized payments by residents of Ghana, with transfers from Foreign Accounts and from other Sterling Area Accounts, and with the proceeds from sales of Sterling Area and non-Sterling Area currencies. They may be debited for payments to residents of Sterling Area countries, for transfers to other Sterling Area Accounts, and for purchases of Sterling Area currencies.

Accounts in new cedis held by residents of countries outside the Sterling Area other than Rhodesia with authorized banks in Ghana are designated Foreign Accounts. The opening of these accounts is subject to approval by the Bank of Ghana. The accounts may be credited with authorized outward payments by residents of Sterling Area countries, with transfers from other Foreign Accounts, and with the proceeds from sales of non-Sterling Area currencies other than Rhodesian currency. They may be debited for inward payments to residents of the Sterling Area, for transfers to other Foreign Accounts, and for purchases of Sterling Area and non-Sterling Area currencies other than Rhodesian currency.

Nonresident accounts maintained under the provisions of bilateral payments agreements are called “Official Accounts” or “Territorial Accounts.” These accounts may be credited with authorized outward payments by residents of Sterling Area countries, with transfers from Foreign Accounts, with payments received through the Bank of Ghana for settlements with bilateral payments agreement countries, and with proceeds from sales of non-Sterling Area currencies other than Rhodesian currency. They may be debited for authorized inward payments to residents of Ghana, for transfers to other Official Accounts related to the same country, and for transfers to the related clearing account at the Bank of Ghana.

Blocked Accounts are nonresident accounts of another category, the purpose of which is to receive funds that are not placed at the free disposal of nonresidents, e.g., certain types of capital proceeds. These may be debited for authorized payments, including the purchase of approved securities.

Imports and Import Payments

Imports from Rhodesia, South Africa, South-West Africa, and the Portuguese Monetary Area are not permitted. A large part of the import trade is carried out by private importers who must be registered and have to pay a flat registration fee of N¢ 50 a year. Other imports are made by state agencies. Imports of certain goods also produced in Ghana, as well as certain other commodities of a luxury character, are severely restricted; these are specified in a List of Restricted Imports comprising some 75 items.2 There are ten open general licenses which permit any registered importer to import freely (and normally from any country) the commodities specified in the relevant license. These commodities include most chemicals, spare parts, fertilizers, certain electric machinery, mineral manufactures, paper and paperboard, certain foodstuffs, and pharmaceutical products. All other imports require individual licenses, which are issued within the limits of an annual import program; for some, the license must be obtained before orders are placed. Individual licenses are of two kinds: specific licenses and special unnumbered licenses. All goods not covered by an open general license must be covered by a specific license, but where satisfactory evidence can be produced to the effect that payment for such goods has been made and therefore no transfer of foreign exchange is involved, they can be imported under “special unnumbered licenses”; these are not issued for imports in commercial quantities.

Import licenses do not specify the country from which the commodity has to be imported; they merely specify whether payment is to be made in convertible or inconvertible currency. Licenses are issued on a c. & f. basis and are endorsed to the effect that insurance must be covered in Ghana.

In principle, exchange for payment of approved imports is granted freely by the Bank of Ghana, but certain arrears have arisen. With the exception of aid imports, imports under bilateral payments agreements, and certain other imports for which exemption has been granted by the Ministry of Trade in consultation with the Bank of Ghana, all goods must be imported on credit terms of payable 180 days’ after shipment (subject to a maximum interest rate of 6 per cent).3 Commercial banks usually require importers to make downpayments on the opening of letters of credit for all categories of imports.

Imports of most commodities under open general license are subject to surcharges at rates ranging from 5 to 150 per cent of the c.i.f. value unless imported by or for the use of the Government of Ghana. Some items exempt from surcharge are subject to a development levy of one new pesewa per pound (which is equivalent to about 10 per cent ad valorem on rice and about 18 per cent on sugar). Many imports are subject to a levy of 11½ per cent on the combined amount of c.i.f. value, import duty, and other import charges.

Payments for Invisibles

All payments for invisibles require specific approval of the Exchange Control Department of the Bank of Ghana, and documentary evidence must support all applications. Certain payments and transfers are in arrears.

The following categories of payments are normally authorized in connection with the importation of goods: (1) the buying commission—this must be duly endorsed on the import license and the amount of the authorized commission is deducted from the value of the import license; (2) the transfer of normal bank charges payable to overseas bankers for import payments, provided that the amount of the bank charges and the buying commission combined do not exceed 4 per cent of the c.i.f. value of the goods; and (3) the transfer of funds to cover interest on bills up to 6 per cent per annum. Freight charges must be paid to the local shipping agents; the transfer of funds to cover such charges is normally permitted, provided that the applications are properly documented. With few exceptions, insurance on all imports shipped to Ghana on f.o.b. or c. & f. terms must be arranged in Ghanaian currency with local insurance companies.

Remittances of income by non-Ghanaian employees are limited to 40 per cent of their annual earnings, up to a maximum of N¢ 3,000 a year, and are permitted only to persons having an annual disposable income of at least N¢ 1,000; this personal remittance quota is intended to cover all personal and family requirements and commitments outside Ghana, including leave expenses, travel for health purposes, education, gifts, insurance premiums, subscriptions, and donations. Applications for remittances of income by non-Ghanaian self-employed persons are considered on their individual merits by the Exchange Control Department of the Bank of Ghana.

Nonresident companies are, with the exception of companies financed with locally raised capital, permitted to transfer abroad freely their net profits, i.e., profits after payment of the prevailing 50 per cent tax on companies and of a 7½ per cent withholding tax; at present, however, profit transfers are being authorized only on a limited basis. The transfer of profits by companies that are either foreign-owned or owned or controlled by nonresidents and that have been financed with locally raised capital is not permitted.

The basic annual travel allowance for Ghanaians is N¢ 55 for each person 18 years of age or over and N¢ 25 for each person under that age. Foreigners resident in Ghana but domiciled elsewhere in the Sterling Area are allowed up to N¢ 490 a calendar year out of their personal remittance quota (if any). Exchange for business travel is granted up to N¢ 37 a day, for a maximum of seven days; not more than two journeys a year are allowed. All residents may buy round-trip tickets in Ghana to the country of destination, subject to approval by the Bank of Ghana. Residents of any nationality (except children under two years of age, diplomats, and UN personnel) who, for any purpose, are leaving Ghana by air or sea, whether temporarily or not, must pay a travel tax of 10 per cent of the price of the round-trip ticket.

Persons leaving Ghana may take with them foreign currency equivalent to N¢ 122.50, provided that not more than the equivalent of N¢ 24.50 is taken in banknotes in any one currency. Ghanaian banknotes may be taken out by any traveler up to N¢ 20 but may be spent only on Ghanaian aircraft and ships. Nonresident travelers may take out any unutilized foreign currency imported and declared upon entry.

Exports and Export Proceeds

Exports to Rhodesia, South Africa, South-West Africa, and the Portuguese Monetary Area are prohibited. Cocoa and certain other agricultural products are exported through the Cocoa Marketing Board. No specific export licenses are required.

Exporters are required to collect proceeds from their exports within 60 days of shipment; export proceeds in foreign exchange must be surrendered to a commercial bank in Ghana upon receipt.4

Proceeds from Invisibles

All receipts from invisibles must be sold to an authorized bank. Foreign currency notes may be imported freely, provided that their exportation is not prohibited by the issuing country. The import of Ghanaian currency notes is prohibited, with the exception of the reimportation of notes taken out previously by the same traveler and recorded in his passport.

Capital

Foreign investment in Ghana requires prior approval. The Capital Investments Act, which was promulgated in April 1963, provides for the granting of special benefits to specified existing investments as well as to new investments. Under the act approval may be granted to investments that contribute to the development and utilization of productive capacity, the reduction of import requirements, the attainment of a high level of employment, or the acquisition of technical skills by citizens of Ghana. However, certain retail, wholesale, and transportation operations are not open to foreigners. Investments granted “approved status” under this act obtain a guarantee of the right to transfer profits and liquidation proceeds; tax holidays, initial capital allowances, etc., are also available for such investments. The act also stipulates that the assets of foreign investors may not be expropriated and that, when approved enterprises are nationalized in the public interest, fair compensation is to be determined either by voluntary agreement of the parties or through arbitration by the International Bank for Reconstruction and Development. A Capital Investments Board decides which foreign investments qualify for benefits under the act.

All outgoing capital movements must be approved; applications for such transfers must be supported by documentary evidence and are considered on their merits. Transfers to beneficiaries under wills and intestacies are approved, provided that all local indebtedness has been paid. Requests for the transfer of funds representing personal assets of foreign residents in Ghana who retire and return to their home country are considered individually on their merits. Applications must be supported by appropriate documentation showing that the savings are genuine and that no illegal transfer of capital is involved. If the amounts involved are large, their transfer may be authorized over a period of a few months. Proceeds from the liquidation of real assets of foreign nationals leaving Ghana may be directed to reinvestment in registered government bonds, treasury loans, or treasury bills; the interest accruing on such investments is transferable. Applications for the transfer abroad of funds by emigrants must be accompanied by appropriate documentation and are also considered on their individual merits.

Loan and overdraft facilities to resident companies controlled by nonresidents require the individual approval of the central bank. Such companies, when financed with locally raised capital, are not permitted to transfer profits or dividends abroad.

Transactions in securities are controlled to ensure that capital is not transferred abroad without express permission. In respect of portfolio investments, residents have to obtain approval for any switch in their holdings of securities issued by nonresidents.

Gold

Residents may hold and negotiate in Ghana gold obtained domestically by washing or mining according to indigenous methods, gold coins that are collectors’ pieces, and gold jewelry. Other domestic transactions in gold, as well as imports and exports, may be authorized by the Ministry of Trade in collaboration with the Bank of Ghana, and certain domestic sales may be carried out by permit under the Gold Mining Products Protection Ordinance. With these exceptions, no Ghanaian resident other than an authorized dealer may buy or borrow any gold from, or sell or lend any gold to, any person other than an authorized dealer. Imports of gold other than imports by or on behalf of the monetary authorities are not normally licensed; imports for industrial use are very small, a specified commercial bank being the sole importer. The import duty on bullion and partly worked gold is 10 per cent, and that on other gold is 50 per cent. The gold mines export their entire output in semirefined form. Exports are free of duties or taxes; the mining corporations are subject to a minerals tax based mainly on profits.

Changes during 1970

January 1. The payments agreements with Bulgaria, Poland, Rumania, and Yugoslavia were terminated.

January 24. Notice to Importers No. 331 established that permission would not normally be given for the sale within 12 months of their importation of cars imported under special unnumbered licenses.

March 1. A new bilateral payments arrangement with Yugoslavia came into effect.

March 12. A number of foodstuffs were placed on open general license: prepared or preserved fish (sardines, salmon, pilchards, and mackerel), baby foods, corned beef, milk, rice, and sugar (crystalline). At the same time, these items were exempted from the 5 per cent ad valorem surcharge. Also, all could henceforth be imported on a sight payments basis and became exempt from the requirement of a commitment form. Previously, imports of these items (except milk, rice, and sugar, for which sight payments had already been allowed) were required to be payable 180 days after shipment.

March 20. A bill proposing new banking legislation was submitted to Parliament. It was enacted on July 21 as the Banking Act, 1970.

April 8. The bilateral payments agreement with Hungary was terminated.

July 3. The Loans Act, 1970 came into force. It regulated the raising of local and external loans by the Government and repealed the External Loans Decree, 1968 as well as certain provisions of the Financial Administration Decree, 1967.

August 1. The Ghanaian Business (Promotion) Act came into force. Certain economic activities would be reserved for Ghanaian citizens.

August 25. The budget statement announced a program of reducing quantitative import restrictions and of imposing additional import taxation.

August 25. The 5 per cent ad valorem surcharge on imports was abolished. In its place, new surcharges were imposed. Goods were classified into five categories: items listed in the first four categories were subject to rates of surcharge of 5, 10, 25, or 40 per cent ad valorem; items listed in the fifth schedule were subject to specific or ad valorem rates ranging from 11 per cent to 150 per cent when imported under open general license, and a uniform rate of 150 per cent when imported under specific licenses. The ad valorem rates were to be calculated on the c.i.f. value of imports, and the surcharge was payable to the Controller of Customs and Excise when the goods were cleared through customs. Exempt were imports of the Government of Ghana, of diplomatic missions and missions of the United Nations and its specialized agencies, of charitable organizations, and under technical assistance schemes. The Minister of Finance was authorized to vary the rates of surcharge if the prevailing economic and financial circumstances of Ghana so required.

August 25. Act No. 345 abolished a provision in the customs tariff which had since 1966 enabled approved manufacturers to pay a concessionary customs duty of 5 per cent or 10 per cent on any item which, in the opinion of the Controller of Customs and Excise, constituted basic raw materials or other materials for use in manufacturing. At the same time, Act No. 345 exempted the following from all customs duties when imported by approved manufacturers: base metals for use in the manufacture of agricultural implements and machinery; materials for use in the manufacture of barbed wire; and chemicals for the production of pharmaceuticals.

August 25. It was announced that an export bonus scheme for nontraditional exports was under consideration.

August 25. A development levy of one new pesewa per pound became payable on imports of certain items included in Open General License No. 10 that were exempt from import surcharge (sugar, rice, and cement).

August 25. The future introduction of an import inspection scheme was announced, under which all imports would be inspected before shipment by accredited agents of the Government.

August 25. All specific export license requirements were terminated. The completion of exchange control forms for exports was centralized at the commercial banks.

September 12. Beef, veal, mutton, lamb, and liver could henceforth be paid for on a sight basis when imported from African countries. Jute, which had been importable on sight terms, could again be imported only on 180-day credit terms.

September 12. With effect from August 25, the ten open general import licenses were extended to cover a wide range of additional commodities. These included plastic materials; newspapers; materials for use in the timber and mining industries; soaps and detergents; agricultural machinery, including tractors; various other machinery and machine tools; buses, scooters, and bicycles; leather and footwear; meat; certain textile fabrics, cotton fabrics, and clothing; spare parts; and cement. The coverage of Open General Licenses Nos. 5, 6, 7, 8, and 9 was made to correspond almost exactly to the five import surcharge categories. No open general license commitment forms would henceforth be required for any of the items of the ten lists; previously, this form, for many open general license items, had to be obtained from the Controller of Imports and Exports before orders could be placed.

September 12. The requirement was terminated that importers of open general license commodities not subject to a commitment form must inform the Bank of Ghana at least two weeks before the import payment was due.

September 22. Notice to Importers No. 348 established that in respect of specified goods (land rovers and jeeps, buses and coaches, trucks and lorries, and chassis with engine mounted) Open General License No. 7 would be applicable only to imports from the United Kingdom, the United States, Canada, the Federal Republic of Germany, and France. Previously, all open general licenses were applicable to all countries except those covered by a trading ban.

October 17. Imports of raw cotton were placed on open general license.

October 17. The import regulations for the year 1971 were published. Applications for specific import licenses were to be filed by November 15, 1970. The List of Restricted Imports was extended to include a few items but a larger number were removed from it, including beef, fish, alcoholic beverages (except beer), toothpaste, soaps, polishes, cement, certain clothing and fabrics, and certain footwear.

October 21. It was announced that applications for a reduction or waiver of import surcharges on certain types of agricultural machinery, implements, and appliances would be considered, provided that they were intended solely for use by the buyer for agricultural purposes.

November 10. Palm oil and coconut oil were removed from the List of Restricted Imports.

December 12. Notice to Importers No. 356 established that with effect from January 1, 1971 two kinds of special import licenses would be issued: “Trade Pact Area Import Licenses” would be available for imports from any of four specified countries (Bulgaria, Poland, Rumania, and U. S. S. R.), while imports from all other countries would be against licenses issued for the Convertible Currency Area.

December 14. A bilateral payments agreement was signed with Upper Volta. The agreement came into force on May 3, 1971.

Greece

Exchange Rate System

The par value is 0.0296224 gram of fine gold per Greek Drachma or Dr 30.00 = US$1. The official rates are Dr 29.90 buying, and Dr 30.10 selling, per US$1. Market rates for other currencies vary between limits which result from combining the official limits for the U.S. dollar maintained by Greece and such limits in force in the country of the other currency concerned.

Administration of Control

Controls are administered on the policy level by the Ministry of Coordination, the Ministry of Trade, the Currency Committee, and the Foreign Trade Council. Exchange control policy is made by the Currency Committee, the Credit Committee, and the Foreign Exchange Sub-Committee, and import policy is made by the Foreign Trade Council. Exchange control is implemented, and import approvals are granted, by the Bank of Greece (the central bank) and authorized commercial banks. Import and export licenses are issued by the Bank of Greece, authorized banks, and the Ministry of Commerce and, in some cases, require the prior approval of the competent ministry. The authorized banks may make exchange settlements relating to permitted trade transactions and may grant residents a standard travel allowance. All other exchange payments require the approval of the Bank of Greece.

Prescription of Currency

Settlements with countries with which Greece has bilateral payments agreements are made through controlled accounts, with the U. S. dollar as the currency of account.1 Settlements with all other countries are made in any convertible currency or through Foreign Sight Deposit Accounts in drachmas.

Nonresident Accounts

Nonresidents are permitted to open with Greek banks convertible Foreign Sight Deposit Accounts in drachmas or convertible currencies. These accounts may be credited with convertible foreign exchange or the proceeds from sales of convertible currencies, with authorized payments by residents of Greece for imports or services payable in convertible currencies, and with transfers from other Foreign Sight Deposit Accounts. They may be debited for payments to residents for current transactions, for transfers to other Foreign Sight Deposit Accounts, and for the purchase and transfer abroad of any convertible currency. Any withdrawal from drachma accounts for use in Greece and any conversion of foreign exchange withdrawals into drachmas entail the loss of the reconversion right of the sums withdrawn. The maximum rate of interest on such accounts is 1.50 per cent per annum.

Nonresidents may also make time deposits in convertible foreign exchange for a minimum period of 90 days with authorized foreign exchange banks; interest rates on the deposits range between 6¾ and 8 per cent per annum according to their term. Particular regulations apply to nonresident investors (including Greek nationals permanently residing abroad) enjoying the privileges of Legislative Decree No. 2687/53 (see section on Capital, below). They may establish time deposits, for a minimum period of six months and with a minimum deposit in convertible currencies equivalent to US$10,000; balances on these accounts earn interest of 7–8 per cent, and principal and interest are freely transferable at maturity in the currency of the deposit.

All drachma assets of nonresidents other than those in Foreign Sight Deposit Accounts must be declared and are held in blocked accounts. Domestic banknotes in excess of Dr 750 brought in by nonresident travelers must also be credited to a blocked account, as must certain income accruing in Greece to nonresidents. Subject to the approval of the exchange control authorities, balances on blocked accounts may be used for such purposes as personal expenses in Greece up to Dr 30,000 a visit, purchases of securities officially listed on the stock exchange in Greece, and purchases of real estate in Greece. Amounts of up to Dr 60,000 may be released for remittance by each account holder, provided that the funds were held before December 31, 1963; amounts of up to Dr 30,000 may be released semiannually for remittance by each account holder, from accounts opened after January 1, 1964, provided that the money deposited was derived exclusively from rents. Other amounts of balances on blocked accounts may be transferred abroad if the prior approval of the Bank of Greece is obtained. All transfers between blocked accounts require prior approval. Blocked balances may be deposited with a commercial bank, where they earn interest at current rates for sight deposits.

Greek citizens (including seamen) who are employed abroad and certain Greek societies and associations operating abroad may establish, with funds originating abroad, convertible foreign currency accounts with authorized banks in Greece. Merchant seamen may deposit their wages and salaries in these accounts, provided that the funds originate abroad and, if they are received in drachmas, that they are obtained through the intermediary of a shipping firm established in Greece. Balances on these accounts earn interest at 3 per cent per annum for sight deposits, 6¾-8 per cent per annum for time deposits, and 6¼ per cent per annum for savings bank deposits. Balances on these accounts, including accrued interest, are freely convertible into foreign exchange as long as the holder continues to work abroad, or to serve at sea, and for five years thereafter.

Imports and Import Payments

Imports of all commodities originating in or shipped from Rhodesia are prohibited and imports of cotton textiles from Hong Kong are suspended. All other imports, except those of goods on Lists P and P-12 with an invoice value c.i.f. of the equivalent of US$100 or less for which payment will be made through an authorized bank, require approval. For most imports, prior approval is required; however, for certain commodities, mainly machinery and raw materials, imports may be effected without prior approval, provided that approval is obtained subsequently. The granting of an import approval implies that appropriate foreign exchange will be made available. Apart from imports for which special licenses are required, two general import procedures (E and D) are applicable to imports, mainly for statistical purposes. Under procedure E, the approval of an authorized bank is required (1) for imports from countries participating in the European Monetary Agreement (EMA) other than Sweden when payment is to be made in a convertible or externally convertible European currency; (2) for imports from Canada or the United States when payment is to be made in free dollars, i.e., not on the basis of procurement authorizations under U. S. aid; and (3) for imports from countries with which Greece has concluded bilateral payments agreements when payment is to be made through the relevant clearing account. No license is necessary under procedure E, but import applications which have been approved by an authorized bank are registered with the Bank of Greece. Under procedure D, an import approval issued by the Bank of Greece is required for imports financed by U. S. aid, for imports other than those covered by procedure E, for all imports from Sweden, and for imports for which the importer requests changes in the general provisions concerning the terms of shipment, method of settlement, terms of payment, etc. For all goods that do not require a special import license, prices must be approved and pro forma invoices visaed in Greece by a local Chamber of Commerce.

Special licenses are required for imports of commodities in List A (including gold, certain luxury items, textiles, automobiles and parts, and certain foodstuffs) and List B (certain types of machinery and spare parts). For a few items on List A no licenses are being issued. Special regulations govern imports of petroleum products similar to those produced by Greek refineries and imports of certain other items, such as goods under monopoly control, medicines, narcotics, wheat and flour, sulphur, and motion-picture films, as well as barter transactions based on clearing agreements.

For purposes of applying regulations concerning payments for imports and advance deposit requirements, all private imports are classified in nine lists (P, P-12, F, F-50/1–3, and F-100/1–3). Payments for imports may be made by letter of credit, by cash against shipping documents, or by acceptance of time drafts (which is permitted only for goods in Lists P and P-12, there being no time limit for List P but a limit of one year for List P-12 which may be extended for a further six months with the permission of the Bank of Greece). The Ministry of Commerce may authorize longer payment periods and may also approve deferred payments for imports not included in the P lists. When time drafts are accepted, a personal written undertaking amounting to 4 per cent of the amount of the draft is required as a guarantee that the payment will be made within the prescribed time limits.

When a letter of credit is opened, the importer is required to deposit in drachmas the whole amount of the credit with the intervening bank. In addition, for those imports included in Lists F-100/1 and F-100/2, further cash deposits of, respectively, 40 per cent and 12 per cent of the c.i.f. value are required as security for import duties and other taxes. For imports under procedure E, this deposit must be made when the import approval is obtained; for imports under procedure D, the deposit must be made within 20 days of the import approval.

Advance deposits are not required for imports for which payment is to be made by acceptance of time drafts. When payments for imports are to be made against sight drafts, advance deposits in cash are required for private imports included in Lists F-50/1–3 and F-100/1–3.2 Advance deposits are the same for all countries. They are calculated on the c.i.f. invoice value and consist of two components: a prepayment required when applying for an import approval and an advance (security) against import duties and other taxes. Security deposits, however, are not required for capital goods and spare parts that are exempt from import duty by virtue of the laws governing investment of foreign or domestic capital. The rates of deposit for each list of imports are set out below.

PrepaymentSecurityTotal
In per cent of invoice value
List F-50/1502070
List F-50/2401656
List F-50/320828
List F-100/110040140
List F-100/28032112
List F-100/3401656

For goods imported and cleared through customs in the Dodecanese Islands, the advance against import duties and other taxes is reduced to one half of the above-mentioned percentages. When imports are financed with U. S. aid funds, a further deposit of 10 per cent must be made in cash or by bank guarantee and in favor of the Greek State, in addition to any deposit as specified above. All deposits must be made with the intervening bank (1) at the time the import approval is obtained, for imports under procedure E, and (2) within 10 days (for Athens and the Piraeus area) or 20 days (for the provinces) of obtaining the import approval, for imports under procedure D. Upon delivery of the shipping documents, the importer’s bank issues a permit for the customs clearance of the goods, and advance deposits are refunded; however, for goods included in Lists F-50/1–3 and F-100/1–3 the deposits must be retained by the commercial bank for a period of four months from the date on which they were made for a range of specified imports including fabrics, electrical household appliances, and passenger motor vehicles, and for a period of two months for other imports.

Certain companies, public agencies, and organizations that have been designated as public service institutions are exempt from the advance deposit requirements.

Advance payments may be made to foreign suppliers for all imports against delivery of shipping documents or against a letter of undertaking issued by a foreign bank. Special regulations govern imports by state agencies, public entities, and public utility companies. Except for goods in Lists P and P-12, which may be shipped prior to approval, goods must be shipped within six months and arrive in Greece within nine months after the date of import approval. Final settlement of the value of imported goods must take place within 60 days following the date of arrival at the first Greek port; however, settlement must take place within 120 days following the date of arrival for goods in List P and P-12.

Most imports are subject to a stamp tax of 2–5 per cent of the c.i.f. duty-paid and tax-paid value.

Payments for Invisibles

Payments for invisibles require approval, but this is granted freely for expenses incidental to authorized trade transactions and for certain other transactions. Transfers abroad on account of specified categories of insurance (shipping, aviation, merchandise transport, and fire) or reinsurance (accident and life) are authorized by the Bank of Greece up to specified percentages of the amounts owed.

Residents going abroad for family reasons, tourist travel, or business are entitled to the equivalent of US$200 for one trip a year; instead of this allowance, tourists participating in group tours are granted an amount based on a cost declaration submitted by the travel agency. Exporters and manufacturers are allowed US$20 a day for a maximum of 45 days when they travel to the United States, Canada, or the Far East; for all other countries the allowance is US$15 a day for a maximum of 30 days. Requests for larger amounts or from other businessmen, commercial representatives, etc., are submitted to the Foreign Exchange Sub-Committee.

Persons traveling abroad may take with them a maximum of Dr 750 in Greek banknotes. Greek nationals, not including those resident abroad, are required to declare all domestic and foreign banknotes and other valuables taken with them upon leaving Greece. Nonresident travelers on leaving Greece may freely take with them up to US$500 in foreign banknotes declared upon entry, provided that departure is within three months of arrival; export of larger amounts or any export after a visit of more than three months is subject to general or specific approval.

Exports and Export Proceeds

Exports to Rhodesia are prohibited. All exports require individual licenses, but most exports are free of quantitative limitation. Export proceeds must be surrendered within 150 days from the date of export of the goods; in special cases, however, the authorities are empowered to extend this period up to two years for manufactures and up to one year for other commodities. The Ministry of Commerce may license barter transactions involving the export of tobacco, certain types of fruit, or wines; such transactions are permitted with mainland China, Czechoslovakia, Eastern Germany, Hungary, Iran, Israel, Poland, and the U. S. S. R. In addition, any commodity may, subject to individual authorization, be exported on a barter basis to Albania, mainland China, the Republic of China, and Iran.

Proceeds from Invisibles

Exchange receipts representing payments for services must be surrendered. Exchange proceeds from shipping are exempt from the surrender requirement, but shipowners have to pay for supplies, repairs, etc., and any taxes and fees, and must cover their disbursements and expenses in Greece in local currency obtained through the sale of foreign exchange to the Bank of Greece.

Travelers may bring in a maximum of Dr 750 in Greek banknotes. Any surplus is deposited in a blocked account with the Bank of Greece; subject to prior approval by the Bank, the surplus may be taken out on departure or spent in Greece on personal financial requirements. Greek residents returning to Greece must declare the foreign exchange in their possession. Nonresident travelers of foreign nationality may import any amount of foreign currency and need not declare it at the time of entering the country, and nonresidents holding Greek passports are required to declare their foreign exchange only if they intend, when leaving Greece, to take out again foreign exchange in excess of US$500 or its equivalent.

Capital

Commercial banks and investment banks may freely borrow convertible currencies abroad, provided that they lend corresponding amounts as foreign currency loans for periods of at least five years to productive enterprises established in Greece. All other investments in Greece by nonresidents are subject to approval. Such approval is automatic for purchases of real estate for personal use. Under Legislative Decree No. 2687/53, approved foreign investments which aim at the promotion of national production or otherwise contribute to the economic advancement of Greece may be granted preferential treatment.3 Under Law No. 4171/61, as amended by Legislative Decree No. 4256/62, further privileges are provided for foreign capital participating in investment projects in Greece exceeding Dr 60 million in value. Moreover, Legislative Decree No. 4256/62 provides additional repatriation facilities for foreign investments which promote exports.

Repatriation facilities are as follows: (1) Approved investments according to the provisions of the legislation mentioned above may not be repatriated before one year from the date the enterprise begins to operate productively and in no case before one year from the date the capital was imported. (2) The repatriation of foreign capital may not exceed 10 per cent a year of the amount of capital imported. The repatriation of dividends on equity capital and of interest on loan capital may not exceed 12 per cent a year and 10 per cent a year, respectively. (3) Under the provisions of Law No. 4171/61, profits on approved foreign investments may be transferred abroad in amounts not exceeding 6 per cent a year of the repatriated portion of the capital, provided, however, that the amount of profits transferred shall not exceed 8 per cent of the foreign exchange earnings of the enterprise from the sale of its products abroad. (4) For investments made under Legislative Decree No. 2687/53 that are not covered by Law No. 4171/61, the transfer of profits is related to the residual capital remaining in Greece, and the transfer privilege expires as soon as all capital has been repatriated. (5) Under the provisions of Legislative Decree No. 4256/62, the repatriation of capital and profits of foreign investments approved under the provisions of Legislative Decree No. 2687/53 can exceed the rates specified in (2) above, up to 70 per cent of the foreign exchange earnings of the enterprise from the sale of its products abroad. Also, foreign loans approved under Legislative Decree No. 2687/53 can be repatriated at an annual rate of up to 20 per cent, provided that the amount of the loan does not exceed double the value of the share capital and that the amounts repatriated do not exceed 70 per cent of the foreign exchange earnings of the corporation.

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

Transfers of capital abroad by residents require approval. The purchase abroad of securities or of real estate for personal use is not normally permitted.

Gold

Residents may freely purchase specified gold coins (mainly sovereigns) from the Bank of Greece, through licensed stockbrokers, at prices set by the central bank; purchasers must sign a statement to the effect that the coins will only be resold to the Bank of Greece or to licensed stockbrokers. Holders of gold coins acquired in the free market that existed prior to December 22, 1965 may sell these anonymously and without formality only to the Bank of Greece or to an authorized bank and at the official price. Residents may deal freely, however, in bullion. Imports of gold against payment in foreign exchange are on Import Lists A and F and require a special license issued by the Ministry of Commerce; licenses are normally issued to reputable importers for distribution to recognized users, such as jewelers and dentists. Gold bars and gold coins may be imported freely by commercial banks and other residents as well as nonresidents when no payment in foreign exchange is involved. Exports of gold other than by the Bank of Greece are not approved, with the exception that gold bars or coins brought in by travelers and declared upon entry may, with the prior approval of the Bank’s Credit Committee, be re-exported by the same person.

Changes during 1970

January 1. Interest rates on bank credit for both imports and domestic trade were raised by 1 percentage point to 11 per cent.

January 1. The US$200 travel allowance previously granted for three trips abroad each year was restricted to one trip each year.

January 21. A payments agreement with Albania was signed. It entered into force on June 2.

February 3. Preferential tariff quotas went into effect for specified industrial goods of U. S. S. R. origin. The relative protocol of December 13, 1969 set the total value of these quotas at US$4,252,000 each year for 1971 and 1972.

March 10. The four-month retention period for advance import deposits was applied to some 70 items previously subject to a two-month retention period.

April 1. Interest rates paid by banks on time deposits in foreign exchange were raised by 1 percentage point, to 7, 7½, or 8 per cent.

April 17. The four-month retention period for advance import deposits on passenger automobiles was extended in operation until September 2, 1970.

April 17. Controls over the acceptance of foreign suppliers’ credit were relaxed and the classification of commodities for this purpose was revised. The existing Lists P-6 and P-12 (covering items for which credit up to 6 months and 12 months, respectively, could be accepted) were replaced by a List P (covering items for which any term of credit could be accepted, many of them goods previously on the F, F-50, and F-100 lists) and a new List P-12 (covering items for which up to 12 months’ credit could be accepted). Some items on the existing Lists P-6 and P-12 were transferred to List F.

April 17. Some foodstuffs and certain other items were transferred to List A and became subject to special import license.

May 1. The sixth reduction of import duties in accordance with the Treaty of Association with the EEC took place. Customs duties on products imported from the EEC and not produced in Greece were reduced by 10 per cent, while those on products also produced in Greece were reduced by 5 per cent. Furthermore, the import tariff was subject to a second alignment on the EEC common external tariff.

May 1. Advance deposit rates were reduced for category F-50/2 imports from 59½ per cent to 56 per cent; for F-50/3 from 35 per cent to 28 per cent; for F-100/2 from 119 per cent to 112 per cent; and for F-100/3 from 70 per cent to 56 per cent.

May 23. The Minister of Coordination instructed the public sector to give preference to the clearing countries when purchasing machinery and equipment abroad.

June 13. Certain types of motors and transformers were transferred to List A.

July 1. The interest rate allowed on foreign credits for imports was limited to 4 per cent above the prevailing discount rate in the country of the supplier, with a ceiling of 10 per cent per annum.

July 8. The export without special approval of foreign banknotes by nonresident travelers was limited to US$500 a person if departure was within three months of arrival; exports of larger amounts or any export after a visit of more than three months became subject to specific approval. The export of domestic or foreign banknotes by mail was prohibited. Conversion of foreign currency into drachmas henceforth could take place only through banks.

July 18. Cream, lucerne flour, and dry batteries were transferred to List A.

August 20. Legislative Decree No. 608/1970 permitted the establishment in Greece of closed-end mutual funds. Twenty per cent of their portfolio could consist of foreign securities. Advertising and sales in Greece by foreign mutual funds required prior approval by the Ministry of Trade and the Capital Market Committee.

September 3. It was announced that the preferential interest rate incentives for exporters would be reinforced with effect from January 1, 1971.

September 9. Nonresidents purchasing government bonds with foreign currency could henceforth obtain the necessary drachmas at parity instead of, as previously, at the prevailing buying rate for the currency concerned.

October 10. Export procedures were simplified by transference to the Bank of Greece of authority to issue export licenses for a wide range of products.

November 6. The facilities allowing nonresidents to maintain time deposits in convertible foreign currencies were expanded as follows. Nonresidents were permitted to make time deposits in foreign exchange for a minimum period of 90 days with authorized banks; interest rates on the deposits ranged between 6¾ and 8 per cent per annum, according to their term. Banks receiving such deposits no longer had to transfer the foreign exchange to the Bank of Greece. Deposit accounts in foreign exchange could be maintained jointly with one or more residents or other nonresidents.

November 16. The four-month retention period for advance deposits on passenger automobiles was extended in operation indefinitely.

Guatemala

Exchange Rate System

The par value is 0.888671 gram of fine gold per Guatemalan Quetzal or Q 1.00 = US$1. The official rates are Q 1.00 buying, and Q 1.01 selling, per US$1. The Bank of Guatemala quotes exchange rates for certain other currencies 1 on the basis of their rates in the New York market. On January 27, 1947, Guatemala notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control is administered by the Bank of Guatemala (Exchange Department) under the direction of the Monetary Board. Foreign exchange transactions of the public sector are carried out exclusively through the Bank of Guatemala; those of the private sector are carried out through the medium of authorized banks for the account of the Monetary Stabilization Fund maintained by the Bank of Guatemala.

Prescription of Currency

All exchange transactions must be carried out through banks. Payments to Costa Rica, El Salvador, Honduras, and Nicaragua in respect of trade and invisibles are normally settled in Guatemalan quetzales through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. The Exchange Department of the Bank of Guatemala, however, is empowered to authorize the sale of currencies of other Central American countries to make payments to the Central American area. There are no obligations prescribing the currency for payments to and from other countries.

Imports and Import Payments

Import licenses are not required except for imports of maps of Guatemala, explosives, poultry, wheat flour, and used trucks and trailers. Imports of soluble coffee are prohibited. Within 8 days after confirmation, importers must register with the Exchange Department any firm order to import merchandise. (Imports originating from Central American countries and included in the General Treaty for Central American Economic Integration are exempt from this requirement.) Importers must effect their registered imports during the 90-day validity of the registration.

All remittances abroad to pay for imports require exchange licenses, which are granted freely by the Exchange Department; the exchange is granted by the authorized banks upon submission of the registration form and the shipping documents. Checks denominated in quetzales are authorized freely for payment for specified imports from Central American countries. Payments for imports which have to be fully or partially prepaid must be made by letter of credit. When it is impossible to establish a letter of credit and the prepayment exceeds Q 1,000, a deposit equal to 25 per cent of the amount of foreign exchange requested must be made with the Bank of Guatemala or an authorized bank in cash or in government bonds by importers who are not established importers in the country or who are unable to provide sufficient proof of the nature of the transaction; the deposit is refunded when the goods arrive in Guatemala. Importers of merchandise for which payment must be made in cash or in installments, and importers of merchandise on consignment, must present the original shipping documents usually required by the Guatemalan customs for the clearance of goods.

Authorizations to withdraw imports from customs must be obtained from the Exchange Department or an authorized bank, except for imports whose value does not exceed Q 50, household goods, samples, printed advertising material, and those imports originating in Central American countries and included in the General Treaty for Central American Economic Integration. The Exchange Department and the authorized banks issue such authorizations without delay. The customs officials may refuse clearance of goods if discrepancies are found between the information contained in the authorization issued by the Exchange Department and in the import documents. For the specified imports from Central American countries, the importer must complete, at either the Exchange Department or the customs office, a special form required by the Exchange Department, giving a description of the merchandise to be imported and the date on which he made the advance payment or the date on which he undertook to pay in the future. If these forms are completed at the customs office, they must be forwarded daily to the Exchange Department.

A surcharge of 100 per cent of the customs duty may be applied to products originating in or imported from countries with which Guatemala has an unfavorable trade balance. On December 31, 1970, this surcharge applied to certain imports from 28 countries.2 This surcharge is waived if the goods are transported in Guatemalan ships. Moreover, all imports from other areas which are included in the agreed uniform tariff list of the countries participating in the General Treaty for Central American Economic Integration are exempt from the surcharge.

Imports originating outside the Central American Common Market are subject to an import surcharge of 30 per cent of the applicable import duty.

Payments for Invisibles

All transfers abroad on account of current invisibles require authorization by the Exchange Department, mainly for the purposes of checking capital transactions. Payments of up to Q 1,000 to El Salvador or up to Q 200 to Costa Rica, Honduras, and Nicaragua do not require authorization by the Exchange Department.

Requests for foreign exchange for payments for current invisibles must be supported by such documents as may be required by the Exchange Department to verify that the operation is genuine. The sale of foreign exchange for most categories of current invisibles, including remittances of income from registered foreign loans and investments, is authorized freely, as is the repayment of registered loans. For certain payments for current invisibles, exchange is sold up to established limits; in some cases, requests in excess of these limits are approved. There is an exchange allowance equivalent to Q 50 a day up to a maximum of Q 2,500 a person a trip for tourist travel abroad. Minors not traveling alone are entitled to half the adult allowance. The exchange allocation for business travel is Q 750 a person for journeys to British Honduras and the Mexican border towns, and Q 2,500 a trip for journeys to other parts of the world. All international air passages (with the exception of those for travel within Central America) are subject to a tax of 10 per cent.

The exchange allocation for remittances abroad for family maintenance is Q 250 a month for each relative (Q 200 for persons under 18), up to a maximum of Q 1,000 a month for each beneficiary family. In addition, remittances of income from property or funds invested in Guatemala (other than foreign investment) and remittances of pensions, annuities, etc., are authorized up to Q 250 a month a person, up to Q 1,000 a month for each beneficiary family. Foreign technical personnel employed in Guatemala may remit abroad up to two thirds of their salaries if their entire family or part of their family resides abroad, or up to one third if their families reside in Guatemala. Foreign technicians leaving the country permanently may, subject to individual approval, transfer their savings up to the full amount of their earnings in Guatemala. Limits are also imposed on remittances for students’ expenses abroad.

The export of Guatemalan banknotes and coins is not prohibited; however, Guatemalan banknotes and coins received from abroad are not converted by the Bank of Guatemala unless they come from Costa Rica, El Salvador, Honduras, or Nicaragua. For these countries, the Bank of Guatemala guarantees monthly conversions into U. S. dollars up to the following limits: Costa Rica, Q 125,000; El Salvador, Q 400,000; Honduras, Q 300,000; and Nicaragua, Q 125,000. There are no regulations prohibiting the export of foreign banknotes.

Exports and Export Proceeds

All exports require an export license from the Exchange Department of the Bank of Guatemala. Exports to Central American countries of goods included in the General Treaty for Central American Economic Integration are exempt from this requirement; for these goods, the exporter must complete a special form required by the Exchange Department presenting evidence that the export proceeds have been sold to an authorized bank. The application for an export license must be accompanied by a full description of the nature of the transaction, including the terms and method of payment. The Exchange Department issues licenses only if certain conditions have been met: (1) for exports paid for in advance or in cash, it requires evidence that the export proceeds have been sold to an authorized bank; (2) for exports on credit, it requires an undertaking to sell the relevant exchange to an authorized bank within 90 days of the date the license is issued; and (3) for exports on consignment, it requires the exporter’s certified declaration showing the estimated value of the export and his undertaking to sell the relevant exchange to an authorized bank within a period not exceeding 180 days after the issuance of the license. Certain export industries financed with foreign loans, however, may be permitted under the terms of specific foreign exchange agreements with the Monetary Board to retain a portion of export proceeds abroad to cover amortization of the loans. Exports of meat to the United States are subject to regulation by the Ministry of Economy.

Proceeds from Invisibles

Foreign exchange proceeds from invisibles must be declared and surrendered. The import of Guatemalan and foreign banknotes is not restricted. The purchase of Salvadoran banknotes by authorized banks is limited to ¢ 500 a person.

Capital

All foreign capital investments in Guatemala must be declared and registered with the Exchange Department of the Bank of Guatemala. All investment by foreign or foreign-controlled companies in the construction of private housing in Guatemala requires the prior approval of the Ministry of Economy; such investment may be limited to a specified overall amount a year, it must meet certain minimum quality and financing standards, and the sales value of a housing unit must not exceed Q 6,000. All outgoing capital payments require exchange licenses, which, like those for the transfer of profits and dividends, are granted freely for remittances of registered foreign investments and amortization of foreign loans. Transfers abroad of resident-owned capital are not permitted, with the exception of transfers for the purpose of investing in, or financing of, commercial, agricultural, or industrial firms in Costa Rica, El Salvador, Honduras, and Nicaragua.

Gold

Residents must sell to the Bank of Guatemala any gold in their possession. Residents other than banks may sell gold coins and gold bars only to the Bank of Guatemala or to banks licensed for this purpose by the Monetary Board. The Bank of Guatemala is obliged to purchase all gold offered to it. The Bank also sells domestic and imported gold to domestic artistic and industrial users, in accordance with directives of the Monetary Board. Gold is imported only by the Bank of Guatemala.

Changes during 1970

March 5. A swap agreement was signed by the central banks of Guatemala, Costa Rica, El Salvador, Honduras, Nicaragua, and Venezuela. The swap facility was for the equivalent of US$5 million.

August 1. Restrictions on payments for certain current invisibles were relaxed, while the regulations concerning capital transfers remained unchanged. The principal measures were the following. (1) The exchange allocation for tourist travel was raised from the equivalent of Q 2,500 a person a year (Q 300 a person a trip for travel in Central America) to Q 2,500 a person a trip for all destinations. (2) The allocation of Q 300 a person a trip for business travel in Central America was raised to Q 2,500 a person a trip, i.e., the standard allocation for other parts of the world. (3) The 100 per cent quetzal deposit that resident tourists were required to lodge with the Bank of Guatemala when purchasing travel exchange was abolished. (4) The maximum allocation for family remittances was raised from Q 700 to Q 1,000 a month for each beneficiary family, and higher amounts could be authorized for physically or mentally disabled persons. (5) Certain remittances formerly included under family remittances were authorized up to the equivalent of Q 250 a person a month, subject to a limit of Q 1,000 a month for each beneficiary family. These were remittances arising from rents, profits, interest, or dividends derived from property located in Guatemala or from funds invested in Guatemala (except foreign investment), and remittances of annuities, pensions, etc. (6) The monthly allocation for boarding and other expenses of students abroad was raised from Q 200 to Q 250. (7) The facilities for remittances for foreign technicians working in Guatemala were improved.

Guinea

Exchange Rate System

No par value for the currency of the Republic of Guinea has been established with the Fund. The unit of currency (introduced on March 1, 1960) is the Guinean Franc, defined as a monetary unit containing 0.0036 gram of fine gold. It corresponds to GF 44.44 = 1 French franc and GF 246.853 = US$1. The official buying and selling rates are GF 246 and GF 272 per US$1, respectively. These rates apply to all types of transactions and include a bank commission. Clearing account transactions under bilateral payments agreements are carried out on the basis of GF 247 per US$1. The buying rate for travelers checks is GF 243 per US$1.

Administration of Control

Exchange control authority is vested in the Central Bank of the Republic of Guinea; this authority has been delegated to the Exchange Control Office of the Bank. The Bank has not delegated any of its exchange control powers to any other bank or institution. The Minister of Financial Affairs is charged with supervision over the Central Bank. All settlements with foreign countries, including payments for imports, require approval by the Exchange Control Office.

Import and export licenses are issued, within the framework of an annual program, by the Ministry of Commerce (State Secretariat of Foreign Trade) after applications have been screened by the National Licensing Commission.

Prescription of Currency

Settlements on account of transactions covered by bilateral payments agreements are made in currencies prescribed by, and through accounts established under, the provisions of the agreements.1 Settlements with other countries are made in designated convertible currencies.2

Nonresident Accounts

There are two types of nonresident accounts: Nonresident Transferable Accounts in Foreign Currencies and Nonresident Accounts in Guinean Francs. The opening of a nonresident account is subject to the prior approval of the Exchange Control Office.

Imports and Import Payments

All imports, other than those under the Seven-Year Plan, require individual licenses, which are issued by the Ministry of Commerce, after applications have been screened and approved by the National Distribution Commission. Once an import license has been issued, authorization for the corresponding payment is granted by the Exchange Control Office. Imports by foreign concession holders require import licenses for statistical purposes only and are not restricted.

Most imports into Guinea are made within the framework of an annual import program. This program is prepared by the Ministry of Commerce on the basis of the country’s import needs, the domestic production possibilities of import substitutes, and experience with the previous year’s import program. The program requires the approval of the National Licensing Commission, which takes into consideration the sources of imports and the availability of convertible currencies and of balances under payments agreements.

Certain items are imported outside the import program. These are goods for which foreign exchange is derived from sources other than the exchange reserves of Guinea—e.g., imports made by foreign concession holders (the Fria Company and the Sifra Company) and by foreign embassies—and goods for the Seven-Year Plan. All commercial imports other than those by the Fria Company and the Sifra Company are made by state enterprises that specialize in various types of commerce.

All commodities are subject to import surcharges, except when imported by the Fria Company.

Payments for Invisibles

All payments for invisibles require the authorization of the Exchange Control Office, irrespective of the country to which the payment is to be made.

Payments for freight and insurance in connection with imports are authorized as part of the import license. No exchange is granted for other types of insurance with companies abroad. There is no basic allocation for tourist travel; each application is considered individually. There is a basic allocation for business travel expenses (other than transportation) of GF 15,000 a trip. Government officials on official missions are permitted an allowance of GF 2,000 a day if they travel in Africa and GF 2,500 a day if they travel outside Africa. Pilgrims are granted exchange up to the equivalent of GF 60,000 for each pilgrimage and, in addition, up to GF 190,000 to pay for fares connected with the pilgrimage. In cases of serious illness, provided that a doctor’s certificate is submitted, residents are granted foreign exchange for medical care abroad or are permitted to transfer exchange for the care of relatives receiving medical treatment abroad. Individual authorization is required for the payment in Guinea of all fares for foreign travel.

Payments for family support may be made up to GF 10,000 a month for each beneficiary, whether child or adult. For officially recognized study abroad, the student’s relatives may transfer the equivalent of the amount of a government scholarship, i.e., GF 22,500 a month. Students starting their studies abroad are granted an additional foreign exchange allowance of up to GF 40,000. The Foreign Investment Law guarantees that at least 20 per cent of the net annual profits of approved foreign investments may be transferred abroad; the percentage actually permitted to be transferred abroad depends on the agreement concluded between the enterprise concerned and the Government. In addition to transfers under other regulations, foreign planters are permitted to transfer abroad GF 4 per kilogram of pineapples exported, GF 3 per kilogram of bananas exported, and GF 2 per kilogram of citrus fruit exported. Expatriate workers employed by the public sector in Guinea may transfer abroad 30 per cent of their net monthly salaries if they are married and 20 per cent if they are single. In practice, however, all expatriate workers employed by the public sector are permitted to transfer up to 40 per cent of their net monthly salaries. Expatriate workers employed by the private sector may transfer abroad 25 per cent of their net monthly salaries if married and 15 per cent if single; in practice, the transfer of up to 30 per cent is permitted. The export of Guinean currency is prohibited.

Exports and Export Proceeds

The Ministry of Commerce establishes an annual export program, which requires the approval of the National Licensing Commission.

All exports require individual licenses in order (1) to assure the implementation of the export program (particularly in respect of commitments under bilateral trade agreements); (2) to permit the Treasury to levy certain duties (e.g., mining companies must pay export taxes of 6 per cent on the value of ores exported); (3) to prevent shortages of goods needed for domestic consumption; and (4) to prevent the export of capital. Special authorization from designated agencies is required in addition to the export license for the following commodities: wild animals (dead or alive), edible animals, articles of historical or ethnographical interest, jewelry, articles made of precious metals, and plants and seeds. An export license is granted only when the exporter assumes the obligation to surrender the proceeds immediately after they are collected.

Exports other than those effected by the Fria Company are made by a state institution, Guinexport. Foreign planters are granted special transfer privileges related to the quantity of pineapples, bananas, or citrus fruits exported (see section on Payments for Invisibles, above).

All export proceeds must be surrendered; however, the Fria Company and the Sifra Company are allowed to retain 66⅔ per cent and 25 per cent, respectively, of their export earnings.

Proceeds from Invisibles

Exchange proceeds accruing to residents in respect of invisibles must be surrendered. The import of foreign banknotes and travelers checks is permitted freely, subject to declaration on entry, but both must in principle be surrendered within 24 hours after entry. Nonresident travelers may repurchase and re-export the foreign exchange declared upon entry, after deduction of their local expenditures; this deduction cannot be less than the equivalent of US$20 for each day of their stay, unless evidence can be produced to show that actual expenditure was less. The import of Guinean currency is prohibited.

Capital

All capital transfers require authorization. Outward capital transfers by Guinean nationals are prohibited.

The Foreign Investment Law (Law No. 50/AN/62) of April 5, 1962, which replaced a more restrictive one of May 1960, provides guarantees against nationalization for foreign investments in the industrial and mining sectors; it also provides for preferential tax and customs treatment applicable to foreign investments and for the transfer of profits, interest, amortization, and proceeds accruing from the liquidation of such investments. Small and medium-sized enterprises in which at least GF 150 million is invested over a 3-year period may receive exemptions for a period of 7 to 10 years; exemptions for up to 25 years may be granted on long-term investments of particular importance to the Guinean economy. The actual conditions under which foreign investments may be made are subject to negotiations within the terms of this law.

Gold

Guinea has issued four commemorative gold coins which are legal tender. Furthermore, residents may hold and acquire gold coins in Guinea for numismatic purposes. With these exceptions, residents other than the monetary authorities and authorized industrial users 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 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 1970

January 1. Decree No. 361 of August 12, 1969 went into force. The import duty (droit unique d’entrée) was replaced by a double levy, i.e., a customs duty (droit de douane) and a fiscal duty (droit fiscal).

Guyana

Exchange Rate Ssytem

The par value is 0.444335 gram of fine gold per Guyana Dollar or G$2 = US$1. The Guyana dollar has a fixed relationship to sterling of G$4.80 = £1 and is freely convertible into sterling at this rate, subject to banking commissions. The central bank normally deals only in Canadian dollars, East Caribbean dollars, Jamaica dollars, pounds sterling, Trinidad and Tobago dollars, and U. S. dollars. In its dealings in sterling with commercial banks, the Bank of Guyana charges a commission of

of 1 per cent on inward transfers and
of 1 per cent on outward transfers (⅛ of 1 per cent, buying and selling, for East Caribbean dollars, Jamaica dollars, and Trinidad and Tobago dollars). The commercial banks’ charges for sterling, U. S. dollars, and Canadian dollars are
of 1 per cent buying and ⅝ of 1 per cent selling. Their buying and selling rates for East Caribbean dollars, Jamaica dollars, and Trinidad and Tobago dollars are ¼ per cent either side of parity. The commercial banks base the rates for currencies other than sterling, East Caribbean dollars, Trinidad and Tobago dollars, and Jamaica dollars on the current London market rates.

Guyana accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement as from December 27, 1966.

Administration of Control

Exchange control authority is vested in the Minister of Finance, who has entrusted its administration to the Bank of Guyana. Authority for approving normal import payments and providing allocations of foreign exchange for other current payments is delegated to the banks authorized for this purpose; certain payments in respect of current invisibles of a personal nature, however, require the approval of the Bank of Guyana. Import and export licensing generally is the responsibility of the Ministry of Trade; imports from CMEA countries and mainland China as well as all imports of specified goods are made only by the External Trade Bureau, a department of the Ministry of Trade.

Prescription of Currency

Guyana is a member of the Sterling Area and maintains prescription of currency requirements broadly similar to those of the United Kingdom.1 Authorized settlements with residents of other parts of the Sterling Area may be made in any Sterling Area currency. Authorized payments, including payments for imports, by residents of Guyana to residents of countries outside the Sterling Area other than Rhodesia may be made in any non-Sterling Area currency, in sterling to the credit of an External Account in any other part of the Sterling Area, or in Guyana dollars to the credit of an External Account in Guyana. Receipts from countries outside the Sterling Area other than Rhodesia may be obtained in any non-Sterling Area currency (in any specified currency 2 for export proceeds) or in sterling or Guyana dollars from an External Account.

Nonresident Accounts

Residents of other parts of the Sterling Area may maintain accounts in Guyana dollars in Guyana. These are treated in the same way as the Guyana dollar accounts of residents of Guyana; thus, no exchange control permission is required for transfers within the Sterling Area. There are two categories of accounts for persons who are not residents of Guyana or other parts of the Sterling Area: External Accounts and Blocked Accounts.

External Accounts may be opened, with exchange control approval, for nonresidents of the Sterling Area. They may be credited with all authorized payments by residents of Guyana to nonresidents of the Sterling Area and with transfers from other External Accounts; other credits require approval. They may be debited for payments for any purpose to residents of the Sterling Area, for transfers to other External Accounts, and for withdrawals by the account holder while he is in Guyana; other debits require approval.

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

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are prohibited. Imports of a few commodities are prohibited; for some goods, the prohibition is not applicable when they originate in other countries of the Caribbean Free Trade Association. Imports subject to individual licensing are specified in a “negative list”; they include coffee, sugar, certain vegetables, cereals, meat, poultry, dairy products, fats, copra, vegetable and animal oils, petroleum products and other fuels, building materials, certain chemicals, detergents, gold, diamonds and jewelry, firearms, grain-milling machinery, radios, and appliances. The granting of individual licenses and the conditions attached thereto depend on current policy; some goods are subject to quota while the others are licensed freely. Other goods may be imported under an open general license applicable to all countries of origin except Albania, Bulgaria, mainland China, Czechoslovakia, Eastern Germany, Hungary, North Korea, Poland, Rumania, and the U. S. S. R.; import quotas for commodities originating in these countries are based on the value of imports from them in 1964. The External Trade Bureau, a department of the Ministry of Trade, has a monopoly over the import of specified commodities from all sources and over all imports from the state trading countries mentioned. For certain garments, the open general license is not applicable to Japan.

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

Imports of all commodities not exempt from import duty are subject to a defense levy of 3 per cent ad valorem.

Payments for Invisibles

Payments for invisibles to other countries of the Sterling Area are permitted freely without limit. All payments for invisibles to countries outside the Sterling Area require approval, which, except for amounts in excess of the standard allocation for tourism, is given freely, provided that no illegal capital transfer seems to be involved. Standard allocations are applied to certain payments of a personal nature on an annual basis, e.g., for travel abroad (G$666),3 for education at schools abroad (G$3,360 for each child), for education at universities and comparable institutions (G$4,800 for each student), and for family maintenance (G$4,800). Resident and nonresident travelers are subject on departure to an exit tax of G$3 per person.

Travelers going abroad may take with them Guyana currency notes not exceeding G$100; these notes do not form part of any allotment of exchange for travel. In addition, Sterling Area or non-Sterling Area currency notes to the value of G$50 may be taken out as part of any travel exchange allowance.

Export and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are prohibited. Exports of rice to non-Caribbean countries may only be made by the Guyana Rice Corporation. Most exports are free of export license, but are supervised by the authorized banks and the Customs and Excise Department to ensure that the exchange proceeds are repatriated and, if obtained in specified currencies (see footnote 2), surrendered. Exchange control forms have to be completed only for exports exceeding G$2,000 in value.

Proceeds from Invisibles

Specified currencies (see footnote 2) received on account of invisibles must be sold to an authorized bank, but other currencies may be retained by the recipient. Travelers may bring in any currency notes freely.

Capital

Residents of the Sterling Area may freely invest in Guyana and repatriate their capital at any time in a Sterling Area currency. Nonresidents of the Sterling Area must obtain “approved status” for new investments at the time of investment in order to be able to repatriate capital. Such approval is normally given for direct investments in new projects that would benefit the balance of payments or the economy of Guyana; it carries with it an assurance that profits may be remitted and that upon liquidation of the investment the proceeds, including any capital increments, may be repatriated in full in non-Sterling Area currency.

The export of capital to non-Sterling Area countries by residents is not normally permitted. Specified currencies (see footnote 2) obtained by residents through capital transactions must be surrendered to an authorized bank, but other currencies may be retained by the recipient.

Gold

Residents may hold and acquire gold coins in Guyana for numismatic purposes. Residents other than the monetary authorities, authorized dealers, producers of gold, and authorized industrial users are not allowed without special permission to hold or acquire gold in any form other than jewelry or coins for numismatic purposes, at home or abroad. Neither the Bank of Guyana nor any other official institution purchases gold to supply domestic industry. Imports and exports of gold in any form require licenses issued by the Ministry of Trade; such licenses are not granted except for imports and exports by or on behalf of the monetary authorities, authorized dealers, producers of gold, and industrial users.

Changes during 1970

During the year, a number of commodities previously on open general license were made subject to specific import licensing.

January 1. The local investment requirements for life insurance companies operating in Guyana were raised significantly.

February 2. The East Caribbean Currency Authority became a party to the intraregional settlements agreement between the central banks of Guyana, Jamaica, and Trinidad and Tobago. Hence this agreement was extended to include the East Caribbean dollar issued on behalf of Barbados, the Leeward Islands, and the Windward Islands.

February 18. Certain local manufacturing industries were granted duty-free entry for their raw material imports.

March 10. A number of goods became subject, whether imported or locally produced, to a consumption tax by virtue of the Consumption Tax Order, 1970.

April 18. All trade with Portugal, including merchanting trade in either direction, was prohibited. A subsequent amendment specified that the term Portugal included all territories under Portuguese administration.

July 9. The External Trade Bureau began operations. All orders for imports from CMEA countries and mainland China had to be placed through the Bureau.

July 18. Exports of copper wire or scrap, unless effected by the Guyana Telecommunications Corporation, required a special license issued by the Minister of Home Affairs.

August 16. The Government announced its intention to acquire majority participation in the exploitation of all natural resources.

November 30. The Government announced plans to acquire an immediate controlling interest in the bauxite industry.

December 16. The External Trade Bureau was given a monopoly over the import of a number of foodstuffs and pharmaceuticals and of caustic soda, cement, and sulphuric acid.

Haiti

Exchange Rate System

The par value is 0.177734 gram of fine gold per Haitian Gourde or G 5.00 = US$1. This rate is applicable to all transactions. In addition to the gourde, the U. S. dollar is legal tender. Exchange transactions by commercial banks with the public are subject to small banking commissions; those by the National Bank with the commercial banks and specified customers are free from such commissions but are subject to a stamp tax of

of 1 per cent. On December 22, 1953, Haiti notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Prescription of Currency

There is no exchange control legislation and no obligations prescribing the method or currency for payments to or from nonresidents are imposed.

Imports and Import Payments

Although the law provides for the imposition of quantitative restrictions on imports, import licenses are not required. Imports from member countries of the Council for Mutual Economic Assistance and Japan, however, require prior authorization by the Ministry of Commerce and Industry. The Ministry’s prior authorization is also required for imports from any aource of certain types of footwear and of a few other items that are controlled for other than balance of payments reasons. In principle, payments abroad may be made freely, but certain payments are in arrears. Importers opening letters of credit at the National Bank are usually required to make cash deposits of up to 100 per cent of the amount of the letter of credit. Certain imports are subject, in addition to the applicable import duty, to surcharges of 4, 5, or 6 per cent of the c.i.f. value; goods subject to the 4 per cent or 6 per cent tax are also subject to an additional tax of 2 per cent. Importers must also pay an “econimic liberation tax” levied on the amount of the customs invoice; when this amount exceeds G 10,000, the tax is 1 per cent.

Exports and Export Proceeds

All exports except coffee require prior authorization from the Ministry of Commerce and Industry. Coffee exports are shipped through the Federation of Haitian Coffee Exporters. Export authorization is usually granted freely but may be withheld when domestic supplies are low. Exports of essential oils are restricted to maintain compliance with quality standards. Gold coins, bullion, etc., may be exported only by the National Bank of the Republic of Haiti. The proceeds of exports are not subject to exchange control. Exporters must pay an “economic liberation tax” levied on the amount of the customs invoice; when this amount exceeds G 10,000, the tax is 1 per cent.

Payments for and Proceeds from Invisibles

In principle, payments for invisibles are not restricted, but certain arrears exist at present and exchange allocations are made on a daily basis. No exchange control requirements are applied to proceeds from invisibles. A regulation, which is seldom applied, prohibits the export and import of U. S. banknotes in denominations of over $20.

Capital

Incoming and outgoing capital payments by residents or nonresidents are not subject to formal exchange control, but certain arrears have arisen in recent years and in practice exchange allocations for outward transfers of resident-owned funds are severely curtailed. Foreign investment in Haiti is regulated by a law of 1949 and a decree of March 13, 1963 and requires the approval of the Ministry of Commerce and Industry. Permission is not usually granted to nonresidents for investments in handicraft industries. Under a decree of June 27, 1957, revising a law of August 14, 1952, private banks operating in Haiti are required to keep in the form of domestic assets a minimum of 80 per cent of deposits collected from residents of Haiti.

Gold

Residents may hold and acquire gold coins in Haiti 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, at home or abroad. By virtue of a law of August 31, 1942, the National Bank has the exclusive right to purchase domestically and export gold in the form of coin, mineral, dust, or bars. Imports and exports of gold in any form other than jewelry carried as personal effects by travelers may be made only by the National Bank; exports require in addition prior authorization by the Ministry of Finance, while imports for industrial use require prior authorization by the Ministry of Commerce and Industry and the Ministry of Finance as well as an endorsement by the Ministry of Commerce and Industry before customs clearance. However, commercial imports of articles containing a limited amount of gold, such as gold watches, are freely permitted and do not require an import license or other authorization. A limited number of gold coins were issued in 1967 and sold mostly to nonresidents; these coins are legal tender.

Changes during 1970

January 30. A surtax of US$0.01 a pound on coffee exports was introduced.

February 2. The tax on coffee for export was increased by US$1.20 a bag.

Honduras

Exchange Rate System

The par value is 0.444335 gram of fine gold per Honduran Lempira, or L 2.00 = US$1. The official rates are L 2.00 buying, and L 2.02 selling, per US$1. Banknotes and coins in Costa Rican colones, Guatemalan quetzales, Nicaraguan córdobas, and Salvadoran colones are purchased at parity rates minus an official exchange commission of 1 per cent and sold at parity rates. Honduras has no exchange restrictions on foreign payments. Exchange may be purchased from local banks without restrictions; however, for statistical purposes, buyers are required to file an application stating how the exchange will be used. Earners of foreign exchange wishing to negotiate the exchange in Honduras may do so only with the Central Bank of Honduras or through the banking system for account of the Central Bank.

On August 19, 1950, Honduras notified the Fund that it had assumed the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, beginning on July 1, 1950.

Prescription of Currency

No obligations prescribing the method of currency for payments to or from nonresidents are imposed. Payments to Costa Rica, El Salvador, Guatemala, and Nicaragua in respect of trade and invisibles may be settled in Honduran lempiras through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. Payments to Mexico may also be settled in Honduran lempiras through the clearinghouse.

Imports and Import Payments

Import licenses are required for a few items. Payments and transfers abroad may be made freely; however, for statistical purposes, buyers of exchange are required to file an application stating how the exchange will be used. Imports originating outside the Central American Common Market are subject to a surcharge of 30 per cent of the applicable import duty.

Exports and Export Proceeds

Exports other than gold do not require licenses. The proceeds of exports are not subject to exchange control, and the foreign exchange may be retained or used for international transactions. Those wishing to negotiate their exchange in Honduras may do so only with the Central Bank or through the banking system for account of the Central Bank.

Payments for and Proceeds from Invisibles

These are not restricted.

Capital

Capital payments are not subject to exchange control. However, by virtue of Decree No. 73 of October 30, 1969, the authorization of the Minister of Economy and Finance is required for all activities implying the transfer abroad of capital. Foreign mutual funds and similar financial institutions require permission to collect funds in Honduras for deposit or investment abroad. The commercial banks and other credit institutions require the approval of the Central Bank to contract any foreign indebtedness.

Gold

Residents may hold and acquire gold coins in Honduras 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, at home or abroad. Imports and exports of gold in any form other than jewelry 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, industrial users, and producers of gold. All locally produced gold is exported in the form of ore for refining. Commercial imports and exports of jewelry and other articles containing gold require licenses issued by the Ministry of Economy; for most articles, these are granted freely.

Changes during 1970

March 5. A swap agreement was signed by the central banks of Honduras, Costa Rica, El Salvador, Guatemala, Nicaragua, and Venezuela. The swap facility was for the equivalent of US$5 million.

December 31. With effect from January 1, 1971, Decree No. 97 made the external customs tariff of the Central American Common Market applicable to imports from all sources. Also from January 1, 1971, the 30 per cent import surcharge imposed under the Protocol of San José on imports from outside the Central American Common Market was abolished, as was the consumption tax of 10 per cent or 20 per cent. (With effect from January 16, 1971, Decision No. 23 of the President of the Republic introduced a system comprising import controls, controls over borrowing abroad, and registration of export proceeds.)

Hong Kong

Exchange Rate System

The par value is 0.146631 gram of fine gold per Hong Kong Dollar or HK$6.06061 = US$1. The exchange rate system comprises official rates and free market rates; as far as rates for the U. S. dollar are concerned, these are, in practice, within 1 per cent of the par value. On December 31, 1970, rates in the official market were HK$14.530 buying, and HK$14.614 selling, per £ stg. 1, or HK$6.046 buying, and HK$6.116 selling, per US$1; rates in the free market on that date were HK$6.0825 buying, and HK$6.0838 selling, per US$1. The official market rates are those of authorized banks, based on the sterling—Hong Kong dollar rate (agreed informally by the three note-issuing banks with the Hong Kong Exchange Fund) and the sterling–foreign currency rates in the London foreign exchange market.

The official rates apply to all transactions in Hong Kong dollars against sterling, to the proceeds in U. S. dollars of exports not of local or neighboring origin, and to most authorized non-dollar transactions. The free market rates apply to other transactions.

Administration of Control

Exchange control authority is vested in the Financial Secretary of the Colony. Some 50 banks are authorized to conduct exchange transactions within the framework of the local regulations and subject to specific or general approval of the local control. These authorized banks are permitted to conclude exchange transactions only at the official market rates. The free market is operated by other banks and financial institutions. Import and export licensing is carried out by the Director of Commerce and Industry.

Prescription of Currency

The Colony of Hong Kong is part of the Sterling Area, and all settlements except those through the free market must be made by the method and in the currency prescribed in the exchange regulations, as described in the following paragraphs.

Settlements for exports to and imports from other parts of the Sterling Area may be made in any Sterling Area currency. Licenses are required, however, for all payments made from Hong Kong to, or received in Hong Kong from, residents of other parts of the Sterling Area, except that authorized banks may freely make or receive such payments in respect of the following: (1) bona fide trade between Hong Kong and other Sterling Area territories; (2) payments between authorized banks or their branches in the Sterling Area for the purpose of transferring banking funds to an authorized bank or for the settlement of the exchange transactions of an authorized bank; (3) bulk payments in favor of banks or recognized dealers in Hong Kong when the payments are for bona fide family remittances and no individual payment exceeds HK$8,000; and (4) other payments not exceeding £500 or the equivalent in other Sterling Area currencies.

Payment in Hong Kong dollars for exports to mainland China, the Republic of China, and Macao is permitted; imports from these territories may be paid for in Hong Kong dollars (but not to the credit of an External Account; see section on Nonresident Accounts, below) without exchange control approval. The proceeds of exports to all other countries outside the Sterling Area must be received in Hong Kong dollars from an External Account, in sterling from an External Account held with an authorized bank in the Sterling Area, in a foreign currency emanating from outside Hong Kong and freely exchangeable for sterling or Hong Kong dollars (the foreign currency must be surrendered to an authorized bank), or by international money order issued outside the Sterling Area. However, U. S. dollar proceeds of exports to the dollar area or to the Republic of Korea of goods originating in mainland China, the Republic of China, Hong Kong, the Republic of Korea, or Macao may be sold in the free market to the extent of the f.o.b. value of the goods; proceeds from freight and insurance payments have to be surrendered to an authorized bank. Payment for imports from countries outside the Sterling Area (except mainland China, the Republic of China, and Macao, as noted above) may be made by crediting sterling or Hong Kong dollars to an External Account or in any foreign currency.

For merchanting transactions by Hong Kong firms in goods bought from and sold to countries outside the Sterling Area, outgoing payments may be made in a Sterling Area currency to the credit of an External Account or in any foreign currency, provided that the incoming payment is received in a Sterling Area currency from an External Account or in a foreign currency from outside Hong Kong that is freely exchangeable for sterling or Hong Kong dollars. Subject to certain requirements, including the submission of evidence that the local regulations of the country of destination have been complied with, authorized banks may, on application by merchants in Hong Kong undertaking a transaction in goods for their own account, make payment to nonresidents of the Sterling Area for direct imports into other territories of the Sterling Area of goods originating outside the Sterling Area. Such payments may be made in sterling or Hong Kong dollars to an External Account or in any non-Sterling Area currency, provided that such currency has not been acquired in the Hong Kong free market.

Nonresident Accounts

The treatment of nonresident accounts distinguishes between those of residents of other parts of the Sterling Area (their accounts being treated in the same manner as accounts of residents of Hong Kong), those of recognized banks situated outside the Sterling Area (External Accounts), and those of other nonresidents outside the Sterling Area.

The accounts of companies and individuals resident outside the Sterling Area are treated in the same way as the accounts of residents, except that, without exchange control permission, they may not be overdrawn or be debited for any payment outside Hong Kong.1

The accounts of recognized banks situated outside the Sterling Area are termed External Accounts. These may be credited with permitted payments from residents of the Sterling Area, with transfers from other External Accounts, and with the proceeds from sales of foreign currencies to authorized banks. They may be debited freely, but they may not normally be overdrawn, and an order for the purchase of foreign currency may be executed only by an authorized bank.

Imports and Import Payments

Except for gold and certain dutiable or dangerous commodities, imports are free of license. If the prescription of currency requirements are fulfilled, and if related shipping documents are presented when the value of the consignment exceeds £250, the authorized banks may freely make payments to residents of countries in the Sterling Area for imports from the Sterling Area, and to residents of other countries for individual shipments not exceeding £ 10,000 in value from those countries.2 To make payment or establish letters of credit through an authorized bank for imports from the dollar area for local consumption or for re-export to mainland China, the Republic of China, or Macao, the importer must surrender to an authorized bank U. S. dollars or Canadian dollars in amounts equivalent to the value of the imports; these currencies may be purchased in the free market. Imports from mainland China, the Republic of China, or Macao are normally paid for in Hong Kong dollars (but not to the credit of an External Account), and exchange control approval is not required.

An exchange control form must be submitted for prior approval for payments for imports not covered by the regulations described above. These include (1) imports for which documents are not presented, payment is required in advance of shipment,3 and payment is not in accordance with the usual prescription of currency requirements; (2) goods imported specifically for re-export, and (3) all imports of diamonds, ships, and boats.

Payments for Invisibles

Payments made through authorized banks and not exceeding £500, or the equivalent in other Sterling Area currencies, to other parts of the Sterling Area do not require approval; for larger amounts, exchange control permission is necessary. The authorized banks have power to approve payments to nonresidents for most invisibles up to certain limits (no exchange control form is required when the payment does not exceed £100 or the equivalent). Payments for invisibles above these limits need the approval of the exchange control authorities, which is normally granted. The basic allowance of exchange at the official rate for residents (for exchange control purposes) of Hong Kong traveling to countries outside the Sterling Area or beyond Macao is £250 or the equivalent for each individual journey. Applications for exchange in excess of this allowance to cover genuine travel expenses may be made to the exchange control authorities. In any event, payments may be made freely through the free market by holders of Hong Kong dollars.

Exports and Export Proceeds

Exports to any destination of gold and certain strategic goods are subject to restrictive licensing; there are also a number of bilateral agreements with specified countries under which the export of certain textiles is restricted. For exports to countries outside the Sterling Area, other than mainland China, the Republic of China, and Macao, the exporter must submit to the Department of Commerce and Industry, for approval, a declaration showing how the export proceeds will be collected. If payment is not being received within six months and in accordance with prescription of currency requirements, the circumstances must be reported to the exchange control authorities. The U. S. dollar proceeds of exports to the dollar area or to the Republic of Korea of goods originating in mainland China, the Republic of China, Hong Kong, the Republic of Korea, or Macao are freely disposable to the extent of the f.o.b. value of the goods; proceeds from freight and insurance payments have to be surrendered to an authorized bank. The proceeds from exports must be obtained in accordance with the regulations (see section on Prescription of Currency, above).

Proceeds from Invisibles

Receipts exceeding £500, or the equivalent in other Sterling Area currencies, from other parts of the Sterling Area require permission. When freight and insurance on exports that have originated in mainland China, the Republic of China, Hong Kong, the Republic of Korea, or Macao, and that have been financed with U. S. dollars, are paid in Hong Kong by the exporter in sterling or in Hong Kong dollars, the exporter must surrender the U. S. dollar proceeds of that freight and insurance at the official market rate. Other exchange receipts from invisibles need not be surrendered.

Capital

Licenses are required for transfers abroad of capital in currencies other than the U. S. dollar; these are granted at the official market rate only for approved purposes or, if the equivalent in U. S. dollars has been sold to an authorized exchange bank, at the discretion of the local control. Exchange for the repatriation of foreign capital is normally provided at the official market rate if prior exchange control approval for the investment has been given. Transfers of capital may be made freely in Hong Kong dollars through the free market. However, licenses are required for all receipts from, as well as transfers to, other parts of the Sterling Area which exceed £500 or the equivalent in other Sterling Area currencies; these licenses are granted for all bona fide transactions between Hong Kong and other parts of the Sterling Area.

Gold

There is a free market for gold in which nonresidents who are not resident in Sterling Area countries may freely deal among themselves in bars and coins; settlements must take place in Hong Kong dollars or U. S. dollars through the free exchange market. Dealings in this market between Hong Kong residents also are unrestricted. Imports and exports of gold in any form other than jewelry, unless made by or on behalf of the monetary authorities, require licenses issued by the Financial Secretary. Imports and exports of bullion are not permitted, but transshipment to legitimate destinations is permitted. Imports and exports of gold jewelry not constituting the personal effects of a traveler require licenses issued by the Director of Commerce and Industry. Unless an import license has been granted, residents other than the monetary authorities are not permitted to purchase gold outside Hong Kong; export licenses are granted only for gold, other than jewelry, in transit. Residents may hold gold in any form in Hong Kong but not outside.

Changes during 1970

January 15. With approval of the Government, the Hong Kong gold market resumed trading in gold of 99 per cent fineness; previously trading was limited to gold of 94.5 per cent fineness.

June 5. The time limit for submission of import, export, and re-export declarations was extended from 4 days to 14 days and penalties were introduced for late submission.

Iceland

Exchange Rate System

The par value is 0.0100985 gram of fine gold per Icelandic Króna or IKr 88.00 = US$1. The official rates are IKr 87.90 buying, and IKr 88.10 selling, per US$1. Rates for other currencies are based on these rates and the dollar rates for such currencies in other countries. Rates for settlements through clearing accounts are fixed; the buying and selling rates maintained for the currencies concerned by the Central Bank of Iceland differ from their parities by 0.12 per cent buying and 0.14 per cent selling for clearing krónur, and the rate for clearing dollars is IKr 87.90 buying and IKr 88.10 selling. The authorized banks are permitted to carry out exchange transactions among themselves and to engage in arbitrage in foreign markets.

Administration of Control

The Ministry of Commerce, after consulting the Central Bank, has the ultimate decision on matters concerning import and export licensing and on payments for invisibles. The Central Bank of Iceland is responsible for the regulation of foreign exchange transactions and of exchange control, including capital controls, and for ensuring that all foreign exchange due to residents is surrendered to the authorized banks and that such exchange is disposed of as authorized. The two largest Icelandic banks, the National Bank of Iceland and the Fisheries Bank, are the only banks, other than the Central Bank, that are authorized to deal in foreign exchange. In addition, they issue import and exchange licenses in consultation with the Ministry of Commerce. Export licenses are issued by the Ministry of Commerce.

Prescription of Currency

Iceland is a member of the Sterling Area. All settlements with countries with which Iceland maintains bilateral payments agreements must be made exclusively through clearing accounts, denominated as follows: with Rumania and the U. S. S. R., in Icelandic krónur, and with Eastern Germany, in U. S. Dollars. As a general rule, exchange receipts from other countries must be obtained in convertible currencies. In practice, settlements with countries in the dollar area and with Brazil are made in U. S. dollars; with countries in the Sterling Area and some other countries, in sterling; and with certain other countries, in their respective currencies.

Nonresident Accounts

There are two categories of nonresident krónur accounts: Foreign Accounts and Special Accounts. The opening of nonresident accounts requires individual approval.

Foreign Accounts may be credited with the proceeds from the sale of foreign currency to authorized banks and with authorized payments due to nonresidents from residents. Balances on Foreign Accounts may be used freely for payments to residents and may without a license be converted into the currency of the country of residence of the account holder. These accounts are in practice seldom used, payments for international transactions generally being made in U. S. dollars, sterling, or other convertible currencies.

Special Accounts in krónur or foreign currency may be opened by agreement with an authorized bank. The most important of these accounts are those of foreign banks and foreign insurance companies. They may be credited freely, up to certain limits, with approved payments from residents.

Imports and Import Payments

All goods not included in the restricted list or subject to state trading (see below) may be imported freely (and, with minor exceptions, without an import license) from any country;1 about 90 per cent of total imports (1969 basis) is liberalized. Some 30 commodities or groups of commodities are included in the restricted list and are subject to quantitative restriction. Seven of these commodities are admitted, subject to individual license, under global quotas that apply to all countries with which Iceland does not maintain bilateral payments agreements.2 The remaining goods on the restricted list are admitted from the same countries on the basis of individual licenses issued on a discretionary basis (“other licensing”). The principal items involved are gasoline, gas oil, and fuel oil; they are imported mainly from the U. S. S. R. All goods on the restricted list require individual licenses when imported from bilateral payments agreement countries; licenses in this case are in principle issued in accordance with bilaterally agreed quotas, but in practice they are granted freely upon application for global quota items. Certain imports are only admitted under state trading; these include fertilizers, tobacco, matches, and alcoholic beverages. Furthermore, fresh vegetables and potatoes are imported under the auspices of the Agricultural Production Board in accordance with a government authorization. None of these commodities, however, is subject to quantitative restriction.

For imports from all sources, a fee of ½ of 1 per cent (minimum IKr 10.00) is charged as a license fee on the krónur amount of the import license when the license is issued; for petroleum products, however, this fee is 0.1 per cent. The commercial banks normally require certain advance deposits in connection with import transactions.

Importers of goods not requiring licenses do not have to obtain a foreign exchange permit prior to shipment from abroad, provided that the purchase is payable at sight. On the other hand, the goods will not be cleared by the customs unless payment has already been made or the importer has arranged with an authorized bank for the payment. An importer may either open a letter of credit or obtain a payment certificate which enables him at any time to buy foreign exchange to pay for the goods. For imports that require individual licenses, foreign exchange is granted in accordance with the terms stipulated in the license.

Importers may freely accept suppliers’ credit for up to 3 months from the date of arrival at an Icelandic port, except for specified nonessential goods (including motor vehicles for personal use, when imported from convertible currency countries). Credit in excess of 3 months and not exceeding 12 months requires permission by an authorized bank, while foreign credit in excess of 12 months is subject to government authorization.

Payments for Invisibles

No exchange license is required for government payments (such as interest and amortization on external loans, expenses of the foreign service, payments to international organizations, payments for postal, telegraphic, and telephone services), for banking commissions, or for bank charges on foreign exchange transactions.

Most other outgoing payments are licensed freely on the basis of bona fide documents. The basic allocation for tourist travel is the equivalent of IKr 21,000 (about US$240) a person for one trip a year (IKr 10,500 for children); if a second trip is made in the same calendar year, an additional allocation of 50 per cent of the basic allocation is granted. Applications for exchange for major repair of ships, repair of means of transport other than ships and aircraft, transactions and transfers in connection with direct insurance, and insurance business operations abroad are considered on their merits. The chartering of foreign ships usually is not allowed when Icelandic vessels are available for charter on normal terms.

Resident and nonresident travelers may take out up to IKr 1,500 in Icelandic banknotes and coins, in denominations not exceeding IKr 100. Nonresident travelers may re-export any foreign exchange they brought in upon entry.

Exports and Export Proceeds

All commercial exports require licenses. The shipping documents must be lodged with an authorized bank. Exchange receipts accruing from exports must be surrendered without undue delay. Export charges of 5.0–11.2 per cent are levied on the f.o.b. value of all fish products.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered without undue delay. The owners of Icelandic ships and aircraft are, with the approval of the authorized banks, permitted to retain their foreign exchange receipts from freight, passenger tickets, or other charges, and to use them for operating purposes and for purchases of necessities for the homeward journey of the ship or aircraft. Icelandic insurance companies which reinsure abroad are permitted to retain foreign exchange earned from premiums and indemnities and to use it to pay reinsurance premiums, claims, and other regular expenditures of the insurance business in the country where the foreign exchange was earned.

Resident and nonresident travelers may bring in up to IKr 1,500 in Icelandic banknotes and coins, in denominations not exceeding IKr 100. There are no limitations on the import of foreign banknotes and coins.

Capital

All investments by nonresidents in Iceland are subject to individual approval. The participation by nonresidents in Iceland’s joint stock companies may not exceed 49 per cent, and is not allowed in the fishing industry. Nonresident-owned foreign capital entering in the form of foreign exchange must be surrendered. Nonresidents may be authorized to open nonresident accounts for these funds, in which case their retransfer abroad may be permitted.

Residents are obliged to surrender foreign exchange accruing to them on account of capital transactions and payments. Without the approval of the Government, residents may not obtain loans abroad, including loans for financing imports, for periods exceeding one year. Applications for the contracting of financial credits and loans abroad for a period of less than one year are considered on their merits and approved only in exceptional circumstances. The contracting of commercial credits abroad for a period of between 3 and 12 months is also approved only in exceptional circumstances, e.g., in connection with the import of industrial raw materials for which the production process is lengthy, the import of construction materials, and so forth. The authorities permit the use of suppliers’ credit of up to 90 days, except for the financing of a number of specified imports, including motor vehicles for personal use (when imported from convertible currency countries),3 various household appliances, specified foods, various types of clothing, precious and semiprecious stones, watches and clocks, toys, and portland cement. Transfers of capital abroad by residents require approval, which is granted only in exceptional cases. However, direct investment abroad for the purpose of assisting the marketing of Icelandic products is normally permitted. Portfolio investment abroad by residents is prohibited. Outward transfers of inheritances, legacies, and emigrants’ assets are considered on their merits and are restricted.

Nonresidents may acquire Icelandic securities and other assets with imported funds; the transfer abroad of the proceeds from the sale of these assets and securities requires authorization. Securities held in Iceland by nonresidents must be registered, and all transactions and operations concerning them are subject to licensing. The import and export of securities by residents are subject to the approval of the Central Bank.

Gold

Residents may hold and acquire gold in Iceland, subject to certain legal requirements. Imports and exports of gold in any form other than jewelry 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. However, citizens returning to Iceland after a period of residence abroad may freely bring in any gold in their possession.

Changes during 1970

January 1. The global quotas for 1970 went into effect. They covered seven commodities or groups of commodities.

January 1. The license fee for import applications was made applicable also to clearing countries. The license fee for imports of petroleum products was reduced to 0.1 per cent.

February 13. An amendment to Law No. 41/68 went into effect. Licenses to operate business firms, which were previously restricted to Icelandic nationals, could be granted irrespective of nationality.

March 1. Iceland became a member of EFTA. A timetable for the removal of protective customs duties and quantitative restrictions on industrial products of EFTA origin other than petroleum and petroleum products started to operate; protective duties on such products were immediately reduced by 30 per cent. Customs duties were also reduced on many industrial raw materials and certain machinery from all most-favored-nation sources. The dismantling of import restrictions would take place on a global GATT-wide basis. Imports of certain commodities were fully liberalized for all GATT members, global quotas for certain other goods were increased, and global quotas were announced for certain goods previously subject to discretionary licensing. The general sales tax was raised from 7.5 per cent to 11 per cent (12.1 per cent where the importer is also the end-user). The special license fee of 15, 45, or 60 per cent of the f.o.b. value on imports of automobiles from all sources was abolished.

May 8. The allocation for tourist travel was increased from the equivalent of IKr 17,600 a person a year to the equivalent of IKr 21,000 a person a trip a year; for a second trip in the same calendar year an additional allocation of 50 per cent of the basic allocation could be obtained. The exchange allocation for participants in inclusive tours or group travel was increased from IKr 8,600–10,000 to IKr 12,000 a person. The exchange allowance for travel agencies for inclusive tours and group travel to Spain was increased from IKr 500 to IKr 600 a day, i.e., the level already applicable to other countries.

June 1. A new trade agreement with Hungary entered into force. The existing payments agreement was terminated and payments henceforth were effected in convertible currency.

October 1. Revised payments arrangements with Brazil entered into force. A credit agreement between the Central Banks of Iceland and Brazil, replacing the payments agreement of September 1, 1968, provided for settlements on a U. S. dollar basis. Previously, settlements were channeled through accounts denominated in pounds