Chapter

Country Surveys

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1976
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Afghanistan

(Position on December 31, 1975)

Exchange Rate System 1

On March 22, 1963, an initial par value was established of 0.0197482 gram of fine gold per Afghani, corresponding at the time to Af 45 = SDR 1. No exchange transactions take place at the par value. The Afghanistan Bank (the central bank) quotes official buying and selling rates for the U.S. dollar of Af 44.70 and Af 45.30, respectively. The official selling rate applies to certain foreign exchange payments by the Central Government (debt service, contributions to international organizations, and the foreign exchange requirements of Afghan embassies and missions abroad). The official buying rate applies to 40 per cent of the foreign currency salaries of foreign employees of the Government, government enterprises, and domestic companies and to purchases of bilateral agreement currencies for maintenance in Afghanistan of embassies and state trading organizations by the respective bilateral partner countries. The Afghanistan Bank charges commissions ranging from 110 of 1 per cent to ½ of 1 per cent on exchange transactions.

Special arrangements are applicable to cotton and wool when exported to bilateral countries, i.e., countries with which bilateral payments agreements are in force.2 The surrender rate for proceeds from wool exports to bilateral countries is Af 60 per US$1 (official rate plus subsidy of Af 15 per US$1), of which Af 3 must be held in a special account, resulting in an effective exchange rate of Af 57 per US$1. The surrender rate for proceeds from cotton exports to bilateral countries is in principle Af 60 per US$1 (official rate plus subsidy of Af 15 per US$1), but this arrangement has been temporarily suspended and for the time being settlement takes place at the free market buying rate of Af 57 per US$1.

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 generally maintains its operational free market selling rate for the U.S. dollar within Af 2.0 per US$1 of the free market rate quoted in the bazaar. On December 31, 1975, the free market rate of the Afghanistan Bank was Af 57 buying, and Af 59 selling, per US$1, and the free market rate in the bazaar was Af 54.28 buying, and Af 54.78 selling, per US$1. The Afghanistan Bank also posts free market rates for deutsche mark, French francs, pounds sterling, and Swiss francs, which reflect their relative values to the U.S. dollar in international markets, and free market rates for the Indian rupee and the Pakistan rupee, which are determined by demand and supply for the currencies concerned.

The Afghanistan Bank from time to time buys and sells in the free market bilateral agreement dollars and bilateral agreement sterling resulting partly from loans for consumer goods under certain of Afghanistan’s bilateral payments agreements; most of this exchange sold by the Bank is purchased by government commercial and industrial enterprises for their imports from the countries concerned. The selling rate for Czechoslovakian, U.S.S.R., and Yugoslav clearing dollars was Af 59.00 per US$1 on December 31, 1975, and that for clearing sterling under the payments agreement with the People’s Republic of China was Af 170.00 per £ stg. 1.

Administration of Control

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

Prescription of Currency

Settlements with countries with which Afghanistan has bilateral payments agreements 2 must be made in the foreign currencies specified in the agreements. The proceeds from exports of karakul, wool, and cotton to other countries must be obtained in convertible currencies. There are no other prescription of currency requirements.

Imports and Import Payments

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

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

Payments for Invisibles

Central government payments for foreign debt service and certain other invisibles are made at the official rate (but see footnote 1). All other payments are settled at free market rates. There is an exchange allocation from the banks for tourist travel abroad of the equivalent of US$800 a person a trip, for one trip a year, and for business travel of the equivalent of US$20 a day for a maximum of one month. The allocation for medical treatment abroad is US$20 a day for the United States, Europe, and Japan, and US$10 a day for other Asian countries; there are, in addition, allocations for accompanying persons. Specific permission is required for the export by travelers of foreign currency notes in excess of the equivalent of US$50. Travelers are not allowed to take out more than Af 500 in domestic banknotes.

Exports and Export Proceeds

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

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

Proceeds from Invisibles

Forty per cent of the foreign currency salaries of foreign employees of the Afghan public and private sectors must be converted into afghanis at the official rate, but the remaining 60 per cent may be remitted abroad or exchanged at the free market rate. Except in the case of India, receipts over bilateral payments agreement accounts from the embassies and state trading organizations of the countries concerned for their local expenses in Afghanistan are converted at the official rate. All other receipts from invisibles are sold at free market rates through either the banks or the bazaar. Travelers entering Afghanistan may not bring in more than Af 500 in Afghan banknotes.

Capital

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

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

Gold

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

Changes during 1975

During the year, the foreign exchange allocation for tourist travel was doubled.

February 16. The buying rate for U.S.S.R. clearing dollars was changed from Af 61 to Af 60 per US$1. and Yugoslav clearing dollars was changed from Af 65

February 26. The buying rate for Czechoslovakian and Yugoslav clearing dollars was changed from Af 65 to Af 64 per US$1.

June 30. The special exchange rate arrangements for proceeds from karakul, cotton, and wool exported to multilateral markets were eliminated, under which the foreign exchange had been eligible either for a fixed “ceiling rate” or the free market rate, whichever was lower. Such proceeds henceforth had to be surrendered at the free market rate, whatever its level.

June 30. The import of certain goods considered nonessential was prohibited. They included alcoholic and nonalcoholic beverages, plywood, chewing gum, honey, and various other foodstuffs. Subsequently, import duties on some 30 other items were increased.

July 12. The buying rates for Czechoslovakian, U.S.S.R., and Yugoslav clearing dollars were changed to Af 58 per US$1, and that for clearing sterling for transactions with the People’s Republic of China was changed to Af 175 per £ stg. 1.

October 29. The two special exchange rates for exports of walnuts to the U.S.S.R. and to other Eastern European countries were abolished; all exports of walnuts henceforth were settled at the free market rate, subject to the existing tax of 9.5 per cent.

October 29. The special exchange rate of Af 60 per US$1 for cotton exports to bilateral countries was suspended for a period of one year, during which the proceeds would be settled at the free market rate.

October 30. The Afghanistan Bank’s free market buying and selling rates for Czechoslovakian, U.S.S.R., and Yugoslav clearing dollars were changed to Af 57 and Af 59, respectively, and thus were unified with the “multilateral” free market rate for the U.S. dollar, which remained unchanged.

October 30. The buying rate for clearing sterling for transactions with the People’s Republic of China was changed to Af 170 per £ stg. 1. On November 22 it was further changed to Af 165 per £ stg. 1.

November. The proceeds from exports of natural gas, which previously were settled at the official buying rate, were converted at the Afghanistan Bank’s free market rate.

Algeria

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.180000 gram of fine gold per Algerian Dinar. Algeria avails itself of wider margins. Since January 21, 1974 Algeria has followed an independent exchange rate policy. Daily buying and selling rates for specified currencies 1 are established by the Central Bank of Algeria. On December 30, 1975, the Central Bank’s buying and selling rates for the U.S. dollar were DA 4.1175 and DA 4.1325, respectively, per US$1. The Central Bank charges on its transactions in foreign currencies a commission ranging from 0.2 per mill to 0.4 per mill, depending on the nature of the transaction, and a tax of 6 per cent on the amount of the commission. An encouragement premium is granted on the conversion of convertible currencies repatriated by Algerians working abroad.

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

Administration of Control

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

Prescription of Currency

Algeria has certain traditional ties with the French Franc Area but the Central Bank does not maintain an Operations Account with the French Treasury and Algeria in principle applies its exchange controls to transactions with all countries.2 Settlements with 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, the People’s Republic of China, Egypt, Guinea, Guinea-Bissau, Hungary, North Korea, Romania, the U.S.S.R., and Yugoslavia.3 Specified noncommercial settlements with Morocco and Tunisia are channeled through a dirham account at the Bank of Morocco and an account in Tunisian dinars at the Central Bank of Tunisia.

Nonresident Accounts

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

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

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

Final Departure Accounts may be opened, without prior authorization, in the name of any physical person residing in Algeria, but not of Algerian nationality, who intends to leave Algeria 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 funds are paid directly by a notary public; with the proceeds of the sale of securities through the intermediary of a bank; and with any other payments, up to DA 2,000. The Central Bank may authorize the crediting of other specific payments. These accounts may be debited without prior approval for certain payments in Algeria on behalf of the account holder. Outward transfers require individual approval; certain balances were released on September 25, 1974 for transfer abroad.

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

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

Imports and Import Payments

Imports from Israel, Rhodesia, and South Africa are prohibited. Certain imports are prohibited regardless of origin. Commodities listed under some 600 tariff headings and subheadings are liberalized and do not require import licenses. All other imports are permitted, in principle, in accordance with an annual import program. This is implemented mainly through global import authorizations (autorisations globales d’importation or AGI) granted to public enterprises or sometimes to private enterprises. A small number of restricted commodities (produits contingentés) requires an individual import license (autorisation préalable d’importation or API), unless covered by a global import authorization. Imports made “without payment” (sans paiement), i.e., imports which do not involve compensation of any kind, are exempt from all exchange and trade control formalities, but not from any absolute import prohibition, when valued at D 1,000 or less. The Government in principle has the monopoly over the importation of many commodities through Onaco, OAIC, SNTA, ONCV, SNED, SNS, Sonatrach, Sonacome, and other similar organizations, but imports are not necessarily restricted to the monopoly holders.

All 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. 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 imports may be approved by, and settled through, the Postal Administration up to an import value of DA 5,000. All individual import licenses require the visa of the Central Bank.

Importers may purchase the necessary exchange from the bank concerned when they have domiciled the transaction. Some imports may be paid for as soon as the transaction has been domiciled. For other imports, unless earlier payment is to be made in accordance with the provisions of the import license or of a commercial contract approved by the authorities, payment to the foreign exporter may be made only after the shipping documents have been presented to the bank; the importer may in this case, after having domiciled the import, open a documentary import credit payable upon presentation of the shipping documents.

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

Payments for Invisibles

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

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

For residents traveling by air or sea to other countries, including countries in the French Franc Area, the foreign exchange allocation is equivalent to DA 300 a person a trip (DA 150 for children under 15) and is issued on presentation of a valid passport and travel documents; for overland travel, the allocation is DA 300 a person a calendar semester for adults and DA 150 for children under 15. These allocations are not applicable to persons living in border areas. Foreign travel requires the approval of the wali of the traveler’s place of domicile. Algerian workers who hold a card of the Office National de la Main-d’Oeuvre (Onamo) are entitled to the equivalent of DA 500 a person for the first trip abroad, and to the equivalent of DA 200 a person for each subsequent trip. Foreign exchange for private business travel, unless debited to an EDAC or EDAB Account (see section on Exports and Export Proceeds, below), is subject to authorization by the Central Bank and allocations cannot exceed DA 1,500 a trip.

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

Exports and Export Proceeds

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

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 60 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 Ministry of Finance, and registration must always take place prior to customs clearance.

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

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

Proceeds from Invisibles

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

Capital

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

A new Investment Code, superseding that of 1963, was promulgated by Ordinance No. 66-284 of September 15, 1966. It provides for state guarantees in respect of foreign investments of more than DA 500,000 in the industrial and tourist sectors. The new code provides for a retransfer guarantee in respect of the sale or liquidation proceeds of invested foreign capital, and establishes that profit remittances on such investments will be permitted up to 15 per cent annually of the foreign capital originally invested. Tax facilities may also be granted, and investments of more than DA 5 million may be given exclusive rights in a specified geographic area and may be accorded tariff protection. Remittances of profits and retransfers of capital are permitted only in respect of investments approved under Ordinance No. 66-284.

Gold

Residents may purchase, hold, and sell gold coins in Algeria for numismatic purposes. 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 and dental 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 to be distributed by the Agence Nationale pour la Distribution et la Transformation de l’Or et des Autres Métaux Précieux (Agenor). This agency is also authorized to purchase in Algeria, and to hold, process, and distribute any other precious metal, and, within the exchange control regulations, to import and export any precious metal, including gold. Furthermore, locally produced gold must be sold to this agency. As at the end of 1975, Agenor had not yet come into operation and some of its functions continued to be performed by the Central Bank (e.g., the issuance of import licenses for dental gold). Commercial imports of jewelry and of other articles containing gold are prohibited.

Changes during 1975

February 6. A protocol was signed with Poland providing for a changeover from a clearing regime to settlements in convertible currencies. Notice No. 87 of April 3, 1975 announced that the payments agreement with Poland had expired, that only payments relating to contracts concluded before January 1, 1975 could still be settled through the clearing account, and that the latter would be closed on April 30, 1975.

March 12. Notice No. 85 revoked the provisions of the last paragraph of Notice No. 5ZF of November 13, 1963. An instruction of the Ministry of Finance would specify the transfer methods for balances in Final Departure Accounts held by any physical person resident in Algeria but not of Algerian nationality who planned to leave Algeria permanently to return to his country of origin.

May 13. Notice No. 86 provided for certain changes in the procedures governing imports made “without payment.” The Notice was not applicable to passenger automobiles (which remained subject to Order No. 103 and Notice No. 73 of June 12, 1973) or to gifts (when governed by special trade or exchange regulations). Imports “without payment” were defined as those which involve neither payment in foreign exchange nor the payment of dinars into a resident or nonresident account of any kind, nor the use of balances in EDAC or EDAB accounts, or compensation in merchandise or in any other form. If the value of such imports did not exceed D 1,000, they were exempt from all exchange and trade control formalities, but not from any absolute import prohibitions. Imports “without payment” valued at over D 1,000 were to be either charged against the global import authorization if the importer held one, or otherwise required the prior approval (license) of the Ministry of Commerce (whether the goods were liberalized, restricted, or under monopoly). In the latter case such imports were charged against the amounts allocated for the same items in the annual general import program. Previously, all imports “without payment” required the prior approval of the Ministry of Commerce, and they were not charged against general authorizations.

Notice No. 8 of September 27, 1963, Notice No. 182F of April 20, 1964, and Articles 101-103 of Notice No. 727 of November 25, 1961 were revoked.

May 20. Ministry of Commerce Circular No. 2050 provided that state enterprises could place direct orders, within the limits of the global authorizations issued to them, for certain imports related to production or maintenance and to the execution of investment programs (List B imports); previously, such imports had required prior approval by state trading monopolies controlling such goods.

May 20. Two Orders were issued containing new lists of prohibited imports and restricted imports. (The Orders were not gazetted until February 20, 1976.)

May 22. Notice No. 89 provided that, as an exceptional measure, the transfer in installments would be authorized of balances held on Suspense Accounts opened in the names of nonresident physical persons of foreign nationality. An instruction by the Ministry of Finance was to set out the conditions for the implementation of the Notice.

May 24. Instruction No. 36 of the Ministry of Finance provided that applications for the transfer of balances in Suspense Accounts in excess of D 20,000 had to be submitted to the Central Bank by August 31, 1975. Transfers of lower amounts could be authorized by the bank with which the account was held. Both facilities related to accounts opened before January 1, 1975.

August 1. The bilateral payments agreement with Czechoslovakia expired.

August 1. Ordinance No. 75-56 was published, which created the Algerian Foreign Trade Institute (Comex).

October 13. A bilateral payments agreement was signed with Guinea-Bissau. It came into force immediately.

December 19. A Code de Commerce (Ordinance No. 75-59 of September 26, 1975) was published.

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

December 31. The bilateral payments agreements with the People’s Republic of China, Hungary, Romania, and Yugoslavia expired.

Argentina

(Position on December 31, 1975)

Exchange Rate System

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

At the end of 1975 all exchange transactions took place in a dual exchange market. The financial market covered the f.o.b. value of trade transactions (except imports and exports of gold and exports of a few other commodities) and foreign loans, and the special financial market all other transactions. On December 31, 1975 the buying and selling rates in the financial market were $a 60.80 and $a 60.97 per US$1, respectively, and those in the special financial market were $a 86.40 and $a 86.62 per US$1, respectively.1

Sales of foreign exchange to residents for travel purposes (other than official travel) are subject to an exchange tax of $a 4.00 per US$ 1.2 Certain remittances of profits and dividends are subject to a tax ranging from 20 to 40 per cent. Exchange transactions between banks and individuals, other than transactions in banknotes, are subject to a tax of 1 per cent (10 per mill) on sales to customers and 3 per mill on purchases.

Forward exchange transactions may be concluded between private firms and authorized banks or among authorized banks at the prevailing financial market rate, subject to freely agreed premiums or discounts. Forward exchange purchases by private firms are restricted to those concluded as part of a swap transaction. Swap operations must be submitted to the Central Bank for prior approval. Foreign exchange insurance covering import payments requires a 100 per cent deposit in local currency for 180 days; this deposit may not be financed by local banks.3 Forward exchange contracts connected with 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 financial forward exchange market as a seller of U.S. dollars at a premium which at the end of 1975 was 40 per cent per annum for imports and 32 per cent per annum for swaps.

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

Imports are in principle free of import and exchange licensing. However, certain import suspensions are in effect.4 In addition, all imports by the private or public sector require a sworn declaration of need (declaración jurada de necesidad) submitted by the importer to the National Import Board. Furthermore, all public sector imports are screened by a special body, the Asesoría de Importaciones del Sector Oficial, and must be approved by the Ministry of Commerce. The declarations of the eight foreign-owned automobile assembly plants are automatically authorized if they have received the prior approval of the Secretary of State for Industrial Development. Within 90 days after submitting their declarations, importers must make an advance deposit equivalent to 10 per cent of the total import value applied for; this amount is applied to the obligatory exchange rate guarantee deposit.

Imports of capital goods are normally allowed only if there is no local production, and imports of some vehicles, tractors, and engines are prohibited. Imports of used goods have been suspended until December 31, 1977, but used capital goods may be imported if authorization is obtained from the Secretary of State for Industrial Development.

Minimum financing requirements have been established for capital goods valued at more than US$10,000. The relevant import value is calculated as the cumulative imports by the same importing firm within any 12-month period. Payment against delivery of shipping documents for transactions in excess of US$10,000 is limited to 15 per cent of the f.o.b. value, of which 5 per cent may be paid in advance at the time of formalizing the purchase. Depending upon the cumulative import value, minimum grace periods ranging from 6 months to two and one half years and minimum maturities of up to six years for transactions of up to US$500,000 are required on the balance. The Central Bank must be consulted to determine acceptable financing terms for imports valued at more than US$500,000. Capital goods imports by the public sector require prior approval by the Central Bank. For most goods not covered by the preceding provisions, minimum foreign financing of 180 days is required. The Central Bank may approve financing of less than 180 days.

For most imports subject to the 180-day financing requirement, a deposit equal to 100 per cent of the f.o.b. value of the import must be made for the duration of the 180-day financing period. This deposit serves to guarantee the exchange rate, and there is a 40 per cent charge for this exchange cover. If the initial financing is extended for an additional 180 days, exchange cover may be obtained for this period with no additional deposit or charge. The following imports are exempt from the obligatory exchange rate guarantee deposit: public sector imports, capital goods imports covered by the minimum financing requirements discussed above, goods of LAFTA origin, inputs for the production of industrial exports, and imports by the automobile assembly industry. In addition to the exchange rate guarantee deposit, an advance import deposit equal to 40 per cent of the c. & f. value is required for certain private sector imports (see below).

Import taxes include the following: a consular fee of 3 per cent payable normally in foreign currency on most import invoices; statistical taxes of 1 ½ per cent or 310 of 1 per cent applicable to all imports; a stamp duty of 0.6 per cent; taxes ranging from 4 per cent to 10 per cent on imports of paper products, certain types of timber and timber products, and forest products; and sales taxes ranging from 5 per cent to 22 per cent. All maritime imports are subject to a tax of 12 per cent on the freight, unless transported in Argentine vessels.

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

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 established in the Province of Tucumán, by certain institutions, or according to the intended use of the goods; in addition, 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 for the commodity to be imported. It must be lodged before any of the following actions can be undertaken: opening a letter of credit; withdrawing shipping documents from the intermediary banks; purchasing forward exchange; or clearing goods through customs. The deposit is automatically refunded after 180 days.

Payments for Invisibles

With the exception mainly of travel expenses, family remittances, and remittances of profits, dividends, royalties, and technical fees, payments for invisibles may be made freely through the special financial market. However, allocations of foreign exchange for licensing fees, royalties, and technical services are subject to prior approval of the contracts by the National Registry of Contracts, Licenses, and Transfer of Technology. Persons and firms eligible for remittances of profits, dividends, and royalties are not granted foreign exchange in amounts greater than US$1,000 for each transaction, but instead are permitted to purchase negotiable five-year U.S. dollar-denominated external bonds issued by the Government. These may be freely exported and imported.

The sale of exchange for private travel abroad normally is limited to US$50 a person a day, up to US$350 a person a trip (half of these amounts for children), or, for neighboring countries, US$25 a person a day, subject to a limit of US$175 a person a trip. The exchange must be purchased in the special financial market and is subject to an exchange tax of $a 4.00 per US$1 (but see footnote 2). Of the travel allocation for neighboring countries, up to the equivalent of $a 400 may be taken out in the form of banknotes of the country of destination; the limit on banknotes and travelers checks is $a 1,000 for travel to other countries.5 Travelers may take out any amount in domestic banknotes and coins except gold coins.

Exports and Export Proceeds

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

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

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

Proceeds from Invisibles

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

Capital

Exchange proceeds from capital inflows received by residents must be surrendered in the special financial market within 30 days of receipt, with the exception that proceeds from foreign loans must be sold in the financial market. There are no limitations on inward capital transfers by residents or nonresidents. Outward capital transfers are restricted. Argentine external bonds may be exported freely. Sales of exchange in connection with investments, placements, or deposits within Argentina or abroad require the prior approval of the Central Bank. Argentine industrial or commercial firms require the authorization of the Central Bank to enter into swap operations under which loans may be accepted in a convertible currency. Foreign borrowing by the public sector is regulated by Decree-Law No. 19328 of October 29, 1971 and Decree No. 3532 of November 25, 1975.

The former Foreign Investment Law (Decree-Law No. 19151 of July 30, 1971) provided that all new foreign investments must have government approval and must be registered. Profits and dividends could then be remitted from the end of the first year of operation. The firms concerned were permitted to receive domestic short-term credit up to 50 per cent of their registered capital and accumulated reserves; this limitation did not apply to export credit. Foreign companies established in Argentina prior to the promulgation of the law were required to register their capital in the investment register in order to be eligible for remittances of profits and dividends or for repatriation of capital. Implementing regulations were contained in Decree No. 2400 of April 27, 1972.

A new Foreign Investment Law (Law No. 20557 of November 7, 1973, implemented by Decree No. 413/74 of February 22, 1974) provides that all new foreign investment must be made under the terms of a contract negotiated with the “Implementing Authority.” The law distinguishes, according to the degree of foreign ownership, between national, mixed, and foreign companies. In the case of companies with 51 per cent or more foreign participation, the contract must be approved by the Congress; for companies with between 20 per cent and 51 per cent foreign capital, the contract needs approval by the President. Repatriation of capital may not take place until at least five years after the investment was made, and the annual amount of repatriation must not exceed 20 per cent of the capital eligible for repatriation. No repatriation of capital is permitted if it endangers the continued existence of the firm. Each contract establishes a maximum limit of domestic short-term indebtedness, and no long-term domestic indebtedness may normally be incurred.

Remittances abroad of profits and dividends are limited to 12.5 per cent or a rate exceeding by 4 percentage points the rate for time deposits of 180 days in the foreign country concerned, whichever is higher, calculated on the basis of the foreign capital eligible for repatriation. Existing foreign and mixed companies in Argentina may remain subject to their previous regulations or negotiate a contract under the new law. However, if they choose the former option, their remittances of profits and dividends become subject to a special transfer tax varying with the annual amount of the remittance as a percentage of foreign capital invested.

Gold

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

Changes during 1975

January 1. New rules for settlements under reciprocal credit agreements came into force (Central Bank Circular R.C. 511 of December 20, 1974).

January 3. Decree No. 10/75 increased the tax on the sale of exchange for foreign travel from $a 2.00 to $a 4.00 per US$1.

January 3. The maximum exchange allocation for travel to neighboring countries was reduced from US$300 to US$70 a person a trip.

January 22. Circular R.C. 514 redefined some regulations governing the control of exchange sales for foreign travel. It also stipulated that shipping lines, airlines, and their agencies could collect in local currency from Argentine citizens and residents traveling abroad only payments for passages and freight but not for other services, such as hotel accommodations.

January 31. The deposit requirement for purchases of forward exchange in respect of import payments was increased from 40 per cent to 100 per cent.

January 31. The rate of advance deposit for certain imports was raised from 40 per cent to 100 per cent of the c. & f. value (Central Bank Telephone Communication No. 3148). This action was reversed on June 2.

February 28. Executive Decree No. 534 vested in the Ministry of Economy the power to set the exchange rate at which transactions under Article 4 of Decree No. 3952/71 are settled.

March 3. In accordance with the powers granted by Executive Decree No. 534, the Ministry of Economy depreciated the peso from $a 5.00 to $a 10.00 per US$1 in the commercial market and from $a 9.93-9.98 to $a 15.05-15.10 in the financial market (Ministry of Economy Resolution No. 286).

March 3. Ministry of Economy Resolution No. 286 modified the exchange market assignment for export proceeds. F.o.b. proceeds of manufactured products contained in the lists appended to Decree No. 3255/71 (as amended), except those contained in the annex to the Resolution, could henceforth be sold in the financial market. Sixty per cent of f.o.b. proceeds from the sale of the 31 items listed in the annex to the Resolution (including fruit, tobacco, hides and skins, quebracho extract, and cotton fiber) could be sold in the financial market. All other export proceeds had to be liquidated at the commercial exchange rate.

March 3. Ministry of Economy Resolution No. 287 adapted the system of export levies and subsidies to the new exchange market regime. For items neither listed in Decree No. 3255/71 (as amended) nor in Resolution No. 287 itself (the listing in which was identical with the one in Ministry of Economy Resolution No. 286), export tax rates were raised from a range of 0-59 per cent to one of 13-64 per cent. For the 31 items listed in the appendix of Resolution No. 287, export subsidies (reembolsos) of 0-40 per cent were replaced by a range of taxes and subsidies, from export taxes of 23 per cent to subsidies of 10 per cent. For the items contained in the lists appended to Decree No. 3255/71 (as amended), export subsidies of 0-40 per cent were replaced by a range of taxes and subsidies, from export taxes of 20 per cent to subsidies of 15 per cent. Exports to nontraditional markets of products whose lists were appended to Decree No. 3255/71 (as amended) or Resolution No. 287 were taxed 5 per cent lower or subsidized 5 per cent higher. Certain specified products were given special rates of taxation or subsidization.

March 3. Ministry of Economy Resolution No. 288 separated imports into three lists. List A contained essential imports (some 3,000 items, including petroleum, coal, industrial raw materials, and chemicals) that could be paid through the commercial market. Up to 40 per cent of the foreign exchange for imports of 201 items (mostly capital goods) in List B could also be purchased in the commercial market. For 163 items of List B the resulting mixing rate applied only if the goods imported were to be used in the extractive industries or in the production and distribution of electricity. List C contained the remaining import items, which had to be paid through the financial market. Also to be settled in the financial market were (1) goods exempt from import suspension by virtue of being included in the Argentine national list for LAFTA or in the special list for imports from Bolivia, Ecuador, Paraguay, and Uruguay, as well as goods included in Decree No. 4091/72 (as extended by Decree No. 2649/73); (2) imports of parts to be incorporated in exports; (3) certain imports of models and prototypes; and (4) goods exempt from import suspension by virtue of Decrees Nos. 2118/71 and 7250/72 (as amended).

March 3. Ministry of Economy Resolution No. 289 modified the regime of sworn declarations of need for imports by abolishing their automatic endorsement and by restricting needs covered by them to four months.

March 3. Certain exemptions from the advance import deposit requirement were rescinded (Circular R.C. 520). These exemptions were reintroduced, however, on March 10 (Circular R.C. 522).

April 14. Ministry of Economy Resolution No. 446 confined all foreign exchange transactions to those financial institutions subject to Decree-Law No. 18061/69 (as amended). As a result, operations of exchange houses, exchange agencies, and exchange offices were suspended.

April 14. A special exchange rate of $a 21.00 per US$ 1 was introduced for the sale of exchange for foreign travel; the exchange tax of $a 4.00 per US$1 continued to apply (Ministry of Economy Resolution No. 445).

April 15. Circular R.C. 524 tightened minimum payments conditions for imports of capital goods (as defined in its appendix). Depending on the annual value of imports per final user, the balance remaining after payment of 15 per cent of the f.o.b. value was subject to a fixed minimum schedule of grace and amortization periods. For terms on annual imports of over US$500,000 the final user had to consult the Central Bank. All public sector imports of capital goods were made subject to prior Central Bank approval. Except for forward exchange purchases, transactions under this circular were exempt from advance import deposits.

April 23. All sworn declarations of need for imports were declared invalid (unless the goods had already arrived in Argentine ports, had been shipped to Argentina, or were covered by irrevocable letters of credit already sent abroad). The opening of any new documentary credit covered by a sworn declaration required the prior approval of the Central Bank.

May 2. The exchange allocation for travelers with destinations other than neighboring countries was reduced to US$30 a person a day, subject to a maximum of US$600 (previously US$900). No more than $a 500 could be taken out in banknotes and travelers checks. For children between 3 and 12 years of age, the entitlement was 50 per cent of the adult allowance (Circular R.C. 526).

May 14. Circular R.C. 527 abolished the special payments arrangements for imports of petroleum and petroleum products from Venezuela (specified in Circular R.C. 392). Payments henceforth were made under the reciprocal credit agreement with that country.

May 27. Ministry of Economy Resolution No. 693 established import regulations for the second half of 1975. Importers with records covering 1973 were invited to submit sworn declarations of need for up to 112 per cent of the volume imported in the second half of 1973. Prices quoted had to conform with reference prices established by the State Secretariat for Foreign Trade and International Economic Negotiations. Stocks on hand on December 31, 1975 were not to exceed 10 per cent of the maximum authorized import volume for 1975; any volume exceeding that percentage was to be multiplied by five and subtracted from the import entitlement for 1976. An interagency Import Committee would examine the position of importers without records for 1973.

May 28. The sale of forward exchange to cover import transactions was prohibited (Circular R.C. 530).

May 28. Telephone Communication No. 3232 temporarily suspended all sales and remittances of foreign exchange, except for purposes specified in that Communication. Exchange sales were still permitted for most imports, for transactions related to foreign loans, for travel expenses, and for other types of transactions expressly authorized by the Central Bank.

June 5. The peso was depreciated from $a 10.00 to $a 26.00 per US$1 in the commercial market and from $a 15.05-15.10 to $a 30.00-30.09 in the financial market (Ministry of Economy Resolution No. 8). The price of exchange for foreign travel (excluding the exchange tax of $a 4.00 per US$1) was increased from $a 21.00 to $a 41.00 per US$1 (Ministry of Economy Resolution No. 9).

June 5. Export proceeds (f.o.b.) and import payments (f.o.b., but including interest under deferred payment terms) were henceforth settled entirely in the commercial market (Circular R.C. 532).

June 5. Ministry of Economy Resolution No. 12 revised export duties and subsidies. For commodities in the attached List I (in general, nonpromoted exports) export duties were fixed at 10-45 per cent. Goods in List II (in general, promoted exports) were subject to duties or subsidies ranging from a duty of 10 per cent to a subsidy of 15 per cent. Items not included in either list (mostly certain animal by-products) were subject to a duty of 50 per cent.

June 5. Imports of certain types of electrical and optical goods were suspended indefinitely.

June 5. All imports already en route to Argentina or in Argentine ports had to be cleared through customs by August 30, 1975. All other imports under sworn declaration could only be effected if letters of credit were transmitted abroad by July 15. All pending sworn declarations submitted since March 12, 1975 would be screened by the State Secretariat for Foreign Trade and International Economic Negotiations. Declarations would be approved only for goods in Lists A and B of Circular R.C. 519 (Ministry of Economy Resolution No. 11).

June 9. The Central Bank increased its maximum forward premium from 16 per cent (effective since May 2, 1974) to 18 per cent per annum.

June 10. Circular R.C. 535 made exchange rate insurance for imports obligatory, against a deposit of 100 per cent of the peso equivalent of the goods. The deposit was to be used for the purchase of the foreign exchange when payment fell due. Capital goods under Circular R.C. 524 and public sector imports were exempt. Banks were not permitted to finance the deposits, which also could not be used as collateral vis-à-vis third parties. The advance import deposit requirements remained in effect, but advance deposits no longer had to be constituted before obtaining exchange cover. Implementing guidelines were issued by Circular R.C. 537 of June 17.

June 13. Ministry of Economy Resolution No. 48 exempted goods in List C from the prohibition of Ministry of Economy Resolution No. 11 when originating in LAFTA countries.

June 18. The Government signed an agreement with the eight foreign-owned automobile assembly plants whereby these undertook to postpone all payments abroad for two years (estimated at about US$500 million) and obtained the following: (1) freedom of domestic pricing policy; (2) exemption from advance deposit and exchange insurance requirements for their imports; and (3) an assurance of automatic authorization of their sworn declarations of need by the State Secretariat for Foreign Trade and International Economic Negotiations, provided that these related to imports approved by the State Secretariat for Industrial Development.

Payments outside the LAFTA clearing arrangements for shipments made before June 30, 1975 were to be deferred by one year, while those for shipments made between July 1, 1975 and June 30, 1977 would be deferred by two years. As regards imports shipped before June 30, 1975, the importing plant had the option of (1) receiving up to 180 days after shipment, against a deposit in pesos, at the exchange rate prevailing at the time of deposit, a one-year promissory note in foreign currency from a duly authorized official bank, or (2) purchasing 180 days after shipment forward exchange for delivery 360 days after shipment. For shipments effected between July 1, 1975 and June 30, 1977, importers would obtain two-year promissory notes under the same circumstances as under the first option above. Provisionally, 50 per cent of the assembly plants’ exchange surrenders from sales outside the LAFTA clearing arrangements were earmarked for the eventual discharge of these import payments.

The assembly plants also agreed (1) to accept external bonds with seven years’ maturity for royalty and technical assistance payments, (2) to refrain from any profit remittances until June 30, 1977, and (3) not to reduce their foreign swap liabilities until the end of 1975.

June 19. Telephone Communication No. 3255 partially reopened the exchange market for transactions in current invisibles that had been suspended by Telephone Communication No. 3232 of May 28. The reopening affected mainly transactions relating to commercial operations.

June 28. Persons traveling abroad were required to pay the difference in pesos between the exchange rate in effect at the time tickets were purchased and the rate ruling five days before trips were started (Circular R.C. 539 of June 19).

June 30. Circular R.C. 540 clarified that the provisions of Circular R.C. 524 on minimum terms for imports of capital goods did not apply to parts intended as inputs for the production of capital goods.

July 3. The export proceeds (f.o.b.) from 31 items in the list of Ministry of Economy Resolutions Nos. 286 and 287 of March 3 could henceforth be surrendered at the exchange rate prevailing at the time the shipping permit was approved (Circular R.C. 541).

July 8. Importers were required to submit in November and May six-month import programs, in the form of sworn declarations of need, for the semesters beginning January and July, respectively (Ministry of Economy Resolution No. 88). Only for capital goods and related spare parts could import programs be submitted at any time. With the exception of public sector imports, and of private imports covered either by promotional regimes or special sectoral agreements within LAFTA (global programs), such import programs had to be detailed by NADI subitems or by individual product and presented to an authorized exchange dealer; the latter was to verify that the proposed program was reasonable and complied with the exchange insurance provisions. The program then was registered with the National Import Board. Global programs could be presented direct to the National Import Board for approval. A program was to be considered reasonable if the importer was financially responsible and if the intended imports were genuine and conformed with existing import regulations.

Exchange rate insurance had to cover at least 10 per cent of any import program. At their option, final users could, by depositing the peso equivalent, guarantee the exchange rate on 100 per cent of imports, but not more than one third of the total value could be covered on goods for resale. Full exchange rate insurance was available on a voluntary basis for (1) books, newspapers, and periodicals; (2) capital goods subject to the minimum payment terms of Circular R.C. 524; and (3) goods imported under sectoral agreements between the Government and individual industries. Public enterprises and private importers of specified capital goods were free to cover 100 per cent of their imports but were obliged to cover 20 per cent of their imports in the period July 1–December 31, 1975. The minimum cover ratio was to be raised to 40 per cent and 60 per cent in the first and second half of 1976, respectively; thereafter full cover would become compulsory.

The Central Bank was empowered to charge a penalty where less than 80 per cent of the import value approved in a program was shipped during the semester. On the other hand, authorized exchange dealers and the customs authorities could permit excess imports of up to 10 per cent. For the remainder of 1975, import programs could be submitted at any time.

July 15. The Ministry of Economy announced it would grant separate exchange rate treatment to packaging and product proper, for certain agricultural and livestock exports where packaging constituted a substantial proportion of the export value. At his option, the exporter would be able to sell an established proportion of his f.o.b. proceeds at the financial rate, free of export taxes, while the remainder was to receive the exchange rate and fiscal treatment corresponding to the commodity’s NADI classification (Ministry of Economy Resolution No. 131).

July 16. The peso was depreciated from $a 26.00 to $a 28.08 per US$1 in the commercial market and from $a 30.00-30.09 to $a 35.40-35.50 per US$1 in the financial market (Ministry of Economy Resolution No. 132).

July 16. The sales price for travel exchange was raised from $a 41.00 to $a 50.00 per US$1. The maximum exchange allocation for travel to noncontiguous countries was reduced to US$210 a person (Ministry of Economy Resolution No. 133).

July 16. Circular R.C. 544 revised the exchange market classification All export proceeds from goods included in List I and from goods not included in List II of Ministry of Economy Resolution No. 129 were to be surrendered in the commercial market at the rate ruling on the date the shipping documents were approved. Proceeds from exports included in List II were to be sold in the financial market at the rate prevailing at the time of payment, if this occurred on schedule; for late payment, the exchange rate on the maturity date would apply. On the import side, goods included in List A of Ministry of Economy Resolution No. 288 could be imported through the commercial market, while those in Lists B and C had to pass through the financial market. The same exchange market assignment applied to interest paid on imports with deferred payment terms (Ministry of Economy Resolution No. 130).

July 16. Ministry of Economy Resolution No. 129 established new export taxes and subsidies (reembolsos). Lists I and II were modified slightly. List I covered agricultural products and most minerals, while List II covered manufactures. Items in List I were subject to duties or subsidies ranging from a duty of 45 per cent to a subsidy of 30 per cent. Exports in List II received subsidies ranging from 0-30 per cent. Export items not appearing in either list were subject to an export tax of 50 per cent. Promoted exports to nontraditional markets continued to receive either a tax rebate of 5 per cent or an additional subsidy of 5 per cent.

July 21. The Central Bank increased its maximum forward premium from 18 per cent to 21 per cent per annum.

August 4. Ministry of Economy Resolution No. 22 suspended until December 31 the importation of almost 1,300 tariff items. Exceptions included imports from the LAFTA area of goods on the Argentine National List or the list of special concessions to Bolivia, Ecuador, Paraguay, and Uruguay, as well as items designated by the State Secretariat for Foreign Trade and International Economic Negotiations as being essential but impossible to produce domestically. Imports of used goods were suspended until December 31, 1977, unless expressly authorized or of a noncommercial character.

August 4. Ministry of Economy Resolution No. 23 stipulated that sworn declarations of need would only be processed for the following: (1) goods covered by sectoral agreements; (2) goods to be incorporated in fixed investment projects, or spare parts for final users; (3) imports not exceeding US$10,000 for each importer; (4) goods of LAFTA origin included in the Argentine National List or the list of special concessions to Bolivia, Ecuador, Paraguay, and Uruguay.

August 11. The peso was depreciated from $a 28.08 to $a 33.50 per US$1 in the commercial market and from $a 35.40-35.50 to $a 42.50-42.64 per US$1 in the financial market (Ministry of Economy Resolution No. 30). For travel abroad, the peso was depreciated from $a 50.00 to $a 60.00 per US$1 (Ministry of Economy Resolution No. 31).

August 13. The State Secretariat for Foreign Trade and International Economic Negotiations could, in duly documented critical situations arising from the lack of imported inputs, authorize exceptions to the ban on processing sworn declarations covering transactions other than those explicitly mentioned in Ministry of Economy Resolution No. 23 (Secene Resolution No. 128).

August 26. The peso was depreciated from $a 33.50 to $a 34.45 per US$1 in the commercial market, and from $a 42.50-42.64 to $a 44.20-44.34 per US$1 in the financial market. A special financial market with buying and selling rates of $a 63.00-63.18 per US$1 was created (Ministry of Economy Resolution No. 17). Financial loans and interest payments thereon remained in the financial market but receipts and payments in respect of freight, insurance, tourism, and other services, as well as all other capital flows were channeled through the special financial market (Resolution No. 17 and Circular R.C. 553).

August 27. The Central Bank exempted imports of inputs for industrial exports from obligatory exchange rate insurance (Circular R.C. 554).

September 2. Commercial and industrial firms which increased the foreign currency value of their swap engagements with a maturity of more than 180 days between August 25 and November 30 were offered additional 180-day general-purpose loan facilities at normal bank lending conditions for up to 50 per cent of the peso value of the foreign loan proceeds (calculated at the financial market rate). For this purpose the Central Bank opened an unlimited rediscount line to the banks concerned and freed them from the obligation of enforcing the usual bank debt/net worth limits applicable to their customers. Applications for the new financing were to be submitted by December 15 and the special rediscount facility offered by the Central Bank was to close on December 30. Excluded from the calculation of increases in swap engagements were old foreign loans without exchange cover that were converted to covered loans after August 25, 1975. Borrowers availing themselves of the special credit facility were also expected not to reduce their foreign swap liabilities as long as special loans to them were outstanding (Circular R.C. 555).

September 12. Ministry of Economy Resolution No. 109 added imports of the public sector to the import categories for which sworn declarations of need would be considered (see Ministry of Economy Resolution No. 23). They were, however, made subject to prior screening.

September 15. The peso was depreciated from $a 34.45 to $a 35.65 per US$1 in the commercial market, from $a 44.20-44.34 to $a 45.75-45.90 per US$1 in the financial market, and from $a 63.00-63.18 to $a 65.20-65.39 per US$1 in the special financial market (Ministry of Economy Resolution No. 62 of September 12, 1975). The allocation of transactions among the three markets remained unchanged. Exports and imports continued to be governed by Circular R.C. 544 (Circular R.C. 556).

September 17. The deadline for the initiation of sectoral agreements was extended to September 26. A statement of the maximum foreign exchange requirements for import shipments through December 31, and of the maturity terms of their financing, had to be presented by October 10 (Ministry of Economy Resolution No. 133).

September 26. The peso was depreciated from $a 35.65 to $a 36.40 per US$1 in the commercial market, from $a 45.75-45.90 to $a 46.70 (buying) per US$1 in the financial market, and from $a 65.20-65.39 to $a 66.50 (buying) in the special financial market. The allocation of the various transactions to the three markets remained unchanged.

October 2. A new export category, List III, was introduced and assigned to the special financial market; the list covered mainly footwear and vehicles (Ministry of Economy Resolution No. 155). New special categories were also established for certain meat products and certain types of wool that formerly were included in List I (Resolutions Nos. 156 and 157). Most export taxes were lowered and some subsidies increased. The revised export taxes ranged from 0-50 per cent and the export subsidies from 0-40 per cent.

October 6. For exports eligible for subsidies, the subsidy percentage was extended to cover, in addition to the f.o.b. value, the cost of freight and insurance if contracted with Argentine firms.

October 13. The peso was depreciated from $a 36.40 to $a 37.70 per US$1 (buying and selling) in the commercial market, from $a 46.70 to $a 48.30 (buying) per US$1 in the financial market, and from $a 66.50 to $a 68.80 (buying) per US$1 in the special financial market.

October 20. The Central Bank announced that it would, upon request, issue external bonds at 120 per cent of their face value to cover the transfer of dividends, royalties, and technical assistance payments accrued through June 30, as well as approved capital repatriation (Circular R.C. 562 and Decree No. 2549/75).

October 27. A new import List A/1, comprising goods previously included in List A, was created; 75 per cent of the f.o.b. value of List A/1 imports was to be settled at the commercial rate and 25 per cent at the financial rate. The remaining imports in List A continued to be settled at the commercial rate (Ministry of Economy Resolution No. 256).

October 30. The maximum premium for forward exchange was increased from 21 per cent to 24 per cent per annum, and that for exchange insurance to 27 per cent per annum.

October 31. Firms wishing to make remittances of less than US$1,000 for dividends, royalties, and technical assistance payments, as well as for capital repatriation, were allowed to do so at the special financial market rate, since external bonds were only issued in denominations of US$1,000 or more (Central Bank Telephone Communication No. 3394).

November 3. Ministry of Economy Resolution No. 276 outlined import procedures for the first half of 1976. Public and private sector importers were required to present their sworn declarations of import need to the National Import Board by November 21. Private sector importers first had to have their declarations verified by their industrial sector organization. An Import Committee was empowered to oversee import approvals and to set policy with regard to imports. Within 90 days after submitting their declaration, importers were required to make an advance deposit equivalent to 10 per cent of the import value applied for. Annual programs were not required for inputs for the production of exports, and imports of approved capital goods could be processed before the general program was approved.

November 4. Where import credits were extended for an additional 180 days, an exchange rate guarantee to cover the extension could be obtained without peso deposit or cover charge (Telephone Communication No. 3398).

November 5. The peso was depreciated from $a 37.70 to $a 39.40 per US$1 (buying and selling) in the commercial market, from $a 48.30 to $a 50.50 per US$1 (buying) in the financial market, and from $a 68.80 to $a 71.90 (buying) per US$1 in the special financial market.

November 6. Payments for imports in List A/1 were settled 55 per cent in the commercial market and 45 per cent in the financial market. The remaining goods in List A were settled 75 per cent in the commercial market and 25 per cent in the financial market (Ministry of Economy Resolution No. 333).

November 7. The premium for exchange insurance was increased from 27 per cent to 33 per cent per annum.

November 10. All List I (traditional) exports and all unlisted exports were shifted from the commercial market to the financial market. Most export taxes were raised, although the range of 0-50 per cent was maintained; some export subsidies were lowered, the maximum remaining at 40 per cent (Ministry of Economy Resolution No. 335).

November 17. All List A imports, including goods in List A/1, were shifted to the financial market; previously, payments for these essential imports were made at mixed rates. This action effectively abolished the commercial market.

November 21. The peso was depreciated from $a 50.50 to $a 52.80 per US$1 (buying) in the financial market and from $a 71.90 to $a 75.10 per US$1 (buying) in the special financial market.

November 24. Ministry of Economy Resolution No. 402 permitted exchange houses, exchange agencies, and exchange offices to resume foreign exchange operations, which had been suspended since April 14.

November 25. Decree No. 3532 gave the Ministry of Economy the responsibility for supervising, coordinating, and approving all public sector debt repayable in foreign currency. Public sector entities were required to provide the Central Bank with all information on these operations requested, and the latter would formulate a “tentative program of public sector external indebtedness” for approval by the Minister of Economy. Both the contracting and servicing of foreign debt would be limited to operations covered by the approved program.

December 1. The deadline for arranging swaps in order to obtain the additional credit provided for by Circular B. 1265-R.C. 555 was extended to December 30.

December 1. The charge for the exchange rate guarantee for import payments was increased from 33 per cent to 40 per cent, and the premium charged for swaps from 24 per cent to 32 per cent.

December 3. The peso was depreciated from $a 52.80 to $a 55.35 per US$1 (buying) in the financial market and from $a 75.10 to $a 78.70 per US$1 (buying) in the special financial market.

December 4. Authorized exchange dealers were allowed to resume foreign exchange sales for certain categories of transactions that had been suspended since May 28. These included registration fees for patents and trademarks, authors’ and musicians’ royalties, private subscriptions to papers and magazines, family remittances, advertising for Argentine exports, registration fees for international congresses and meetings, diplomatic remittances, and remittances of public welfare institutions (Telephone Communication No. 3425).

December 4. Central Bank Resolution No. 869 empowered exchange houses to act as intermediaries in transactions in external bonds.

December 9. The maximum foreign exchange allowance for travel abroad was changed to US$25 a person a day, up to US$175 a trip, for travel to neighboring countries, and to US$50 a person a day, up to US$350 a trip, for other destinations. Children between 3 and 12 years of age were entitled to one half of the adult allowance.

December 15. The peso was depreciated from $a 55.35 to $a 58.00 per US$1 (buying) in the financial market and from $a 78.70 to $a 82.45 per US$1 (buying) in the special financial market.

December 15. Exports were reclassified into a new List I (comprising the former Lists I and II) and a new List II (which included the former List III). Proceeds from exports in List I were to be sold in the financial exchange market and those from items in List II in the special financial exchange market. Items in List I were subject to revised export duties and subsidies ranging from a duty of 40 per cent to a subsidy of 40 per cent. Goods in List II were subject to neither duties nor subsidies. Products not included in either list were subject to an export duty of 40 per cent.

December 26. Capital goods for which an authorization had been obtained from the Secretary of State for Industrial Development were exempted from the suspension of imports of used goods. Authorization would be granted only if the goods were not substitutes for locally produced goods, were imported for direct use by the importer, and would not be resold within five years (Ministry of Economy Resolution No. 539).

December 29. The peso was depreciated from $a 58.00 to $a 60.80 per US$1 (buying) in the financial market and from $a 82.45 to $a 86.40 per US$1 (buying) in the special financial market.

December 30. The 180-day credit facilities available to firms contracting new swap arrangements with a maturity of at least 180 days were reduced from 50 to 40 per cent of the peso value of each swap; the deadline was extended to January 30, 1976 (Central Bank Resolution No. 946). (Subsequently, the deadline was again extended to March 31, 1976, but the application of this system was suspended on March 5, 1976 by Circular B. 1334-R.C. 624.)

December 30. In view of the termination on December 31 of the sectoral agreements, under which certain imports were to be contracted with financing for more than 180 days, the required financing for such imports was reduced to 180 days (Telephone Communication No. 3445).

December 30. Ministry of Economy Resolution No. 553 extended until February 26, 1976 the final shipment date of imports for which the sworn declaration of import need had been approved under the system established in Ministry of Economy Resolution No. 88, provided that the letter of credit had been opened and transmitted before December 30.

December 30. With effect from January 2, 1976, sales of foreign exchange to foreign transportation firms were permitted in respect of passages sold locally against payment in pesos, these receipts becoming transferable with effect from January 1, 1976.

December 31. Importers of ores and concentrates of lead and zinc became eligible for an exchange rate guarantee for 180 days. A 100 per cent deposit would only be required during the last 90 days of this period, and the charge was 36 per cent per annum.

December 31. The 180-day extension of the period allowed to foreign investors to register under the Foreign Investment Law expired.

December 31. The temporary ban on imports of almost 1,300 tariff items, imposed on August 4, was allowed to expire.

Australia

(Position on January 1, 1976)

Exchange Rate System

The par value is 1.09578 grams of fine gold per Australian Dollar.1 However, on September 25, 1974, the former fixed link with the U.S. dollar at the parity relationship was discontinued; the exchange rate for the Australian dollar is determined by changes in an average of foreign currency values weighted in accordance with their trading significance to Australia. The Reserve Bank of Australia determines the exchange rate daily to ensure that the weighted average exchange value remains constant. The rate is expressed in terms of the U.S. dollar. On December 31, 1975, the Reserve Bank’s middle rate for the U.S. dollar was $A 1 = US$1.2571, and the official limits at or within which banks were to effect spot transactions with the public in U.S. dollars were US$1.2596 and US$1.2546 per $A 1. Banks are free to determine their own spot rates for all other currencies, including sterling; quotations are based on rates in overseas markets.

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

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

With the exceptions mentioned below, goods may be imported freely without import licenses, and no restrictions are imposed on payments for imports. The latter normally must be made not later than six months after the arrival of the goods in Australia; consent to longer deferment is given only where it is established that longer periods are normal commercial practice. Import licenses are required for the following, irrespective of origin: used, secondhand, or disposals machinery or equipment and parts therefor (earthmoving or excavating vehicles, machinery, or equipment; tractors, road rollers, or material-handling equipment); disposals, used, or secondhand four-wheel drive vehicles (excluding public service type passenger vehicles), completely assembled passenger automobiles, light commercial motor vehicles, sunglasses, ophthalmic frames and sunglass frames, and certain sheets and plates of iron and steel. In addition, import licenses are required for certain types of footwear and certain types of clothing from the Republic of China, the People’s Republic of China, the Philippines, Singapore, and Thailand.3 Ships are treated as prohibited imports, and new or secondhand ships may only be imported with the written consent of the Minister of Transport. The treatment accorded to ships also applies to aircraft, with the variation that the written consent of the Secretary of the Department of Transport is required.

In 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 the relevant Resolutions of the UN Security Council, mandatory sanctions have been applied against Rhodesia.

Payments for Invisibles

All payments for invisibles are subject to exchange control, but, with the exception of remittances to Rhodesia which are contrary to the UN sanctions, they are not restricted. The control operates primarily to prevent unauthorized capital transfers; in addition, remittances to the New Hebrides are subject to a screening procedure to ensure that no tax minimization transactions are involved. Applications for outward transfers in connection with current invisibles are normally dealt with immediately by banks; no forms have to be filled out for amounts up to $A 2,000, and banks need not report these smaller transfers to the Reserve Bank. There is no limit on travel funds. Banks may approve up to $A 4,000 for each person in any 12 months for any kind of travel in any country; additional amounts may be obtained on application, provided that the exchange control authorities are satisfied that the exchange is to be used for bona fide travel expenses and not for an unauthorized capital transfer. Similarly, no limits are placed on remittances for family maintenance and gifts, but beyond certain amounts, applications must be referred to the exchange control authorities; such applications are treated liberally.

Payment to overseas suppliers of services must be made no later than six months after the date when payment is contractually due; consent to longer deferment is given only where it is established that longer periods are normal commercial practice. Dividends and interest due to overseas residents must be paid within one month of the date on which they become payable. Foreign exchange is not normally provided to enable residents to take out personal life insurance with foreign insurers. Travelers who are not residents of Australia may take out any amount in foreign or domestic banknotes within six months of entry, provided that they brought the notes into Australia. Other travelers may take out, without special authorization, up to $A 250 in Australian currency notes plus $A 5 in Australian 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,4 to ensure that the full proceeds are received in a currency and within a period approved by the Reserve Bank; the approved period is within six months prior to or after the date of exportation, but where the value of the goods exceeds $ A 10,000 the approved period for receipt prior to the date of exportation is one month, longer periods being allowed only where the prepayment is in accordance with normal commercial practice. To assist supervision, there is a further condition (in the case of export licenses covering goods exported by ship) that all shipping documents, bills of lading, etc., must be drawn to the order of and delivered to the Reserve Bank or to a trading bank acting as its agent. Under the Customs (Prohibited Exports) Regulations the export of specified goods may be prohibited absolutely or may be permitted subject to prescribed conditions. The controls are available for a variety of purposes. Exports of minerals in raw or semiprocessed form are subject to controls to ensure that export prices bear a reasonable relationship to market prices. Controls have also been utilized to ensure adequate supplies to meet domestic requirements (e.g., agricultural products, primarily stock foods and fertilizers, and some minerals and metals), to enable Australia to comply with obligations under international agreements, and to assist in the orderly marketing of primary products. Provision also exists for government control over the export of defense material. Controls exist over exports of Australian-registered ships to ensure that at all times adequate shipping is available for the purpose of trade and commerce among the states and territories of Australia. In accordance with UN Resolution No. 253 of 1968, Australia enforces trade sanctions against Rhodesia.

Proceeds from Invisibles

Proceeds from invisibles in foreign currencies 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 for travel expenditure.

Capital

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

Applications by resident individuals to invest abroad in amounts up to $A 10,000 in any 12-month period normally are readily approved; institutional investors and public companies can expect to receive permission to make investments abroad of up to $A 1 million in any 12-month period. Applications for investments in larger amounts may be approved in special circumstances. Eligible investments include portfolio investments abroad in stocks and shares and investments in real estate; they do not include investments in loans or other fixed-interest securities. When exchange control approval is being sought, investment in and other transactions of a capital nature with countries designated as tax havens5 require the production of a certificate from the Commissioner of Taxation to the effect that tax evasion or avoidance is not involved.

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

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

Inward equity investment requires exchange control approval. The Government’s general policy on such investment is flexible and there are, for example, no general mandatory levels of Australian equity in new ventures. However, the Government has a firm policy objective of securing the maximum practicable levels of ownership and control of Australian resources and industries and ensuring that foreign capital inflows are associated with productive investment which adds to Australia’s real resources. The policy is being applied in a pragmatic way with all cases being considered on their merits.

Under revised policy guidelines announced on September 24, 1975, new foreign investment proposals are screened by the Foreign Investment Advisory Committee, irrespective of whether they involve exchange controls. Foreign investment not involving a take-over is subject to the screening process if it is for the purpose of the foreign interests establishing a new business or undertaking a new mining project, or significantly expanding an existing business or project.7 Foreign interests are defined as corporations in which a single foreign shareholder, or associated foreign shareholders, own 15 per cent or more of the equity, or in which the total foreign equity exceeds 40 per cent. The longstanding controls over inward investment in the fields of banking, civil aviation, and radio and television are being continued. Also, the Government has given particular attention to foreign investment in the areas of mining, real estate, and nonbank finance.

Under the Foreign Takeovers Act, 1975 the Government is empowered to examine all take-overs of Australian businesses by foreigners and, through the Treasurer, to prohibit such take-overs found to be contrary to the national interest. The Government has indicated that the criterion of national interest is flexible in interpretation and application in individual cases. The following areas are covered: take-overs made by acquiring voting shares; take-over methods such as the acquisition of shares other than voting shares; the splitting of large shareholdings into small nominee groups; leases or licenses over a business; agreements relating to branch representation rights; take-overs by acquisition of assets and mineral rights; and take-overs by transferring control of a business by one foreign group to another. The Government does not intervene, except in special circumstances, where a take-over involves assets of $A 1 million or less.

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

Gold8

Residents must surrender to the Reserve Bank all gold coming into their possession in Australia 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 32.25 a fine ounce to an association of gold producers for sale at free market prices to local industrial users or overseas purchasers. Until June 30, 1975, domestic gold producers were, subject to certain conditions, eligible for subsidy under the Gold-Mining Industry Assistance Act; however, this Act lapsed on July 1, 1975. 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 an export license. Travelers require an export license if taking out of Australia certain specified personal and household effects, 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 1975

January 1. An export restraint agreement for one year on knitted tops and knitted dresses was negotiated with Korea. (Previous export restraint agreements for textiles were negotiated in 1974 with the People’s Republic of China, Hong Kong, and India.)

January 1. Temporary global tariff quotas were applied to imports of men’s shirts, woven pajamas, and other woven nightwear.

January 1. Mozambique became eligible for tariff preferences under Australia’s Generalized System of Preferences.

January 14. The restrictions on capital inflows were eased further. The minimum period for which deposits by nonresidents could be made with Australian financial institutions was reduced from two years to six months. Nonresidents henceforth could subscribe to new issues of fixed-interest securities having a maturity of six months or more and could purchase existing securities having six months or more to run to maturity; previously the minimum maturity in either case was greater than two years. The restrictions on nonresident deposits and nonresident investment in fixed-interest securities no longer applied to a nonresident whose investment aggregated less than $A 10,000 in any 12-month period.

February 1. Temporary global quota restrictions were applied to imports of completely assembled passenger automobiles and light commercial motor vehicles for a period of one year. Imports of passenger vehicles in February, March, and April would be limited to 5,500 units a month; thereafter, quotas would be issued which would permit imports up to a maximum of 7,500 a month for the remainder of the 12-month period. The situation would, however, be reviewed after the first 6 months. Imports of light commercial vehicles in 1975 would be permitted up to the 1974 level. It was subsequently announced that policy was to allow imports of completely assembled passenger automobiles, by monthly quotas, at an annual rate of about 20 per cent of the market.

February 1. The Export Payments Insurance Corporation was reconstituted as the Export Finance and Insurance Corporation to operate as an export financing institution as well as a credit and investment insurer and guarantor.

February 13. The amount of Australian currency that travelers could take out of Australia was increased from $A 100 (of which $A 4 could be in coins) to $A 250 in Australian currency notes, plus $A 5 in coins.

March 1. Temporary global tariff quotas were applied to imports of refrigerators, washing machines, and clothes dryers.

March 1. Temporary global quota restrictions were applied to imports of sunglasses, ophthalmic frames, and sunglass frames.

March 1. Temporary global tariff quotas were applied to imports of men’s and boy’s suits and coats, certain women’s outer garments, swimwear, and babies’ diapers.

March 1. Temporary global tariff quotas were applied to imports of precision-ground steel ball bearings for the 12 months beginning March 1, 1975. Imports at normal rates of duty were limited to two million units, while imports above that level attracted an additional temporary duty of 20 per cent.

March 10. Temporary global quota restrictions were applied to imports of hot-rolled sheets and plates of iron or steel. They were intended to limit such imports on and from January 1, 1975 to an annual level equivalent to 50 per cent of average annual imports of these items cleared for home consumption in 1972 and 1973.

March 14. It was announced that foreign-owned companies were not required to seek Australian participation at the initial level of oil exploration, up to the detailed proving stage. However, foreign companies were expected to offer every reasonable opportunity for Australian participation, both public and private, beyond this stage.

March 14. It was announced that exports of uranium would be made solely by the Australian Atomic Energy Commission. (On January 1, 1976 this policy was under review.)

April 1. Australia’s interim agreement with New Zealand guaranteeing the tariff preference margins in each other’s markets was extended for a further 12 months. Motor vehicles and components continued to be excluded from the provisions of the agreement.

May 1. Export restraint arrangements effective until June 30, 1976 were negotiated with Hong Kong and Macao concerning a range of knitted and woven apparel. The arrangement with Hong Kong was a renewal and extension of a previous one.

May 13. Temporary global tariff quotas were applied to imports of certain types of carpet should imports exceed certain “trigger” levels. (On January 1, 1976 the “trigger” levels had not been activated.)

May 22. The Foreign Takeovers Bill was introduced to replace and extend the Companies (Foreign Takeovers) Act, 1972-74. The new legislation would enable the Government to screen all take-overs of Australian businesses by foreign interests.

May 29. The OECD Declaration of May 30, 1974 on Imports, Exports, and Other Current Account Transactions (the Trade Declaration) was renewed for one year.

June 6. Global tariff quotas were applied to certain yarns and textile products.

June 20. The Customs Tariff (Anti-Dumping) Act, 1975 came into effect. The major changes to existing legislation related to the definition of normal value, the determination of injury, and the application of provisional antidumping duties.

June 26. A small number of commodities were added to the list under Schedule A of the New Zealand-Australia Free Trade Agreement providing for the elimination of customs duties over a period of eight years. The first reduction in duty on these items came into effect on July 1.

July 1. The Gold-Mining Industry Assistance Act expired.

July 1. Existing import controls were continued on certain garments from the Republic of China and were extended to certain other garments.

July 1. Import licensing requirements were introduced for certain garments from the Philippines, Singapore, and Thailand.

July 1. An export restraint agreement effective for one year governing woven shirts and blouses for women was negotiated with Korea.

July 1. Temporary import restraints were applied to certain garments imported from the People’s Republic of China.

July 24. The arrangements for the export of live cattle were eased.

July 28. Denim was added to the items subject to the export restraint arrangement with Hong Kong.

August 28. The Foreign Takeovers Act, 1975 received royal assent. It came into force on January 1, 1976 after the Companies (Foreign Takeovers) Act, 1972-74 had expired on December 31.

September 24. New policy guidelines on foreign investment in Australia were announced. Foreign investment proposals would henceforth be screened irrespective of whether they involved exchange controls; previously, proposals not involving exchange controls were not screened unless they fell within the ambit of the Foreign Takeovers Act. A new committee to screen proposals, the Foreign Investment Advisory Committee, was established, by merging the Foreign Investment Committee and the Committee on Foreign Takeovers. Special requirements would have to be observed in respect of proposed investments in the fields of nonbank finance, insurance, and real estate.

The new guidelines also contained a further elaboration of the Government’s policy toward foreign investment in minerals. It would no longer be necessary for foreign companies to seek Australian participation at the grass roots exploration stage, but they would be required to report to the Foreign Investment Advisory Committee on their exploration programs. Foreign companies making commercial mineral discoveries could proceed to the development stage only on the basis of the following guidelines: (1) With respect to uranium, the development of uranium ore bodies discovered under exploration licenses granted after September 24, 1975 would be on the basis of 100 per cent Australian ownership; for companies which had already discovered, or might in future discover, uranium ore bodies under exploration licenses granted up to September 24, 1975, the Government would be prepared to discuss particination in future development on fair and reasonable terms. (2) For other minerals, the Government would expect proposals for new mineral development projects to have no more than 50 per cent foreign ownership, with foreign participants having no more than 50 per cent voting power on the board of the development company.

November 11. Australia extended its generalized tariff preferences to Angola, the Cape Verde Islands, the Comoro Islands, Greece, Nauru, Portugal (including Timor and Macao), Spanish Sahara, British Indian Ocean Territory, and certain French and U.S. dependencies (including New Caledonia, American Samoa, and Guam).

December 31. The Australian dollar ceased to be legal tender in Papua New Guinea, which ceased to be part of the Australian monetary area.

The following change took place at the beginning of 1976:

January 1. Transactions between residents of Australia and residents of Papua New Guinea became subject to exchange control. Papua New Guinea took similar reciprocal action.

Austria

(Position on January 1, 1976)

Exchange Rate System

The par value is 0.0359059 gram of fine gold per Austrian Schilling. Austria has notified the Fund that the rate for the Austrian schilling is S 1 = SDR 0.0423597, but no announced margins are maintained for any currency. In practice, and without having assumed any formal obligations in this respect, the authorities observe margins of 4½ per cent either side of cross parities for currencies participating in the European common margins arrangement. On December 31, 1975, the authorized banks’ buying and selling rates for the U.S. dollar were about S 18.51 per US$1. Forward premiums and discounts are, in principle, left to the interplay of market forces.

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

Administration of Control

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

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

Nonresident Accounts

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

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

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

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

Imports and Import Payments

All commodities not included in the Annex to the Foreign Trade Law are free of import licensing and may be imported from any country without quantitative restriction. All goods included in the Annex require licenses. Most of these goods are free of quantitative restriction. For many goods licenses are granted by the customs, at the time of clearance, when they are imported from any country other than Rhodesia.1 Nearly all imports from GATT countries, their associated territories, and some other countries 2 are liberalized. Austria’s GATT liberalization is applied world-wide, except in respect of cotton textiles. Nonliberalized imports may be obtained under various procedures, namely, state trading, global quotas, bilateral quotas, discretionary licensing, and compensation (barter). State trading covers tobacco in any form, ethyl alcohol, and salt. Global quotas apply to specified imports from GATT countries, except Japan. Discretionary individual licensing is applicable to all other private imports not covered by the procedures listed above, including imports of certain textiles from specified countries. Licenses are usually granted if the imports concerned do not adversely affect domestic industries; 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, milk and butter, and cattle, pigs, and horses for slaughter and products from these animals for human consumption are imported in accordance with a special system of controls and regulations maintained under the Agricultural Marketing Law.

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

Payments for Invisibles

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

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

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

Exports and Export Proceeds

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

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

Proceeds from Invisibles

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

Capital

Some inward capital transfers, some transactions that could lead to such inflows, and most private sector borrowing from nonresidents are at present restricted. The acquisition by nonresidents of Austrian securities from authorized banks is permitted freely, but the acquisition of shares or participations in Austrian companies or firms, and of most Austrian real estate is subject to individual approval by the National Bank; direct investments by nonresidents normally are permitted when they serve to create or maintain lasting economic relations and provided that they are financed from foreign currency accounts or Free Schilling Accounts, or in freely convertible foreign currency, or from profit claims on the domestic firm concerned.

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

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

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

The transfer of funds owned by emigrants, and payments due to nonresidents on account of dowries, inheritances, and settlements under certain agreements between heirs, are permitted. Residents may freely grant loans up to the equivalent of S 260,000 a resident lender each year to nonresident relatives.

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

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

Residents are allowed to purchase from nonresidents, without restriction, foreign securities issued in “multilateral member countries” and registered on stock exchanges 3 and Austrian securities; for foreign securities and Austrian external bonds, the transactions must be carried out on a spot basis through authorized banks and, with certain exceptions (e.g., in the case of securities listed on the Vienna stock exchange), the securities purchased must be kept with such banks. Payments for these purchases to nonresidents may be made in convertible currencies. Residents may sell foreign securities and Austrian external bonds to nonresidents only on a spot basis against payment in convertible currencies and, for securities deposited in accordance with the aforementioned provision with Austrian authorized banks, only through such banks. The proceeds of the sale, as well as the foreign exchange obtained as a result of redemption of the foreign securities by the debtor, may be kept on account with an authorized bank.

Gold

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

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

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

Changes during 1975

January 1. As announced on December 18, 1974, the restrictions on the expansion of domestic bank credit were extended until June 30, 1975; credits in foreign currencies granted to nonbank residents after June 30, 1974 remained excluded from the relevant calculations.

January 1. As announced on December 12, 1974, the gentlemen’s agreement was temporarily suspended which had required the lodging of interest-free deposits with the National Bank equal to 75 per cent of any increase in banks’ schilling liabilities to nonresidents. However, the credit institutions were to continue to abstain from increasing domestic liquidity by taking up foreign currency funds abroad and thus raising such schilling liabilities, and from calling in their foreign claims prior to maturity. The deposit requirement could be reintroduced by the National Bank whenever necessary and without consultation with the credit institutions, and the credit institutions were to inform the National Bank immediately of any large foreign currency inflows.

January 1. Foreign Exchange Announcement DE 3/74 of December 19, 1974 extended the suspension of the liberalization of inward capital movements until December 31, 1975 by extending the validity of the provisions of Announcement DE 8/73. As a result, restrictions remained in force on the acquisition by nonresidents of domestic securities, share rights in domestic companies, and domestic real property, as well as on other inward capital transfers and on the granting of certain credits to nonresidents, except where the proceeds were to be spent abroad.

January 1. The general license permitting credit institutions to sell a limited amount of domestic securities to nonresidents was extended until December 31, 1975. The global quota for 1975 for such sales (which again was in addition to the amount of purchases by each bank from nonresidents, including redemption and amortization) was set at S 1.5 billion. The National Bank indicated that applications for additional sales would be granted liberally once the quota had been taken up in full.

January 1. Foreign Exchange Announcement DE 2/74 of December 19, 1974 granted residents two general licenses permitting purchases of goods originating in “multilateral” countries for resale on a transit basis to residents of “multilateral” countries. The general licenses, which were expressed in terms of the acceptance of monetary obligations and the making of payments, were not applicable to transactions involving Rhodesia. Previously, specific licenses were required for incurring monetary obligations to nonresidents in respect of such transit trade transactions. The issuance of the general licenses had become possible as a result of the expiration of the last clearing arrangement on December 31, 1973.

January 1. The validity of all existing unilateral tariff reductions (introduced under the price containment program that began in 1969) was carried over into 1975. (They were subsequently carried over also into 1976.)

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

January 1. Further amendments to the scheme of generalized tariff preferences for developing countries came into effect. Additional items, including agricultural products, became eligible for such preferences. The preferential margin for industrial products other than textile products was raised from 30 per cent to 50 per cent; in the textile sector the margin was increased from 30 per cent to 35 per cent and the existing exceptions from eligibility for cotton textiles were removed.

January 1. Austria extended its GATT liberalization world-wide, except for cotton textiles. As regards imports originating in Eastern European countries and in Japan, 205 tariff items remained subject, however, to screening of invoice prices.

January 8. Austria informed the Fund that it subscribed to the voluntary Declaration on trade and other current account measures for balance of payments purposes.

April 8. The Government announced that funds available for export financing would be increased by S 1 billion. On April 24, the National Bank raised the ceiling for the unconditional rediscounting of export promotion bills from S 3 billion to S 4 billion for the period May 2, 1975-April 30, 1976. (On January 22, 1976 the Bank announced that the S 1 billion increase would remain available until the end of 1976.)

May 29. The OECD Declaration of May 30, 1974 on Imports, Exports, and Other Current Account Transactions was renewed for one year.

June 20. The Ministry of Finance, the National Bank, and the commercial banks agreed on an extension during the period July 1-December 31 of the restrictions on the growth of domestic bank credit. The limit on credit expansion would remain at 1 per cent a month. The National Bank would authorize capital imports more liberally than hitherto.

June 20. The National Bank announced certain liberalization measures for capital inflows and outflows. With respect to inflows, the Bank would with immediate effect issue individual authorizations for the following: (1) the acquisition by nonresidents of domestic real estate in connection with the exploitation or finishing of buildings whose construction was started before November 29, 1972, provided that at the time the sale of building and land to foreign nationals had already been planned and had been approved by the competent land commission; (2) direct investments by nonresidents in the secondary sector of the economy, viz., in industry and in small trading and manufacturing firms (except in the building trade), and in the tertiary sector, viz., in tourism and in the establishment of marketing firms at the wholesale level by foreign producers; (3) the granting of commercial credits by residents to nonresidents, for expenditure in Austria; and (4) family loans from nonresidents to residents up to the equivalent of S 260,000 a borrower a year. With respect to outflows, the National Bank would henceforth approve applications for (1) family loans and (2) gifts and support remittances, from residents to nonresidents resident or domiciled in “multilateral member countries.”

July 3. Two federal laws amended the Export Promotion Law of 1964 and the Law for the Promotion of Export Financing of 1967, respectively.

November 27. The Export Promotion Decree, 1975 was issued. It provided for an improvement of the export credit insurance facilities. Among other things, exports of services became eligible for federal export credit guarantees.

December 2. The Ministry of Finance, the National Bank, and the commercial banks agreed on an extension until June 30, 1976 of the ceiling of 12 per cent per annum on the expansion of domestic bank credit. For the time being, however, and with effect from October 31, 1975, banks would not be penalized for exceeding this ceiling. Some of the credit institutions’ commitments to prevent capital inflows would continue in force.

December 6. Minimum import prices were imposed for the period to October 31, 1976 on specified textile products, irrespective of origin.

December 21. Foreign Exchange Announcement DE 2/75 of December 19 was published. It provided for the substantial reliberalization of inward capital movements from “multilateral member countries,” with effect from January 1, 1976 (see below). It also revoked Announcement DE 12/71, with effect from December 31, 1975.

The following changes took place at the beginning of 1976:

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

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

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

Bahamas

(Position on December 31, 1975)

Exchange Rate System

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

There is also a market in which “investment currency”1 may be negotiated between residents through the intermediary of an investment currency dealer at freely determined rates, usually attracting a premium over the official market rate. This premium was 13 per cent on December 31, 1975, unchanged since March 1974.

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

Administration of Control

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

Prescription of Currency

The Bahamas has ceased to be a Scheduled Territory in terms of the U.K. Exchange Control Act, 1947 but under current U.K. exchange control regulations continues to be regarded as a country of the Overseas Sterling Area. The Bahamas’ exchange controls extend to all territories outside the Bahamas and make no distinction between foreign territories. Settlements with residents of foreign countries may be made in any foreign currency2 or in Bahamian dollars through an External Account.

Nonresident Accounts

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

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

Imports and Import Payments

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

Payments for Invisibles

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

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

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

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

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

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

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

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

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

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

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

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

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

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

Gold

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

Changes during 1975

April 2. A set of legal tender gold coins in denominations of B$50, B$100, B$150, and B$200 was issued.

April 17. A new customs tariff based on the Brussels tariff nomenclature and amending the existing rates of duty was published.

November 26. The Bahamas abolished its Commonwealth tariff preferences.

Bahrain

(Position on December 31, 1975)

Exchange Rate System

The par value is 1.86621 grams of fine gold per Bahrain Dinar, corresponding to BD 0.394737 = US$1, and Bahrain avails itself of wider margins. The Bahrain Monetary Agency quotes daily rates for the U.S. dollar based on the par value and daily rates for pounds sterling and deutsche mark based on the latest available rates for the U.S. dollar against those currencies. On December 31, 1975, the Monetary Agency’s buying and selling rates for the U.S. dollar were BD 0.39550 and BD 0.39580 per US$1, respectively, and those for sterling were BD 0.79925 and BD 0.80175 per £ stg. 1, respectively. The Monetary Agency does not deal with the public. In their dealings with the public, commercial banks are required to use the Agency’s rates for U.S. dollars, pounds sterling, and deutsche mark, but they are authorized to charge an exchange commission of 2 per mill (special rates of commission apply for transactions up to BD 1,000). The banks’ rates for other currencies are based on the Monetary Agency’s rates for the U.S. dollar and the New York market rates for the currencies concerned against the U.S. dollar.

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

Administration of Control

The Monetary Agency is the exchange control authority but there is no exchange control legislation in Bahrain. Bahrain has ceased to be a Scheduled Territory in terms of the U.K. Exchange Control Act, 1947 but under current U.K. exchange control regulations continues to be regarded as a country of the Overseas Sterling Area. Import and export licenses are issued by the Bahrain Chamber of Commerce.

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

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

Exports and Export Proceeds

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

Payments for and Proceeds from Invisibles

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

Capital

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

Gold

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

Changes during 1975

January 4. The Monetary Agency started quoting daily rates for the U.S. dollar, based on the par value. It also modified the basis for the daily quotations for sterling. The commercial banks henceforth used the Monetary Agency’s rates for the U.S. dollar as the basis for their quotations for other currencies. Previously, the Monetary Agency quoted daily rates for sterling only, and the commercial banks’ rates for other currencies were based on the Monetary Agency’s rates for sterling and the London market rates for the currencies concerned against sterling.

January 4. Definitions of the concepts of resident and nonresident were issued.

September 27. The Monetary Agency announced an offshore banking scheme. Domestic and foreign banks licensed by the Agency to operate Offshore Banking Units would be granted special facilities to engage in Euro-currency and similar business. They would not normally be permitted to engage in domestic business, although the Monetary Agency could grant exemptions for projects in the national interest.

November 26. Applications from 15 foreign banks and domestic branches of foreign banks to be licensed to operate Offshore Banking Units were approved.

December 10. The ban on exports to Portugal of certain refined petroleum products was lifted.

December 22. A scheme was announced whereby travelers from the United Arab Emirates were permitted to use U.A.E. dirhams at the fixed rate of Dh 10 = BD 1, for transactions up to BD 500.

Bangladesh

(Position on December 31, 1975)

Exchange Rate System 1

No par value or central rate for the Bangladesh currency, the Taka, has been established. The official exchange rate is Tk 30 = £ stg. 1, and the currency is floating with sterling. Exchange rates for currencies other than sterling and the Indian rupee are based on the London market rates for the currencies concerned. On December 31, 1975, the spot buying and selling rates of the Bangladesh Bank (the central bank) for authorized dealers were Tk 29.9844 per £ stg. 1 and Tk 30.0313 per £ stg. 1, respectively. On December 31, 1975, the spot buying and selling rates (telegraphic transfers) of authorized dealers were Tk 29.9688 per £ stg. 1 and Tk 30.0625 per £ stg. 1, respectively.

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

Administration of Control

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

Prescription of Currency

Bangladesh has ceased to be a Scheduled Territory in terms of the U.K. Exchange Control Act, 1947 but under current U.K. exchange control regulations continues to be regarded as a country of the Overseas Sterling Area. Settlements with all countries are subject to exchange control. Settlements with countries with which Bangladesh has bilateral payments agreements 2 normally must be effected through clearing accounts specified in the agreements. Payments to, and receipts from, member countries of the Asian Clearing Union (India, Iran, Nepal, Pakistan, and Sri Lanka) in respect of current transactions (other than those relating to petroleum, natural gas, and their products) may, but need not, be effected in Asian monetary units through the Clearing Union. As regards other countries, settlements normally take place in sterling and other convertible currencies or through Nonresident Taka Accounts. Payments for imports may be made to the country of origin of the goods or to any other country (with the exception of those countries from which importation is prohibited); they may be made (1) in takas for credit to an account in Bangladesh held by a resident of the country concerned or of any country in the Overseas Sterling Area; (2) in the local currency of the country concerned; or (3) in pounds sterling, U.S. dollars, or any other currency specified by the exchange control authorities. Export proceeds must be received in freely convertible foreign exchange, or in takas from a Nonresident Taka Account of a bank in any country of the Overseas Sterling Area. All settlements with Rhodesia and South Africa are prohibited.

Nonresident Accounts

The accounts of individuals, firms, or companies resident in countries outside Bangladesh are designated Nonresident Accounts. All such accounts are regarded for exchange control purposes as accounts related to the country in which the account holder is permanently residing.3

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

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

Under the Wage Earners’ Scheme, Bangladesh nationals and persons of Bangladesh origin who are working and earning abroad are permitted to open Foreign Currency Accounts denominated in pounds sterling or U.S. dollars (with effect from February 27, 1975). These accounts may be credited with (1) remittances in convertible currencies received from abroad through normal banking channels; (2) proceeds of convertible currencies (currency notes, travelers checks, drafts, etc.) brought into Bangladesh by the account holder while on temporary visits to Bangladesh, provided they were declared to the customs upon arrival in Bangladesh; and (3) transfers from other Foreign Currency Accounts opened under the Wage Earners’ Scheme. The accounts may be debited, without restriction, for the following purposes: (1) all local disbursements; (2) transfers to other Foreign Currency Accounts opened under the Wage Earners’ Scheme; (3) payments for imports of specified goods; (4) payments of bank commissions and other bank charges connected with the handling of the accounts; and (5) travel expenditures abroad for business or private purposes by the account holder and his nominee authorized to operate the account, or by any other person authorized by him or his nominee with the permission of the Bangladesh Bank.

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

Imports and Import Payments

Imports are financed either from Bangladesh’s own resources or with foreign aid, loans, and barter arrangements. Imports financed from Bangladesh’s own resources are licensed within the framework of a semiannual import policy (import budget). Under the import policy for the “shipping” period, July-December 1975, items permissible for import were classified into four broad categories: (1) goods permitted to be imported by “commercial importers,” including the TCB; (2) raw material and packing materials permitted to be imported by “industrial units” recognized as such under an entitlement system; (3) items permitted to be imported exclusively by the TCB and/ or jointly by the TCB and private sector importers; and (4) items that could be imported under the Wage Earners’ Scheme against payment from Foreign Currency Accounts. No provision was made for commercial imports of any other goods, whose importation, therefore, was de facto prohibited unless financed by foreign aid. Imports from Rhodesia and South Africa are prohibited.

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

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

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

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

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

Payments for Invisibles

Payments for invisibles connected with authorized trade transactions generally are not restricted. Payments for most other invisibles require prior approval and are restricted. No foreign exchange is provided for tourist travel. Applications for foreign exchange for business travel, medical treatment, and education abroad are considered on an individual basis; as a rule, for business travel the amount granted is £ stg. 10 a day, subject to a maximum of £ stg. 500 a calendar year, provided that total export earnings in the preceding year were Tk 1 million, and for medical treatment about £ stg. 400. Subject to certain conditions, travel abroad may be financed from balances held in Foreign Currency Accounts. Foreign nationals working in Bangladesh must obtain approval before making remittances abroad for family maintenance purposes; such approval is usually granted for 50 per cent of wages or salaries, subject to a maximum of £ stg. 200 a month (net of tax) if the terms of employment have been approved by the Government.

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

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited. The Jute Mills Corporation has a monopoly over the export of jute goods. The proceeds from exports of jute goods and tea must be received within six months of shipment, those from exports of perishable goods to India within two months of shipment, and those from other exports within four months of shipment. Certain export industries are granted incentives through a Raw Materials Replenishment Scheme.

Proceeds from Invisibles

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

Capital

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

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

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

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

Under this policy, dividends on foreign capital can be remitted net of tax. Also remittable are 50 per cent of the net salary of foreign nationals, up to a maximum of £ stg. 200 a month a person, and savings from earnings, retirement benefits, and personal assets on termination of services or retirement. The moratorium on nationalization has been deleted. However, it has been stated that in the event of nationalization of any industry, compensation will be paid on a fair and equitable basis.

Gold

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

Changes during 1975

January 1. Following the expiration of the bilateral payments arrangements with India, settlements with that country were placed on a convertible currency basis.

January 9. The import policy for the first half of 1975 was announced. It provided for total imports valued at Tk 3 billion, implying considerable liberalization. The list of goods which could be imported under the Wage Earners’ Scheme was expanded.

February 22. Authorized dealers were instructed henceforth to open Foreign Currency Accounts in the names of Bangladesh nationals or persons of Bangladesh origin working and earning abroad, instead of Nonresident Convertible Taka Accounts. Such Foreign Currency Accounts could be opened in pounds sterling or U.S. dollars. Balances in existing Nonresident Convertible Taka Accounts could be converted into sterling or U.S. dollars and credited to Foreign Currency Accounts. These could be opened to enable eligible persons to import commodities listed in List III of Public Notice No. 1(75)/Import of the Chief Controller of Imports and Exports issued on January 9, 1975; the accounts could also be used for other purposes, including travel abroad, by the account holder or any other person authorized by him.

Advance import permits issued under the Wage Earners’ Scheme would be freely transferable, by endorsement, to any Bangladesh national or person of Bangladesh origin, and to any firm or company registered in Bangladesh. The advance import permit and the import license were required to be registered by the central bank. The Scheme was not applicable to government officials, or to employees of semigovernment and autonomous bodies (Foreign Exchange Circular No. 17).

March 11. The tax on import licenses henceforth was collected at the time of retirement of the import documents, rather than upon opening of the letter of credit.

April 3. Authorized dealers were informed that they could enter into interbank dealings, spot or forward, in all foreign currencies in which they dealt. In addition, they were henceforth allowed to give forward sales cover to their customers (F.E. Circular No. 26).

May 17. With effect from May 19, the official exchange rate was changed from Tk 18.9677 = £ stg. 1 to Tk 30 = £ stg. 1. The exchange rate structure was unified by the abolition of the 30 per cent exchange tax applicable to certain purchases of travel exchange, and of the Premium Scheme for Home Remittance, under which certain inward remittances had received a premium and had been converted at Tk 30 per £ stg. 1.

May 19. The import license tax of 20 per cent of the face value of all licenses and other forms of import permits was abolished.

May 19. The cash subsidy scheme for exports was abolished.

June 21. Direct trade relations having been established with the People’s Republic of China, authorized dealers were permitted to open letters of credit for imports from the People’s Republic of China and to accept letters of credit in respect of exports to that country (F.E. Circular No. 51).

July 1. The coverage of the Wage Earners’ Scheme was further expanded. Henceforth, any item importable by the TCB, public corporations, industrial units, or commercial importers was eligible for import under the Scheme.

July 1. The import policy for the second half of 1975 was announced. It provided for total imports valued at Tk 5.5 billion, implying further liberalization. Import procedures were improved. End-users were enabled to import certain raw materials and capital goods direct, rather than through the TCB; among the items for which the TCB ceased to be the sole importer were copper and raw rubber. Also, importers could obtain allocations for groups of commodities, rather than single items. The validity of import licenses was extended to nine months. The requirement of deferred payment terms of at least 180 days for commercial imports was terminated. Recognized industrial units were exempted from import duties on their full half-yearly entitlement of raw materials and spare parts. The list of goods eligible for import under the Wage Earners’ Scheme was further expanded.

August 22. Export duties were imposed on long jute and jute cuttings.

September 12. Authorized dealers were informed of new arrangements for hajj pilgrimages. The foreign exchange quota for eligible persons was the equivalent of Tk 8,000 (F.E. Circular No. 72). This was increased to Tk 8,066 on October 25 (F.E. Circular No. 92).

September 18. Import licenses on a cash basis became subject to the condition that letters of credit must be opened within four months from the date of issue (F.E. Circular No. 98).

September 23. The export of raw jute ceased to be the monopoly of the Bangladesh Jute Export Corporation.

September 30. Authorized dealers were advised that, where Bangladesh nationals or persons of Bangladesh origin remitted funds from abroad in foreign exchange through normal banking channels direct to their beneficiaries in Bangladesh (instead of for credit to their Foreign Currency Accounts), the beneficiaries could use the funds so received for import under the Wage Earners’ Scheme, subject to specified conditions. Where advance import permits were not obtained within one month from the date of receipt of the remittance advance in Bangladesh, the bank concerned would encash the foreign exchange amount of the remittance and pay the taka proceeds to the beneficiary. Remittances received under this procedure could not be repatriated (F.E. Circular No. 83).

October 16. The general permission was withdrawn which had been accorded to authorized dealers in 1970 in connection with the issue or transfer of securities in favor of nonresidents against payment outside Bangladesh and/or investment made out of the genuine savings of the investors in Bangladesh or out of funds transferred to Bangladesh from abroad (F.E. Circular No. 85).

October 21. Authorized dealers were empowered to approve applications for remittances up to Tk 500 a person a calendar year made by individual students or readers for imports of textbooks, reference books, and technical journals (F.E. Circular No. 86).

October 30. The central bank stood ready to purchase from, or rediscount for, authorized dealers, export bills of exchange drawn in any freely convertible foreign currency and payable abroad (F.E. Circular No. 94).

November 1. The Asian Clearing Union began operations. At the option of the payor or payee, payments and receipts for current transactions (other than those relating to petroleum, natural gas, and their products) to and from India, Iran, Nepal, Pakistan, and Sri Lanka could be settled in Asian monetary units (1 Asian monetary unit = SDR 1).

November 1. Authorized dealers were advised that, the restriction on direct trade with Pakistan having been withdrawn, they could open letters of credit providing for shipment from Pakistani ports and to accept letters of credit in respect of exports for direct shipment to such ports (F.E. Circular No. 95).

November 12. The central bank stood ready again to sell sterling forward to authorized dealers. The maturities offered were three months and six months. Authorized dealers could sell sterling forward, for imports against cash licenses only, to all importers in the private or public sector, except government departments (F.E. Circular No. 97).

November 15. The terms and conditions on which the central bank stood ready to purchase U.S. dollars forward from authorized dealers, for three or six months’ delivery, were modified (F.E. Circular No. 100).

December 1. The agreement with the EEC on trade in jute products, signed on November 26, 1974, came into force.

December 7. The ceiling on direct participation by foreign nationals in the ownership of private firms was raised from Tk 30 million to Tk 100 million.

December 19. The central bank began to set spot buying and selling rates for the Asian monetary unit, in terms of taka, for each accounting period of the Asian Clearing Union (F.E. Circular No. 110).

Barbados

(Position on December 31, 1975)

Exchange Rate System

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

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

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

On December 31, 1975, the Central Bank’s buying and selling rates for the U.S. dollar were BDS$ 1.9975 and BDS$2.0100, respectively, and those for sterling were BDS$4.0399 and BDS$4.0728, respectively.

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

Administration of Control

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

Prescription of Currency

Barbados has ceased to be a Scheduled Territory in terms of the U.K. Exchange Control Act, 1947 but under current U.K. exchange control regulations continues to be regarded as a country of the Overseas Sterling Area. Settlements with residents of the Sterling Area countries, other than member countries of the Caribbean Common Market (Caricom),1 may be made in sterling, in any other Sterling Area currency, or in Barbados dollars from External Accounts. Settlements with residents of countries outside the Sterling Area other than Rhodesia may be made in any foreign currency2 or through an External Account in Barbados dollars. Settlements with residents of Caricom countries must be made either through External Accounts (in Barbados dollars) or in the currency of the Caricom country concerned.

Nonresident Accounts

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

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

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

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited and imports originating in the People’s Republic of China, the CMEA countries, North Korea, Japan, and Portugal require individual licenses. Certain imports are prohibited; these include various foodstuffs and beer. Certain other commodities require individual licenses; these include passenger automobiles, buses, refrigerators, cement, unrefined gold, sewing machines, certain petroleum products, certain foodstuffs and beverages, and certain textiles. Individual licenses are also required for imports of commodities subject to the provisions of the Oil and Fats Agreement between the Governments of Barbados, Dominica, Grenada, Guyana, St. Lucia, St. Vincent, and Trinidad and Tobago. Where commodities are placed under license, it is necessary to seek a license whether the goods are being imported from Caricom countries or elsewhere. Special licensing arrangements have been made for the regulation of trade between Barbados and other Caricom countries in 22 agricultural commodities. All imports not referred to previously are on open general license.

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

Payments for Invisibles

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

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

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

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

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

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

Gold

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

Changes during 1975

During the year, additional imports from all sources became subject to specific license. These included paints, instant coffee, salt, sulfuric acid, jute sacks, certain textiles, and sewing machines.

February 12. The Central Bank henceforth was prepared, in dealings with commercial banks, to both buy and sell U.S. dollars. Previously, the Bank bought and sold sterling, and purchased but did not sell U.S. dollars.

May 30. The Prime Minister announced the Government’s intention to fix the value of the Barbados dollar in terms of the U.S. dollar.

July 5. The currency was repegged from sterling to the U.S. dollar. A central rate of BDS$2 = US$1 was established, and Barbados availed itself of wider margins. Previously, a fixed relationship of BDS$4.80 = £ stg. 1 was maintained.

September 23. A legal tender gold coin with a face value of BDS$100 was issued.

October 9. The Central Bank began to quote rates to the commercial banks for selling Canadian dollars.

November 20. A new export levy on sugar was introduced.

December 10. The normal exchange control directives became formally applicable also to transactions with residents of Portugal.

December 10. The Central Bank specified the forms that invested funds eligible for registration as a foreign investment could take.

December 18. The Central Bank announced that it would continue to consider applications for the transfer of land, buildings, or hereditaments situated in Barbados where nonresidents were involved. Ordinarily, however, nonresidents would be required to make payment in full at the time of purchase of real property. The Central Bank would normally consider applications for mortgage facilities only in respect of (1) nonresidents who were Barbadian nationals, and (2) other nonresidents investing substantial amounts of external funds in productive enterprises in Barbados.

December 30. The East Caribbean Currency Authority was deleted from the list of authorized dealers and authorized depositories.

December 31. The Commonwealth tariff preferences of Barbados expired. The Caricom common external tariff came into force the following day.

Belgium-Luxembourg

(Position on December 31, 1975)

Exchange Rate System

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

In the official exchange market, only authorized banks may carry out exchange transactions permitted in that market.1 Belgium-Luxembourg maintains a maximum margin of 2¼ per cent for exchange rates in the official market between the Belgian franc/Luxembourg franc and the Danish krone, the deutsche mark, the French franc, the Norwegian krone, and the Swedish krona, while a maximum margin of 1½ per cent on either side of the cross parity of BF 100 = f. 6.8953 or f. 1 = BF 14.5026 is maintained for the Netherlands guilder.2 No announced margins are maintained for any other currency. On December 31, 1975 the buying and selling rates for the U.S. dollar in the official market were BF 39.4275 and BF 39.6275, respectively, per US$1. Most exchange transactions are settled through the official market. For all inward and outward payments in excess of BF 10 million through that market, supporting documents must be submitted to the Belgo-Luxembourg Exchange Institute (Institut Belgo-Luxembourgeois du Change or IBLC).

In the free exchange market, all currencies (including domestic and foreign banknotes) may be bought and sold at freely fluctuating rates. On December 31, 1975 the free market rates between banks for the U.S. dollar were BF 40.28 buying, and BF 40.35 selling, per US$1.

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

In the official market, authorized banks in Belgium-Luxembourg may deal with other authorized banks and with nonresidents in any of the convertible currencies; however, there are special regulations for the zaïre. Nonbank residents may not acquire or surrender convertible currencies in the official spot market until a foreign payment is due. Nonbank residents may make forward purchases and sales of convertible currencies in the official market through authorized banks, provided that the currencies thus acquired are used for the authorized settlement of obligations within 15 working days from delivery; exchange not used within that period must be resold in the official market. Profits resulting from forward contracts not covering authorized inward or outward payments through the official market must be given up to the Treasury. Any resident or nonresident, banks included, may deal in any currency in the free market. Exchange rates in the forward market are normally left to the interplay of market forces.

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

Exchange Control Territory

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

Administration of Control

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

Prescription of Currency

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

Foreign countries are divided into two groups: the bilateral countries 3 and the convertible area (all other countries).

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

The permissible methods of settlement for foreign payments are summarized in the accompanying table.

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

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

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

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

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

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

Nonresident Accounts

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

1. Convertible Accounts. Balances on these accounts are equivalent to currencies negotiated on the official market, and these accounts may be opened freely in the name of any nonresident.4 They are not related to any country or monetary area. They may be used freely for settlements with residents which either must or may be made through the official market and for retransfer abroad through the official market, and they may be credited freely with proceeds from the sale by a nonresident of convertible currencies in the official market to authorized banks in Belgium-Luxembourg. Balances on Convertible Accounts may be transferred freely to other Convertible Accounts or be converted into any currency in the official market. Advances on Convertible Accounts other than mail-credit advances are subject to authorization by the IBLC. Convertible Accounts may be held in the form of sight accounts (demand deposits), prior notice accounts, and time deposits.

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

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

Imports and Import Payments

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

Imports from non-EEC countries of most products covered by the Common Agricultural Policy of the EEC are subject to 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 50,000 in value. The authorized bank is required to make certain that payment is made by one of the methods laid down in the regulations (see section on Prescription of Currency, above) and that foreign exchange is not acquired until the import payment is due. 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 six months after the date of customs clearance. Payments for transit transactions must be made within three months from the date of any advance payment collected from the foreign buyer.

Payments for Invisibles

Payments to convertible area countries for transactions included in Lists A and B must be made through the official exchange market or by crediting Belgian or Luxembourg francs to a Convertible Account. Supporting documents must be presented to an authorized bank; for payments exceeding BF 10 million and in other exceptional cases, prior examination of the supporting documents by the IBLC is required. Payments to convertible area countries for items in List C may be made through either the official market (alternatively, by crediting Belgian or Luxembourg francs to a Convertible Account) or through the free market (alternatively, by crediting Belgian or Luxembourg francs to a Financial Account, or in foreign or domestic banknotes); payments for items in List D must be made through the free market (alternatively, by crediting Belgian or Luxembourg francs to a Financial Account, or in foreign or domestic banknotes); payments to bilateral countries (see footnote 3) must be made by crediting Belgian or Luxembourg francs to a Bilateral Account related to the country concerned; payments to Zaïre, however, may also be made in zaïres through a convertible account in Zaïre. Foreign and domestic banknotes may be exported freely.

Exports and Export Proceeds

The export of all goods to Rhodesia is prohibited in accordance with UN Security Council Resolution No. 253(68) of May 29, 1968. Individual licenses are required for specified exports to all countries except Luxembourg.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 50,000 in value. The authorized bank is required to make sure that export proceeds are received in accordance with the regulations (see section on Prescription of Currency, above). Special authorization is required to collect export proceeds more than six months after the date of exportation. Export proceeds in convertible currencies must, within eight days of receipt, be surrendered to an authorized bank (i.e., sold in the official exchange market), or, alternatively, they may be deposited in a Controlled Resident Account in Foreign Currency with an authorized bank if they are to be used later for current payments authorized to be made in these currencies. Advance collection of export proceeds more than three months before the expected date of exportation requires prior authorization of the IBLC; in addition, 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. Prior examination of supporting documents by the IBLC is required for receipts exceeding BF 10 million.

Proceeds from Invisibles

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

Capital

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

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

The external position of authorized banks is subject to control. Banks in Belgium and Luxembourg have been requested not to allow their net external debtor spot positions (in foreign currency relating to the official market plus, vis-à-vis nonresidents, in Belgian francs and Luxembourg francs in Convertible Accounts) to increase beyond specified levels. In addition, a ceiling has been imposed on the net foreign asset positions of Belgian and Luxembourg banks (their net creditor spot positions in foreign currencies on the official market). Banks have also been instructed that their overall foreign currency position relating to the official market (spot and forward combined) should normally be close to balance and should not register a substantial creditor or debtor position.

Gold

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

Changes during 1975

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

January 1. The Belgian law of December 20, 1974 concerning the budget proposals for 1974–75 came into force. Among other things, it contained provisions that modified the law of October 6, 1944 which created the IBLC. The principal effect was that the IBLC was given powers to issue mandatory regulations limiting or prohibiting the payment of interest on nonresident-owned deposits and claims; limiting the amount of nonresidents’ claims and deposits in Belgian francs; prescribing the deposit of certain funds in noninterest-bearing blocked accounts; and imposing by Royal Decree a negative interest charge, payable in advance, on certain nonresident-owned funds. In addition, the IBLC was empowered to obtain information on all foreign assets and liabilities, on a daily basis, from banks and all other economic agents. A definition of residents was also provided. The law related to Belgium only.

February 1. The ceilings on bank credit were continued. The growth of commercial banks’ short-term export credits ceased to be subject to limitation; since November 1, 1974, their annual growth rate had been restricted to 24 per cent, while banks’ medium-term export credits had been unrestricted.

February 16. The Belgian Government introduced in the Parliament a bill that would provide for reporting requirements for the sale of firms with total own assets in excess of BF 1 billion; reporting to the Banking Commission would be required for all transactions involving the acquisition by any person of over 10 per cent of the voting rights. (In early 1976 this bill was still under consideration.)

February 20. Belgian banks were asked not to encourage the expansion of Belgian franc deposits in foreign countries.

February 28. As announced on December 17, 1974, banks in Luxembourg were required with effect from this date to submit quarterly reports on the maturity structure of their claims and liabilities in foreign currencies.

April 15. Henceforth, 50 per cent of the total invoice value of goods of Egyptian origin (other than rice, raw cotton, and crude petroleum) and payable to a commercial bank in Egypt had to be effected in Belgian francs at the National Bank of Belgium.

April 30. The binding recommendations of the National Bank to the Belgian banks providing for ceilings on bank credit and minimum cash reserve requirements were allowed to expire.

April 30. The Luxembourg Banking Commissioner terminated the ceiling on credits in francs granted by Luxembourg banks to Belgian firms and firms established in Belgium. Such credits remained subject to reporting requirements.

May 10. For purposes of surveillance only, import licensing requirements were introduced for specified garments (tariff headings 60.04, 60.05, 61.01, and 61.02). No license was required, however, when the goods originated in, and were consigned from, France, the Federal Republic of Germany, Italy, the Netherlands, or Luxembourg.

May 29. The OECD Declaration of May 30, 1974 on Imports, Exports, and Other Current Account Transactions was renewed for one year.

July 1. Improved market access was granted to many imports from specified developing countries, under the terms of the Lomé Convention between the EEC and certain developing countries of Africa, the Caribbean area, and the Pacific region (the ACP countries).

July 10. France resumed its participation in the European common margins arrangement; accordingly, the BLEU again observed maximum margins of 2¼ per cent for the Franch franc.

August 1. Certain procedural changes in the IBLC rules governing payments for imports and exports came into force.

August 19. Import licenses were required for additional textile products (virtually all items under tariff headings 51.04, 55.08, 56.05, 56.07, 60.02, 60.03, 61.04, 61.09, 62.02, and 62.03). No license was required, however, when the goods originated in, and were consigned from, any member state of the EEC.

September 17. The maximum amount of the guarantees that could be granted, for its own account, by the Office National du Ducroire was increased to BF 90 billion.

September 25. The Belgian Government announced that it would further ease the conditions for export credits.

November 24. The maximum amount of the guarantees that could be granted, for its own account, by the Office National du Ducroire was increased to BF 100 billion.

November 29. The ceiling on the guarantees that the Office National du Ducroire could grant for the account of the Belgian State was increased to BF 25 billion.

December 29. The ceiling on the liabilities (including all endorsements and guarantees) of the Rediscount and Guarantee Institute was increased from BF 42.5 billion to BF 45 billion.

Benin

(Position on December 31, 1975)

Exchange System

No par value for the currency of Benin has been established with the Fund. The unit of currency is the CFA Franc,1 which is officially maintained at the rate of CFAF 1 = 0.02 French franc. Exchange transactions in French francs, the intervention currency, between the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) and commercial banks take place at the rate of CFAF 1 = F 0.02; the BCEAO levies a commission of 110 of 1 per mill on transfers from countries outside the West African Monetary Union and a commission of 2.50 per mill on transfers to countries outside the Union.2 Exchange rates for foreign currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission. Banks levy a commission on transfers to all countries outside the West African Monetary Union, part of which must be surrendered to the Treasury.

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments 4

All imports originating in or shipped from Portugal, Rhodesia, or South Africa are prohibited. Certain imports, such as narcotics, are prohibited from all sources. The Société Dahoméenne pour le Développement de l’Industrie et du Commerce (Sodaic, later renamed Sonib) has a monopoly over the importation of sugar, rice, wheat, wheat flour, condensed milk, alcoholic beverages, tobacco, and khaki cloth. Certain other agencies, such as the Société Nationale de Production Animale (Sonapa), have an import monopoly for other specified commodities. Imports of all other goods originating in countries in the French Franc Area may be made freely without an import license. Imports of all other goods originating in EEC countries other than France may also be made freely; these goods require a license, which is issued automatically. Certain imports are liberalized when originating in OECD countries other than Japan and only require an import certificate made out by the importer himself. Imports of nonliberalized commodities originating in OECD countries, all imports originating in Japan, and all imports originating in non-OECD countries are subject to licensing; they are admitted in accordance with an annual import program, which is determined each year in a French-Beninese Committee, in which both countries have equal status, as provided for by the Economic Cooperation Agreement with France. (The Committee held no meetings in 1973, 1974, or 1975.) Under this program, a global quota is established for imports from all countries outside the French Franc Area except EEC countries. Certain French textiles processed in foreign countries are licensed separately.

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

Payments for Invisibles

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

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

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

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

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

All investments abroad by residents of Benin require prior authorization by the Minister of Commerce and Tourism.5 Foreign direct investments in Benin 6 must be declared to the Minister before they are made. The Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of either type of investment also requires declaration. Both the making and the liquidation of investments, whether these are Beninese investments abroad or foreign investments in Benin, must be reported to the Minister and to the BCEAO within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent in the capital of a company whose shares are quoted on a stock exchange.

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

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

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

Gold

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

Changes during 1975

June 17. Sonapa was given a monopoly over the import and export of livestock.

June 18. The importation of pharmaceutical and veterinary products became a monopoly of the National Pharmacy Bureau (ONP).

June 18. The National Transit and Forwarding Company (Sonatrac) and the Dahomean Maritime Navigation Company (Codanam, later renamed Cobenam) were given a monopoly over all forwarding operations, under the supervision of the Dahomean Transit and Forwarding Union (Union Dahoméenne de Transit et de Consignation or Udatrac, later renamed Sotracob).

June 30. The importation of alcoholic beverages, tobacco, and khaki cloth became a monopoly of the state trading corporation, Sodaic; it already had a monopoly over imports of rice, sugar, flour, and milk.

July 10. France resumed its participation in the European common margins arrangement; the parity between the CFA franc and the French franc remained unchanged.

September 18. Ordinance No. 75-71 created the Société Nationale de Papeterie et de Librairie (Sonapal). It was given a monopoly over imports of books, stationery, and all school supplies.

Bolivia

(Position on December 31, 1975)

Exchange Rate System

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

For operational purposes, the exchange market is divided into two sectors: the public sector and the private sector. The Central Bank of Bolivia operates in both sectors, buying foreign exchange from the Government, the official enterprises, including the Bolivian Mining Corporation (Comibol), and private export firms, and selling foreign exchange without any restriction to the Banco del Estado, the commercial banks and exchange houses, the Government and its official agencies, and—through the banks—to the public. The commercial banks and exchange houses purchase exchange accruing to the private sector on account of capital and invisibles, and they cover all foreign exchange requirements of the private sector. The exchange rate of the Central Bank on December 31, 1975 was $b 20.00 buying, and $b 20.02 selling, per US$1. All sales of foreign exchange are subject to a 1.6 per cent exchange tax, a 2 per mill stamp tax, and a 1 per mill banking commission. Accordingly, the effective selling rate of the commercial banks and exchange houses on the same date was $b 20.40 per US$1.

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

Prescription of Currency

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, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela may be made through accounts maintained with each other by the central banks.

Imports and Import Payments

All imports by public sector agencies require the prior authorization of the Ministry of Industry and Commerce; 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, and petroleum and petroleum products. The import of cigarettes, cement, radios, television receivers, and certain other locally produced goods is prohibited. All other goods may be imported freely. Exchange to pay for imports may be purchased freely from commercial banks. Most foreign credits, including officially guaranteed suppliers’ credits, are subject to authorization by the National Council for Planning and Economy and to control by the Financing Institute.

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

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

Payments for Invisibles

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law of December 16, 1971. The law is administered by the National Investment Institute. Investments in petroleum and mining are governed by the General Hydrocarbons Law and the Mining Code. Certain foreign investments are considered subject to Decision 24 of the Cartagena Agreement.

Gold

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

Changes during 1975

January 17. Decrees Nos. 12190 through 12193 reduced import duties on many textiles, certain domestic appliances, and certain motor vehicles. Late in 1975, most of these reductions were rescinded.

February 7. Supreme Decree No. 12222 exempted certain manufactured and agricultural products from the 15 per cent tax levied on nontraditional exports.

March 21. Supreme Decree No. 12315 prohibited the importation of cattle, sheep, and hogs.

April 4. Supreme Decree No. 12344 extended the exemption from the 15 per cent tax on nontraditional exports to virtually all agricultural and manufactured products.

April 10. Taxes and royalties on exports of mining products were lowered by 50 per cent for production in excess of specified output levels.

May 15. A reciprocal credit agreement with Venezuela was signed.

May 21. Supreme Decree No. 12509 complemented the Investment Law. Further regulations were issued by Supreme Decree No. 13050 of November 7.

August 14. Banks were authorized to accept deposits in foreign currencies on fixed terms and at freely negotiable rates of interest up to 9 per cent. In addition, banks were permitted to issue certificates of deposit denominated in domestic currency, with index clauses designed to maintain the value in terms of the U.S. dollar (previously available only for Bolivian peso savings deposits). (Decree-Law No. 12766.)

October 3. Supreme Decree No. 12914 prohibited for two years the import of 32 items also produced domestically. They included radios and television sets.

October 5. Most private sector imports became subject to an advance deposit requirement of 25 per cent ad valorem. The deposit was to be lodged 120 days prior to the anticipated release of the goods from customs. With the exception of books, magazines, and periodicals, cattle on the hoof, fish, and certain machinery and spare parts, no merchandise could be released prior to the end of the 120-day period. Goods exempt from deposit were mainly cement, wheat, wheat flour, edible oils, milk products, and pharmaceuticals.

November 14. Decree-Law No. 13072 granted the benefits and guarantees of Decree-Law No. 10045 of December 10, 1971 to all external financing for purposes of working capital obtained for a period not less than three years in the form of loans in convertible currencies. Such borrowings had to be registered in the National Investment Register.

Botswana

(Position on December 31, 1975)

Exchange and Trade System

Botswana’s currency is the South African Rand. The par value of the rand is 1.04550 grams of fine gold per rand. The South African Reserve Bank on December 31, 1975 quoted a middle exchange rate for the U.S. dollar of US$1.1500 per R 1. Exchange rates for other currencies are based on the South African Reserve Bank’s rates for the U.S. dollar against the rand and the London market rates for the currencies concerned against the U.S. dollar.

Botswana has ceased to be a Scheduled Territory in terms of the U.K. Exchange Control Act, 1947 but under current U.K. exchange control regulations continues to be regarded as a country of the Overseas Sterling Area. De facto, Botswana also forms part of the Rand Monetary Area, which is a single exchange control territory comprising Botswana, Lesotho, South Africa, and Swaziland. For purposes of exchange control over transactions in securities or gold, residents of a member country of the latter area are not regarded as residents of another member country. The Ministry of Finance and Development Planning controls all external currency transactions.

No restrictions are applied to payments within the Rand Monetary Area, and in principle these are uncontrolled and unrecorded. In relation to countries outside the Rand Monetary Area, Botswana applies exchange controls that are generally similar to those of South Africa, although Botswana’s treatment of certain capital transfers may be more liberal. Payments to nonresidents for current transactions, while subject to control, are not restricted, but applications for outward transfers of capital are considered on their merits. The rulings on applications for inward and outward capital transfers may depend on whether the applicant is a temporarily resident foreign national, a nonresident, or a resident. Authority to approve some types of current payments is delegated to commercial banks up to established limits; this is true, for example, of the basic exchange allowance for tourist travel (the equivalent of R 2,000 in a calendar year for an adult and R 800 for a child) and a smaller annual allocation for travel to neighboring countries. There are no bilateral payments arrangements.

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

Changes during 1975

June 27. It was announced that the South African Reserve Bank was discontinuing the practice of making small and frequent adjustments to its buying and selling rates for U.S. dollars. In future these rates would be kept constant for longer periods at a time and would only be adjusted upward or downward if considered essential in the event of any basic change in domestic or international economic circumstances. The new policy would be based on a middle rate of R 1 = US$1.40 with the same total spread of ½ of 1 per cent as before. The Reserve Bank quoted public buying and selling rates of US$1.4035 and US$1.3965 per rand. The previous middle rate had been R 1 = US$1.47.

July 1. The Bank of Botswana formally came into being as the country’s central bank.

September 22. The Reserve Bank’s middle rate for the U.S. dollar was changed from R 1 = US$1.40 to R 1 = US$1.15. The Reserve Bank’s buying and selling rates were adjusted to R 1 = US$1.1529 and R 1 = US$1.1471, respectively. No change was made in the exchange rate policy introduced on June 27.

Brazil

(Position on December 31, 1975)

Exchange System

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

Exchange transactions are carried out by the Central Bank, the Bank of Brazil, the authorized banks, and the exchange houses. The Central Bank operates in foreign exchange in Rio de Janeiro and São Paulo, and the Bank of Brazil undertakes exchange transactions in the name of the Central Bank in other parts of the country. The exchange houses deal only in banknotes and travelers checks in a “manual market.” Uniformity between the rates quoted by the monetary authorities and the effective rates of the authorized banks is ensured by the practice of the monetary authorities of standing ready to purchase exchange from the banks and to sell it to the banks on an adequate basis, for approved transactions; such purchases and sales are made at the official rate. On December 31, 1975, the buying and selling rates quoted by the monetary authorities to the public were Cr$9.020 and Cr$9.070 per US$1, respectively; those quoted by the authorized banks for transactions other than in banknotes or travelers checks were the same (see Table of Exchange Rates, below). The same exchange rates are applicable to “agreement dollars” used for settlements with bilateral agreement countries. Rates for other currencies are based on the U.S. dollar rates in Brazil and the rates for the currencies concerned in New York and Europe. With specified exceptions, foreign exchange transactions are subject to brokerage fees, calculated on a sliding scale, which for the rates listed above result in effective rates within 1 per cent on either side of the rates of the monetary authorities.

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

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

The Bank of Brazil, acting on its own behalf or on behalf of the Central Bank, carries out a considerable proportion of all exchange transactions. The following arrangements assure the Bank of Brazil of a large proportion of the country’s foreign exchange receipts: (1) Petrobrás surrenders to the Bank its entire foreign exchange proceeds from certain exports of petroleum. (2) Proceeds from exports of iron ore by the Vale do Rio Doce Company also are surrendered to the Bank of Brazil. (3) All public sector agencies carry out their exchange operations through the Bank of Brazil. (4) Furthermore, exporters in regions not served by other banks 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 the transaction is made. Like the other commercial banks the Bank of Brazil also sells foreign exchange for payments in respect of a large number of imports, including crude oil and petroleum products, wheat, newsprint, fertilizers, and the requirements of the Vale do Rio Doce Company. The Central Bank handles all exchange transactions in bilateral currencies and exchange transactions related to imports under U.S. aid (by transferring exchange to authorized banks or vice versa).

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

Administration of Control

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

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

Coffee exports are regulated by the Brazilian Coffee Institute (IBC), which is an autonomous body responsible to the 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 Concex. The CPA also decides on changes in customs duties under the provisions of existing legislation. The import policy of the public sector is coordinated by the Committee for the Coordination of Foreign Purchasing Policy (CCPCE).

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.1 These accounts are maintained with Bulgaria, the German Democratic Republic, Greece, Hungary, Israel, Poland, Romania, and Yugoslavia. 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 providing for settlements through accounts denominated in U.S. dollars are in force with Argentina, Bolivia, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Peru, and Uruguay. Proceeds from exports to Latin American member countries of the Inter-American Development Bank, other than Argentina, Mexico, and Venezuela, may be received in the currency of the importing country.

Imports and Import Payments

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

With certain exceptions,4 all imports are subject to a compulsory advance deposit requirement equal to 100 per cent of the f.o.b. value of the imports. The deposits must be lodged before import certificates are collected and are held without interest by the Central Bank for a period of 360 days.

As a general rule, imports may be cleared through customs before an exchange contract is closed. However, Cacex may approve applications for the payment of imports of any goods at terms of up to 360 days from the date of shipment, without any test for similares nacionais, provided that no import duty concessions or other tax concessions are involved. External financing at terms in excess of 360 days for imports of capital goods, intermediate products, raw materials, and other goods and merchandise regardless of the classification of the importer and the purpose of the merchandise, must be registered with the Central Bank. Financial terms in respect of external financing for imports of more than one year must be submitted for approval to the Central Bank, which will evaluate them in the light of foreign debt policy, before a request can be made for registration with Firce. Registration with Firce is also dependent on a ruling by Cacex that similares nacionais do not exist and that Brazilian firms are unable to supply the imports. Payment of the amount financed, and of interest thereon, may only be made upon presentation of a certificate of authorization issued by the Central Bank approving the credit terms. Prior to shipment of the goods, total payments to suppliers for the nonfinanced amount may not exceed 20 per cent of the import value. Furthermore, installments of the financed amount must be distributed to ensure that amortization of the debt is scheduled in proportion to the terms of the financing operation. Spot exchange contracts may be closed if the contract is intended to settle drafts, at sight or on maturity, and the appropriate shipping documents are presented. Spot exchange contracts must be settled on maturity of the draft; this may take place 2 working days in advance of the maturity date if the exchange transfer is processed by telegram or telex, or 10 working days in advance if processed by airmail or check. Forward contracts, for up to 180 days, may be closed when a letter of credit is being opened. Letters of credit must be opened within 5 working days from the date of the exchange contract. Letters of credit for more than 360 days may be opened without prior closing of an exchange contract (Gecam Communication No. 297).

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

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

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

Payments for Invisibles

Payments for current invisibles related to income from foreign capital, royalties, and technical assistance are governed by the provisions of the Foreign Investment Law. In addition to certain restrictions on remittances stipulated in that law, limits are placed, by virtue of Normative Act No. 15 of the National Institute of Industrial Property of September 11, 1975, on remittances of all royalties and technical assistance fees (see below). Subject to certain conditions authorized banks may sell foreign exchange up to the equivalent of US$300 a month for personal remittances abroad. The sale of foreign exchange for travel abroad is subject to special regulations as described below. Payments for other current invisibles require the approval of Gecam, or Firce, which 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: for neighboring countries (1) in banknotes up to US$100, and (2) in payment orders for the remainder; and for other countries (1) in banknotes up to US$100, and (2) in payment orders or travelers checks for the remainder. Applications for purchases of travel exchange in excess of US$1,000 must be submitted to the Central Bank, which considers each case on its merits; amounts in excess of US$1,000, when authorized, may be taken up in the form of payment orders only. Foreign residents in transit in Brazil are permitted to purchase foreign currency up to the equivalent of the amount they sold during the period of their stay in Brazil; however, purchases in excess of 30 per cent of the amount previously sold require the approval of the Central Bank. Each purchase transaction is registered, and the records of these operations, which must contain the names of clients, are submitted daily to the Central Bank.

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

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

Travelers may take out domestic and foreign banknotes freely.

Exports and Export Proceeds

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

The IBC does not grant the authorization to export coffee unless the sale contract is based on a price per pound that is at least equal to the minimum registration price (in U.S. dollars a pound, f.o.b.) fixed from time to time by the IBC. The minimum registration price varies with the quality of the coffee and the port of shipment. Exporters of coffee are required to surrender, without compensation, a portion of their proceeds in the form of a contribution quota which varies according to the type of coffee. The cruzeiro proceeds from the contribution quota are transferred to the Coffee Defense Fund. The contribution quotas are set from time to time by the IBC and are fixed in terms of foreign currency; on December 31, 1975 it was US$29.00 a bag for green coffee, US$24.00 a bag for washed coffee, and US$0.19 a pound for decaffeinated green coffee. The contribution quotas are adjusted whenever the exchange rate for the cruzeiro is changed in order to ensure that exporters’ returns in cruzeiros, at the minimum registration price, remain unchanged.

Exporters may convert exchange proceeds, after deduction of the contribution quotas, at the prevailing official market rate of exchange. Thus, the exchange rate for exports of coffee depends on (1) the amount of the contribution quota, (2) the actual price received (f.o.b. Brazil, in U.S. dollars a pound), and (3) the official market rate of exchange. On December 31, 1975, the minimum registration prices, depending on the grade of coffee and the port of shipment, were US$0.82 and US$0.84 a pound for green coffee, US$0.84 a pound for washed coffee, and US$0.92 and US$0.94 a pound for decaffeinated green coffee. The corresponding cruzeiro payments a bag, after deduction of the contribution quota, were Cr$714.74 and Cr$738.56 for green coffee, Cr$783.66 for washed coffee, and Cr$869.17 and Cr$892.98 for decaffeinated green coffee. Thus the exchange rates for proceeds from coffee exports on sales at the minimum registration price were Cr$6.603 and Cr$6.661 per US$1 for green coffee, Cr$7.068 per US$1 for washed coffee, and Cr$7.157 and Cr$7.197 per US$1 for decaffeinated green coffee. The exchange rate for coffee exports is higher to the extent that sales are made in excess of the minimum registration price. Proceeds of exports of spray-dried and freeze-dried soluble coffee are also subject to a contribution quota. On December 31, 1975, the minimum registration price for spray-dried soluble coffee was US$1.85 a pound and for freeze-dried soluble coffee US$2.80 a pound. The contribution quota on both types of coffee was US$0.21 a pound. Thus the exchange rates for proceeds from exports of spray-dried and freeze-dried soluble coffee on sales at the minimum registration price were Cr$7.996 and Cr$8.343, respectively, per US$1.

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

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

Proceeds from Invisibles

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

Capital

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

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

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

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

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

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

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

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

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

Gold

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

Table of Exchange Rates (as at December 31, 1975)5(cruzeiros per U.S. dollar)
BuyingSelling
5.412(Official Market Rate less 40% Contribution Quota)
Exports of quartz chips.
6.603-6.661(Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)6
Exports of green coffee effected at a price equal to the minimum registration price, for payment at sight.
7.068(Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)6
Exports of washed coffee effected at a price equal to the minimum registration price, for payment at sight.
7.157-7.197(Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)6
Exports of green decaffeinated coffee effected at a price equal to the minimum registration price, for payment at sight.
7.996(Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)6
Exports of spray-dried soluble coffee.
8.118(Official Market Rate less 10% Contribution Quota)
Exports of cocoa beans and cocoa products other than sweetened cocoa powder. Exports of raw hides of wild animals.
8.343(Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)6
Exports of freeze-dried soluble coffee.
8.569(Official Market Rate less 5% Contribution Quota)
Exports of tanned or processed hides of wild animals.
Exports of sweetened cocoa powder.
9.020(“Manual Market” Rate) Foreign banknotes and travelers checks.9.070(“Manual Market” Rate) Foreign banknotes and travelers checks.
9.020(Official Market Rate) All other export proceeds. Other proceeds.9.070(Official Market Rate) Imports. Invisibles.7 Capital.

Changes during 1975

During the course of the year, the buying and selling rates of the monetary authorities were changed as follows: January 28, Cr$7.510 and Cr$7.550 per US$1; February 20, Cr$7.580 and Cr$7.620 per US$1; March 19, Cr$7.695 and Cr$7.735 per US$1; April 11, Cr$7.805 and Cr$7.845 per US$1; May 14, Cr$7.925 and Cr$7.975 per US$1; June 26, Cr$8.020 and Cr$8.070 per US$1; July 8, Cr$8.080 and Cr$8.130 per US$1; August 5, Cr$8.235 and Cr$8.285 per US$1; September 23, Cr$8.470 and Cr$8.520 per US$1; October 27, Cr$8.620 and Cr$8.670 per US$1; November 25, Cr$8.850 and Cr$8.900 per US$1; and December 16, Cr$9.020 and Cr$9.070 per US$1.

January 1. The contribution quota on export proceeds from quartz was increased from 10 per cent to 40 per cent of the f.o.b. value (Central Bank Resolution No. 315 of December 31, 1974).

January 9. CPA Resolution No. 2331 exempted from import duty, for a period of one year, wood pulp and paperwaste intended for the manufacture of paper.

January 9. The contribution quota on export proceeds from sweetened cocoa powder containing up to 50 per cent of cocoa cake as a raw material was reduced from 10 per cent to 5 per cent of the f.o.b. value (Central Bank Resolution No. 316 and Gecam Communication No. 250).

January 9. CPA Resolution No. 2329 extended for a further year the validity of Resolution No. 1992 which exempted certain fertilizers from import duty.

January 9. Cacex Communication No. 500 revoked Communication Nos. 463, 478, 479, 490, and 492 which had for certain imports reduced the validity of import certificates from 180 days to either 90 or 60 days.

January 28. IBC Resolution No. 907 established a contribution quota of US$30.54 a bag for exports of green coffee.

January 30. Cacex Communication No. 501 established quotas for the export of quartz chips in 1975.

February 1. The guaranteed cruzeiro prices for washed and unwashed coffee came into effect which had been established for shipment from February 1 by IBC Resolution No. 895 of October 2, 1974.

February 4. IBC Resolution No. 908 established the minimum registration price for green decaffeinated coffee at the level applicable for green coffee plus US$0.10 a pound. The contribution quota for green decaffeinated coffee was reduced to US$0.15 a pound (from US$29.76 to US$19.80 a bag) for exports shipped on or after January 10; this reduction would remain in effect for 180 days.

February 5. CPA Resolution No. 2352 exempted from import duty, for one year, a quota of 8,000 tons of aluminum waste and scrap when intended for use of manufacturers of aluminum and secondary alloys.

February 5. CPA Resolution No. 2354 exempted from export duty for one year a quota of 30,000 tons of aluminum oxide when imported for the use of producers of primary aluminum.

February 17. IBC Resolution No. 910 established contribution quotas of US$31.00 a bag and US$0.155 a pound for exports of green coffee and decaffeinated green coffee, respectively.

February 25. Cacex Communication No. 502 regulated exports of the 1975 soybean crop and its by-products (bran, cake, and oil). Such exports continued to require the prior approval of Cacex; exports of soybean oil were furthermore made subject to a ceiling of 10 per cent of domestic production.

February 25. Cacex Communication No. 503 regulated 1975 timber exports. Quotas were established for exports of milled pinewood and sawn cinnamon and imbuia wood.

February 28. Most imports bearing customs duty of 37 per cent or more became subject to the requirement of cash payment on sight which previously applied to goods subject to duty at a rate of 55 per cent or more. In addition, a large number of other import items became subject to the cash payment requirement, irrespective of the rate of customs duty. Included among goods exempt from the requirement were specified types of industrial and agricultural machinery, goods imported on the basis of drawback, and imports effected with medium-term or long-term external financing or as a foreign investment registered with the Central Bank. Also exempt were imports into the free trade zone of Manaus (Central Bank Resolution No. 319 and Gecam Communication No. 255).

March 18. CPA Resolution No. 2370 reduced the import duty on tires and inner tubes of certain sizes from 85 per cent to zero until December 31, 1975.

March 19. IBC Resolution No. 916 established contribution quotas of US$31.68 a bag and US$0.1628 a pound for exports of green coffee and decaffeinated green coffee, respectively.

March 19. Concex Resolution No. 98 made the granting of import licenses for steel products dependent until December 31,1975 upon the prior approval of the Conselho de Não-Ferrosos e Siderurgia (Consider). Imports made under drawback arrangements were not affected.

April 8. IBC Resolution No. 918 established minimum registration prices for exports of green coffee for the period April 9-June 30, and for exports of soluble coffee for shipments for the period September 1-30.

April 11. IBC Resolution No. 919 established a contribution quota of US$32.31 a bag for exports of green coffee.

April 25. IBC Resolution No. 920 established contribution quotas of US$32.31 a bag and US$0.1701 a pound for exports of green coffee and decaffeinated green coffee, respectively.

April 29. Decree No. 75677 provided that until December 31, 1975 applications by government departments and federal agencies for import licenses for machinery, equipment, and raw materials submitted to Cacex must be accompanied by the written approval of the minister concerned, and that Cacex authorization for these imports must be obtained before shipment of the goods. Similar provisions were applicable to imports by state governments and state agencies. The Decree maintained the requirement that each ministry present a monthly report of authorized imports to the President.

April 30. CPA Resolution No. 2439 gave exemption from import duty to raw, waste, and scrap aluminum when the importer could prove to Cacex that he had bought domestically produced aluminum in the proportion of 1.4 tons for every ton imported.

May 7 and May 8. Decree-Law No. 1401 of May 7 and Central Bank Resolution No. 323 of May 8 permitted inward portfolio investment, through the country’s stock exchanges, in Brazilian commercial and industrial securities by persons resident or domiciled abroad. Such capital had to be channeled through “investment companies” based in Brazil, and remain in the country for at least three years, following which repatriation could be made—free of income taxes—at an average rate of up to 20 per cent every six months. Income tax payable on cash dividends or bonuses distributed to shareholders residing or payable abroad would be at the rate of 15 per cent; the rate of tax would fall to 12 per cent if the investment was held in Brazil for more than six years and to 8 per cent if held for more than eight years. The tax payable on capital gains would be at a rate of 25 per cent. The supplementary withholding tax applicable to remittances abroad of capital gains, dividends and cash bonuses, net of income tax, would be levied at rates ranging from 40 per cent to 60 per cent depending on the extent to which such remittances exceeded, in each fiscal year, 12 per cent of the value of the initial investment registered in foreign currency. Investments held longer than eight years would be exempt from the supplementary withholding tax. Investment companies authorized by the Central Bank to invest foreign capital in the stock markets would not be allowed to control more than 10 per cent of any company’s voting stock, or to invest more than 10 per cent of their funds in any one company, and an investment company’s average investment per firm could not exceed 5 per cent of the investment company’s total investments. The minimum participation in investment companies by a nonresident individual or corporation would be US$10,000 or its equivalent. The investment companies had to invest at least 50 per cent of the funds received from nonresident investors in Brazilian “open capital corporations”; no investment in public sector corporations, in banking shares, in other financial securities, or in real estate was permitted.

May 12. Cacex Communication No. 509 regulated the granting of import certificates for machinery, equipment, raw materials, and other goods on behalf of government departments and federal agencies, states, and municipalities and other public sector organizations.

May 13. IBC Resolution No. 923 established contribution quotas of US$32.98 a bag and US$0.1778 a pound for exports of green coffee and decaffeinated green coffee, respectively.

May 15. CPA Resolution No. 2458 reduced the import duty from 30 per cent to 5 per cent for a quota of 11,600 tons of lead scrap and waste.

May 23. Decree-Law 1403 exempted from import duties and the manufactured goods tax (IPI) materials and equipment imported during 1975-79 for the Brazilian shipbuilding program.

June 5. A new bilateral payments agreement was signed with Romania to replace the existing agreement. (At the end of 1975 the new agreement had not yet come into force.)

June 6. Cacex Communication No. 510 further consolidated regulations and procedures for imports. Communication No. 500 of January 9, 1975 was revoked.

June 9. A new bilateral payments agreement with Greece was signed to replace the existing agreement. (At the end of 1975 the new agreement had not yet come into force.)

June 20. IBC Resolution No. 929 established minimum registration prices for exports of green coffee for the period to September 30, established a contribution quota of US$20.00 a bag for exports of green coffee, and fixed a separate contribution quota of US$15.00 a bag for exports of washed coffee.

June 20. IBC Resolution No. 930 established the contribution quota for exports of decaffeinated green coffee at US$0.11 a pound.

June 23. IBC Resolution No. 924 established contribution quotas of US$20.00 a bag and US$15.00 a bag for exports of green coffee and washed coffee, respectively.

June 25. IBC Resolution No. 931 established contribution quotas of US$20.53 a bag, US$0.1156 a pound, and US$15.60 a bag for exports of green coffee, decaffeinated green coffee, and washed coffee, respectively.

July 4. IBC Resolution No. 932 eliminated the system of monthly individual quotas for exports of soluble coffee to the United States, Canada, and the EEC. It also abolished a contribution quota of US$0.05 a pound on exports of spray-dried soluble coffee.

July 7. IBC Resolution No. 933 established contribution quotas of US$20.86 a bag, US$0.1190 a pound, and US$15.97 a bag for exports of green coffee, decaffeinated green coffee, and washed coffee, respectively.

July 16. Central Bank Resolution No. 331 and Gecam Communication No. 265 established a system of advance import deposit requirements for certain imports, whether imported by the public sector or the private sector. Under the new regulations, deposits equivalent to 100 per cent of the f.o.b. value of imports carrying a customs duty of 37 per cent or more, must be made with the Central Bank before the import certificate could be issued. The deposits would be held without interest for six months. Certain goods subject to a duty of less than 37 per cent were also affected. Exempted from the deposit were imports made under the drawback system; imports with foreign financing of at least 360 days or made as a registered foreign investment; pharmaceuticals, insecticides, oilseeds, raw materials, and other products either not produced in Brazil or produced in insufficient quantities to satisfy domestic consumption; and imports into the free port of Manaus. The deposit was to be made in domestic currency at the exchange rate of the day the import license is issued. Resolutions Nos. 319 of February 26, 1975 and 325 of June 5, 1975 were revoked, thereby terminating the requirement of cash payment for imports specified in these Resolutions.

July 16. Gecam Communication No. 266 allowed interest on suppliers’ credit to be paid on drafts maturing in 360 days or less.

July 24. Central Bank Resolution No. 333 established that imports under export programs approved by Befiex were not subject to prior deposits under the terms of Resolution No. 331.

July 27. Cacex Communication No. 515 required an import certificate for imports of spare parts valued at less than US$5,000. This measure was revoked by Cacex Communication No. 534 of December 2.

July 30. Decree 76055 revised the drawback provisions for imports.

July 31. The IBC lifted the two-week suspension of coffee exports introduced for determining the extent of the frost damage to coffee trees. In various resolutions the IBC announced sharp increases in the minimum registration prices (of about 50-60 per cent for green coffee and 30-40 per cent for soluble coffee) and in the guaranteed prices to producers (of 40 per cent), and terminated the policy of granting substantial discounts to its larger customers.

July 31. IBC Resolution No. 938 established a contribution quota of US$0.1210 a pound for exports of decaffeinated green coffee.

August 1. IBC Resolution No. 939 established contribution quotas of US$22.43 a bag, US$0.1356 a pound, and US$17.66 a bag for exports of green coffee, decaffeinated green coffee, and washed coffee, respectively.

August 5. IBC Resolution No. 941 reintroduced the contribution quota on export proceeds from spray-dried soluble coffee and introduced a new contribution quota on proceeds from exports of freeze-dried soluble coffee. Both contribution quotas were set at US$0.08 a pound.

August 5. Decree No. 76084 provided for the imposition of import restrictions on products originating in any country that in any way impeded Brazilian exports. The Decree authorized the Finance Ministry to suspend tariff concessions already granted, to apply tariff surcharges of up to 100 percentage points, or to impose other restrictions on the importation of merchandise from countries that in any way restricted Brazilian exports to their markets.

August 5. Central Bank Resolution No. 334 revoked Resolution No. 305 of October 24, 1974 which reduced temporarily (from 25 per cent to 5 per cent) the withholding tax payable on interest, commissions, and expenses arising from registered foreign currency loans. The minimum term of these loans was maintained at five years.

August 5. Foreign financial credits and import financing subject to a minimum maturity of five years were made eligible for a tax credit of 85 per cent of the 25 per cent withholding tax on remittances of interest, commissions, or other expenses arising from such loans and credits (Central Bank Resolution No. 335).

August 6. Order No. 296 of the Ministry of Finance regulated the processing and signature of foreign loans with the guarantee of the Federal Government.

August 13. Central Bank Resolution No. 336 permitted importers of capital goods, raw materials, intermediate goods, and other merchandise to apply for medium-term and long-term financing abroad, and thus avoid (in accordance with Resolution No. 331) the 100 per cent prior import deposit. It also required the prior approval of Cacex for all such import contracts.

August 22. IBC Resolution No. 942 established contribution quotas of US$23.19 a bag, US$0.1406 a pound, US$18.48 a bag, and US$0.10 a pound for exports of green coffee, decaffeinated green coffee, washed coffee, and soluble coffee, respectively.

August 25. Cacex was authorized to levy a processing charge of up to 0.9 per cent on the value of import certificates, with certain exceptions. The charge would be payable on issue of the documents (Decree-Law 1416).

August 25. The buying and selling rates of the monetary authorities were changed to Cr$8.310 and Cr$8.360 per US$1, respectively.

September 3. Decree-Law No. 1418 introduced the following new incentives for exports:

(1) Companies exporting services and locally owned concerns engaging in operations on foreign commodity exchanges could deduct from profits liable to income tax the foreign exchange earnings arising from these transactions.

(2) Sales in the domestic market to locally owned engineering concerns of machinery, equipment, vehicles, and instruments, together with parts and components of local manufacture, to be exported by them for use in projects contracted abroad would be eligible for tax incentives and credit facilities provided for exports. These goods could remain abroad for use in other projects for which the concern had been awarded a contract, or could be leased, lent, sold, or donated upon conclusion of the project; if returned to Brazil, they would become liable to import duties. Subject to the authorization of Cacex, other new and used machinery and equipment, vehicles, and instruments could be temporarily exported for the execution of projects abroad by companies that obtained contracts for these projects; these could also be sold, leased, lent, or donated abroad. In both cases, foreign exchange earnings arising out of the lease or sale could be deducted from profits liable to income tax.

(3) The Minister of Finance was empowered to authorize, with suspension of taxes, imports by locally owned engineering concerns for the execution of projects abroad of machinery, equipment, vehicles, and instruments, together with components and parts that could not satisfactorily be manufactured in Brazil.

(4) The Minister was also authorized to provide the guarantee of the Federal Government for insurance to cover concerns exporting capital goods and services or executing projects abroad against risks in respect of nonfulfillment of contractual obligations.

September 4. It was announced that LAFTA countries had been exempted from the ban imposed in November 1974 on the import of consumer goods by government bodies.

September 11. The National Institute of Industrial Property issued Normative Act No. 15 regarding the use of patents, trademarks, and industrial technology, as well as the related payments.

September 23. IBC Resolution No. 947 established contribution quotas of US$24.80 a bag, US$0.1555 a pound, US$20.21 a bag, and US$0.1412 a pound for exports of green coffee, decaffeinated green coffee, washed coffee, and soluble coffee, respectively.

October 9. The President announced that a number of measures would be introduced to restore economic stability and improve the balance of payments. These included a 15 per cent reduction in public sector imports in 1976; directives to the public sector to accord preference to national products; an increase in import duties on a wide range of products (by 100 per cent on “superfluous” products and by 30 per cent on “less essential” goods); and an expansion of export financing facilities at low rates of interest. In addition, foreign companies would be permitted to engage in exploration for oil in Brazil under risk contracts to be negotiated with Petrobrás.

October 9. Decree No. 76406 limited, during 1976, imports, leasing, or purchases in the domestic market by ministries and other agencies controlled by the Federal Government of raw materials, equipment, and other goods and services.

October 9. Decree No. 76407 prohibited imports, leasing, and purchases in the domestic market by ministries or agencies controlled by the Federal Government of machinery, equipment, vehicles, and spare parts of foreign origin for which similares nacionais exist, except under specified conditions.

October 9. Decree-Law No. 1421 increased import duties on some 2,000 items. Duty increases of 100 percentage points and 30 percentage points were applied to specified luxury and intermediate products, respectively. Goods originating in LAFTA countries and items bound under the GATT were not affected. The maximum rate of duty in force remained at 205 per cent.

October 21. Cacex Communication No. 523 provided a revised listing of the cases in which imports must be shipped on Brazilian-flag vessels. Among other things, the regulation extended this requirement to imports receiving exemptions from or reductions of customs duties because no similares nacionais exist, or because the import transaction is covered either by a multilateral or bilateral tariff agreement or by Article 4 of Law No. 3244 of August 14, 1957 (as amended by Decree-Law No. 63 of November 21, 1966). Exemptions from the requirement could be granted by the Superintendency of Maritime Shipping (Sunamam).

October 22. Cacex Communication No. 525 extended the list of products that could benefit from the special line of refinancing made available under Central Bank Resolution No. 71 of November 1, 1967 to provide support for the production of manufactured goods for export. Cacex Communication No. 340 was revoked.

October 23. Decree-Law No. 1423 extended the period of application of tax and credit incentives for exports of manufactured products.

October 24. IBC Resolution No. 950 established contribution quotas of US$26.00 a bag, US$0.1600 a pound, US$21.00 a bag, and US$0.1600 a pound for exports of green coffee, decaffeinated green coffee, washed coffee, and soluble coffee, respectively.

November 6. A new bilateral payments agreement was signed with the German Democratic Republic to replace the existing agreement. (At the end of the year the new agreement had not yet come into force.)

November 12. The buying and selling rates of the monetary authorities were changed to Cr$8.725 and Cr$8.775 per US$1, respectively.

November 12. IBC Resolution No. 955 established contribution quotas of US$27.00 a bag, US$0.17 a pound, US$22.00 a bag, and US$0.17 a pound for exports of green coffee, decaffeinated green coffee, washed coffee, and soluble coffee, respectively.

November 13. Proceeds from foreign financial loans received by commercial banks and investment banks and held on deposit with the Central Bank pending relending to Brazilian customers could receive interest of up to 1¾ per cent above the London interbank offered rate. These funds previously received interest only up to the London interbank offered rate (Central Bank Circular No. 276).

November 13. Central Bank Resolution No. 348 permitted the cruzeiro equivalent of foreign currency intended for portfolio investment in Brazilian stock exchanges to be deposited with the Central Bank for 180 days, receiving interest equal to London interbank offered rates.

November 13. Relending operations by commercial and investment banks through funds obtained from foreign financial loans were exempted from the tax on financial operations (Central Bank Circular No. 278).

November 24. IBC Resolution No. 956 established contribution quotas of US$28.00 a bag, US$0.18 a pound, US$23.00 a bag, and US$0.19 a pound for exports of green coffee, decaffeinated green coffee, washed coffee, and soluble coffee, respectively.

December 2. Decree-Law No. 1426 established the conditions whereby tax credits accruing to exporters in respect of the tax on the circulation of goods (the ICM tax) could be deducted from the amount of tax on industrialized products (the IPI tax) owing in respect of operations in the domestic market. The Minister of Finance was authorized to establish other means by which these tax credits could be applied, including the use of compensation or offsetting arrangements.

December 2. Decree-Law No. 1427 increased, from 180 to 360 days, the retention period for which deposits must be held with the Central Bank under the import deposit scheme established in July. In addition, a system of obligatory registration with Cacex was established for all importers and henceforth imports could be effected only by registered firms or persons. Furthermore, the Minister of Finance was empowered, on a temporary basis, in accordance with the directives of the Economic Development Council and without prejudice to commitments under LAFTA, to authorize Cacex to reject applications for import certificates where (1) imports were for speculative stock building purposes; (2) imports were causing or threatened to cause serious damage to the national economy; and (3) imports originated in or were shipped from countries that discriminated against Brazilian exports.

December 2. Central Bank Resolution No. 354 and Gecam Communication No. 287 regulated Decree-Law No. 1427 and extended the coverage of the import deposit scheme to all goods except petroleum, fertilizers, disinfectants, insecticides, herbicides, breeding stock, oil seeds, antibiotics and other pharmaceutical products, wheat, coal, printing paper, certain books, and aircraft and helicopter parts. The following import categories were also exempted: equipment and components without similares nacionais for petroleum prospecting and production, and for certain approved scientific and research programs, imports through the Manaus free trade zone, subject to certain conditions; imports under drawback arrangements; imports with foreign financing of more than five years of machinery and equipment without similares nacionais for the importer’s own use or in the form of foreign capital investment registered with Firce; and goods imported from LAFTA countries under special concessions. Also exempt were temporary imports of equipment; components and parts for maintenance, repair, or reconditioning purposes; Brazilian goods returning to the country; and goods imported under export programs approved by Befiex. Central Bank Resolutions Nos. 331 of July 16, 1975 and 333 of July 24, 1975 were revoked.

December 2. Under Decree-Law No. 1428 the granting of tax benefits in respect of customs duties and the tax on industrialized products (the IPI tax) could be made by governmental authority only in respect of imports destined for use in projects of exceptional national interest approved by the President of the Republic. In addition, the Minister of Finance was authorized to suspend the application of these benefits when the imports to which they apply originate in countries that prohibit, restrict, or impede Brazilian exports. The availability of tax, exchange, and credit incentives for locally manufactured goods would be subject to indices of the content of nationally produced components. The Decree furthermore established incentives in respect of the IPI tax for the domestic machinery and equipment industry, with the objective of increasing its competitiveness with imported products; tax credits of up to 15 per cent of sales of capital goods on the domestic market could be granted to Brazilian manufacturers. In addition, export programs approved by Befiex would receive tax incentives only if annual exports exceeded annual imports.

December 2. Central Bank Resolution No. 352 and Gecam Communication No. 286 established through Cacex a new line of credit to refinance exports of capital goods and consumer durables with monies from the Fund for the Financing of Exports (Finex). These credits would be made available through commercial banks authorized to deal in foreign exchange and also through investment banks.

December 2. Central Bank Resolution No. 355 and Firce Communication No. 25 established new procedures for foreign financing for imports at more than 360 days. Payments of the amount financed, and interest thereon, could only be made upon presentation of a certificate of authorization issued by the Central Bank approving the credit terms. Prior to shipment of the goods, total payments to suppliers for the nonfinanced amount could not exceed 20 per cent of the import. Furthermore, installments of the financed amount must be distributed so as to ensure that at any time in the life of the debt the proportion between the total amount already amortized and the amount of the financing would not exceed the proportion existing between the term already elapsed and the total term of the operation.

December 2. Gecam Communication No. 290 revised arrangements for personal remittances abroad. Authorized banks continued to have authority to effect such remittances of up to US$300 a month without prior approval of the Central Bank, provided (1) the remitter was a registered customer of the bank selling foreign exchange and had held a current account with that bank for more than six months; and (2) the relevant payment order was debited to the customer’s current account for the equivalent amount in cruzeiros. Remittances falling outside the provisions of these regulations required the authorization of the Central Bank.

December 2. Exchange contracts for import payments in the form of sight or term drafts could be concluded only upon (1) submission of the documents relating to shipment of the merchandise; and (2) for sight settlement, on maturity of the draft. This could take place two working days in advance of the maturity date if the exchange transfer was processed by telegram or telex, or ten working days in advance if processed by airmail or check (Gecam Communication No. 289).

December 2. The sale by authorized dealers of checks in foreign currency was suspended in the following cases: (1) transfers to foreign countries in respect of personal remittances (see Gecam Communication No. 290, above); (2) payments for imports originating in or shipped from countries bordering Brazil; and (3) payment orders on foreign countries, when issued in connection with the sale of exchange to travelers. Regulations relating to the sale of travelers checks were not affected (Gecam Communication No. 291).

December 2. CPA Resolutions Nos. 2631, 2632, 2633, and 2634 revoked import duty suspensions and reductions for a number of import items.

December 2. The public sector was directed to reduce imports in 1976 to 75 per cent of 1975 imports and to reduce its gasoline consumption in 1976 to 80 per cent of the 1975 level. Ministers in charge of executive departments were prohibited from delegating the power to approve imports by or on behalf of their ministries. Imports of nonferrous metals became subject to the prior approval of Consider, and imports of computers to that of the Comissão de Coordenação das Atividades de Processamento Eletrônico (Capre).

December 2. The exemption from import duty and the IPI tax on raw materials for the petrochemical industry was suspended until December 31, 1976.

December 8. Cacex Communication No. 534 further consolidated regulations and procedures for imports. Communications Nos. 510, 515, 519, 521, 523, and 524 were revoked.

December 10. Gecam Communication No. 292 exempted from the 100 per cent import deposit requirement imports of raw materials intended for the manufacture of fertilizers and agricultural pesticides.

December 16. IBC Resolution No. 959 established contribution quotas of US$29.00 a bag, US$0.19 a pound, US$24.00 a bag, and US$0.21 a pound for exports of green coffee, decaffeinated green coffee, washed coffee, and soluble coffee, respectively.

December 19. The IBC undertook to offer its coffee on similar terms in all nine EEC countries. Previously, buyers in France and Italy were barred from reselling green coffee.

December 19. Cacex Communication No. 536 extended until December 31, 1976 the provisions of Cacex Communication No. 509 of May 12, 1975 concerning the granting of import certificates for machinery, equipment, raw materials, and other goods on behalf of government departments, federal agencies, states and municipalities, and other public sector organizations.

December 26. Cacex Communication No. 537 specified the procedures to be followed, in terms of Central Bank Resolution No. 355 and Firce Communication No. 25 of December 2, 1975, in connection with imports covered by foreign financing at terms of more than 360 days.

December 31. IBC Resolution No. 960 established contribution quotas of US$29.00 a bag for exports of green and washed coffee and US$0.20 a pound for decaffeinated green coffee, for exchange contracts closed after December 31, 1975. (On January 22, 1976 the IBC announced that the contribution quotas had been frozen at these levels and would no longer be adjusted when changes were made in the cruzeiro parity.)

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

Burma

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.186621 gram of fine gold per Burmese Kyat. The central rate is K 7.74289 = SDR 1, and Burma avails itself of wider margins. On December 31, 1975 the buying and selling rates for the U.S. dollar of the Myanma Foreign Trade Bank, the sole authorized dealer in foreign exchange, were K 6.6116 and K 6.7438, respectively, per U.S. dollar. The Bank’s buying and selling rates for sterling on the same date were K 13.3640 and K 13.6312, respectively, per £ stg. 1.

Administration of Control

Exchange control is administered by the Exchange Control Board in accordance with instructions from the Ministry of Planning and Finance, through the Exchange Control Department of the Union of Burma Bank. A Foreign Exchange Control Committee headed by the Minister of Planning and Finance is in charge of the allocation of foreign exchange to the public sector. 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 for imports are made in accordance with an annual foreign exchange budget drawn up by the Ministry of Planning and Finance.

Prescription of Currency

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

Imports and Import Payments

An import program is drawn up annually as part of the foreign exchange budget. All imports are made by, or in the name of, the MEIC. All imports from Rhodesia and South Africa are prohibited. Also prohibited are imports of a few commodities from any source—principally opium and similar narcotics, monkeys, playing cards, and gold and silver bullion. Imports of consumer goods 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 Union of Burma Bank.

Payments for Invisibles

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

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

Exports and Export Proceeds

All exports are effected by the MEIC. There is a list of prohibited exports which comprises iron and steel, brass, copper, and aluminum and scraps thereof, foreign manufactures, and commodities of domestic origin the conservation of which is desired for domestic requirements. All exports to Rhodesia and South Africa are prohibited. Export proceeds must be obtained in a manner satisfactory to the exchange control authorities; the exchange must be surrendered to the Union of Burma Bank 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 the Burma Five Star Line or on vessels nominated by it.

Proceeds from Invisibles

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

Capital

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

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

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

Gold

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

Changes during 1975

January 25. The central rate was changed from K4.8138 per US$1 to K 7.74289 per SDR 1. Burma continued to avail itself of wider margins. The selling rate for the U.S. dollar was changed on that date from K 4.8138 to K 6.2391.

November 12. A new banking law was enacted; it came into force on the same day. The law provided for four separate banks: the Union of Burma Bank, which was to function as the central bank; the Myanma Economic Bank, which was to act as a savings and commercial bank; the Myanma Foreign Trade Bank, which was to handle all foreign exchange transactions and supervise the country’s foreign exchange income and expenditure; and the Myanma Agricultural Bank. Previously, the Union of Burma Bank was the only bank and the sole authorized dealer in foreign exchange.

Burundi

(Position on December 31, 1975)

Exchange Rate System1

The par value is 0.00935443 gram of fine gold per Burundi Franc. The parity for the U.S. dollar is FBu 78.7501 = US$1, and Burundi avails itself of wider margins. The exchange rates quoted by the Bank of the Republic of Burundi (the central bank) for the U.S. dollar, the intervention currency, are fixed at FBu 78.35 buying, and FBu 79.15 selling, per US$1. The Bank quotes buying and selling rates for the Belgian franc based on its fixed rates for the U.S. dollar and the official market rates for the U.S. dollar in Brussels; the Bank also quotes buying and selling rates for other specified currencies 2 which are based either on its quoted rates for the Belgian franc and the official market rates for the currencies concerned in Brussels, or, for the Kenya shilling, the Rwanda franc, the Tanzania shilling, the Uganda shilling, and the Zaïre, on their official parities.

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Certain nonresidents may maintain Nonresident Accounts in Foreign Currencies with an authorized bank. The opening of such accounts requires the approval of the central bank and is restricted to (1) physical persons of foreign nationality who are resident abroad and (2) juridical persons having branches or subsidiaries abroad. These accounts may be credited freely with any foreign currency quoted by the Bank of the Republic that is received from abroad. They may be debited freely for (1) conversion into Burundi francs 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 originating in or shipped from Rhodesia are prohibited. All imports except trade samples and merchandise not intended for sale and valued at FBu 20,000 or less require licenses; these are generally issued freely, except for certain used clothing, but importers have been instructed not to order abroad certain goods of which domestic stocks are adequate or that are also produced locally. Applications for licenses must be submitted to the Bank of the Republic of Burundi on a form entitled Import License and Payment Authorization. They must also be submitted to the Ministry of Economy. The approval of such an application constitutes an authorization also to obtain foreign exchange. With certain exceptions, applications for amounts under FBu 100,000 are approved by the authorized banks. Import licenses must be presented to the customs officials when the goods are cleared through customs. The license is valid for a period of 12 months starting at the end of the month following that of validation (6 months for goods shipped from neighboring countries); in special cases, extensions may be granted by the central bank. The number and date of expiration of the license must be entered on the customs clearance form, the Consumption Declaration, a copy of which is then sent to the central bank by the customs office. Sugar, salt, and matches are imported either by public sector agencies or are reserved for Burundi nationals.

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

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

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

Payments for Invisibles

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

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

Gold

Dealings in gold coins must be carried out through the central bank, since all private dealing in gold is prohibited. The central bank purchases unrefined gold from domestic producers at FBu 300 a gram. After refining abroad, this gold is included in the official monetary reserves. Imports and exports of gold may be made only by the central bank, with the exception that private firms may be licensed to import gold for dental use.

Changes during 1975

February 13. The ban on trade with Portugal and South Africa was revoked by Ordinance No. 510/27.

March 28. Importers were instructed to refrain from ordering abroad commodities that were also produced locally or of which adequate stocks existed. The goods affected included cement, cereals, and corrugated iron.

November 4. The tariff preferences for goods originating in EEC countries were abolished.

Cameroon

(Position on December 31, 1975)

Exchange System

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

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

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

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

Payments for Invisibles

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

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

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

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

Direct investments abroad 2 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments requires only a report ex post to the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investment in Cameroon 3 require prior declaration to the Minister of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of direct investments in Cameroon requires only reporting ex post to the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in Cameroon. Both the making and the liquidation of direct investments, whether these are Cameroonian investments abroad or foreign investments in Cameroon, must be reported to the Minister of Finance within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent of the capital of a company whose shares are quoted on a stock exchange.

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

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

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

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

Gold

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

Changes during 1975

April 1. All imports from France and the Operations Account countries became subject to license and domiciliation. Exports to these countries became subject to domiciliation only. The repatriation obligation for export proceeds was extended also to proceeds from exports to France and the Operations Account countries.

June 17. Import taxes on rice were reinstated. Imports of sugar were freed from the equalization tax.

July 10. France resumed its participation in the European common margins arrangement; the parity between the CFA franc and the French franc remained unchanged.

December 11. Cameroon signed an agreement with France providing for a loan of CFAF 5 billion to be issued on the French capital market.

Canada

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.822021 gram of fine gold per Canadian Dollar. Since May 31, 1970, however, the authorities have not maintained the exchange rate of the Canadian dollar within margins. The closing free market rate for the U.S. dollar on December 31, 1975 was Can$1.016 per US$1. Canada has no exchange restrictions on foreign payments other than certain restrictions on payments to Rhodesia.

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

Prescription of Currency

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

Imports and Import Payments

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

Exports and Export Proceeds

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

Payments for and Proceeds from Invisibles

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

Capital

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

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. Under the Emergency Gold Mining Assistance Act of 1948, any mines receiving subsidies are required to sell their newly mined gold to the Royal Canadian Mint at the official price of SDR 35 a fine ounce. No such sales have taken place since 1971. Unsubsidized mines sell their output on the free market. Exports of gold are subject to the following conditions: (1) exports to Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic and East Berlin, Hungary, North Korea, Mongolia, Poland, Romania, North Viet-Nam, and the U.S.S.R. are included among those exports subject to control and require a license from the Department of Industry, Trade and Commerce; (2) gold of U.S. origin may only be re-exported from Canada when covered by a permit issued by the Minister of Industry, Trade and Commerce under the authority of the Export and Import Permits Act; and (3) movements of gold to or from Rhodesia are prohibited. Commercial imports of articles containing minor quantities of gold, such as watches, are unrestricted and free of license.

Changes during 1975

January 1. Exports of crude petroleum to the United States began to be curtailed, as announced on November 22, 1974, when it was stated that they would be phased out by the end of 1983. (During the year, the export taxes on crude petroleum and on petroleum products were modified on a number of occasions.)

January 1. For a period of 60 days, direct and indirect imports of nylon woven fabrics originating in the Republic of Korea were restricted to a specified quantity.

January 1. The 1971 global quota measures regarding imports of woven and knitted shirts were extended to the end of November, when they were further extended.

January 16. Restrictions on exports of scrap of iron and steel were lifted but export permits continued to be required.

January 29. The Minister of Finance stated that petrodollar investments in Canada enjoyed the same status as investments from other sources. However, the Government hoped that petro-dollar investments would not be of a scale which would upset exchange markets. The Federal Government did not intend borrowing in the petro-dollar market but other governments and private institutions were free to do so.

February 27. The Minister of Finance withdrew his 1970 request that Canadian borrowers carefully explore the potentialities of the Canadian market before offering securities for sale abroad.

February 27. The Minister of Finance extended for three years the exemption from withholding tax for interest on federal, provincial, and municipal bonds sold abroad.

March 1. Import permits were required for certain cotton yarns originating in any of 17 specified countries.

April 26. Guidelines regarding corporate reorganizations were issued under Part I of the Foreign Investment Review Act.

May 5. It was announced that quotas would be imposed on imports of men’s fine suits from the Republic of Korea, and that the following would be included on the import control list: fine suits originating in the Republic of China, Hong Kong, Hungary, Romania, and Poland; certain acrylic yarn and certain knit fabrics, irrespective of origin; and nylon filament fabrics originating in the Republic of China.

May 6. A clarification was issued regarding the guidelines for the application of Part I of the Foreign Investment Review Act to take-overs involving real estate transactions.

May 29. Canada renewed for one year its adherence to the OECD trade pledge.

June 7. A global quota of 50 million pounds was introduced for imports of all types of cheese from any country except Rhodesia. In contrast to the previous import controls, the quota made no distinction as to variety or end-use.

June 24. The 15 per cent withholding tax on interest payments to nonresidents was removed for certain corporate securities with a maturity of five years or more issued between parties dealing at arm’s length between June 1975 and the end of 1978.

July 5. A global quota was introduced for imports of eggs and egg products.

July 18. New Principles of International Business Conduct were issued for foreign investors. One of these provided that Canadian affiliates must be given access to the technology and know-how of the foreign parent company.

July 18. The second part of the Foreign Investment Review Act was proclaimed and the relevant regulations were issued, as well as special guidelines concerning “related” business. Part II dealt with the establishment of new businesses by persons other than Canadians not already established in Canada or whose new business is unrelated to their existing business in Canada. It came into force on October 15.

August 7. The import quota on live cattle from the United States was lifted.

August 12. The global quota system for imports of beef and veal was extended until December 31. Subquotas were introduced for Australia, New Zealand, and the United States. (With effect from January 1, 1976 imports from any country except Rhodesia of beef and veal in fresh or frozen form ceased to require individual import licenses.)

October 14. A program of wage and price guidelines was announced. It was enacted on December 15. On February 26, 1976, the Government announced its decision not to proceed with the proposed special levy on excess profits derived from exports, which was originally to be part of the anti-inflation program. Export sales would therefore be generally exempt from the domestic guidelines. However, the Government would follow developments in the Canadian economy for signs of diversion of goods to export markets at the expense of adequate domestic supply. The Anti-Inflation Board would also be monitoring profits of exporting firms and, where excess revenue was generated, the way in which they were reinvested and, in particular, any evidence that they were not being reinvested in Canada. Such developments would be considered to be contrary to the domestic guidelines and would necessitate a review of the situation by the Government.

November 12. The renegotiation of the 1925 Canada-West Indies Trade Agreement began.

November 20. It was announced that exports to the United States of crude petroleum and natural gas would be phased out by the end of 1981.

Central African Republic

(Position on December 31, 1975)

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,1 which is officially maintained at the rate of CFAF 1 = 0.02 French franc. Exchange transactions in French francs, the intervention currency, between the Banque des Etats de l’Afrique Centrale (BEAC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission. Exchange rates for foreign currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned.

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

All remittances to non-BEAC countries are subject to a commission of 0.25 per cent; the commission is applicable also to the purchase of banknotes.

Administration of Control

All draft legislation, directives, correspondence, and contracts having a direct or indirect bearing on the finances of the State require the prior approval of the Minister of Finance, who has delegated his approval authority to the Director of the Budget. The Office of Foreign Financial Relations in the Ministry of Finance supervises borrowing and lending abroad, the issuing, advertising, or sale of foreign securities in the Central African 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 BEAC,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 BEAC.

Prescription of Currency

The Central African Republic is an Operations Account country of the French Franc Area, since the BEAC maintains an Operations Account with the French Treasury; settlements with France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made in any of the currencies of those countries or in French francs through Foreign Accounts in Francs.3

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The principal nonresident accounts are Foreign Accounts in Francs. BEAC banknotes received by the foreign correspondents of authorized banks and mailed direct to the BEAC agency in Bangui by the Bank of France or the BCEAO may be credited freely to Foreign Accounts in Francs.

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are suspended. The import from all countries of a few commodities also produced domestically is prohibited. The import of certain foodstuffs is not authorized unless local production of these commodities is inadequate. Imports of certain goods, when not originating in a member country of the Central African Customs and Economic Union (UDEAC), may be made only in given ratios to purchases of the local product. The import of firearms is prohibited irrespective of origin. All other imports from countries in the French Franc Area may be made freely and without an import license. All other imports from EEC countries (the original member states) also are free from quantitative restrictions. Imports from all countries outside the French Franc Area are subject to licensing within the framework of an annual import program of an indicative character.

All import transactions relating to foreign countries must be domiciled with an authorized bank. The import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved.

Resident tourists traveling to countries other than France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 50,000 a year for each person; of this allocation, an amount equivalent to CFAF 25,000 may be taken out in foreign banknotes. Any exchange in excess of the equivalent of CFAF 5,000 that remains after return to the Central African 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 BEAC banknotes, French banknotes, and banknotes issued by any other institute of issue maintaining an Operations Account with the French Treasury. Travelers to other countries may take out any amount in BEAC banknotes.

Nonresident travelers may take out foreign currency and other foreign means of payment up to the amount declared by them on entry; they may reconvert up to CFAF 50,000 in BEAC banknotes into foreign currency.

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are suspended. All exports of cotton, coffee, corn, tobacco, peanuts, palm oil, meat, and diamonds require a license. All other exports to countries in the French Franc Area may be made freely. All exports to countries outside the French Franc Area require licenses, which are issued freely.

Proceeds from exports to foreign countries must be collected and repatriated within one month from the due date; the latter must not be later than 90 days after the arrival of the goods at their destination, unless special authorization is obtained. Export proceeds received in currencies other than those of France or another Operations Account country must be surrendered. All export transactions relating to foreign countries must be domiciled with an authorized bank.

Proceeds from Invisibles

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

Capital

Capital movements between the Central African Republic and France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. All foreign borrowing by the Government or its public and semipublic enterprises, as well as all foreign borrowing with a government guarantee, requires the prior approval of the Director of the Budget within the Ministry of Finance.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in the Central African 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 (as defined above), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad 4 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 5 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 liquidation of direct investments, whether these are 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, 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. 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.

Certain companies have been officially appointed as Offices for the Purchase, Import, and Export of Gold and Raw Diamonds.

Changes during 1975

January 1. The National Marketing Office for Agricultural Products (ONCPA) was abolished by Ordinance No. 74-121 of December 26, 1974. It had held a monopoly over the export of certain agricultural commodities.

July 10. France resumed its participation in the European common margins arrangement; the parity between the CFA franc and the French franc remained unchanged.

Chad

(Position on December 31, 1975)

Exchange System

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

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

A commission of 0.25 per cent is levied on all capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury.

Administration of Control

The Office of the Minister of Finance, Economy, and Planning supervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Chad, and inward and outward direct investment; it also issues import and export authorizations for gold. Exchange control is also administered by the Minister of Finance, who has delegated his approval authority in part to the authorized banks. All exchange transactions relating to foreign countries must be effected through authorized banks. Import and export licenses are issued by the Foreign Trade Office in the Ministry of Finance, Economy, and Planning.

Prescription of Currency

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

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC banknotes may be credited freely to Foreign Accounts in Francs maintained by the foreign correspondents of authorized banks, provided that the notes are mailed direct to the BEAC agency in Chad by the correspondent banks concerned.

Imports and Import Payments

Imports from Rhodesia and South Africa are prohibited. Imports from all sources of wheat, wheat flour, and sugar require licenses. All other imports from countries in the French Franc Area and from EEC countries (the original member states) other than France may be made freely. All imports from non-EEC countries outside the French Franc Area are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by the Minister of State in Charge of the Modern Economy, Planning, Commerce, and International Cooperation on the basis of proposals drawn up by the Committee on Imports.

The import program contains global quotas for imports from non-EEC countries outside the French Franc Area and a special quota for imports of cotton textiles from countries with abnormal competitive advantages. In addition, the program contains global quotas for imports of wheat, wheat flour, and sugar from EEC countries, countries in the French Franc Area, as well as other countries.

Specified imports from neighboring countries not belonging to the French Franc Area (the Libyan Arab Republic, Nigeria, and the Sudan) up to a value of CFAF 3 million a year in each direction for a single importer may be made through compensation transactions.

All import transactions valued at CFAF 100,000 or more and relating to foreign countries must be domiciled with an authorized bank. Import licenses entitle importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank. Forward cover for imports from foreign countries is only permitted for specified commodities and requires the prior approval of the Office of the Minister of Finance, Economy, and Planning.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when bona fide. Some current payments, however, may be subject to delay.

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip, for any number of trips a year; any foreign exchange remaining after return to Chad must be surrendered. For business travel to foreign countries, there is a special allocation of the equivalent of up to CFAF 400,000 a person a trip; the Office of the Minister of Finance, Economy, and Planning may issue exceptional allocations in excess of CFAF 400,000. Tourist and business travel allocations may not be combined. Travelers going to foreign countries may take out up to a maximum of CFAF 10,000 in BEAC banknotes. Travelers to other countries may take out any amount in BEAC banknotes. A resident going abroad for less than 24 hours may not take out more than CFAF 5,000 in CFA banknotes.

Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry, or, if no declaration has been made, up to the equivalent of CFAF 100,000; they may reconvert into foreign currency BEAC banknotes up to CFAF 25,000 that have been obtained from the sale of foreign means of payments that were declared upon entry.

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited. All exports to non-EEC countries outside the French Franc Area require licenses. Specified exports to the Libyan Arab Republic, Nigeria, and the Sudan may be made through compensation transactions. Exports of cotton are the monopoly of the Société Cotonniére du Tchad (Cotontchad).

Export transactions relating to foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 50,000. Export proceeds received in currencies other than those of France or an Operations Account country must be surrendered. Export proceeds normally must be received within 180 days after the arrival of the commodities at their destination. The proceeds must be collected, and surrendered if received in a foreign currency, within two months of the due date.

Proceeds from Invisibles

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

Capital

Capital movements between Chad and France (as defined above), Monaco, and other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in Chad by residents or nonresidents must be deposited with authorized banks in Chad. A commission of 0.25 per cent is levied on capital transfers to foreign countries, except those made for the account of the Treasury.

Special controls (additional to any exchange control requirements that may be applicable or suspended insofar as they would be contrary to the exchange control regulations) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in Chad; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over the sale or introduction of foreign securities in Chad, the control measures do not apply to relations with France (as defined above), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad 2 require the prior approval of the Minister of Finance, Economy, and Planning unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires the prior approval of the Minister, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investments in Chad3 require prior declaration to the Minister of Finance, Economy, and Planning unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of direct investments in Chad must also be declared to the Minister, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in Chad. Both the making and the liquidation of direct investments, whether these are Chadian investments abroad or foreign investments in Chad, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent of the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in Chad requires prior authorization by the Minister of Finance, Economy, and Planning. 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, Economy, and Planning. The following are, however, exempt from this authorization: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Chad and countries abroad or between foreign countries, in which these persons or firms take part; (3) loans contracted by registered banks; and (4) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one borrower. The contracting of loans referred to under (4) that are free of authorization, and each repayment thereon, must be declared to the Minister within 20 days of the operation, unless the total outstanding amount of all loans contracted abroad by the borrower is CFAF 5 million or less.

Lending abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in Chad, or by branches or subsidiaries in Chad of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance, Economy, and Planning. The following are, however, exempt from this authorization: (1) loans granted by registered banks; and (2) other loans, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one lender. The making of loans that are free of authorization, and each repayment thereon, must be declared to the Minister within 20 days of the operation, unless the amount of the loan is less than CFAF 500,000, provided, however, that the total outstanding amount of all loans granted abroad by the lender does not exceed CFAF 5 million. Commercial banks must maintain in Chad a specified minimum proportion of their assets.

Under the Investment Code of August 26, 1963, any enterprise established in Chad, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specified income. The Code also provides for three categories of preferential treatment, in accordance with which certain fiscal and other privileges may be accorded to firms investing in specified new industries or in the expansion of existing ones. Requests for preferential treatment must be submitted to the Minister of State in Charge of the Modern Economy, Planning, Commerce, and International Cooperation, who, after examining the documents, transmits them to the Investment Commission. After an opinion has been given by that Commission, the project is submitted to the Council of Ministers.

Gold

Chad has issued five gold coins of CFAF 1,000, 3,000, 5,000, 10,000, and 20,000 which are legal tender. Ordinance No. 3/PR/TP of February 10, 1968 concerning nonmonetary gold (ratified by Law No. 23 of June 4, 1968), in conjunction with relevant exchange control regulations, governs the holding, sale, import, circulation, export, and processing of gold and diamonds. Residents who are not producers of gold may not hold unworked gold unless they have obtained an authorization issued by the President acting on the advice of the Minister of Mines. Imports and exports of gold, whether unworked or refined, require prior authorization by the Office of the Minister of Finance, Economy, and Planning and by the Directorate of Mines and Geology as well as the visa of the Foreign Trade Office. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Exports of unworked gold and of raw diamonds (as well as domestic purchases and sales of both) are the monopoly of an approved Office for Purchases, Sales, Imports, and Exports (BAVIE), which is a private company. Unworked gold may be exported only to France. Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1975

July10. France resumed its participation in the European common margins arrangement. The parity between the CFA franc and the French franc remained unchanged.

Chile

(Position on December 31, 1975)

Exchange Rate System

The currency is the Chilean Peso, which replaced the Chilean Escudo on September 29, 1975. There are two exchange markets: the official market (known as the banking market) and the brokers’ market. Only the Central Bank of Chile, the Banco del Estado, authorized commercial banks, and other persons or entities authorized by the Central Bank may operate in these markets; at present, brokers are not permitted to operate in either market.1 Outward transfers through both markets are controlled. The spot rates of exchange in both markets have been identical since August 25, 1975; they are set by the Central Bank and are adjusted periodically. Transactions passing through the brokers’ market are confined to outward payments in respect of obligations resulting from earlier capital inflows through that market (interest, dividends, royalties, and amortization and repatriation). Exchange rates for the currencies of Argentina, Bolivia, Brazil, Paraguay, Peru, and Uruguay may be established freely.

Transactions in the banking market are for both spot and forward delivery at the same exchange rate; forward exchange purchases are mandatory for imports of most commodities, and a portion of export proceeds (other than those from copper, nitrate, and iron and a few minor exports) may be sold forward.2 For both types of transaction, settlement in pesos is effected at the time the foreign exchange contract is negotiated. Transactions in the brokers’ market are for spot delivery only. There is some restriction on the availability of foreign exchange in that the Central Bank sells exchange to the commercial banks only for forward delivery (120 days or 90 days from the date of settlement in pesos for settlement on a letter of credit basis or on a documentary collection basis, respectively);3 banks must sell the exchange to importers on the same terms.

On December 31, 1975 the exchange rate in both spot exchange markets was Ch$8.50 per US$1. In both markets, commissions of 410 of 1 per cent were permitted only on sales of exchange; the same commission was permitted on purchases of exchange in the brokers’ market, where, however, no purchases took place. The Central Bank issues, for sale to the public through the banking system, bearer certificates denominated in U.S. dollars (certificados para cobertura en mercado bancario or CEPACs) which may be used for import payments or other payments eligible for the banking market rate or as collateral for the opening of import letters of credit. The certificates are valid for two years from the date of issue; within the validity period, the Central Bank makes available to the owner or holder, upon his request, the sum in U.S. dollars stated on the certificate. On or after their maturity date, the certificates are redeemable in pesos for the amount originally paid.4 Banks can purchase them from the Central Bank, for account of their customers or the general public, at the forward banking market exchange rate in effect on the date of issue, plus such premium or minus such discount as may be established by the Central Bank, plus a 2 per mill commission charge.5 The use of certificates does not relieve the importer from compliance with the forward purchase obligations.

Administration of Control

The Foreign Trade Department and the Department of International Transactions of the Central Bank are in charge of the operation of the exchange control system. Some functions of the Foreign Trade Department have been delegated to local commissions in important cities, and the supervision of copper exports, all imports of the copper industry, and some imports of the nitrate and iodine industry has been delegated to the Copper Corporation (Codelco), which is supervised by the Central Bank and the Superintendency of Banks.

Prescription of Currency

Settlements with Argentina, Bolivia, Brazil, Colombia, Mexico, Paraguay, Peru, Uruguay, and Venezuela, except those in respect of specified commodities, must be made through accounts maintained with each other by the Central Bank of Chile and the central bank of the country concerned, within the framework of the LAFTA multilateral clearing system. Settlements with the Dominican Republic must be made through clearing accounts established under a reciprocal credit agreement. Settlements with other countries must take place in specified convertible currencies. There are inoperative bilateral payments agreements with Bulgaria, the People’s Republic of China, and Poland. Certain payments and transfers to South Africa are prohibited.

Imports and Import Payments

All imports from Rhodesia and imports of military equipment from South Africa are prohibited. There is a List of Permitted Imports; commodities not appearing on it are prohibited unless imported through a “free port” zone (see below) or unless they are on Chile’s National List negotiated with LAFTA or are imported from Andean Pact countries. A small number of 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, originate in Andean Pact countries, are imported under a special regime, 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 may normally be imported in any amount. Prior to shipment, all imports must be registered with the Central Bank, which is empowered to reject import applications but currently is not exercising this authority.6 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 purchase forward exchange as soon as their import applications have been approved; forward purchase is mandatory for most imports. Settlement in pesos is effected at the time the forward exchange contract is negotiated. Foreign exchange for payments of approved imports is sold by the Central Bank for delivery 120 days or 90 days from the date of the peso payment (i.e., from the date on which the importer buys his exchange forward—but see footnote 3). Imports on deferred payment terms (cobertura diferida) require prior authorization of the credit terms by the Central Bank. Imports are subject to a registration tax of 3 per cent of the c.i.f. value.

Payments for Invisibles

All payments for invisibles are subject to exchange control. Most are settled in the banking market, including travel expenses. There are established limits for a number of purposes. For tourist travel the allocation (in addition to fares) is the equivalent of US$200 for travel to neighboring countries; the equivalent of US$400 for travel to other parts of Latin America (defined to include the Bahamas, Curaçao, Jamaica, and Puerto Rico); the equivalent of US$1,000 for travel to Canada, the United States, Europe, and other countries. Banks may sell up to US$120 a person a month for payment of insurance premiums contracted prior to July 23, 1974 in foreign currency with national insurance companies or with foreign companies authorized to operate in Chile. Transfers of other insurance premiums require the approval of the Central Bank, which acts on the advice of the Superintendent of Insurance. Other established limits include those for study abroad. At the end of 1975 the basic allocation for family remittances remained suspended. Transfers in excess of the limits and those in respect of transactions for which no basic allocation has been announced require the prior authorization of the Central Bank.7 Payments for medicines and pharmaceutical products may only be made provided that the product in question is not available in Chile.

For some invisibles the Central Bank must approve a transfer application (solicitud de giro); the only documentation required for invisibles that are neither covered by the approval authority delegated to authorized commercial banks nor by a solicitud de giro is an application form (carta petición) addressed to the Central Bank through an authorized bank. Residents of Chilean nationality and residents of foreign nationality who have spent more than a year in Chile, when traveling to countries outside Latin America, are required to pay a travel tax of 10 per cent of the value of the ticket.

Exports and Export Proceeds

With minor exceptions for humanitarian reasons, exports to Rhodesia are prohibited. Exports of arms and related equipment to South Africa also are prohibited. 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 (with Codelco in the case of copper), and the proceeds of exports are subject to surrender requirements. Commercial banks are authorized to purchase on a spot or a forward basis certain foreign exchange proceeds from exporters (but see footnote 2). Receipts from major exports (including copper) and a few minor exports, however, are sold to the Central Bank on a spot basis, either direct or through commercial banks.

Most export proceeds subject to surrender requirements must be repatriated within 90 days from the date of shipment, and surrendered within 10 days thereafter, but for specified goods this period is extended to between 120 days and 480 days. However, exporters are permitted to repurchase up to 5 per cent of export proceeds for travel expenses and certain other purposes.

Proceeds from Invisibles

All foreign exchange proceeds from invisibles must be surrendered in the banking market.

Capital

Capital inflows are free, but most outflows are restricted. Chile has ratified the Andean Group’s Cartagena Agreement and in principle limits transfers of profits, dividends, and interest on foreign capital to 14 per cent per annum. All new foreign borrowing or refinancing of existing credits by commercial banks requires prior approval by the Central Bank, with the exception of the taking up of lines of credit with foreign correspondents. Foreign capital may enter Chile under one of three different arrangements depending on the purpose and type of the investment.

(1) Article 14 of Decree No. 1272 of September 7, 1961, stipulates that capital brought into the country in the form of foreign exchange (aporte de capital) may be sold freely through authorized banks when the investor (individual or corporation, national or foreign) has registered with the Central Bank. At the end of 1975, however, such capital had to be sold to the Central Bank in the spot banking market.8 It could only be repatriated with the prior approval of the Central Bank, and not earlier than 18 months after the inflow took place.9 The interest rate must not exceed specified limits. Repatriation is only allowed in accordance with the amortization schedule established at the time of registration. The Central Bank, however, has established special terms for the servicing of debt contracted under this regime before December 31, 1973.

(2) Article 15 of the same Decree provides that the Executive Committee of the Central Bank may authorize the use of foreign credit without any minimum period of repayment. The foreign exchange may be used for payments abroad and does not have to be sold to the Central Bank. Repayments, however, can only be settled in the forward banking market. The peso equivalent of the credit must be deposited with the Central Bank at the time of settlement of the transaction, and the foreign exchange is delivered 90 days thereafter.

(3) Decree-Law No. 600 of July 7, 1974, the Foreign Investment Law, establishes a regime both for foreign exchange transfers and long-term capital investment. Authorization to make a foreign investment in Chile is granted by a Foreign Investment Committee through a fixed-term contract containing undertakings regarding the applicable exchange regime, the withdrawal of capital and remittances of interest and profits, and taxes. The contracts normally are for 10 years, which may be extended to 20 years in special cases. Any foreign credits involved must be authorized by, or registered with, the Central Bank. Foreign capital which entered Chile prior to the promulgation of Decree-Law No. 600 continues to be subject to the regulations prevailing on the date of entry but had to be registered with the Foreign Investment Committee within a year from its promulgation.

Decision No. 24 of the Cartagena Agreement is considered to override any contrary provisions of Decree No. 1272 and of Decree-Law No. 258 of 1960, which prior to Decree-Law No. 600 was the principal law governing foreign investment in Chile.

Gold 10

Chile has issued four gold coins, which are legal tender. Newly mined gold is purchased from the producers by Empresa Nacional de Minería (Enami), which, after refining, sells it to the Central Bank. The latter has this gold coined at the Mint. The Central Bank makes gold available, to dental users (in the form of Chilean gold coins) and to industrial users (in the form of mint blanks), at prices that are adjusted from time to time on the basis of quotations on the London gold market. 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, except when imported by authorized buyers; the import of gold coins is not normally permitted.

Changes during 1975

January 1. A value-added tax of 20 per cent was introduced. It was applicable also to imports.

January 3. Decree No. 221 introduced a new customs tariff. The maximum rate of duty was lowered to 120 per cent and a minimum rate of 5 per cent was established.

January 16. The Central Bank issued new regulations for sales of gold to domestic users. Dentists and industrial users of gold were allowed to purchase their full requirements, provided only that they keep a record of their purchases. Purchases and sales of gold by occasional users continued to require the specific authorization of the Central Bank.

January 27. The amount of foreign currency that Chileans or resident foreign nationals not receiving salaries in foreign currency could purchase for travel abroad was reduced as follows: for neighboring countries from US$500 to US$200, for other parts of Latin America from US$1,000 to US$400, and for all other countries from US$2,000 to US$1,000 (Central Bank Circular No. 2281).

January 27. The exchange rate in the banking market was changed from E° 1,870 to E° 2,150 per US$1 and that in the brokers’ market from E° 2,000 to E° 2,350 per US$1 (Circular No. 2282).

February 11. A new List of Permitted Imports was issued. The number of items subject to a 10,000 per cent advance deposit was reduced (Circular No. 2285).

February 12. The exchange rate in the banking market was changed to E° 2,320 per US$1 and that in the brokers’ market to E° 2,550 per US$1 (Circular No. 2286).

February 17. Decree-Law No. 896 modified and increased the travel tax (previously E° 50,000 a trip for travel outside Latin America). A rate of 14 tax units a month was established for trips outside Latin America and a rate of 3 tax units for trips within Latin America (except to Argentina, Bolivia, and Peru, travel to which was exempt). One tax unit was equivalent to approximately US$20; its domestic currency equivalent was periodically adjusted upward.

February 18. The coverage of the 10,000 per cent advance import deposit requirement was further reduced (Circular No. 2289).

March-April. Decrees Nos. 153, 154, 184, 227, 234, 236, and 565 introduced substantial reductions in import duties.

March 1. The exchange rate in the brokers’ market was changed to E° 2,900 per US$1. The rate in the banking market remained unchanged at E° 2,320 per US$1 (Circular No. 2292).

March 1. The three exchange taxes totaling 13.15 per cent on sales of exchange in the brokers’ market for travel exchange and certain other purposes were eliminated by Decree-Laws Nos. 825 and 829 of December 13, 1974.

March 1. Under Decree-Law No. 896, the travel tax was increased to E° 147,000 for travel to Latin American countries other than Argentina, Bolivia, and Peru, for which there was an exemption, and to E° 686,000 for travel to other countries.

March 1. The exchange tax of 18.5 per cent on sales of exchange in the banking market for transfers of profits and dividends was eliminated by Decree-Law No. 825 of December 27, 1974.

March 7. The exchange rate in the banking market was changed to E° 2,550 per US$1 and that in the brokers’ market to E° 3,150 per US$1 (Circular No. 2295).

March 14. The exchange rate in the banking market was changed to E° 2,750 per US$1 and that in the brokers’ market to E° 3,400 per US$1 (Circular No. 2297).

March 19. The exchange rate in the banking market was changed to E° 3,250 per US$1 and that in the brokers’ market to E° 3,700 per US$1 (Circular No. 2299).

March 26. The foreign exchange required for payments for various services and interest and for capital repatriation had to be purchased forward instead of spot (Circular No. 2301).

April 4. The exchange rate in the banking market was changed to E° 3,500 per US$1 and that in the brokers’ market to E° 3,900 per US$1 (Circular No. 2303).

April 4. Circular No. 1275 of the Superintendency of Banks, which supplemented its Circular No. 1249 of November 22, 1974, gave further implementing instructions for the New Entrepreneur Plan (Plan Nuevo Empresario) authorized by Decree No. 1955 of November 12, 1974 of the Ministry of Finance.

April 16. Certain remittances covered by Circular No. 2301 could again be made with spot exchange, up to US$1,000 a transfer; they included remittances to scholarship students and for medical treatment abroad (Circular No. 2309).

April 23. The exchange rate in the banking market was changed to E° 3,800 per US$1 and that in the brokers’ market to E° 4,200 per US$1 (Circular No. 2316).

May 2. The Banco del Estado and the commercial banks were freely permitted to contract lines of credit with foreign correspondent banks, without prior Central Bank approval (Circular No. 2321).

May 5. The exchange rate in the banking market was changed to E° 3,900 per US$1 and that in the brokers’ market to E° 4,300 per US$1 (Circular No. 2322).

May 9. The regulations regarding the importation and repatriation of foreign capital and credits under Article 14 of Decree No. 1272 were changed to allow re-export of capital imported on or after May 7 after 6 months (previously 18 months) as well as semiannual remittances of interest. The ceiling on the permissible rate of interest (2 per cent over the New York prime rate or over LIBOR) was removed; the permissible rate would be that approved by the Central Bank when the capital was imported (Circular No. 2326).

May 12. Further implementing regulations for the New Entrepreneur Plan were announced. Lines of credit in foreign currency would be made available through commercial banks to finance imports of vehicles, machinery, and equipment on eight-year credit terms and at 6 per cent interest (Circular No. 2330).

May 12. The exchange rate in the banking market was changed to E° 4,100 per US$1 and that in the brokers’ market to E° 4,500 per US$1 (Circular No. 2331).

May 16. Commercial banks no longer required Central Bank approval to grant guarantees in foreign currency. Any obligation arising under such guarantees, however, had to be met out of their own foreign currency holdings (Circular No. 2334).

May 22. Banks were freely permitted to advance foreign exchange by forward sale, in respect of freight charges on exports. Such advances were subject to interest at a rate not exceeding 18 per cent (Circular No. 2335).

May 23. The exchange rate in the banking market was changed to E° 4,300 per US$1 and that in the brokers’ market to E° 4,800 per US$1 (Circular No. 2336).

May 26. The provisions of Circular No. 2062 concerning transfers of capital under Article 14 of Decree No. 1272 of 1961 were modified. The minimum time after which capital could be re-exported was reduced from 18 months to 6 months for capital imported on or after May 7, and the interest rate on credits taken up before May 7 could be set freely. For capital inflows, the Central Bank would issue nontransferable certificates (certificados de aporte de capital). Import, re-export, and servicing were to be effected through the banking market (Circular No. 2337).

May 29. Circular No. 2338 modified Circular No. 2218 and listed the export commodities whose exchange proceeds could not be sold forward as copper ore and copper products, iron ore, nitrates, and iodine.

May 29. The retransfer was permitted of capital imported prior to December 31, 1973 and registered by means of capital import certificates. Remittances relating to capital imported after December 31, 1973 would be governed by Circular No. 2337. Circular No. 2227 was revoked (Circular No. 2341).

May 29. The servicing of specified foreign financial debts was regulated. Circulars Nos. 2134 and 2216 were revoked (Circular No. 2342).

June 4. The validity of banking market payments certificates (CEPACs) was extended from one to two years from the date of issue (Circular No. 2346).

June 5. Remittances to scholarship students abroad were shifted from the banking market to the brokers’ market. Their maximum amount was increased by 30 per cent (Circular No. 2350).

June 6. Allocations for monthly remittances to students abroad were increased; they were differentiated according to three groups of countries (Circular No. 2351).

June 10. The exchange rate in the banking market was changed to E° 4,600 per US$1 and that in the brokers’ market to E° 5,100 per US$1 (Circular No. 2353).

June 12. All import registrations and attached applications had to be submitted to the Executive Committee Secretariat of the Central Bank (Circular No. 2355).

June 23. A new list was issued of imports for which prior authorization from the Ministry of National Defense was required (Circular No. 2358).

June 23. Banks were authorized to supply advances, by forward sales of exchange, for the amortization and interest on foreign credits taken up under the provisions of Article 14 of the Foreign Exchange Law. Such advances were subject to interest not exceeding 18 per cent per annum (Circular No. 2360).

June 24. The exchange rate in the banking market was changed to E° 5,000 per US$1 and that in the brokers’ market to E° 5,500 per US$1 (Circular No. 2361).

June 25. Decree-Law No. 1055 provided for the establishment of free zones in Iquique and Punta Arenas. The import duty and tax exemptions would for most free zones be phased out by July 1, 1978.

July 2. Medium-term and long-term obligations maturing in 1975 to Austria, Finland, Israel, Liechtenstein, Norway, and Portugal were exempted from the requirements of Circular No. 2274, which had suspended payments of capital and interest (Circular No. 2366).

July 10. The exchange rate in the banking market was changed to E° 5,300 per US$1 and that in the brokers’ market to E° 5,800 per US$1 (Circular No 2370).

July 11. The export proceeds from 13 commodities, including coal, certain ores, newsprint, fish meal, and fish oil could no longer be sold forward (Circular No. 2371).

July 16. The state monopoly on oil exploration was ended and foreign firms were allowed to bid for service contracts.

July 17. The exchange rate in the banking market was changed to E° 5,500 per US$1 and that in the brokers’ market to E° 6,000 per US$1 (Circular No. 2373).

July 18. Circular No. 1313 of the Superintendency of Banking allowed foreign firms free access to the domestic credit market.

July 24. The exchange rate in the banking market was changed to E° 5,700 per US$1; that in the brokers’ market remained unchanged at E° 6,000 per US$1 (Circular No. 2375).

August. Decrees Nos. 833, 841, 847, 892, 896, and 950 provided for further reductions in import duties.

August 1. The regulations for imports into other parts of Chile from the free zones of Iquique and Punta Arenas were revised. Circular No. 1350 was revoked (Circular No. 2376).

August 1. The Central Bank declared that access to the exchange market to make payments in respect of royalties and technical know-how was given by implication as soon as the relevant contract was approved by the Foreign Investment Committee (Circular No. 2377).

August 1. A reciprocal credit agreement with the Dominican Republic came into operation (Circular No. 2378).

August 7. New rules were announced for forward purchases and sales of foreign exchange by authorized banks from exporters and to importers. Circulars Nos. 2218, 2223, 2338, and 2371 were revoked (Circular No. 2381).

August 8. The exchange rate in the banking market was changed to E° 5,800 per US$1; that in the brokers’ market remained unchanged at E° 6,000 per US$1 (Circular No. 2383).

August 14. Access to the banking market was given to banks obliged to pay foreign currency liabilities stemming from foreign currency guarantees for specified types of transactions. No special authorization from the Central Bank was required for such guarantees, but they had to be registered with the Central Bank. Circular No. 2334 was revoked (Circular No. 2384).

August 25. The period within which capital imported under Article 14 of Decree No. 1272 could not be re-exported was increased from 6 months to 18 months for inflows authorized by the Central Bank from the date of publication of the new regulation in the Official Gazette. This modified Circular No. 2337 (Circular No. 2388).

August 25. The exchange rate in the banking market was changed to E° 6,000 per US$1, while that in the brokers’ market remained unchanged. As a result, the spot rates in the two markets were unified (Circular No. 2389).

August 29. The regulations for the surrender of advance receipts of export proceeds and of loans to exporters were revised. Also, banks were empowered to sell exchange to exporters, at the spot banking market rate, for the payment by exporters of freight, insurance, consular duties, premiums or interest on guarantees, and interest on foreign currency loans. This modified Circular No. 2035 (Circular No. 2390).

August 29. The exchange rate in both spot exchange markets was changed to E° 6,100 per US$1 (Circular No. 2391).

September I. Instructions were issued for the registration with the Central Bank of guarantees and pledges (Circular No. 2392).

September 4. The allocation of payments and receipts in respect of invisibles between the two exchange markets (Circular No. 1972) was revised; most items in the brokers’ market were shifted to the banking market. The only transactions that could still be settled in the brokers’ market were those related to the servicing of foreign capital that had previously been imported through that market. Circular No. 2106 was revoked (Circular No. 2394).

September 4. Imports of certain iron and steel manufactures were exempted from the 10,000 per cent advance deposit requirement (Circular No. 2395).

September 5. Commercial banks were permitted to issue exchange guarantee certificates in foreign currency, without special authorization of the Central Bank, to foreign correspondents or to guarantee the quality and reliability of export shipments. Banks were given access to the banking market for any exchange needed to comply with resulting commitments. The guarantee certificates had to be registered with the Central Bank. Circular No. 1998 was revoked (Circular No. 2396).

September 5. Circular No. 2398 modified Circular No. 2384 in respect of bank guarantees relating to exports.

September 17. The exchange rate in both spot exchange markets was changed to E° 6,400 per US$1 (Circular No. 2402).

September 26. The Central Bank announced that it would maintain the authorization given to banks to purchase the foreign exchange proceeds from exports of nitrates, iodine, and iron ore. This clarified Circular No. 2381 and modified Circular No. 1972 (Circular No. 2407).

September 29. A new monetary unit, the peso, replaced the escudo, at a ratio of E° 1,000 = Ch$l.

September 30. The exchange rate in both spot exchange markets was changed to Ch$6.70 per US$1 (Circular No. 2409).

October 3. Authorized banks were freely permitted to buy, sell, transfer, or settle in, Argentine pesos, Bolivian pesos, Brazilian cruzeiros, Paraguayan guaraníes, Peruvian soles, and Uruguayan new pesos. Chilean and foreign physical or juridical persons could freely deal in these currencies with banks, at freely agreed prices. Banks were not required to surrender these currencies to the Central Bank, and the latter was not required to buy or sell them. Circulars Nos. 2192 and 2194 were revoked (Circular No. 2412).

October 9. New rules were issued for forward purchases and sales of exchange by banks. Banks could freely establish the interest rate on forward purchases from exporters, and were required to sell this exchange to the Central Bank. The Central Bank would sell exchange forward to the commercial banks at 120 days for import letters of credit (previously 10-120 days) and at 90 days for imports on a collection basis (previously 10-90 days). Three forward banking markets were established (A, B, and C). The commodities whose export proceeds could not be sold forward, or whose proceeds had to be sold spot to the Central Bank, were listed. Circulars Nos. 2381 and 2407 were revoked (Circular No. 2413).

October 10. Exporters were permitted to repurchase in the spot banking market up to 5 per cent of the amount of export proceeds they sold. These amounts could be held in foreign currency in a bank account in Chile, the balance in which could not exceed US$50,000. They could be used for travel expenses and expenses of advisory services associated with the holder’s export program (Circular No. 2414).

October 16. A loose-leaf compendium of all existing exchange control regulations was issued, to be completed shortly with a chapter on import payments. Upon publication of these regulations in the Official Gazette, all relevant decisions and circulars would be deemed revoked (Circular No. 2416).

October 20. An updated and modified version of the export regulations was issued. It would come into force from the date of publication in the Official Gazette (Circular No. 2417).

October 22. New regulations for forward purchases of export proceeds by banks were issued. These could not exceed 50 per cent of the total amount to be surrendered, or 20 per cent where the exporter was a foreign firm (Circular No. 2419).

October 27. The exchange rate in both spot exchange markets was changed to Ch$7.10 per US$1 (Circular No. 2422).

October 28. Except for travel within Latin America, Decree-Law No. 1234 replaced the travel tax expressed in terms of tax units with a tax of 10 per cent on the value of the ticket.

November 7. The chapter on imports for the exchange control compendium was issued (Circular No. 2423).

November 7. The exchange rate in both spot exchange markets was changed to Ch$7.50 per US$1 (Circular No. 2424).

November 14. It was confirmed that “old” capital imports, which had not been entitled to retransfer abroad and were not covered by Article 2 of Decree-Law No. 600 of 1974, continued to be governed by the general rules of the Foreign Exchange Law (Circular No. 2426).

November 24. The exchange rate in both spot exchange markets was changed to Ch$7.80 per US$1 (Circular No. 2428).

December 4. The exchange rate in both spot exchange markets was changed to Ch$8.10 per US$1 (Circular No. 2430).

December 4. The lists of imports subject to the 10,000 per cent advance deposit requirement were reduced to five tariff items. For two of these (including certain gold for dental or industrial use), there was a conditional exemption (Circular No. 2431).

December 4. Decree No. 751 of the Ministry of Economy, Development, and Reconstruction modified the list of imports subject to the 10,000 per cent deposit with automatic release.

December 17. The exchange rate in both spot exchange markets was changed to Ch$8.50 per US$1 (Circular No. 2433).

December 18. The rules relating to the servicing of foreign private debt in foreign currency contracted before December 31, 1973 were extended to the end of 1976. Repayments due in 1976 were to be made in three equal installments starting in 1976 (Circular No. 2434).

Republic of China

(Position on December 31,1975)

Exchange Rate System

The par value is 0.0204628 gram of fine gold per New Taiwan Dollar. On February 16, 1973, the Republic of China established a central rate of NT$1 = SDR 0.0218144, corresponding at the time to 0.0193858 gram of fine gold per new Taiwan dollar or NT$38 = US$1, and availed itself of wider margins. The official buying and selling rates for the U.S. dollar are NT$37.95 and NT$38.05, respectively, per US$1. Buying and selling rates for certain other currencies are also officially posted, with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad.1 Currencies for which rates are not officially posted may be accepted by authorized banks (“appointed banks”), and the rates are calculated in accordance with foreign market quotations.2 With certain exceptions, earners of foreign exchange must sell it to banks appointed by the Central Bank of China. There is no exchange market. The appointed banks clear their exchange transactions at the end of each day with the Central Bank. Forward cover facilities are limited to import and export transactions and to the officially posted currencies, with the exception of the U.S. dollar.

Administration of Control

The Executive Yuan is responsible for policies concerning foreign exchange and trade controls. Foreign exchange and trade matters are entrusted to the Ministries of Finance and Economic Affairs and the Central Bank. The Ministry of Finance has general jurisdiction over foreign exchange laws and regulations, and is in charge of government remittances. The Foreign Exchange Department of the Central Bank is responsible for the overall management of foreign exchange, for the determination of the official buying and selling rates of exchange, and for the supervision of the appointed banks, of which the Bank of Taiwan is the most important. The Central Bank also licenses private remittances and capital movements. The Board of Foreign Trade of the Ministry of Economic Affairs coordinates industrial and trade policies, including those relating to the import regime and export promotion, and is in charge of the issuance of import and export licenses. By delegation, the Application Receipt and Dispatch Center at the Board of Foreign Trade screens applications for import licenses and issues the licenses; for some goods, however, import applications and licenses are screened and issued by 18 appointed banks and their branches. Export applications are screened, and export permits are issued, by 30 appointed banks. Most foreign exchange transactions are conducted through appointed banks.

Prescription of Currency

Export receipts must be obtained in Australian dollars, deutsche mark, Hong Kong dollars, pounds sterling, Singapore dollars, Swiss francs, or U.S. dollars. Currencies not officially posted may be accepted by appointed banks but must be converted into posted currencies in exchange markets abroad. The Central Bank supplies foreign exchange in the form of any of the posted currencies for making payments to residents of foreign countries.

Nonresident Accounts

The Republic of China’s exchange control regulations do not provide for a clear distinction between residents and nonresidents. As a consequence, persons who would be considered nonresident under many other exchange control systems are 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 or other negotiable instruments drawn on foreign banks may have the proceeds credited to Foreign Exchange Accounts. Balances in Foreign Currency Accounts may be withdrawn in the original currency or in new Taiwan dollars, after conversion at the official buying rate. Balances in Foreign Exchange Accounts may be withdrawn in new Taiwan dollars; they may also be remitted abroad freely, with the exception that foreign exchange that originated in the United States may not be remitted to Hong Kong. Foreign Exchange Accounts and Foreign Currency Accounts are subdivided into interest-bearing time deposits and passbook accounts (which do not bear interest).

Imports and Import Payments 3

Most imports require individual licenses. Appointed banks have authority to screen import applications for most items on the permissible list (see below), to issue import licenses on behalf of the Central Bank, and to make the necessary foreign exchange available; these goods are automatically approved for an import license. For other commodities subject to license, license applications are screened, and import licenses are issued, by the Application Receipt and Dispatch Center at the Board of Foreign Trade. The holder of an import license is entitled to obtain the necessary foreign exchange from an appointed bank.

Importers of goods on the permissible list may contract on documents against payment (D/P), documents against acceptance (D/A), or usance letter of credit terms (credit terms of less than 180 days may be approved by appointed banks, while longer terms require approval by the Central Bank). For imports on a letter of credit basis, exchange settlement corresponding to 15 per cent of the letter of credit must be made within 28 days of approval of the license for imports taking place on the basis of sight letters of credit, usance letters of credit, letters of credit financed by self-provided exchange, and letters of credit on an installment payment basis; for letters of credit covering bulk imports specially approved by the Ministry of Economic Affairs, the settlement requirement is 10 per cent. This advance settlement requirement, the so-called performance deposit, is a condition for the issuance of a letter of credit.

Imports from communist countries are prohibited in principle, although imports of bulk goods, industrial raw materials, and many consumer goods from any source other than the People’s Republic of China are now being licensed. The authorities license and check imports from Hong Kong in order to induce importers to obtain certain imports direct from the country of production and to control effectively imports from the People’s Republic of China; for similar reasons, certain commodities are not permitted to be imported from Hong Kong, Japan, Macao, Malaysia, and Singapore. Certain commodities financed with U.S. aid funds (including tied letter of credit funds) can be imported only from the United States. Imports of color television sets and many types of scrap metal are prohibited when originating in Japan. Applications for imports from Japan of machinery valued over US$200,000 for each individual order require the approval of the Board of Foreign Trade. Imports of 1,215 items on the permissible list (see below) are allowed only when the goods originate in Western Europe, the United States, or Canada.

Imports are divided into three groups: (1) prohibited, (2) controlled, and (3) permissible. The prohibited imports comprise not only narcotics and some other goods excluded by most countries from importation but also a wide range of pharmaceuticals. The controlled list contains, in addition to such items as arms and ammunition, ships, and poisonous chemicals, a number of luxury goods and less essential items (such as certain Chinese luxury foods, cigarettes, cigars, liquor, certain medicines, tea, sugar and its substitutes, molasses, made-up clothing, consumer durables, antiques, certain jewelry, gold, and silver) and goods subject to domestic regulation and allocation. The first type of goods are licensed restrictively;4 goods of the second type are often imported by government agencies, which offer them for sale either by allocation or by auction. Liquor and cigarettes are imported by a government monopoly organization, which is also responsible for domestic distribution of these commodities. Goods on the permissible list are licensed liberally and can be imported by both end-users and traders. The importation of items on the controlled list is permitted only to factories and end-users. Manufacturers applying for licenses for raw materials are encouraged to give preference to locally produced supplies. On December 31, 1975, of 15,288 classified import items, 13 were prohibited, 503 were controlled, and 14,772 were permissible; on the same date, only 97 items on the permissible list required approval by the Board of Foreign Trade, while all others could be imported under the automatic approval system.

A general (covering) licensing procedure applies in respect of a few items on the controlled list. Under this procedure, manufacturers and other direct end-users are granted authorization semiannually for the importation of listed items specified by value and by quantity. Exchange for such imports is obtainable automatically each time the importer presents the general approved license at an appointed bank. Furthermore, an automatic approval system is applied to most items on the permissible list. Under this system, importers may obtain foreign exchange at any appointed bank by submitted import licenses which are automatically approved. On December 31, 1974, the system applied to 14,693 items, and on December 31, 1975 to 14,675 items.

Special regulations apply to seven commodities normally imported in bulk shipments.5 They are subject to annual quotas and priority must be given to Chinese flag vessels for their importation.

According to the intended utilization, goods may be imported by one of the three main groups of importers: government trading agencies, qualified private traders, and end-users and manufacturers. The import of crude oil is confined to the Chinese Petroleum Corporation. The Central Trust of China is the main government trading agency. It handles imports for government and military organizations, public enterprises, and other customers. Another government trading agency is the Taiwan Supply Bureau, which is in charge of imports for the Taiwan Provincial Government, some local industries, and certain other customers.

Firms that wish to operate as authorized (“registered”) importers must obtain approval (“registration”) from the Board of Foreign Trade; the firms must be operating in accordance with certain laws and have a minimum capital of NT$500,000 and an “export record” equivalent to more than US$100,000 for the last year. Traders licensed to operate on a commission basis may act only as agents for foreign suppliers. They also must be registered by the Board of Foreign Trade.

End-users and manufacturers are permitted to import raw materials, machinery, and replacement equipment needed for their factories. In granting licenses to this category of importer, the licensing authorities take into account such criteria as production capacity and equipment. In processing applications for licenses to import capital equipment for the construction of new plants, the licensing authorities consider the feasibility of the project and its priority from the point of view of the economic needs of the country. When the capital goods concerned are available from domestic sources, import licenses usually are not issued. Imports to be used for processing or producing goods for export are licensed up to requirements (e.g., raw cotton, wool, and wood for the production of plywood).

According to the methods of financing, imports may be divided into two broad categories: (1) imports for which exchange is allocated directly out of official exchange reserves, and (2) imports which are made without recourse to official exchange reserves and which comprise (a) those made under the U.S. P.L. 480 program and (b) those paid for with self-provided exchange or exchange supplied by foreign investors, foreign lenders, or overseas Chinese. Imports obtained with self-provided exchange are those financed by importers out of their own foreign exchange obtained by them prior to their coming to the Republic of China or originating from exchange receipts exempt from the surrender requirement.

Payments for Invisibles

All payments for invisibles require approval from the Central Bank. Payments for invisibles directly related to trade are permitted freely when the basic trade transaction has been approved. The transfer of interest, profits, and earnings on authorized foreign investments in the Republic of China may be made without restriction. Residents may at any time (but not more often than four times a year) make outward transfers up to the equivalent of US$250 for any purpose other than import payments; applications for such personal remittances are approved automatically.

Foreign exchange for payments for certain other invisibles is allocated only up to established limits or on a percentage basis. Foreign technicians are allowed to remit to their dependents abroad up to 60 per cent of their monthly salary. Employees of the Government or of educational institutions may remit to their dependents in Hong Kong or Macao up to HK$150 a month. Membership fees of foreign institutions and certain payments for news services, books, and magazines (personal subscriptions for reference purposes) are also approved. Receipts from local subscriptions to, and sales of, imported newspapers and periodicals are remittable. Up to 70 per cent of the net amount of motion-picture film rentals may be transferred abroad; the remainder is to be used for local expenses. The remittance of the earnings of foreign entertainers may be approved on a case-by-case basis. The full amount of tuition and living expenses during the first academic year of students studying abroad may be remitted, and up to US$4,000 a year in the second to fifth academic years. Residents are granted an exchange allowance equivalent to US$1,200 a person a trip (US$600 for each accompanying dependent under the age of 12) for any approved type of travel; visas for tourist travel, however, are not normally granted to Chinese nationals. For business travel, an allowance equivalent to US$1,500 a month for up to three months is granted for living expenses. All travel allocations are net of fares and tickets. Applications for exchange to pay for certain other types of invisibles are approved on their merits.

Residents leaving the Republic of China may take with them no more than NT$2,000 in domestic banknotes and 20 coins and the equivalent of US$600 in foreign currencies. Nonresident travelers who have stayed in the Republic less than six months may take with them any unspent portion of the foreign currency which they registered upon entry, and may in addition convert local currency into foreign currency upon submission of the foreign exchange memorandum evidencing their acquisition of local currency by sale of exchange.

Exports and Export Proceeds 6

All exports require licenses, mainly in order to ensure the surrender of foreign exchange. Licenses may be issued only for exports to noncommunist countries. The re-exportation of imported goods is permitted after they have been processed. Exports of sugar, rice, and salt are handled by government trading agencies.

Quota limitations are maintained on the export of canned mushrooms and asparagus. The export of some foodstuffs, as well as of fertilizers, logs, cement, steel, and scrap of iron and steel, is either prohibited or suspended. There are ceilings on the export of textiles and stainless flatwear to specified countries.

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

With minor exceptions, exporters are required to surrender exchange earnings accruing from exports immediately after their collection. Most exports to any permitted destination may be made on a consignment or collection basis, provided that payment is not deferred for more than 180 days from shipment. Subject to approval, bona fide gifts and commodity samples up to the value of US$200 may be sent abroad. When leaving the Republic of China, tourists are allowed to take out domestic products valued up to US$200 without providing evidence that they have surrendered foreign exchange.

Proceeds from Invisibles

Exchange surrender requirements applicable to proceeds from invisibles are generally similar to those applicable to export proceeds. Interest, earnings, and profits on investments made by Chinese investors outside the country, and originally approved by the Investment Commission of the Ministry of Economic Affairs, must be surrendered to the banks; otherwise, earnings may be retained. Private inward remittances may be retained by the recipients for deposit on a foreign exchange account.

Travelers may bring in any amount of foreign currency and either hold or surrender it; the amount imported must be declared upon entry. The import of domestic banknotes expressed in new Taiwan dollars is limited to NT$4,000 for each traveler; a license from the Ministry of Finance is required for importing a larger amount.

Capital

Investments by nonresidents (including overseas Chinese) may be made in capital equipment or raw materials, or through the transfer of foreign currency to the Republic of China. In accordance with the Foreign Investment Law of July 14, 1954 (as amended in 1959 and 1968) and the Statute for the Encouragement of Investment of September 10, 1960 (as amended in 1965, 1967, 1970, and 1974), new foreign investments approved by the authorities are guaranteed (1) unrestricted transfer of net annual profits or earned interest; (2) repatriation of capital, including reinvested earnings, 2 years after completion of the investment plan, at an annual rate not exceeding 15 per cent, calculated in relation to the invested funds; (3) the right to re-export invested capital in its original form; (4) favorable treatment in respect of rezoning and requisition of agricultural land for industrial use; (5) certain benefits with respect to business income tax and import duties; and (6) compensation for expropriation where the foreign investment constitutes less than 51 per cent, and immunity from expropriation for 20 years where the foreign investment constitutes at least 51 per cent, of the total investment. In addition, foreign investments are granted treatment at least as favorable as that accorded to new domestic investments. Laws for the encouragement of foreign investments provide for additional benefits in specific cases.

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

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

Subject to approval, direct investments may be made outside the Republic of China in the form of technical know-how, semifinished products, locally manufactured equipment, and remittances of foreign exchange. Applications that receive sympathetic treatment include those which would assist in assuring a stable supply of raw materials for domestic industries. Portfolio investment abroad by residents who are private persons is not normally permitted.

Chinese nationals who wish to emigrate, and foreign persons who have settled in the Republic of China and wish to return to their native countries, are not accorded any transfer facilities in respect of proceeds from the liquidation of their assets in the Republic, other than an exchange allowance of US$2,000 for each Chinese emigrant. Persons outside the Republic of China who acquired in the Republic assets or balances in new Taiwan dollars on account of dowries, inheritances, gifts, and so forth, are not normally granted the right of transferring them from the Republic.

Certain inflows of short-term capital are restricted. Domestic banks are permitted to hold short-term deposits (with maturities up to three months) with their correspondents but they are not normally permitted to make longer-term time deposits abroad or to acquire foreign securities.

Gold

Producers of gold must sell their output to ornamental gold processors (registered goldsmiths, silversmiths, and jewelers), through the Central Trust of China; gold delivered to the Central Trust for refining must have a fineness of 0.945, any necessary reduction being undertaken by the Taiwan Metal Mining Corporation. Any newly produced gold that remains unsold must be kept in the custody of institutions specifically designated by the Government; at present, only the Central Trust is so designated. Ornamental gold processors are not permitted to sell gold of a fineness in excess of 0.945.

Other residents may hold gold in any form and of any fineness, but its use as collateral for loans is prohibited. Travelers may bring in any amount of gold, which must be declared upon entry if its weight exceeds 5 shih liang, i.e., 156.25 grams; other imports of gold are not permitted. Residents may freely take out gold in the form of jewelry, provided that its weight does not exceed 2 shih liang, i.e., 62.5 grams. Otherwise, exports of gold and gold jewelry by travelers are not normally permitted.

Changes during 1975

January 1. A three-year agreement with the United States on trade in textiles came into force.

January 23. The suspension of exports of wheat flour was extended for another year.

January 25. The 50 per cent reduction of import duties on crude petroleum and petroleum products was extended for another year.

February 2. Imports of several types of glass were restricted to sources in Western Europe, the United States, and Canada.

February 21. The 50 per cent reduction of import duties on nine industrial raw materials (introduced in August 1973) was terminated.

February 25. The 50 per cent reduction of import duties on barley, soybeans, wheat bran, scrap of iron and steel, and five other items (introduced in February 1973) was terminated, but for corn the same measure was extended for another year.

March 1. Imports of various precious stones, ivory, and certain paper products were restricted to sources in Western Europe, the United States, and Canada.

April 7. The regulations governing domestic trade in gold were revised. Gold for use in the production of ornaments had to be of a fineness of 94.5 per cent or less. Gold intended for the production of ornaments for export and gold for industrial use could henceforth be purchased from the Central Trust by special distribution, while previously it could only be purchased through open tenders conducted by the Central Trust.

April 12. Imports from Japan of certain types of scrap metal were prohibited. On August 2 and October 25 imports from Japan of additional categories of scrap metal were prohibited.

April 12. Imports of 103 items, including various types of fish and fruits and certain industrial goods, were prohibited from sources in Hong Kong, Japan, Macao, Malaysia, and Singapore.

April 13. The import duty reductions ranging from 15 per cent to 35 per cent (introduced in 1973) for certain industrial raw materials and some iron products were terminated.

June 7. Imports of various types of rosin were prohibited from sources in Hong Kong, Japan, Macao, Malaysia, and Singapore.

June 13. The 50 per cent reduction of import duties on certain animal and vegetable fats and oils (introduced in June 1974) was terminated.

June 21. Imports of certain machine tools, including grinding, gear cutting, and boring machines, were restricted to sources in Western Europe, the United States, and Canada.

June 27. Import duties on sound equipment and television sets were raised. Those on certain animal products were lowered.

July 10. The amount of foreign currency that residents leaving the Republic of China could take out was increased from US$400 to US$600.

August 2. The exchange allowance for any approved type of travel was increased from US$1,000 a person a trip to US$1,200 a person a trip. The business travel allowance for per diem and living expenses was increased from US$1,200 a month to US$1,500 a month.

August 2. The exchange allowance for students abroad, for the second to fifth academic years, was increased from US$3,600 to US$4,000 a year.

August 2. The remittance facility for “petty outward remittances” was increased from US$200 to US$250 a person every three months.

August 25. Borrowing abroad by banks in the form of foreign currency loans for conversion into new Taiwan dollars and relending to domestic industrial and mining firms was suspended; such firms, however, continued to receive permission to borrow foreign currency abroad for their own account, for working capital purposes.

September 22. Importers of beef voluntarily agreed to donate NT$4 per pound of beef imported to a development fund for the domestic cattle industry.

October 9. Borrowing abroad by investment and trust companies in the form of foreign currency loans and relending to domestic industrial and mining firms was restricted to loans for the import of machinery and equipment by productive enterprises, and provided that the term of the relending exceeded one year.

October 17. The exchange allocation for the payment of export commissions was reduced from 5 per cent to 3 per cent of the selling price.

Colombia

(Position on December 31, 1975)

Exchange Rate System

The currency of Colombia is the Colombian Peso. All exchange transactions are effected through the Bank of the Republic (the central bank) or the authorized banks in the official market—the exchange certificate market—in which the rate fluctuates. On December 31, 1975, the average selling rate in the certificate market was Col$33.02 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$30.00 per US$1; the Government purchases exchange for all public debt payments and other expenditures included in the national budget at the same exchange rate. There are also certain other effective exchange rates, some of which result from a system of tax credit certificates granted on export proceeds. The different exchange rates and the types of transaction to which they apply are set out in the Table of Exchange Rates, below. On December 31, 1975, the fluctuating buying rate for proceeds from coffee exports (after taking into account a 19 per cent1 exchange tax) was Col$26.70 per US$1, and that for most other exports about Col$34.61 per US$1. In principle, all imports are paid for at the certificate market rate, and all payments and receipts in respect of current invisibles and capital also take place at that rate. A fixed rate of Col$25.00 per US$1 applies to certain petroleum transactions.2

The Bank of the Republic stands ready to sell to the public, against payment in pesos at the certificate market selling rate ruling on the date of issue, exchange warrants (títulos canjeables por certificados de cambio, títulos de divisas, or certificados de futuro). These warrants, which are expressed in U.S. dollars and have a maturity of six months or one year, are negotiable and may also be exchanged, provided that the holder presents an exchange license, for exchange certificates (for the same amount of foreign currency and free of charge). Within their period of validity, warrants may also be sold to the Bank of the Republic for pesos, at the certificate market buying rate ruling on the date of repurchase. Warrants bear interest at 7 per cent per annum. Warrants held until after maturity cease to bear interest and can no longer be converted into exchange certificates but may be resold to the Bank at the certificate market rate ruling on the maturity date.

Administration of Control

All imports and exports require prior registration at the Colombian Institute of Foreign Trade (Incomex). Exchange for payments must be purchased through the Bank of the Republic or the commercial banks, with an approved exchange license issued by the Exchange Office of the Bank of the Republic; however, payments for specified current transactions, when made through credit institutions, do not require prior exchange licenses. The Monetary Board periodically draws up a foreign exchange budget. It also establishes priorities within that budget for the delivery of exchange, after setting aside the amounts necessary to cover the obligations of the Bank of the Republic and to service the external debt of the public agencies and the National Federation of Coffee Growers. Overall import and export policy is determined by the Foreign Trade Council. Incomex, through its Import Board, controls imports that are subject to prior licensing. The National Council for Economic and Social Policy issues directives concerning direct investment in Colombia to the Exchange Office and the National Planning Department, which evaluates new projects. The Exchange Office of the Bank of the Republic keeps an accounting record both of foreign investment in Colombia and of debts abroad, and controls the movement of foreign capital as well as the transfer of profits, dividends, commissions, and royalties for trademarks, patents, etc. The Superintendency of Exchange Control, which is an autonomous agency reporting to the Presidency of the Republic, enforces the control and supervision over exchange transactions and is responsible for applying penalties for any violation of the exchange regulations.

Prescription of Currency

Payments and receipts related to international transactions are normally effected in U.S. dollars, but importers and exporters are also free to use Belgian francs, Danish kroner, deutsche mark, French francs, Italian lire, Japanese yen, Netherlands guilders, pounds sterling, Swedish kronor, and Swiss francs. Settlements with Bulgaria, the German Democratic Republic, Hungary, Poland, Romania, Spain, and Yugoslavia for commercial transactions must be made through clearing accounts in accordance with the provisions of the relevant bilateral payments agreement.

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

Nonresident Accounts

Credit establishments are authorized to receive short-term deposits in foreign currency from physical or juridical persons not resident in Colombia; these deposits are freely available to the holders, but any foreign currency deposits that they may wish to convert into Colombian currency must be sold to the Bank of the Republic. Before releasing the accounts of nonresidents, banks must obtain authorization from the Exchange Office.

Imports and Import Payments

There is no prohibited import list. Imports are classified as follows: goods whose import is subject to prior licensing by Incomex, and goods that may be imported freely without license although subject to registration. In the latter category, there are a global free list applicable to all countries, a National Free List applicable to LAFTA countries only, and a free list applicable to Andean Common Market countries only. Liberalized imports on the global free list corresponded to about 50 per cent of reimbursable imports in 1975.3 All import registrations by public sector agencies are screened by Incomex to determine whether local substitutes are available. Import licenses for certain items are not normally issued; these include arms and habit-forming drugs, certain foodstuffs, certain textiles and garments, jewelry, and a number of other consumer goods.

Prior registration of the import transaction at Incomex is required for all imports other than those classified as “minor imports” or shipments with an f.o.b. value of less than US$100. Registration is not automatically accepted by Incomex and may be rejected. The charge for import registration is Col$200 plus a consular invoice tax of 1 per cent of the f.o.b. value (with a minimum of US$4). Advance import deposits (consignaciones) in Colombian currency of at least 25 per cent of the registered amount must be made with an authorized bank before import registration is permitted; the deposit may be used at any time to make import payments.4 This deposit is increased to 100 per cent when the goods are financed by banks abroad or by suppliers’ credit; in the latter case, a guarantee of 20 per cent of the amount of the registration must in addition be given but in the former case the importer has the option of making a deposit of only 40 per cent, provided a guarantee of 20 per cent is given. An advance deposit of 5 per cent of the registered amount applies to certain imports of the automobile industry.

The following are among the main exemptions from advance import deposits: nonreimbursable imports;3 imports brought into Colombia under special import-export arrangements (the Vallejo Plan); all foodstuffs and agricultural inputs; all imports for the military and the police; all imports from Andean Group countries; imports by official entities when financed with foreign credits having a maturity of at least three years; imports from Spain (when financed under the bilateral payments agreement); goods exempt by virtue of an international agreement; goods of prime necessity imported by the Institute of Agricultural Marketing (Idema); most imports by universities and other nonprofit-making educational institutions; books, newspapers, and magazines; and goods from countries with which Colombia maintains payments agreements, provided they are imported through the free port of San Andrés y Providencia.

The advance import deposit is calculated on the total value of the goods, at the current selling rate for exchange certificates. The importer is issued a non-negotiable noninterest-bearing title denominated in foreign currency and corresponding to the advance import deposit; during its six-month validity the title may be used to purchase exchange for import payments, and at the expiration of this period the title, if unutilized, will be repurchased by the central bank at the original exchange rate. Under these arrangements, the importer is free to put up a deposit in excess of the prescribed minimum of 25 per cent of the registration amount.

A prior exchange license issued by the Exchange Office is required for payments for imports.

Import duties are calculated at the “Ministry of Finance exchange rate” (the average selling rate for exchange certificates for the previous month, as determined by the Ministry of Finance). In addition to customs duties, there is an ad valorem tax on imports equal to 5 per cent of the c.i.f. value, the proceeds of which go to the Export Promotion Fund. Exempt from this tax are imports by public entities; goods of LAFTA origin; imports under the Vallejo Plan; diplomatic, consular, and similar imports; gifts; and imports destined for the free port of San Andrés y Providencia or effected through the port of Leticia. Imports are also subject to a tax of 1.5 per cent of the c.i.f. value, whose proceeds accrue to the ordinary budget of the National Government, and a consular invoice tax of 1 per cent of the f.o.b. value.

Payments for Invisibles

Payments for invisibles are made at the exchange certificate rate. In principle, all payments for invisibles are subject to exchange licenses, which are granted according to officially established priorities determined by the Monetary Board; however, the Bank of the Republic may make payments abroad on behalf of credit institutions without prior exchange license, and commercial banks in cities where Exchange Offices are located may sell exchange directly for the purpose of foreign travel and may also transfer without prior approval payments for certain other current invisibles (including banking commissions, interest on suppliers’ credit, and the monthly allowances of students studying abroad with government support) and for the service on registered foreign loans taken up by the private sector. Payments for travel abroad are limited to US$40 a person a day, not to exceed US$1,400 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$200 to US$300 a month, depending on the cost of living in the country concerned. Remittances for the support of relatives abroad are limited to US$250 a month for each beneficiary. The Exchange Office, however, is empowered to grant larger allocations. Foreign tourists who have stayed in Colombia for a period not exceeding three months may, on leaving the country, purchase foreign currency not exceeding US$60 on presentation of their boarding pass.

Colombian nationals and resident foreigners are required to pay a travel tax of Col$500 whenever they leave the country.

Exports and Export Proceeds

Exports of crude oil and certain other commodities are prohibited, and exports of certain foodstuffs are subject to quotas. Exports of certain other items, such as beef, are reserved for Idema. No export licenses are required. Prior application for registration, however, is required for all exports except crude oil, samples, and Colombian products in noncommercial quantities. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. When registering an export transaction, exporters must provide Incomex with either a personal guarantee in pesos (but without depositing any funds) or a bank guarantee corresponding to 20 per cent of the registered amount, to ensure that the proceeds will be surrendered to the Bank of the Republic. Coffee exporters are exempt. The periods for surrendering export proceeds normally are as follows: (1) for coffee exports, within 20 days from the date of registration of the export; (2) for banana exports, 50 per cent of the value must be surrendered within 30 days following the registration of the export, and the remaining 50 per cent within 60 days after the registration; and (3) for other goods, generally within 180 days of registration. However, Incomex may permit longer terms for goods sold on a commission basis, capital goods, and other goods that normally require more extended payment terms. In addition, where the exporter avails himself of advance surrender of export proceeds, special rules are applicable for the definitive surrender.

The Bank of the Republic is empowered in certain cases to retain a portion of the exchange proceeds surrendered by the exporter of any product to repay debts for imports under the Vallejo Plan incurred by the exporter concerned. All exchange proceeds from exports, except those from the export of crude oil not produced by Ecopetrol, must be surrendered to the Bank of the Republic; Ecopetrol, however, is permitted to retain part of its export proceeds abroad for the settlement of its imports.

On surrendering their export proceeds to the Bank of the Republic, exporters of commodities other than coffee, raw cattle hides, or petroleum and petroleum products receive tax credit certificates (certificados de abono tributario) in an amount corresponding to a specified percentage of the total earnings surrendered, converted at the Ministry of Finance exchange rate. This ratio is 110 of 1 per cent, 5 per cent, or 7 per cent, depending on the commodity; the rates are calculated on domestic value added for exports under the Vallejo Plan. These certificates, which are freely negotiable and are quoted on the stock exchange, are accepted at par by tax offices three or six months after issuance for the payment of income tax, customs duties, and sales taxes.

The surrender of foreign currency earned by exports is carried out by exchanging the foreign currency for exchange certificates that are negotiable in the bankers’ market. The certificates have a validity of five to ten days, after which they must be surrendered to the Bank of the Republic at 90 per cent of the lowest certificate rate quoted by the Bank in the preceding week.

Minimum surrender prices for coffee, bananas, and a few other exports are set from time to time by the Monetary Board. Coffee exports are subject to the following regulations: (1) A minimum surrender price (reintegro) is fixed after deduction for freight and insurance, at US$117.00 per 70-kilogram bag.5 (2) Exportters pay a tax in foreign exchange at the rate of 19 per cent ad valorem (see footnote 1). Of this tax, 4 percentage points are paid to the National Coffee Fund while the remainder provides revenue for the Treasury’s Special Exchange Account, of which the net product forms a contribution to the national budget. (3) Exporters must either surrender in the form of untreated coffee to the National Federation of Coffee Growers and without payment the equivalent of 30 per cent of the volume of excelso coffee that they wish to export (retención cafetero) or pay the Federation the peso equivalent. (4) Exports of coffee are subject to an additional tax of 6 per cent ad valorem (pasilla y ritio tax); the tax must be paid, either in kind or in pesos, to the Federation. (5) A committee composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation establishes a domestic buying price for export-type coffee, expressed in pesos per arroba of 12.5 kilograms.

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 60 days of the provisional surrender, at the prevailing exchange rate in the certificate market.6 The peso payment to the coffee exporter at the time of actual surrender is based on the certificate market rate on the day of advance surrender. Exporters of meat and textiles may surrender 80 per cent of their export proceeds in advance, at the Ministry of Finance exchange rate; they must sell the remaining 20 per cent to the Bank of the Republic within four months following the advance surrender, in order to be eligible for the exchange differential between the Ministry of Finance exchange rate and the certificate market rate prevailing at the time of definitive surrender. The advance surrender of the export proceeds from cotton, bananas, and tobacco is settled at the certificate market rate ruling on the day the exchange is purchased, and is subject also to the other conditions established for such transactions by Monetary Board Resolution No. 86/74.

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, direct lines of foreign credit obtained by nonbank residents,7 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.8 Capital imports also require prior approval by the National Planning Department in accordance with directives issued by the National Council for Economic and Social Policy; capital for the petroleum industry or for other mineral exploration in addition requires approval by the Ministry of Mines and Energy. Capital registration entitles the investor to export profits and to repatriate capital at the certificate market rate on certain conditions specified in Resolution No. 17 of July 19, 1972 by the National Council for Economic and Social Policy. 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. Following a transitional period ending on June 30, 1978, all foreign banks and their branches must have Colombian majority participation. New direct foreign investment in banks, insurance companies, and other financial institutions is restricted to investors from Andean Pact member countries and to “national” or “mixed” companies. Foreign participation is also restricted in new or established companies engaged in the international resale of imported and domestic products or in tourism-related activities.

Foreign loans contracted by private Colombian individuals or firms are generally subject to a minimum maturity of five years and to an interest rate ceiling of 2 per cent over the New York prime rate or the London interbank rate. Such loans normally are permitted only when needed as working capital by, or for direct investment in, industrial, mining, or agricultural businesses that produce for export only. Special regulations govern the periods for which resident banks may provide import financing from foreign currency borrowed abroad. Foreign loans for national or governmental entities in excess of Col$10 million or US$500,000 require prior authorization by the Ministry of Finance and the National Planning Department. For loans to the Government, or guaranteed by the Government, the following are also required: prior authorization by the National Council for Economic and Social Policy and by the Monetary Board, prior consultation with the Interparliamentary Committee on Public Credit, and ex post approval by the President of the Republic.

Contracts involving royalties, commissions, trademarks or patents, and similar arrangements must be registered with the Exchange Office to enable the beneficiary to make transfers abroad. They require approval by the Royalties Committee before they can be registered.

Colombian nationals who have invested abroad must surrender to the Bank of the Republic not only the interest, profits, commissions, and royalties but also the proceeds of the sale or liquidation of the investment at the prevailing certificate market rate. Exports of capital by residents are restricted and such exports by private individuals are not normally permitted.

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$42.2222 an ounce and pays 50 per cent in foreign currency on presentation by foreign capital mining companies of exchange licenses entitling them to make payments abroad for services, dividends, capital repayments, taxes, etc. The remaining 50 per cent and all payments to domestic producers are paid in pesos at the certificate market exchange rate. On selling their gold to the Bank of the Republic, the producers receive tax credit certificates equivalent to 110 of 1 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 market value. The Bank of the Republic pays producers a premium to offset the difference between the international price and the official gold price. In addition, the Bank of the Republic levies an ad valorem tax of 2 per cent on the total payment received by the miner.

The Bank of the Republic makes domestic sales of gold for industrial use either direct or through the Colombian Mining Association at a price equivalent to the average quotation in the free external gold markets during the previous month; this price is translated into pesos at the prevailing selling rate of exchange certificates on the date of sale. Imports and exports of gold are a monopoly of the Bank of the Republic; imports of nonmonetary gold are not normally undertaken.

The assay and refining houses and the mining companies producing gold are under the supervision of the Superintendency of Exchange Control. In addition, the mining companies must obtain a license from the Superintendency in order to carry on their operations.

The Bank of the Republic from time to time strikes commemorative gold coins which are legal tender. Residents and nonresidents may freely buy such coins, but export licenses are not normally granted.

Changes during 1975

During the year the selling rate in the certificate exchange market was gradually depreciated from Col$28.74 to Col$33.02 per U.S. dollar.

January 1. Presidential Decree No. 2374 of October 31, 1974 came into effect. It reduced the tax on the exchange proceeds from coffee from 20 per cent to 19 per cent for the year 1975. This tax would be reduced in annual installments of 1 percentage point to 16 per cent by January 1, 1978.

January 1. Presidential Decree No. 2004 of September 24, 1974 came into effect. It reduced the rates of tax credit certificates granted on exports from generally 15 per cent to 110 of 1 per cent for specified agricultural and mineral products; to 7 per cent for certain agricultural products; and to 5 per cent for all other products.

Table of Exchange Rates (as at December 31, 1975)(pesos per U.S. dollar)
BuyingSelling
25.00(Fixed Rate)

Purchases of crude oil from foreign-owned companies in Colombia for domestic refining.9
26.70(Certificate Market Rate less 19% Exchange Tax, Fluctuating Rate)
Coffee exports.10
30.00(Accounting Rate of Bank of the Republic) Conversion of Government’s receipts from exchange tax on coffee exports.30.00(Accounting Rate of Bank of the Republic) Government’s purchases of exchange for servicing of public debt, diplomatic expenses, official travel, etc.
32.96(Certificate Market Rate, Fluctuating Rate) Net proceeds from exports of crude oil and petroleum derivatives.11 Exports from free ports. All receipts from invisibles and capital transfers.33.02(Certificate Market Rate, Fluctuating Rate) All imports. All other transactions.12
32.99(Certificate Market Rate plus Tax Credit Certificates for110of 1% of Export Value Converted at Average Certificate Market Rate of Previous Month, Fluctuating Rate)
Exports of cement and specified agricultural and mineral commodities (including milk and dairy products, live animals other than cattle, cereal grains, sugar, sulfur, emeralds and other precious stones, and gold).13
34.61(Certificate Market Rate plus Tax Credit Certificates for 5% of Export Value Converted at Average Certificate Market Rate of Previous Month, Fluctuating Rate)
Specified agricultural exports.13, 14
35.27(Certificate Market Rate plus Tax Credit Certificates for 7% of Export Value Converted at Average Certificate Market Rate of Previous Month, Fluctuating Rate)
All other exports.13,14,15

January 1. Ministry of Finance Decree No. 2086 of September 30, 1974 came into effect. It provided that in calculating the tax credit certificate entitlement for exported manufactured goods the value of the imported raw materials would be deducted from the value of the export.

January 1. The Bank of the Republic was required to deduct the amount needed to make import payments under the Vallejo Plan from the export proceeds surrendered in respect of the relevant export transaction (Monetary Board Resolution No. 81 of December 11, 1974).

January 15. Freight on exports registered on a c.i.f. or c. & f. basis under Monetary Board Resolutions Nos. 15 of March 6, 1974 and 39 of July 3, 1974 could also be paid in national currency. Transportation companies receiving such freight payments in national currency had the right to receive exchange licenses from the Exchange Office for up to 80 per cent of value (Monetary Board Resolution No. 3).

January 21. The export controls were modified and liberalized with effect from February 1 (Incomex Resolution No. 003).

January 31. Presidential Decree No. 169 restricted inward foreign investment in tourist activities and in companies dealing with the resale in Colombia of imported and domestic products. In the case of internal resale of domestic products new direct foreign investment could be permitted by the National Planning Department but the Director would generally make the establishment of new firms conditional upon their transformation into mixed companies under Presidential Decree No. 1900 of 1973. In the case of companies active in the tourist sector, however, the minimum domestic participation was lowered to 15 per cent.

February 5. The discount rate charged by Proexpo under Monetary Board Resolution No. 87 of December 20, 1974 was lowered from 6 per cent to 2 per cent per annum for maturities up to 180 days and from 8 per cent to 4 per cent per annum for longer maturities (Monetary Board Resolution No. 5).

February 21. Presidential Decree No. 314 exempted from the payment of all customs duties imports of capital goods and spare parts for the mining and petroleum sector, provided they were not available in the domestic market.

February 24. In accordance with Presidential Decree No. 295 a commission was established to organize the gradual purchase by the Government or by Colombian private companies of a 51 per cent participation in foreign banks or their branches operating in Colombia. Subsequently, the following minimum schedule for the transfer of ownership was set: 5 per cent of shares were to be sold to Colombian residents by December 31, 1975; 20 per cent by December 31, 1976; 40 per cent by December 31, 1977; and 51 per cent by June 30, 1978 (see December 15, below).

March 5. The minimum maturity for private sector capital imports under Monetary Board Resolution No. 73 of October 21, 1974 was lowered from five to three years, with maximum annual repayments permitted of one third instead of one fifth of principal. Subject to the additional requirement of a certification by the National Tourism Corporation, the foreign borrowing privilege was extended to cover working and investment capital needs of hotel and other service enterprises catering to international tourism (Monetary Board Resolution No. 7). Detailed regulations on foreign borrowing by the tourism industry were issued in the Exchange Control Office’s General Circular No. 43 on September 12.

March 5. Except for newly established financial institutions or those with low short-term foreign currency liabilities, the Bank of the Republic was instructed to reduce its time deposits in foreign currency with credit institutions in Colombia from a maximum of 20 per cent to 10 per cent of each institution’s short-term liabilities. The time deposits would be made for three months and were renewable at the Bank’s discretion. For each U.S. dollar of such deposits received from the Bank, the credit institutions were required to deposit Col$15 (previously, Col$8.50) with the Bank, free of interest. Time deposits in excess of 10 per cent of short-term foreign currency liabilities were to be withdrawn in six equal monthly installments beginning on March 30 (Monetary Board Resolution No. 8).

March 5. With effect from March 13, the period within which the 100 per cent advance payments deposit (depósito provisional) had to be lodged was reduced from 20 to 10 days prior to the submission of an application for an exchange license (Monetary Board Resolution No. 9).

March 5. For commercial banks a maximum ratio of 10:1 between liabilities and paid-up capital and reserves was established. Banks whose liabilities exceeded this ratio were prohibited from accepting further liabilities in foreign exchange; they also had to reduce their liabilities to the public or increase their capital or legal reserves within 12 months, starting from April 1 (Monetary Board Resolution No. 10).

March 5. The minimum surrender price per 70-kilogram bag of coffee was lowered from US$107.50 to US$100, with effect from March 14 (Monetary Board Resolution No. 12).

March 16. In accordance with Decisions 57 and 57a of the Commission of the Cartagena Agreement, tariff reductions went into effect retroactively from January 1, 1975 on a number of items covered by the first of the Andean Pact’s sectoral industrial development agreements on mechanical products (Presidential Decree No. 370).

April 2. Imports made by automobile assembly and production plants within a biannual exchange budget agreed with the Monetary Board were made subject to an advance import deposit (consignación) of 5 per cent of the registered value. Parts for assembly and repair of vehicles for public transportation remained exempt from the deposit requirement, as stipulated by Monetary Board Resolution No. 36 of June 26, 1974 (Monetary Board Resolution No. 16).

April 16. With effect from April 21, the minimum surrender price per 70-kilogram bag of coffee was lowered further from US$100 to US$95.50 (Monetary Board Resolution No. 17).

April 16. A rediscount line of US$10 million and available for use during one year was opened for Proexpo to finance exports to Andean Pact countries under a credit agreement signed with the Andean Development Corporation (Monetary Board Resolution No. 18).

April 17. The quantity of coffee to be surrendered to the National Federation of Coffee Growers was raised from 30 per cent to 35 per cent of the equivalent of the volume of excelso coffee that exporters wished to export (Presidential Decree No. 732).

April 21. Ecopetrol was given the exclusive right of oil exploration and exploitation. Any subcontracts were to be made with Ecopetrol (Decree No. 743 of the Ministry of Mining and Petroleum).

April 30. The Bank of the Republic was authorized to purchase until September 30, at the Ministry of Finance exchange rate, the exchange proceeds from foreign loans intended exclusively to finance coffee sales. An adjustment would be made at the certificate market exchange rate prevailing either two months after the sale of the exchange or, if the latter occurred earlier, at the time of shipment. With effect from October 1, exporters would again receive the certificate market rate prevailing at the time of advance surrender (Monetary Board Resolution No. 21).

May 5. Decree No. 844 stipulated that the price of crude oil which had to be sold for domestic refining was to be expressed in foreign currency. Twenty-five per cent of that price was to be paid in pesos, calculated at the exchange rate for petroleum.

May 14. The maximum spread above the New York prime rate or the London interbank offered rate permitted for foreign financing, including suppliers’ credits, was raised from 1½ per cent to 2 per cent. Subject to this limitation, the Exchange Office was authorized to grant exchange for the payment of commissions and interest on all forms of financing permitted under Monetary Board Resolutions Nos. 37, 61, and 79 of 1972, 73 and 86 of 1974, and 7 of 1975 (Monetary Board Resolution No. 22).

May 14. The ceiling on family remittances in support of dependents abroad was raised to US$250 a month (Monetary Board Resolution No. 23).

May 22. Improved terms were established for insurance against nonpayment of export credits. The Export Promotion Fund was to provide 50 per cent of the premium for such insurance (Proexpo Circular No. 10).

May 28. A bank guarantee of at least 30 per cent of the value had to be provided before applications for exchange licenses could be submitted for the financing of Colombian investments abroad (Exchange Office Circular No. 29).

June 18. The 100 per cent advance payments deposit was abolished, with effect from June 20 (Monetary Board Resolution No. 29).

June 18. The advance import deposit requirement was reduced from 40 per cent to 35 per cent of the registered import value, with effect from July 1. With immediate effect, additional exemptions from the requirement were introduced: (1) for imports related to the International Fair in July 1976, and (2) for imports by the private or public sector with at least three years’ financing (previously five years’ financing). (Monetary Board Resolution No. 30.)

June 18. The Exchange Office was authorized to register foreign loans to agriculture in general; such loans previously were restricted to the production of agricultural exports (Monetary Board Resolution No. 31).

June 20. Incomex would accept import prices in excess of the maximum prices established by the Division of International Price Control, provided that the excess was due to the appreciation of the currency of origin in terms of the U.S. dollar (Incomex Postal Circular No. SI-14).

July 9. Foreign exchange sales for the purchase of domestically produced natural gas from newly discovered deposits henceforth were effected at the certificate market rate; previously they were made at the special rate for petroleum of Col$20.00 per US$1. The certificate market rate was also applied to determine the payment in pesos for that portion of sales of natural gas that had to be settled in domestic currency (Monetary Board Resolution No. 33).

July 21. The minimum surrender price per 70-kilogram bag of coffee was raised from US$95.50 to US$117, with effect from July 22 (Monetary Board Resolution No. 35).

July 23. With effect from July 24, coffee exporters availing themselves of the advance exchange surrender option were (contrary to the provisions of Monetary Board Resolution No. 21) again given the certificate market rate prevailing at the time of exchange surrender. Shipments of coffee financed in this manner had to take place within 60 days of exchange surrender, but in exceptional cases the deadline could be extended by up to 60 days (Monetary Board Resolution No. 37).

August 5. Idema was given the exclusive right to export beef, or to export it through domestic producers or specialized agencies (Resolution No. 035 of the Foreign Trade Council).

August 5. Twenty-three tariff items were transferred from the free import list to the list of imports requiring a prior license (Incomex Resolution No. 036).

August 6. With effect from August 8, Proexpo’s credit line with the central bank for the refinancing of foreign currency credits granted by Colombian exporters to their foreign customers was increased by US$20 million. Acceptances, irrevocable letters of credit, and drafts covering export operations already effected could be rediscounted for generally 180 days at 2 per cent per annum if they were endorsed by a foreign bank of prime standing. For capital goods which required longer-term financing Proexpo could, with central bank approval, discount export credit claims at more than 180 days’ maturity at 4 per cent per annum (Monetary Board Resolution No. 42).

August 6. With effect from August 11, the central bank opened a peso credit line for the equivalent of US$28 million so that Proexpo could give credit to producers of textiles and garments for their purchase, at the certificate market rate, of foreign exchange to finance future exports. Proexpo would extend one-year credits at 7 per cent per annum (Monetary Board Resolution No. 43).

August 6. With effect from August 11, imports under the Vallejo Plan were exempted from the guarantee deposit required by Monetary Board Resolution No. 14 of March 1, 1974 (Monetary Board Resolution No. 44).

August 20. With effect from September 1, the fixed exchange rate for crude oil was depreciated from Col$20.00 to Col$22.00 per US$1 (Monetary Board Resolution No. 47).

September 1. The list of “minor imports” was revised. They could henceforth be imported free of registration, provided that the total ex-works value of a shipment did not exceed US$100 (Decree No. 1769 of the Ministry of Finance and Public Credit).

September 9. Fifty-four tariff items were shifted to the free import list (Incomex Resolution No. 040). In October the free import list was further extended by 14 tariff items (Incomex Resolution No. 046).

September 17. With effect from October 1, the fixed exchange rate for crude oil was depreciated from Col$22.00 to Col$23.00 per US$1 (Monetary Board Resolution No. 53).

September 17. With effect from October 1, the advance import deposit requirement was further reduced from 35 per cent to 32 per cent of the registered import value (Monetary Board Resolution No. 51).

September 17. With effect from September 19, the minimum maturity of foreign loans to the private sector was raised from three years to five years, the minimum term in effect between November 2, 1974 and March 5, 1975. The minimum amortization schedule was tightened. Amortization of over one third of the loan could not take place before 24 months had elapsed, and amortization of over two thirds could take place after 42 months at the earliest (Monetary Board Resolution No. 50).

October 1. In accordance with Ministry of Finance Decree No. 2366 of 1974 the tax on the c.i.f. value of imports levied for the benefit of Proexpo was increased from 3.5 per cent to 5.0 per cent.

October 7. The validity of import registrations for agricultural products was reduced to three months and that for other items was reduced to six months. Merchandise had to be shipped within this period. Registrations could be extended by Incomex if application was made two months before expiration (Decision No. 47/75 of the Foreign Trade Council).

October 8. With immediate effect, foreign loans to the private sector registered before September 18, 1975 could be partially or entirely repaid ahead of schedule. For loans registered on or after September 18, the minimum maturity of five years was maintained (Monetary Board Resolution No. 57).

October 8. In order to obtain exchange licenses to pay for “minor imports,” the commercial invoice had to be presented to the Exchange Office (Monetary Board Resolution No. 58). Regulations for customs clearance of “minor imports” were issued by General Customs Regulation No. 305 on October 23, 1975.

October 8. With effect from October 13, the Bank of the Republic authorized commercial banks to effect certain remittances abroad without prior authorization, provided that supporting documents were submitted within two months of remittance. This liberalization measure affected import payments; debt service on registered foreign loans to the private sector; bank commissions; interest on suppliers’ credit; and shipping costs other than freight (Monetary Board Resolution No. 59).

October 8. With effect from October 10, the Bank of the Republic ceased to buy in advance exchange obtained by exporters of cotton, bananas, meat, tobacco, and textiles. Henceforth, only definitive settlements would be made for these commodities (Monetary Board Resolution No. 60). This measure was repealed on October 29, 1975 by Monetary Board Resolution No. 63 (see below).

October 23. With effect from October 24, the surrender requirement for coffee was lowered from 35 per cent to 30 per cent of the equivalent of the volume of excelso coffee that exporters wished to export (Decree No. 2247 of the Ministry of Finance and Public Credit).

October 28. Books and many paper products were transferred to the free import list (Foreign Trade Council Resolution No. 048).

October 29. With effect from November 1, the fixed exchange rate for crude oil was further depreciated from Col$23.00 to Col$24.00 per US$1 (Monetary Board Resolution No. 62).

October 29. With effect from November 3, the advance import deposit requirement was further reduced from 32 per cent to 25 per cent of the registered import value (Monetary Board Resolution No. 63). (The requirement was later suspended with effect from February 2, 1976.)

October 29. With immediate effect, Monetary Board Resolution No. 60 of October 8 was repealed, which had eliminated the advance exchange surrender facility for exports of cotton, bananas, meat, tobacco, and textiles. This action re-established the regime of Monetary Board Resolution No. 86 of 1974 (Monetary Board Resolution No. 63).

October 29. The regulations of Monetary Board Resolution No. 81 of 1974 regarding exports under the Junior Vallejo Plan were modified with immediate effect. The Bank of the Republic would pay the exporter the full countervalue in pesos of the exchange surrendered. The amount of tax credit certificates issued by the Bank of the Republic would depend on the value added domestically, as established by Incomex (Monetary Board Resolution No. 64).

November 12. Colombia signed the declaration providing for its provisional accession to the GATT.

November 17. Presidential Decree No. 1670 of 1975 regulating borrowing by the Government and official entities was amended. External loans of Col$10 million or more, or of US$500,000 or more, required prior authorization by the Ministry of Finance and approval from the National Planning Department. For loans to the Government or loans with government guarantee the following were required in addition: prior authorization by the National Council for Economic and Social Policy and by the Monetary Board, prior consultation with the Interparliamentary Committee on Public Credit, and ex post approval by the President of the Republic. External loans for lower amounts required only prior authorization by the Ministry of Finance (Presidential Decree No. 2449).

November 19. With effect from November 20, a marginal reserve requirement of 100 per cent was applied to any increase above the November 20 level in most deposit liabilities of the banking institutions; included among the liabilities affected were the deposits obtained from banks abroad (Monetary Board Resolution No. 65).

November 19. With effect from November 20, the Bank of the Republic, when purchasing foreign exchange derived from loans to finance exports of cotton, bananas, and tobacco, applied the certificate market rate ruling at the time of definitive surrender. Previously, the Bank paid the exchange rate differential between initial purchase and final liquidation four months later, as stipulated in Monetary Board Resolution No. 86 of 1974; that regulation continued in effect for loans financing exports of textiles and meat (Monetary Board Resolution No. 66).

November 19. With effect from December 1, the fixed exchange rate for crude oil was further depreciated from Col$24.00 to Col$25.00 per US$1 (Monetary Board Resolution No. 69).

November 19. The regulations governing the issue by the Bank of the Republic of exchange warrants were modified. Maturities would be either six months or one year. Warrants could be sold to the public either directly by the Bank or through the commercial banks. The interest rate, to be paid in pesos every three months, remained at 7 per cent per annum. As before, warrants were negotiable and could, during their validity, either be used for payments abroad or resold to the Bank at the certificate market rate ruling at the time of repurchase. After maturity, warrants ceased to bear interest or to be usable for foreign payments, but the Bank could still repurchase them at the certificate market rate in effect when they matured (Monetary Board Resolution No. 70).

November 20. The Monetary Board instructed the Exchange Control Office to authorize (in addition to the permitted percentage for export commissions) payment of up to 25 per cent of the f.o.b. value of exports of pharmaceuticals to cover their export costs (Monetary Board Communication No. 431). The Exchange Control Office put this measure into effect by General Circular No. 63 of December 2.

November 21. The Exchange Control Office stood ready to open revolving credits in foreign exchange for companies having to make payments for imports under the Vallejo Plan before the corresponding export or exchange surrender took place (General Circular No. 61 of the Exchange Control Office).

December 3. The Bank of the Republic was authorized to approve commercial banks’ payments abroad in respect of dividends whose transfer was permissible under the rules governing foreign investments. Such payments would be governed by the conditions of Monetary Board Resolution No. 59 of October 8 (Monetary Board Resolution No. 73).

December 5. The common minimum external tariff of the Andean Group was introduced with effect from January 1, 1976 (Decree No. 2677 of the Ministry of Finance and Public Credit).

December 17. The accounting exchange rate of the Bank of the Republic was changed from Col$26 to Col$30 per US$1, to be applicable for the first time to the balance sheet for December 1975 (Monetary Board Resolution No. 74).

December 17. With effect from January 1, 1976 the fixed exchange rate for crude oil was further depreciated from Col$25 to Col$26 per US$1 (Monetary Board Resolution No. 75).

December 19. The President signed into law Law No. 055. It regulated foreign participation in banks, insurance companies, and other financial institutions. New direct foreign investment in such institutions was prohibited unless it originated in member countries of the Cartagena Agreement and was destined for “national” or “mixed” companies, subject to reciprocal treatment for Colombian investment in those countries. Foreign institutions or their branches had to be converted into “mixed” companies with a minimum Colombian participation of 51 per cent. The Government could grant foreign institutions up to three years to effect the conversion. The Bank of the Republic, acting as a fiduciary holder, was to take over the shares and sell them to Colombian citizens with the prior approval of the Superintendency of Banking. Each buyer could not acquire more than 5 per cent of total shares. Foreign institutions which refused to effect the conversion had to cease operations by December 31, 1976. The Monetary Board was empowered to regulate all banking operations regarding international trade, with a view to reserving them to domestic banks, and to supervise the activities of representatives of foreign banks without Colombian branches.

December 17. With effect from December 22, and until December 31, 1976, the Exchange Office could grant exchange licenses for up to 95 per cent of the value of freight on imports and exports. For exports, registration had to be on a c.i.f. or c. & f. basis (Monetary Board Resolution No. 77). Implementing instructions were issued in the Exchange Control Office’s General Circular No. 68 of December 23.

December 17. With effect from December 22, the Bank of the Republic was authorized to raise its foreign currency time deposits with banks from 10 per cent to 20 per cent of each bank’s short-term liabilities in foreign currency. This re-established the maximum in effect prior to March 5, 1975. The peso deposit per US$1 of such time deposits remained, however, at Col$15 (Monetary Board Resolution No. 78).

December 17. The six-month guarantee deposit of Col$10 per US$1 for travel exchange was abolished (Monetary Board Resolution No. 78). Implementing instructions were issued in the Exchange Control Office’s General Circular No. 67 of December 23.

People’s Republic of the Congo

(Position on December 31, 1975)

Exchange Rate 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,1 which is officially maintained at the rate of CFAF 1 = 0.02 French franc. Exchange transactions in French francs, the intervention currency, between the Banque des Etats de l’Afrique Centrale (BEAC) and commercial banks take place at the rate of CFAF 1 = F 0.02. Exchange rates for foreign currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned.

Payments to the following countries, although subject to declaration, are unrestricted: (1) France (and its Overseas Departments and Territories, except the French Territory of the Afars and the Issas) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Cameroon, the Central African Republic, Chad, Gabon, Ivory Coast, Mali, Niger, Senegal, Togo, and Upper Volta). Settlements and investment transactions with all foreign countries, however, are subject to control. Foreign countries are defined as all countries other than the People’s Republic of the Congo.

Payments to France (as defined above), Monaco, and the Operations Account countries (as well as the purchase of their banknotes and travelers checks) are subject to a commission of 0.75 per cent, subject to a minimum of CFAF 75; exempt are payments of the State, the Postal Administration, and the BEAC, the salaries of Congolese diplomats abroad, the expenditures of official missions abroad, and the scholarships of persons studying or training abroad. Most payments to other foreign countries and credits to Foreign Accounts in Francs are subject to a commission of 1 per cent or, for foreign exchange purchased by Diamond Purchase Offices, 0.50 per cent; this commission also is subject to a minimum of CFAF 100.

Administration of Control

The Office of External Financial Relations in the Ministry of Finance supervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Congo, and inward and outward direct investment. Exchange control is administered by the Minister of Finance who has delegated his approval authority to the Office of External Financial Relations and the authorized banks. All exchange transactions must be effected through authorized banks or the Postal Administration. Import and export licenses are issued by the Foreign Trade Office in the Ministry of Commerce, except those for gold, which are granted by the Office of External Financial Relations.

Prescription of Currency

The People’s Republic of the Congo is an Operations Account country of the French Franc Area, since the BEAC maintains an Operations Account with the French Treasury; settlements with France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with the People’s Republic of China are made through special accounts established under a bilateral payments agreement.2 Settlements with all other countries are usually made in any of the currencies of those countries or in French francs through Foreign Accounts in Francs. All payments to Portugal require the prior approval of the Ministry of Finance. All settlements between Congo and Rhodesia are prohibited.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting of BEAC banknotes to Foreign Accounts in Francs is permitted when they have been mailed direct to the BEAC agency in Brazzaville by the foreign correspondents of authorized banks.

Imports and Import Payments

Imports from all sources require prior authorization. For imports of virtually all commodities from countries in the French Franc Area and from EEC countries other than France such authorization is given freely. All imports of Rhodesian origin are prohibited. Imports from all non-EEC countries outside the French Franc Area are subject to licensing in accordance with an annual import program; the program also includes indicative quotas for a few commodities from EEC countries other than France. This program is determined by a joint French-Congolese Committee. The import program does not include petroleum imports, for which a joint quota is set for the countries of the Central African Customs and Economic Union (UDEAC). Also outside the program are imports for the Government under foreign aid and bilateral payments agreements and imports made by the Office National du Commerce (Ofnacom). The quotas for non-EEC countries may be used to import goods originating in any country outside the French Franc Area. Licenses for liberalized commodities originating in EEC countries other than France are issued automatically.

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

Ofnacom has a monopoly over certain imports, including hardware, rice, canned tomatoes, salt, and salted fish from all sources, certain cotton piece goods from Japan, and certain other textiles from the People’s Republic of China.

All import transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank. Licenses for imports from countries other than France (as defined above), Monaco, and the Operations Account countries require the visa of the Foreign Trade Bureau and that of the Office of External Financial Relations. The approved import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are permitted freely provided they have been declared and are made through an authorized intermediary; those to other foreign countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. Resident tourists traveling to foreign countries other than France (as defined above), Monaco, Operations Account countries of the French Franc Area, or Zaïre may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip (CFAF 87,500 for children under ten) for any number of trips a year; any foreign exchange remaining after return to Congo in excess of CFAF 5,000 must be surrendered.

For business travel to such foreign countries, there is a special allocation of the equivalent of CFAF 20,000 a person a day, subject to a maximum of CFAF 400,000 a trip. Additional amounts of foreign exchange for business travel may be authorized in appropriate cases. The use of credit cards abroad by residents is prohibited. There are special facilities for travelers to Kinshasa who request no foreign means of payment other than Zaïrian banknotes. The transfer of the entire net salary of a foreigner working in Congo is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Residents traveling to France (as defined above), Monaco, or an Operations Account country make take out CFAF 25,000 in BEAC banknotes. Resident and nonresident travelers going to foreign countries other than France (as defined above), Monaco, Operations Account countries, or Zaïre may freely take out up to a maximum of CFAF 10,000 in BEAC banknotes, French banknotes, and banknotes issued by any other institute of issue maintaining an Operations Account with the French Treasury.

Exports and Export Proceeds

All exports require prior authorization. Exports to Rhodesia are prohibited. Most exports to countries in the French Franc Area may be made freely; among the exceptions are commodities exported by the National Marketing Office for Agricultural Products (Office National de Commercialisation des Produits Agricoles, or ONCPA) or other state enterprises having an export monopoly.

Proceeds from exports to foreign countries must be collected and repatriated, generally within 180 days of arrival of the commodities at their destination. Export proceeds must be surrendered within a month of the due date. All export transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank.

Proceeds from Invisibles

All amounts due from residents of foreign countries in respect of services and all income earned in those countries from foreign assets must be collected when due and surrendered within a month of the due date. Resident and nonresident travelers may bring in any amount of banknotes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign banknotes and coins (except gold coins).

Capital

All capital movements between Congo and Rhodesia are prohibited. Movements of funds between Congo and France (as defined above), Monaco, and other Operations Account countries in the French Franc Area are free, although subject to declaration; most investment operations and borrowing and lending between Congo and these countries are subject to authorization. Capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries generally are permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in Congo by residents or nonresidents must be deposited with authorized banks in Congo.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, and offering for sale of foreign securities in Congo; these controls relate to the transactions themselves, not to payments or receipts.

Direct investments abroad 3 require the prior approval of the Minister of Finance; the full or partial liquidation of such investments also requires the prior approval of the Minister. Foreign direct investments in the Congo 4 require the prior approval by the Minister of Finance, unless they involve the creation of a mixed economy enterprise. The full or partial liquidation of direct investments in Congo must be declared to the Minister. Both the making and the liquidation of direct investments, whether these are Congolese investments abroad or foreign investments in Congo, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise.

The issuing, advertising, or offering for sale of foreign securities in Congo requires prior authorization by the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) borrowing backed by a guarantee from the Congolese Government and (2) shares similar to securities whose issue, advertising, or offering for sale in Congo has previously been authorized.

Borrowing by residents from nonresidents requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment in Congo for which prior approval has been obtained as indicated above; (2) loans contracted by registered banks; and (3) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 10 million for any one borrower. The contracting of loans that are free of authorization, and each repayment thereon, must be reported to the Office of External Financial Relations within 20 days of the operation.

Lending by residents to nonresidents is subject to exchange control, and all lending in CFA francs to nonresidents is prohibited unless special authorization is obtained. In addition, lending to nonresidents requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans in foreign currencies granted by registered banks; (2) other loans in foreign currencies when the total amount outstanding of these loans does not exceed the equivalent of CFAF 5 million for any one lender; and (3) foreign currency loans whose interest rate does not exceed 5 per cent a year and whose maturity is two years or less. The making of loans that are free of authorization, and each repayment thereon, must be reported to the Office of External Financial Relations within 20 days of the operation.

Under the Investment Code of April 26, 1973 (Ordinance No. 11/73), a number of privileges may be granted to approved foreign investments. The Code provides for four categories of preferential treatment.

Gold

By virtue of Decree No. 66/236 of July 29, 1966, as amended by Decree No. 66/265 of August 29, 1966, residents are free to hold in Congo, gold in the form of coins, art objects, or jewelry, but they require the prior authorization of the Minister of Finance to hold gold in any other form or to import or export gold in any form, from or to any other country. Exempt from the latter requirement are (1) imports and exports by or on behalf of the Treasury or the BEAC and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration. There are no official exports of gold.

Changes during 1975

May 13. Decrees Nos. 75/237 and 75/239 prohibited imports of specified textiles, except when originating in member countries of the UDEAC.

July 10. France resumed its participation in the European common margins arrangement. The parity between the CFA franc and the French franc remained unchanged.

November 22. Imports of salted fish, canned tomatoes, and salt became a monopoly of the Ofnacom.

Costa Rica

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.0859580 gram of fine gold per Costa Rican Colón. The Central Bank of Costa Rica buys and sells exchange in the official market at fixed rates of Ȼ 8.54 and Ȼ 8.60, respectively, per US$1. Transactions with member countries of the Central American Common Market (CACM), when settled through the Cámara de Compensación Centroamericana (a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries) are effected at a uniform buying and selling rate of Ȼ 8.57 per US$1. The Central Bank stands ready in principle to buy U.S. dollars forward at 90 days, at Ȼ 8.39055 per US$1.

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

Administration of Control

The exchange controls are operated by the Central Bank. No licenses are required to buy or sell foreign exchange that is not subject to mandatory sale to the banking system.

Prescription of Currency

In practice, nearly all exchange transactions in Costa Rica are expressed in U.S. dollars. Payments to Poland may be made through special U.S. dollar accounts established under a payments agreement with that country. Payments to El Salvador, Guatemala, Honduras, and Nicaragua in respect of trade and trade-related invisibles must be made in Costa Rican colones through the Cámara de Compensación Centroamericana. Payments to Mexico in respect of trade and invisibles must 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.

Imports and Import Payments

There is no import licensing and all import payments may be made freely, subject to submission of evidence of prior registration (see below). However, certain imports from CACM countries require prior authorization, and imports made on a barter basis require a barter license (licencia de trueque) issued by the Ministry of Economy, Industry, and Commerce. Imports from South Africa are prohibited in principle. To be eligible for foreign exchange, orders for imports valued at over US$300 must be registered with the Central Bank upon confirmation by the foreign supplier.

In addition to any applicable customs duty, there are levied on imports (1) a stamp tax of 3 per cent of the customs duty on commodities not covered by the common external tariff of the CACM; (2) a sales tax of 8 per cent ad valorem, from which certain essential items are exempt; and (3) a selective consumption tax with a range of 10-100 per cent ad valorem on imports from outside the CACM and at lower rates on many CACM imports.1 There also exists a small consular tax on certain imports. Furthermore, most imports originating outside the CACM are subject to an import surcharge of 30 per cent of the applicable import duty.

Payments for Invisibles

The prior approval of the Central Bank is required for all sales of official foreign exchange for current invisibles; for certain travel exchange this approval is given by the Central Bank’s representatives in the commercial banks, while in all other cases the approval must be sought from the Central Bank’s Department of International Transactions.

Any physical or juridical person may purchase, subject to prior approval by the Central Bank, exchange up to the equivalent of US$300 a remittance for any purpose and at any time, but not more often than once every six months, and subject to submission of evidence as to purpose by the applicant. Foreign exchange for private travel may be purchased at agent banks up to US$1,000 a person a trip for trips of ten days (US$100 a day for shorter trips), upon presentation of passport and travel tickets; agent banks may sell additional amounts of US$75 a person a day, up to a total additional amount of US$2,000 a person a trip, subject to presentation of evidence of the length of the stay abroad. Travel exchange in excess of US$3,000 a person a trip must be approved by the Department of International Transactions. Taxes of 15 per cent and 10 per cent, respectively, are levied on remittances abroad of dividends and interest; interest on certain borrowing abroad (e.g., from government banks) is exempt.

Residents traveling abroad by air must pay a travel tax of 5 per cent of the value of the tickets plus Ȼ 20 a trip; government officials, diplomats, minors, and students are exempt.

Exports and Export Proceeds

The Central Bank supervises exports to ensure that exchange proceeds are surrendered as prescribed. Surrender must take place by sale to the Central Bank or an agent bank. Nontraditional exports are entitled to tax credit certificates (CATs) corresponding to 15 per cent of the f.o.b. value, which are freely negotiable.2

Licenses from the Central Bank are necessary for the exportation of merchandise. In addition to the export license from the Central Bank, other export licenses are required as follows: strategic materials, such as armaments, munitions, scrap iron, and scraps of nonferrous base metals (from the Ministry of Economy, Industry, and Commerce); sugar (from the Ministry of Economy, Industry, and Commerce); bear, rice, potatoes, onions, cotton, meat, and purebred and other cattle (from the National Council of Production); airplanes (from the Civil Aviation Board); Indian art objects made of gold, stone, or clay (from the National Museum); tobacco (from the Tobacco Defense Board); lumber, root of ipecacuanha, certain livestock, and animals and plants of forest origin (from the Ministry of Agriculture and Livestock); and coffee (from the Coffee Office); in addition, when there is a lien on the coffee in favor of a bank, that bank’s approval is required before the Central Bank grants an export license. Exports to South Africa are prohibited in principle.

The exchange proceeds of all exports must be surrendered within 15 days of receipt or, if the goods were sold on credit, upon expiry of the term of the credit. Foreign-owned banana companies that have contracts with the Government must surrender their net export proceeds, which are calculated by deducting from their gross export proceeds (1) profits obtained during the year from their transactions in Costa Rica; (2) the allowance for depreciation on their investment in Costa Rica that is acceptable to the U.S. Internal Revenue Service; (3) the export tax on bananas payable in foreign currency; and (4) the cost of imports made during the year that were necessary for their normal business in Costa Rica. There are export taxes on most traditional and nontraditional exports.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered at the official rate within 15 days of accrual, with the exception of the following, which may be retained and used as “free market exchange”: diplomatic and similar salaries and expenses; tourist expenditure; family remittances and other personal remittances; settlements on insurance claims, provided that the premium was paid through the free market; and commissions received by agents and representatives of foreign firms.

Capital

Inward transfers of capital may be made freely by residents and nonresidents. The Charter of the Central Bank provides that foreign capital entering through the official market may be registered with the Central Bank in order to be ensured access to that market for the transfer of interest, profits, and amortization. Private outflows of foreign capital may be effected through the official market only if so registered. Incoming capital may be sold freely or retained by the recipient if it is foreign capital that did not elect registration and surrender at the official rate or if it is national capital returning from abroad. Agent banks have authority to sell foreign exchange at the official rate for repayments on certain private and public debts and certain amortization on registered foreign capital. Registration is mandatory only for public sector borrowing abroad and for government-guaranteed borrowing abroad. The state commercial banks require Central Bank approval to borrow abroad. By virtue of the National Planning Law, ministries and autonomous or semiautonomous organizations other than the commercial banks require the approval of the Office of Planning and Economic Policy before they may initiate steps to arrange any borrowing abroad. Foreign and domestic capital transferred from abroad may freely be deposited as time deposits with agent banks in the form of specified foreign currencies 3 or be invested in certificates of deposit denominated in colones; such funds may be retransferred abroad upon maturity at the official exchange rate.

Outward transfers of national capital are restricted. However, any physical or juridical person may, subject to prior Central Bank approval, purchase foreign exchange from agent banks, up to US$300 a remittance, for any purpose and at any time, but not more often than once every six months and provided the purpose is indicated. Agent banks have authority to sell exchange for certain investment operations approved by the Ministry of Economy, Industry, and Commerce as well as the Central Bank. All other outward transfers of national capital require prior authorization by the Central Bank; it does not authorize these where there is no actual obligation abroad, or where, despite the existence of an actual obligation abroad, the Bank considers the transfer to be an unauthorized transfer of national capital.

Gold

The Central Bank may purchase, sell, or hold gold coins or bars as part of the nation’s monetary reserves in accordance with regulations established by its own Board. Private physical and juridical persons may negotiate freely, at home or abroad, domestically produced gold (except national archaeological treasures), provided there is no infraction of international agreements. They may also hold gold in any form in Costa Rica. The Central Bank does not supply gold to artistic or professional users.

Changes during 1975

January 1. The sales tax was increased from 5 per cent to 8 per cent.

January 7. The rates of the selective consumption tax were raised from 10-50 per cent to 10-100 per cent ad valorem on imports from outside the CACM; smaller increases were applicable to imports from CACM countries. The list of goods affected by the tax was expanded (Decree No. 4432-H of December 24, 1974).

January 15. All import orders in excess of US$300 became subject to prior registration With the Central Bank upon confirmation by the foreign supplier. Evidence of registration had to be submitted before foreign exchange for import payments could be obtained.

March 1. Central Bank regulations issued on November 8, 1974 regarding installment sales and credit sales of goods and services came into effect. Imported goods and services covered by free trade treaties were treated in the same manner as those of national origin, while the goods affected had to be fully paid in cash when imported from outside the CACM. The transitional regulations of December 3, 1974, which accorded equal treatment to domestically produced and imported goods, were revoked. The new regulations were later extended to August 31, when they expired.

April 26. Decree No. 4780-H set a new export price for bananas and increased the export tax on bananas.

May 8. In Board Session No. 2992-75, the Central Bank eliminated the last multiple currency practices remaining after the unification of the dual exchange market by Law No. 5519 of April 24, 1974. They had resulted from the continuing application to certain transactions of the old official buying and selling rates of Ȼ 6.62 and Ȼ 6.68 per U.S. dollar.

May 15. Decree No. 4833-H reduced the export tax on coffee from 5 per cent to 1 per cent.

August 14. The Central Bank arranged a medium-term borrowing of US$30 million in the Euro-currency market.

September 1. Decree No. 5154 provided for the purchase of all gasoline distributing companies by the Costa Rican Oil Refinery.

November 25. Article 34 of the Regulations for the Application of the Ruling Exchange System was modified, which had permitted any physical or juridical person to purchase foreign exchange up to US$300 for any purpose and at any time, subject only to declaration of the purpose. Such purchases became subject to prior Central Bank approval and could not be made more often than once every six months. Prior authorization by the Central Bank also became required for the purchase by travelers of foreign exchange up to US$1,000 a person a trip. Higher amounts, up to a total additional amount of US$3,000 a person a trip, could still be obtained, subject to presentation to the Central Bank of evidence regarding the length of the stay abroad (Central Bank Board Session No. 3059-75 of November 18).

November 28. The prior Central Bank approval for purchases of travel exchange up to US$3,000 a person a trip henceforth could be obtained from the Central Bank’s representatives in the commercial banks. Subject to this approval, commercial banks could sell foreign exchange to travelers up to US$1,000 on presentation of passport and travel ticket, or, for trips of less than ten days, at the rate of US$100 a day. For trips of more than ten days, travelers could buy US$75 for each additional day, up to a total additional amount of US$2,000, subject to presentation of evidence of length of stay. Applications for travel exchange in excess of US$3,000 a person a trip had to be submitted for approval to the Department of International Transactions.

December 27. A Fund for the Promotion of Exports and Tourism was established (Central Bank Board Session No. 3075-75).

December 27. With effect from January 3, 1976, a temporary import surcharge of 10-50 per cent ad valorem was applied to many goods; imports from CACM countries and Panama were exempt. The proceeds of the surcharge would go to the Fund for the Promotion of Exports and Tourism (Central Bank Board Session No. 3075-75).

December 27. With effect from January 5, 1976, Decree No. 5623-H increased the rates of selective consumption tax on many goods; the range of rates remained unchanged at 10-100 per cent.

Cyprus

(Position on December 31, 1975)

Exchange Rate System

The par value is 2.13281 grams of fine gold per Cyprus Pound. However, no exchange transactions take place at the par value. Since July 9, 1973, the rate for the Cyprus pound has been adjusted daily with the aim of maintaining its effective relationship with the currencies of the main trading partners of Cyprus. The Central Bank of Cyprus quotes daily buying and selling rates for deutsche mark, Greek drachmas, pounds sterling, and U.S. dollars. The rate for the U.S. dollar on December 31, 1975 was US$2.5440 buying, and US$2.5410 selling, per £C 1, and that for sterling was £ stg. 1.2600 buying, and £ stg. 1.2550 selling, per £C 1. The Central Bank quotes indicative rates for a number of other currencies as well. Furthermore, the Central Bank offers authorized dealers facilities for forward purchases and sales of U.S. dollars and pounds sterling for periods of up to six months, in cover of trade transactions only.

Administration of Control

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

Prescription of Currency

Cyprus has ceased to be a Scheduled Territory in terms of the U.K. Exchange Control Act, 1947 but under current U.K. exchange control regulations continues to be regarded as a country of the Overseas Sterling Area. Settlements with clearing countries1 must be made through the appropriate clearing account denominated either in pounds sterling or in U.S. dollars. Payments to countries other than the clearing countries (except Rhodesia) may be made by crediting Cyprus pounds to an External Account, or in any foreign currency 2 other than Rhodesian currency; the proceeds of exports to such countries may be received in Cyprus pounds from an External Account or in any foreign currency except Rhodesian currency. Settlements with Rhodesia are subject to special regulations; payments for exports to Rhodesia must be received in any foreign currency other than Rhodesian currency.

Nonresident Accounts

Residents of countries outside Cyprus other than Rhodesia may maintain with authorized banks nonresident accounts in Cyprus pounds, designated External Accounts, or foreign currency deposit accounts. These may be credited with authorized payments from residents of Cyprus, with transfers from other External Accounts or foreign currency accounts, and with the proceeds from sales by nonresidents of any foreign currency other than Rhodesian currency. External Accounts and foreign currency accounts may be debited for payments to residents and nonresidents, for transfers to other External Accounts or foreign currency accounts, and for purchases of any foreign currency other than Rhodesian currency; however, the delivery of foreign currency notes to nonresidents in Cyprus against External Accounts or foreign currency accounts is prohibited, with the exception of sales for travel purposes to nonresident individuals, to members of foreign embassies, and to members of the United Nations forces in Cyprus (up to the equivalent of £C 50 a trip).

Rhodesian Accounts are held by residents of Rhodesia and are subject to separate rules.

Blocked Accounts are maintained in the name of a nonresident for certain funds of a capital nature which, under the existing exchange control regulations, may not be transferred outside Cyprus. Blocked funds may either be held as deposits or invested in government securities or government-guaranteed securities. Income earned on blocked funds so invested may be remitted to the nonresident beneficiary or credited to an External Account without prior reference to the Central Bank. Funds can be released from Blocked Accounts in the following circumstances: on application by the authorized bank concerned acting on behalf of the nonresident account holder, the Central Bank may authorize the release of blocked funds for (1) reasonable educational expenses in Cyprus of the account holder’s children; (2) reasonable living expenses of the account holder while on a visit to Cyprus; and (3) donations to charitable institutions in Cyprus. In addition to any releases under (1), (2), and (3), amounts up to a level determined from time to time may become eligible for release. At present, the Central Bank is prepared to permit the release to each nonresident holder of blocked funds up to £C 1,000 in any calendar year.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. Imports of virtually all commodities may be made freely from any other country except Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, North Korea, Poland, Romania, Tibet, the U.S.S.R., and North Viet-Nam. For protective reasons, certain goods (such as some agricultural and textile products, footwear, metal manufactures, and industrial machinery) may not be imported freely; for a few of these items, no licenses are granted, while for most of them licenses are granted liberally. Imports from Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, Poland, Romania, and the U.S.S.R. are licensed in accordance with the terms of bilateral trade and/or payments agreements. With respect to Albania, North Korea, Mongolia, Tibet, and 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 (which may not be sold) up to £C 10 in value, for returned goods, or for certain special import transactions.

Payments for all permitted imports may be made freely after arrival (where documents are received on a collection basis) or after receipt of shipping documents (where payment is made under a documentary credit).

Payments for Invisibles

Payments for invisibles to nonresidents require the approval of the exchange control authorities. Profits, dividends, and interest from approved foreign investments may be transferred abroad, after payment of any charges and taxes due. Insurance premiums due to foreign insurance companies are remittable after deduction of all expenses and contingencies in respect of any claims. Maintenance remittances are allowed on application accompanied by documentary evidence of hardship. For certain categories of payments, limits are imposed, generally only for the purpose of preventing illicit capital outflow. For study abroad, the lower limit is £C 700 a year, and the upper limit is is £C 2,200 a year; the amount allowed depends on the cost of living in the country concerned—e.g., for study in countries in the Middle East (defined as Egypt, Greece, Israel, etc., except Lebanon), £C 700; in Lebanon, £C 1,000; in the United States and Canada, £C 2,200; in other countries, £C 1,500. Higher amounts for student allowances may be granted on presentation of documentary evidence. However, allowances normally are granted only for study at colleges, universities, or comparable institutions. For tourist travel, the limit is £C 150 a person annually; for business travel £C 20 to £C 40 a day is granted in addition to the tourist allowance. The basic tourist allowance is not available for travel to Rhodesia. Resident travelers may take out Cyprus notes up to £C 10 and foreign currency notes up to the equivalent of £C 50, the latter as part of their annual basic travel allowance. Nonresident travelers may take out £C 10 in Cyprus notes and any amount of foreign currency notes that they brought into Cyprus.

Exports and Export Proceeds

Exports of potatoes are subject to control by the Cyprus Potato Marketing Board, and those of wheat and barley to control by the Cyprus Grain Commission. All exports are subject to licensing when the f.o.b. value exceeds £C 75 to ensure repatriation of the sales proceeds in an appropriate manner (see section on Prescription of Currency, above). Export proceeds in all currencies must be surrendered within one month of receipt.

Proceeds from Invisibles

Receipts from invisibles in all 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 up to £C 10 in Cyprus currency notes.

Capital

Exchange control is exercised over all capital receipts or payments. Capital receipts must be offered for sale to an authorized dealer; payments of a capital nature to any destination require prior approval. Outward portfolio investment is not normally permitted, and only specified types of outward direct investment (e.g., for export promotion) are approved.

Foreign investments in Cyprus by nonresidents require the prior approval of the exchange control authorities. In considering applications due regard is given to the purpose of the investment, the extent of possible foreign exchange savings, the number of persons to be employed, the extent of the foreign exchange liability which might arise from the investment, and possible competition with existing industries. Proceeds from the liquidation of approved foreign investments may be repatriated in full at any time, after payment of any charges and taxes due.

Foreign nationals who repatriate or take up residence outside Cyprus, and Cypriots who emigrate, may transfer abroad up to £C 1,000. Any excess amount is deposited in a Blocked Account. The transfer abroad of funds resulting from estates and intestacies and of the sales proceeds of real estate also is limited to £C 1,000, with any excess amount to be credited to a Blocked Account.

Transactions in foreign securities owned by residents require prior permission from the authorities. In principle, all securities held abroad by residents are subject to registration. Foreign life insurance policies not covered by the Insurance Law must be deposited with an authorized dealer.

Gold

Residents may hold and acquire gold coins in Cyprus for numismatic purposes. With this exception, residents other than the monetary authorities, authorized dealers in gold, and industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Authorized dealers in gold are permitted to import gold only for the purpose of disposing of it to industrial users. The export of gold requires the permission of the exchange control authorities.

Changes during 1975

January 1. Following the expiration of the bilateral payments agreement with Poland, settlements with that country were placed on a convertible currency basis.

January 1. The annual basic exchange allowance for tourist travel, which had been reduced in August 1974, was continued unchanged at £C 150 a person a year; additional amounts were not normally granted.

February 17. An export guarantee scheme and an export credit insurance scheme came into operation.

May 16. Imports of a small number of commodities, including yarn of synthetic material not produced for retail trade and knitted fabrics, were made subject to specific license for protective reasons. Certain items mainly produced in the area outside the control of the Cypriot Government ceased to require an import license.

May 26. Holders of foreign life insurance policies not covered by the Insurance Law were required to deposit their policies with authorized dealers before they could make premium payments abroad.

July 11. A tax amnesty was granted in respect of residents’ undeclared funds and capital assets abroad, provided the funds or the proceeds of the assets were transferred to Cyprus by December 31, 1976. In addition, where such monies were placed on deposit with any bank in Cyprus, the interest would be exempt from income tax for five years.

July 11. For an initial period of five years, and for such additional period as the Council of Ministers might determine, the equivalent of 3 per cent of the repatriated foreign exchange proceeds from exports could be offset against the producer’s taxable income. Similar privileges were granted in respect of 30 per cent of repatriated exchange proceeds from professional services rendered abroad and 90 per cent of repatriated exchange proceeds from labor performed for private firms abroad.

July 11. Income earned abroad by aliens resident in Cyprus was exempted from “emergency relief” taxation. The same applied to certain unearned foreign income of alien residents, viz., interest on capital already exempt from income tax.

July 11. Import duties on a number of luxury goods and other nonessential items were increased.

July 31. The indicative limits on foreign exchange allocations for higher education abroad in the “other countries” category were increased from £C 1,400 to £C 1,500 a year.

Denmark

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.118489 gram of fine gold per Danish Krone. The central rate is DKr 6.28205 = US$1, and Denmark avails itself of wider margins. Denmark maintains a maximum margin of 2¼ per cent for rates in spot exchange transactions in the official exchange market between the Danish krone and the Belgian franc, the deutsche mark, the French franc, the Luxembourg franc, the Netherlands guilder, the Norwegian krone, and the Swedish krona. No announced margins are maintained for any other currency. Market rates are quoted daily for the 17 currencies that are used most often.1 On December 31, 1975, the buying and selling rates for the U.S. dollar were DKr 6.1735 and DKr 6.1815, respectively, per US$1.

Authorized exchange dealers may engage in arbitrage both spot and forward. Spot transactions are defined as transactions where actual delivery takes place within two banking days; transactions which mature in three banking days or more are defined as forward transactions. Spot transactions in all currencies, including Danish kroner, and forward transactions involving purchases of foreign currencies against sales of foreign currencies, may be concluded freely with domestic and foreign banks. Forward transactions which involve Danish kroner may also be concluded, but only with a maturity of up to two years; furthermore, special rules apply for the forward sale of foreign currencies against Danish kroner to foreign correspondents and for forward dealings against Danish kroner with nonresident customers. Forward premiums and discounts are generally left to the interplay of market forces, but the National Bank of Denmark (the central bank) has from time to time sold U.S. dollars forward to authorized banks. Forward transactions with residents which involve Danish kroner must cover contractual payments for goods and services or payments on authorized loans and credits, the payments covered being due not more than two years from the date of the forward contract. Forward transactions with resident customers which do not involve Danish kroner but the purchase of one foreign currency against another, must also cover either claims or liabilities in one of the two currencies concerned, but the requirements with respect to contractual payments are less strict in this case.

Denmark formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from May 1, 1967.

Exchange Control Territory

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

Administration of Control

Exchange control is administered by the National Bank of Denmark, which is the central exchange control authority. However, administrative powers for most payments and transfers are delegated to the authorized exchange dealers, i.e., most banks, some savings banks, and some of the stock exchange brokers who are members of the Copenhagen Stock Exchange. The exchange regulations generally do not apply to individual transactions and transfers of DKr 3,000 or less. Permission, when required, for foreign direct investments in Denmark has to be obtained from the Ministry of Commerce. Licenses for imports and exports, when required, are issued by the Ministry of Commerce, the Ministry of Agriculture, or the Ministry of Fisheries.

Prescription of Currency

Payments to or from foreign countries may be made in any foreign currency or in Danish kroner. For payments to and from Rhodesia, however, special rules are applied for security reasons, in accordance with UN Security Council Resolution No. 253 (1968).

Nonresident Accounts

Nonresident krone accounts are convertible. The only exceptions are Emigrant Accounts and South Rhodesian Accounts.

Krone Accounts may be opened by authorized banks for foreign banks, insurance companies, and shipping companies, and for specified official institutions of the EEC. They may also be opened for other nonresidents, including persons who are or have been of Danish nationality, provided that the total credit balance of the accounts of an individual nonresident does not exceed DKr 75,000; any amount in excess of DKr 75,000 must be transferred abroad within two days. Special accounts not subject to a maximum balance may be opened for nonresidents provided they are only credited with the liquidation proceeds or capital earnings from certain investments in Denmark and some other funds.

Emigrant Accounts are kept by authorized exchange dealers for holding 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 at the time of departure. Certain payments to residents may be made freely from these accounts and the balances are in any case made convertible one year after departure.

South Rhodesian Accounts are kept for residents of Rhodesia; balances in these accounts are inconvertible.

Imports and Import Payments

Most commodities are liberalized and free of licensing from all sources. The only commodities that require a license when originating in or purchased from member countries of the EEC are a few agricultural products and unwrought and semimanufactured gold. A few items require a license when originating in Japan, the Republic of Korea, or any other non-state-trading, non-EEC country. A larger number of items require a license when originating in or purchased from Albania, Bulgaria, the People’s Republic of China, the Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, North Korea, Mongolia, Poland, Romania, the U.S.S.R., or North Viet-Nam. No licenses are granted for the importation of goods originating in or purchased in Rhodesia.

The transfer of funds to, or for the benefit of, Rhodesia is prohibited. With this exception, payments for imports and the related shipping expenses may be made freely within five years from the end of the month in which the goods were cleared through customs, provided that the terms of payment conform to normal commercial practice in the line of business concerned. Repayments of debts must not be made more than 30 days before the day stipulated as the latest in the contract (or before the latest customary date in the trade). However, commercial credits can be repaid at any time if any discount is obtained as a result, provided the payment is made to the supplier and conforms to normal commercial practice in the trade concerned. Prepayments linked to trade in goods and services that are in conformity with normal commercial practice for the particular line of business, may be granted to nonresidents up to one year prior to the expected date of import or the expected date of performance of the service; the permitted period is up to five years for capital goods (ships, aircraft, heavy machinery, and major installations) when purchased for an amount of DKr 1 million or more. All other advance payments for imports require prior approval by the National Bank.

Payments for Invisibles

The National Bank has delegated to authorized exchange dealers the authority to permit payments by residents, including foreign nationals temporarily working in Denmark, for most invisibles to be made freely, provided that payments of debts are not made more than 30 days before the day stipulated as the latest in the contract (or before the latest customary date in the trade); only in a few cases is approval from the National Bank required. Authorized banks are empowered to allow the transfer up to DKr 40,000 a person a year of foreign nationals’ wages and salaries earned in Denmark, provided that the person concerned has not resided in Denmark for more than three years and the transfer is made to the remitter’s own account abroad. Transfers of up to DKr 3,000 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 except Rhodesia, but not earlier than 30 days before the trip if the amount applied for exceeds the equivalent of DKr 3,000. All transactions not included in a list of current transactions are considered capital transactions.

Payments of any kind to Rhodesia, except payments for pensions, for strictly humanitarian, medical, or educational purposes, or for the purchase of news material, are prohibited.

Travelers may take out freely DKr 3,000 in Danish banknotes and coins, and any amount in foreign banknotes or other means of payment. Nonresidents may in addition export any amount of Danish banknotes and coins derived from sales of foreign currency in Denmark or brought in by them when they entered Denmark.

Exports and Export Proceeds

Exports to Rhodesia are prohibited with the exception of products intended for strictly medical purposes, educational material or other equipment for schools and the like, publications, and news material. The only commodity that requires a license when exported to member countries of the EEC is gold. With respect to other destinations, except for certain items subject to strategic controls, export licenses are required only for waste and scrap of certain metals, crude oil and some oil products, and monetary gold.

Export proceeds must be transferred to Denmark without undue delay unless the National Bank permits otherwise. However, this obligation does not apply to amounts which are to be used within 30 days to settle or to offset the cost of certain commercial expenses. Foreign exchange receipts must either be offered for sale to the National Bank or to an authorized exchange dealer without undue delay or kept in an account with an authorized exchange dealer for a maximum period of 30 days.

Proceeds from Invisibles

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

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

Capital

Both inward and outward transfers of capital and all borrowing and lending between residents and nonresidents are subject to exchange control and may be restricted. Licensing practice vis-à-vis residents of member countries of the EEC is based on the rules of the EEC’s directives on capital movements, subject to certain transitional arrangements, and licensing practice in respect of residents of the rest of the world (except Rhodesia) as a rule is similar. Residents have an obligation to repatriate proceeds realized from the sale or liquidation of assets abroad.

Transfers abroad may be made by residents to pay interest on, or to redeem upon maturity, or to repurchase any Danish securities denominated exclusively in Danish kroner as well as the transferor’s own bonds irrespective of denomination (provided these bonds are quoted on an authorized stock exchange abroad), to lend amounts not exceeding DKr 200,000 in a calendar year to subsidiary companies, branches, and so forth, or to a member of the resident’s family, and to buy foreign securities that do not represent direct investments in foreign commercial or industrial enterprises, provided that the securities are acquired on the basis of a subscription right to shares or the like owned by the resident concerned or provided that the resident furnishes proof that he has repatriated a corresponding amount within the last 12 months from the sale of foreign securities to a nonresident.

No special permission is required for residents to make transfers abroad, within certain limits, in connection with direct investments in most industries (equity capital or loan capital) or with the private acquisition of real estate abroad. The limits are DKr 100,000 a year for each foreign enterprise for direct investments of equity capital, DKr 200,000 for direct investments of loan capital, and DKr 60,000 a person for private acquisition of real estate for noncommercial purposes (DKr 150,000 for health reasons). Direct investments abroad by residents are normally approved in accordance with Denmark’s obligations as a member of the EEC and the OECD. The private acquisition of real estate in excess of DKr 60,000 normally is approved in accordance with Denmark’s obligation as a member of the EEC. Normal loans and credits granted by exporters or banks and made in connection with the sale of goods or services are permitted in connection with sales of capital goods for periods up to five years. Permission from the National Bank is required for most other transfers abroad of a capital nature by residents. Portfolio investment abroad is generally not allowed.

Danish emigrants are granted an exchange allowance of up to DKr 40,000 for each person at the time of departure. Funds exceeding these amounts must be credited to an Emigrant Account in the name of the owner and may be transferred abroad one year after departure, or earlier if the emigrant can show that he has taken up permanent residence abroad with the approval of the relevant foreign authorities.

Inward direct investment in the form of equity capital may be made without any special license if the investment concerns industry, trade in goods, handicrafts, the hotel business, travel agencies, or transportation, and if the investment does not increase total direct foreign investment in the enterprise concerned by more than DKr 100,000 in each calendar year. Inward direct investments with loan capital also are exempt from special license within certain limits. Other direct investment by nonresidents requires permission from the exchange control authorities, which is granted liberally in accordance with Denmark’s obligations as a member of the EEC and the OECD. The purchase by a nonresident of real property in Denmark usually requires a special license from the Ministry of Justice; permission is usually granted readily where real estate is to be used for industrial or similar enterprises.

The sale to nonresidents (including persons who are or have been Danish nationals) of Danish bonds listed on a stock exchange does not require a special license. Bonds denominated only in Danish kroner may be resold to residents. Nonresidents may freely purchase or subscribe to shares that are quoted on the Copenhagen Stock Exchange, provided the purchase does not represent a direct investment and is not being made with a view to subsequent direct investment in the company concerned; this liberalization does not apply to certificates of investment companies, etc., whose latest balance sheet shows that more than 10 per cent of their assets are securities other than stock exchange securities.

Nonresidents may freely grant credits for up to five years to residents to finance purchases of commodities and services abroad and to finance the granting of credits for exports of commodities and services, provided the credit is in conformity with commercial practice in the trade concerned. They may, further, grant loans of up to DKr 20 million a borrower in a calendar year to enterprises in most industries, provided that the maturity is at least five years and that the entire proceeds are used only to finance expenditures made within 6 months prior to the date the loan is contracted or to be made within 12 months following that date, for the establishment, expansion, or equipment of the borrower’s own business and/ or industrial premises and for the acquisition of plant, machinery, and transport equipment to be used for its own business and/or industrial activities. Finally, they may grant loans up to DKr 200,000 a borrower in a calendar year to members of the nonresident’s family.

Municipalities and public utility companies may as a rule issue debenture loans abroad without special permission of the National Bank, but their foreign borrowing is subject to control by the competent executive department of the Government.

Transfers of proceeds from the sale or liquidation of all types of investments and transfers of all other liquid funds in Denmark owned by nonresidents other than newly emigrated persons are permitted freely, irrespective of when and how the original investment was acquired. Interest and repayment of principal on authorized loans, credits, and deposits received from persons and firms who are nonresidents at the time of receipt may be paid freely, with the proviso that loans and credits obtained from a nonresident generally must not be amortized or repaid in full more than 30 days before the amortization payment or repayment is due, or before the customary date in the trade.

Inheritances and gifts to relatives may normally be transferred to any country without limitation. Individual payments above DKr 3,000 as gifts to persons other than relatives as a rule require approval from the National Bank. Such approval is normally given for bona fide gifts.

Imports and exports of securities are subject to regulations, the details of which are established by the National Bank. Bona fide imports of Danish securities payable only in Danish kroner are permitted. Exports of Danish and foreign securities owned by nonresidents are normally permitted also. Danish securities held in Denmark and belonging to nonresidents may, with the principal exception of bonds denominated wholly or partly in foreign currencies, be sold freely to residents. Foreign securities held in Denmark and belonging to nonresidents may, with certain exceptions, be sold to residents only with the permission of the National Bank. Foreign securities held in Denmark may be negotiated freely between residents, provided that the exchange control regulations are not circumvented.

The net “commercial” foreign position of authorized foreign exchange dealers is subject to limitation. For any individual bank, this position must not be negative, except in accordance with the following. For all banks collectively, a “frame” has been established of DKr 600 million (until further notice). This total has been subdivided into individual “frames” for those banks interested. The latter may incur a negative net “commercial” foreign position, insofar as this results from the taking up of foreign currency loans and credits for purposes of on-lending in foreign currency to customers in order to finance Danish foreign trade. Bank advances to customers financed by foreign credit taken up under these “frame” arrangements are exempt from the credit ceiling to which the bank concerned is subject; such advances to customers must be used only for purposes permitted by the exchange control regulations. A positive net “commercial” foreign position is in principle allowed only as long as it does not exceed the higher of the following amounts—DKr 2 million or 15 per cent of the capital and reserves of the individual bank concerned. The National Bank has granted a number of exemptions from this rule. Such exemptions are granted only when necessary for the individual bank to cover a net short position in the forward market which could not otherwise be covered. Banks are not normally permitted to borrow abroad for their own account at medium or long term.

Gold

Residents may freely buy, hold, and sell gold coins in Denmark; they may also import gold coins. Otherwise, residents other than the monetary authorities and authorized industrial users are not allowed to acquire gold abroad. Imports and exports of gold normally require licenses issued by the Ministry of Commerce; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users. Imports of gold in bars or coins, unless made by or on behalf of the monetary authorities, are subject to value-added tax at a rate of 9.25 per cent but not to customs duty. Domestic transactions also are taxed at a rate of 9.25 per cent.2

Changes during 1975

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

January 1. Further tariff reductions under the Treaty of Accession to the EEC came into force.

January 1. An exchange rate insurance scheme for long-term export credits came into force.

January 1. The Banking Law of April 2, 1974 came into effect. One of its provisions made it possible for foreign banks to be established in Denmark.

January 1. Savings banks could be appointed as authorized exchange dealers.

January 1. The Japanese yen was included among the currencies for which authorized banks quote daily market rates.

April 1. An export credit institution, the Danish Export Finance Fund, formed by the National Bank in cooperation with the commercial banks, began operations. It provided up to 100 per cent cover against credits with a maturity of 1½-5 years after delivery or shipment, with provision for extension in special cases.

May 15. The ceiling on the negative net “commercial” foreign position of authorized foreign exchange dealers was raised from DKr 400 million to DKr 600 million.

May 29. The OECD Declaration of May 30, 1974 on Imports, Exports, and Other Current Account Transactions was renewed for one year.

June 12. An amendment to the Danish Trust Fund Act was passed raising the ceiling on export guarantees and sureties from DKr 15 billion to DKr 22 billion.

July 1. Improved market access was granted to many imports from specified developing countries, under the terms of the Lomé Convention between the EEC and certain developing countries of Africa, the Caribbean area, and the Pacific region (the ACP countries).

July 10. France resumed its participation in the European common margins arrangement; accordingly, Denmark again observed maximum margins of 2¼ per cent for the French franc.

September 29. The value-added tax was reduced until February 29, 1976 from 15 per cent to 9.25 per cent; the reduction was applicable also to imported goods other than automobiles and gasoline.

November 3. The National Bank began to issue to banks and the public 91-day certificates of deposit denominated in Danish kroner. Since these were considered to be money market securities, they could not be acquired by nonresidents.

December 11. The restrictions on nonbank residents’ forward exchange transactions were relaxed. The maximum term for transactions involving the trading of foreign currency against domestic currency was increased from one year to two years. The rules governing transactions between foreign currencies were eased in several ways. The ceiling on the maximum term of these transactions was abolished, so that claims and liabilities in foreign currencies could be covered against any other foreign currency until maturity. Furthermore, the requirement that underlying claims should be in the currency sold and underlying liabilities in the currency bought, was eased so that it became sufficient that either a claim or a liability was denominated in the currency sold or purchased. This enabled residents to cover a position in a certain foreign currency against any other foreign currency until the maturity of the covered outstanding balance.

December 18. The Government entered into a standby Euro-currency loan agreement for the equivalent of US$300 million.

December 29. The rule that spot transactions between Danish and foreign banks needed approval from the National Bank when they comprised amounts exceeding DKr 1 million for delivery in less than two days was abolished. Transactions maturing in three days or more were considered to be forward transactions.

Dominican Republic

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.736662 gram of fine gold per Dominican Peso. The currency is pegged to the U.S. dollar, the intervention currency, at RD$1 = US$1. Exchange transactions in U.S. dollars between the Central Bank of the Dominican Republic and other banks take place at RD$1 = US$1, plus a commission of 132 of 1 per cent. Exchange transactions by commercial banks with the public also take place at the rate of RD$1 = US$1, subject to banking commissions of ¼ of 1 per cent buying and ½ of 1 per cent selling. Different effective exchange rates may arise from the requirement of a fully prepaid letter of credit for certain imports. With the exception of payments for imports made with the importer’s own foreign exchange, all payments abroad must be made through banks, and all exchange received must be sold to banks. 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 formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange and trade control policy is made by the Monetary Board. Foreign exchange control is administered by the Central Bank. The Monetary Board establishes import quotas, which are administered and controlled by the Foreign Exchange Department of the Central Bank. Certain releases of foreign exchange require the express authorization of the President of the Republic.

Prescription of Currency

Imports from the United States that are financed by the U.S. Agency for International Development must be effected under special letters of credit. Certain import commissions must be paid in local currency only. Settlements with Brazil, Chile, Colombia, Mexico, and Venezuela may be effected through special accounts established under reciprocal credit agreements.1 Import payments in currencies other than the U.S. dollar must be made through a letter of credit. Otherwise no obligations are imposed on importers, exporters, or other residents in respect of the method to be followed or the currency to be used for payments to or from nonresidents.

Imports and Import Payments

Imports of many goods are prohibited. Imports of certain other commodities are restricted to quotas. All commodities are exempt from quota and prohibition when they are financed with the importer’s own foreign exchange; such imports are also exempt from prepayment of import taxes and surcharges. Licensing controls are maintained over a few commodities, however, for reasons of health or security. The import controls involve exchange allocations; in addition, releases of official foreign exchange during 1975 were subject in principle to a ceiling of RD$800 million. All payments for imports require the approval of the Central Bank, except those made with the importer’s own exchange. Insurance on imports must be effected with companies authorized to operate in the Dominican Republic.

Commodities subject to quantitative restrictions (other than restrictions resulting from the RD$800 million ceiling) can be imported and settled with official exchange only against a fully prepaid letter of credit. The same requirement applies to some other goods that are not subject to quantitative restrictions, including many types of smoked, dried, or canned fish, Venetian blinds, some perfumes and cosmetics, and certain construction materials. Some other import items not subject to restrictions must be covered by regular letters of credit. The commercial banks transmit to the Central Bank each day a list of applications for all imports against letters of credit. After the Central Bank approves an application, the letter of credit may be opened by the commercial bank. For prepaid letters of credit the Central Bank debits the account of the commercial banks for the peso equivalent at the time of approval of the letter of credit. The peso equivalent of other letters of credit is forwarded to the Central Bank after they have been negotiated and exchange is requested by the commercial bank. In principle, exchange for import payments is made available within not more than five working days from the receipt of the application.

Most imports are subject to an internal consumption tax of 20 per cent ad valorem. Virtually all imports are also subject to customs surcharges (impuestos internos) ranging from 10 per cent to 200 per cent of the f.o.b. value; for most imports, however, they are 56.6 per cent. Imports of agricultural and industrial machinery and equipment and spare parts are subject to a single import tax (including customs duties) of 10 per cent.

Payments for Invisibles

All payments for invisibles require the prior approval of the Central Bank, which is given only after careful examination of the application and if the transaction is considered genuine. The allocation of foreign exchange for travel and for insurance premiums is suspended. Allowances for family remittances and medical expenses are rarely granted. Residents are not prevented, however, from purchasing exchange for travel purposes and personal remittances in the parallel market. Airline tickets are subject to a tax of 15 per cent when the price of the ticket is over RD$200 or from RD$5 to RD$25 when the price is RD$200 or less.

Nonresident foreign nationals working in the Dominican Republic in industries and firms that contribute to the country’s economic development may remit abroad for any purpose up to 60 per cent of their salaries. For students pursuing approved courses, exchange requests for monthly maintenance allowances are approved up to US$240 for Puerto Rico, up to US$250 for Spain, up to US$300 for other European countries, and up to US$270 for all other countries; an additional allocation of US$50 a month, irrespective of country, is available for postgraduate students. Exchange is also sold for remittances to authorized students to meet expenses for tuition, books, and other fees.

Applications for exchange for contractual payments, such as interest and amortization payments on loans registered with the Central Bank, are approved in conformity with the terms of the contract. Transfers of profits and dividends are permitted only in respect of foreign investments that have been registered in the Central Bank and cannot exceed 18 per cent a year of the net value of the original and any additional investment, including reinvested profits. The Monetary Board, however, is empowered to authorize remittances in excess of 18 per cent when investments are deemed beneficial to the Dominican economy. Dividends remitted or credited to nonresidents are subject to a tax of 18 per cent.

In principle, exchange for payments for invisibles is made available within five days from receipt of the application.

Travelers are not permitted to take with them any domestic currency.

Exports and Export Proceeds

Export licenses are required for sugar, coffee, cocoa, and tobacco. Within two working days of receiving payment, exporters of Dominican products must surrender through the commercial banks to the Central Bank foreign exchange equal to 100 per cent of the f.o.b. or c.i.f. value of their exports. For the purpose of exchange surrender, declared export prices must equal or exceed the minimum export prices 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. All exports of sugar and sugar by-products are subject to prior authorization by a special committee. Exporters may not extend credit for more than 90 days from the date of shipment without authorization by the Central Bank.

Proceeds from Invisibles

The foreign exchange proceeds from invisibles must be surrendered to the Central Bank through the commercial banks. The import of Dominican banknotes and coins is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. Inward capital remittances must be registered with the Central Bank and converted into pesos at that Bank. Registered foreign direct investments are eligible for remittances of profits and dividends. Registration is permitted for investments in agriculture, livestock, mining, manufacturing, tourism, transportation and communications, and finance companies. The Monetary Board may, however, permit the registration of other investments when deemed beneficial to the economic development of the country. Registration may cover the value of machinery and equipment, as well as intangible assets such as licenses and patents. Applications for approval of outward capital remittances must be submitted through the commercial banks to the Central Bank. Withdrawals of capital by foreigners leaving the Dominican Republic are authorized in reasonable amounts, sometimes with provision for the transfer to be effected in annual installments. Applications by residents to transfer capital abroad to make portfolio investments, purchase real estate, etc., are not normally approved.

Gold

Residents may purchase, hold, and sell gold coins in the Dominican Republic for numismatic purposes. With this exception, residents other than the monetary authorities and authorized industrial users are not allowed to hold or acquire gold in any form other than jewelry, in the Dominican Republic or abroad. Imports and exports of gold in any form other than jewelry constituting the personal effects of a traveler require licenses issued by the Central Bank; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users.

Changes during 1975

February 27. Presidential Decree No. 603 established a ceiling of RD$800 million on foreign exchange sales by the Central Bank during 1975 (payments arising from 1974 transactions were deemed excluded from the ceiling). All foreign exchange earnings in excess of the ceiling were to be deposited in a special account at the Central Bank, to be used only with the express authorization of the President of the Republic. The Monetary Board was charged with the allocation of the RD$800 million. The Central Bank was required to inform the Minister of Finance, within the first five days of each month, of the exchange payments made in the previous month. Official foreign exchange could no longer be granted for imports of passenger cars, alcoholic beverages, electrical domestic appliances, or textiles.

February 27. Sales of official exchange were suspended for about two weeks.

June 18. The President announced a number of austerity measures already taken or under consideration. Among the latter was a proposed ban on the import of luxury goods.

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

December 13. Monetary Board Resolution No. 3 extended the system of import controls until December 31, 1976.

Ecuador

(Position on December 31, 1975)

Exchange Rate System

The currency of Ecuador is the Sucre. On February 26, 1973 a central rate of S/ 25.00 = US$1 was established, corresponding at the time to 0.0294665 gram of fine gold per sucre.

There are two exchange markets. In the official market the Central Bank of Ecuador maintains rates of S/ 24.80 buying, and S/ 24.95 selling, per U.S. dollar, which apply to export proceeds, import payments (except for printed matter), certain invisible and capital transactions, and most transactions by the Government or public entities; however, the exchange transactions of the private petroleum companies must be conducted with the Central Bank, at S/ 25.00 = US$1, subject to an exchange tax of 1 per cent, buying and selling. Proceeds from loans granted by international agencies to the Government and to public institutions also are converted at the Central Bank, at S/ 25.00 = US$1, but are exempt from the 1 per cent exchange tax. All other transactions take place in a free market where the rate fluctuates according to supply and demand but in which the Central Bank intervenes. Transactions eligible for the free market may alternatively be effected at the Central Bank, at its official market buying and selling rates. Applications for the purchase of foreign exchange in excess of US$10,000 at the official rate must be supported by documentary evidence regarding the intended use.

Loans taken up abroad are subject to an exchange tax ranging from 2 per cent for maturities under one year to 6 per cent for maturities over 30 months. Exempt from this tax are (1) credits from foreign governments and international financial organizations; (2) credits granted to public and semipublic agencies; (3) investment credits for the agricultural and fishing sectors with a maturity exceeding three years; (4) credits with a maturity exceeding three years for the importation of machinery and capital goods; and (5) suppliers’ credits which do not involve an inflow of foreign exchange.

Ecuador formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, with effect from August 31, 1970.

Administration of Control

The Monetary Board has authority to shift transactions between the two exchange markets and has extensive powers with respect to import policy. The official exchange market is under the control and supervision of the Central Bank. The Central Bank also issues import and export licenses and registers foreign capital. Imports which enter as part of a direct investment and imports by foreign enterprises which have contracts with the Government require prior authorization by the Ministry of Industries, Commerce, and Integration and, when exemptions from fiscal charges are sought, by the Ministry of Finance. However, all applications for import licenses by industrial firms must be submitted to the Central Bank. Foreign investment in Ecuador is supervised by the Foreign Investment Council.

Prescription of Currency

Most settlements with the German Democratic Republic, Hungary, Poland, and Romania must take place through bilateral accounts. Payments between Ecuador and Bolivia, Brazil, 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 goods (Group A) and semiessential goods (Group B), and List II, consisting of less essential and luxury goods. All goods not included in these two lists are prohibited; in addition, imports of passenger automobiles and certain other vehicles are suspended. Prior import licenses are required for all permitted imports, with the exceptions specified below. Books, newspapers, periodicals, and printed or recorded music may be imported freely without a license or consular invoice; payments have to be made through the free market. Medicine and spare parts for machinery and automotive vehicles are free of license when valued at US$500 c.i.f. or less (US$500 f.o.b. or less for goods shipped by air). A few goods may be imported only from LAFTA countries, and some only from Paraguay; with these exceptions, import licenses are issued freely irrespective of the origin of the goods, provided that the appropriate import taxes (including import surcharges) have been paid, that the required prepayments of 80 per cent of import duties have been made, that an advance deposit has been made, and that a certificate is submitted showing that the insurance has been arranged in Ecuador. The licenses automatically entitle the holders to obtain exchange at the official rate to cover the c. & f. value of the imports upon presentation of the shipping documents; advance payments for imports are prohibited. Import licenses which do not entitle the importer to foreign exchange at the official rate (“no exchange licenses” or permisos de importación no reembolsables) may be issued for goods financed from the proceeds of certain international loans, provided that these have been registered at the Central Bank, but such licenses are not required to import the goods concerned.

The Monetary Board is authorized to shift items between Lists I and II and to prohibit the import of goods or lift import prohibitions when the economic situation of the country and the balance of payments situation so require.

Many imports are subject to advance deposit requirements. The deposit, which must be maintained for 180 days, is 30 per cent of the c.i.f. value for goods on List II and 20 per cent for goods on List I-B.

Most imports are subject to a tax of 4 per cent levied on commercial transactions. Furthermore, all goods are subject to a tax of 1 per cent of the c.i.f. value, unless they represent gifts or foreign loans. Many goods in List II are subject to an import surcharge of 30 per cent ad valorem.

Payments for Invisibles

Exchange for payments in respect of certain current invisibles may be obtained from the Central Bank at the official rate. These invisibles are in principle limited to interest on foreign loans that have been registered at the Central Bank, dividends and profits on foreign investments registered at the Central Bank, payments by the Government and public entities, and the necessary expenses of Ecuadorans studying at universities abroad. Interest payments at the official rate may not exceed 3 percentage points over the prime rate in the country of the lender or exporter, and remittances of dividends and profits at the official rate may not exceed 14 per cent of the registered value of the investment. With respect to loans to petroleum companies only, interest, commission, and other financial charges on foreign loans may not exceed the equivalent of 2 per cent above the rates of interest of the creditor country; moreover, annual amortization may not exceed the sum of undistributed profits, depreciation of fixed assets and liquidated assets, and any variation in working capital. There are also limits on student allowances eligible for the official rate; these range from US$300 to US$450 a month, depending on the type of study and on the country involved.

All other payments for current invisibles, including travel expenditure, must be settled in the free market and are unrestricted. There are no limitations on the amounts of domestic and foreign banknotes that travelers may take out. Residents traveling abroad by air must pay a tax of S/ 600 for each exit visa. Airline tickets for foreign travel are taxed at 10 per cent, while tickets for travel by ship are subject to tax at the rate of 8 per cent for departure from Ecuador and 4 per cent for the return trip to Ecuador.

Exports and Export Proceeds

All exports require licenses to ensure, among other things, the full surrender of the exchange proceeds to the Central Bank; licenses are issued freely, subject to guarantee. No surrender is required for exports effected under licensed barter transactions. Reference prices are established for exports of bananas to help ensure the full surrender of the exchange proceeds. Reference prices are also established for exports of crude petroleum; these serve as the basis for the calculation of taxes, royalties, etc. Certain exports are subject to export taxes, payable at the time the export license is received. An export tax of 15 per cent is levied on crude petroleum, one of 12 per cent on sugar, and one of 10 per cent on cocoa beans; exports of coffee beans are subject to a sliding-scale tax which ranges from 2.5 per cent to 15 per cent. Certain exports exempted from the ad valorem export taxes receive a subsidy based on the f.o.b. value. The subsidy is received in the form of a tax credit certificate (certificado de abono tributario) on the basis of customs documentation. There are other export taxes in addition to those mentioned above.

Proceeds from Invisibles

Receipts from specified invisibles have to be sold to the Central Bank at the official rate. All other receipts, including those from travelers, may be sold in the free market. There are no limitations on the amounts of domestic and foreign banknotes that travelers may bring in.

Capital

Capital may freely enter or leave the country through the free market. For all outward transfers through the official market in excess of US$10,000 documentation as to the purpose must be submitted to the Central Bank. Outward transfers through the official market are restricted. Most borrowing abroad is subject to an exchange tax ranging from 2 per cent to 6 per cent (see section on Exchange Rate System, above).

All foreign investments in Ecuador must be registered with the Central Bank. New investments require the prior authorization of the Ministry of Industries, Commerce, and Integration and of the Foreign Investment Council. In the case of investment for which exchange was sold to cover local costs, the investor must document that the exchange was sold to the Central Bank in order to be entitled to foreign exchange at the official rate for remittances of interest, profits, dividends, and amortization. For foreign capital entering in the form of machinery and equipment, the investor must document that the merchandise has been cleared through customs and that it took the form of a “nonreimbursable” import. Additionally, the investor must present to the Central Bank the certification from the appropriate ministry that the declared value conforms to the actual value of the machinery and equipment. The Exchange Department of the Central Bank must submit a recommendation to the General Management of the Central Bank within 30 days from receipt of the request for registration in the official market and all pertinent documentation. Thereafter, taking into account the interests of the Ecuadoran economy and priorities established in the country’s development plans, the General Management of the Central Bank must approve or deny the registration for foreign exchange purposes within an additional 30 days. In certain cases, where all documentation has been submitted, the Central Bank can provisionally register the investment for a period of up to 90 days.

Similarly, loans in foreign exchange granted to the Government or to official entities may be registered for foreign exchange purposes with the Exchange Department of the Central Bank; for all foreign loans, however, registration for statistical purposes is mandatory. In the case of suppliers’ credits and similar credit for financing the importation of merchandise, no special registration procedure is required; all the pertinent information on terms of payments, etc., is contained in the import license, and that provides the basis for purchase of exchange for remittance of interest, charges, and scheduled amortization. Foreign nationals are prohibited from owning rural properties and from owning or operating mining industries within 30 miles of Ecuador’s coastline or borders. The participation of foreign capital as a direct investment in the banana industry, in domestic wholesaling and retailing, and in real estate development is also prohibited.

Foreign exchange at the official rate may be obtained for the withdrawal of foreign investment from Ecuador five years after the date of registration, on the basis of a schedule agreed by the Central Bank. Profits accumulated in previous years may be repatriated also on the basis of a schedule agreed by the Central Bank for investments which have completed the registration procedure for foreign exchange purposes. For investments registered on a provisional basis, no profits may be repatriated through the official market. Profit remittances may not exceed the limit (14 per cent a year) specified in the Foreign Investment Code of the Andean Pact.

Residents who are private individuals are not granted official foreign exchange to purchase securities or real estate abroad. Commercial banks are authorized to maintain accounts with correspondent banks abroad in convertible currencies.

Gold

Residents other than the Central Bank may export gold only in the form of filigree work whose gold content represents not more than 25 per cent of its market value. Imports of monetary gold are reserved for the Central Bank; they are treated as List I imports, payable through the official market. Imports of nonmonetary gold in bars may be made by the Central Bank or by any other resident and are also treated as List I imports eligible for the official rate. Imports of gold for the production of jewelry are treated as List II imports. Gold bars are exempt from import duty, while that on semiworked gold is 40 per cent ad valorem.

Changes during 1975

January 1. Decree No. 1353-A of December 31, 1974 came into force. Among other things, it required companies to convert their bearer shares into nominative shares by March 13, 1975.

January 13. Inward direct and portfolio investment in banking and finance companies were prohibited, as was inward direct investment in domestic wholesaling and retailing of imported goods, banana production, and real estate development (Resolutions Nos. R-01, R-02, and R-03 of the Superior Foreign Trade Council).

January 13. Direct foreign investment to establish branches in Ecuador was only permitted for temporary activities. Investment in other firms of the profits of firms with foreign capital participation could be authorized as foreign direct investments (Resolutions Nos. R-04 and R-05 of the Superior Foreign Trade Council).

January 17. Import duties on many textiles were increased (Decision No. 18 of the Ministry of Finance).

January 24. Exports of cocoa beans became subject to the basic export tax of 10 per cent and to a supplemental export duty of 15 per cent.

January 24. Access by firms with foreign capital participation to overdraft facilities in foreign currency was restricted to firms holding current accounts in foreign exchange with domestic banks; such overdrafts could not exceed 3 per cent of the average six-monthly balance in the accounts concerned (Resolution No. 75-287 of the Superintendent of Banking).

February 4. New regulations for the exploration and exploitation of hydrocarbons were issued (Decree No. 57).

March 5. The prescribed maximum surrender periods for export proceeds were modified. The new time limits (after the date of shipment specified in the export license) were 60 days for coffee, cocoa, bananas, and unprocessed seafood; 180 days for other primary products; and 360 days for manufactured goods and handicraft products. These rules were not applicable to hydrocarbons or to cash sales; for the latter, exporters had to sell the foreign exchange at the latest 30 days after shipment (Monetary Board Resolution No. 761).

April 14. The Hydrocarbons Law of August 6, 1974 was amended (Decree No. 286).

May 14. Foreign investments in Ecuador made without prior authorization and foreign credits contracted after June 30, 1971 that had not been registered, had to be registered with the Superior Foreign Trade Council within 120 days (Decree No. 387).

May 16. Exports of coffee by specified producers (agricultural cooperatives in which individual holdings did not exceed 20 hectares) were exempted from the export tax of 15 per cent. In June this exemption was made general, by extension to all other coffee cooperatives, their regional associations, and the National Federation of Coffee Cooperatives.

June 2. Imports of passenger automobiles, light pickup trucks, and certain other motor vehicles were prohibited until August 31 (MBR No. 774). On August 21 the ban was extended to December 31 (MBR No. 784). It was further extended until March 31, 1976 by MBR No. 819, and until September 30, 1976 by MBR No. 854.

July 1. The 15 per cent export tax on coffee was replaced by a sliding-scale tax which ranged from 2.5 per cent to 15 per cent, according to the f.o.b. price in U.S. dollars of the grades concerned (Decree No. 541-A).

July 8. The tax-paid cost of crude petroleum was reduced by US$0.43 a barrel (Decrees Nos. 569 and 570). An increase of US$0.40, retroactive to October 1, was made on November 21 (Decree No. 982).

August 21. Advance payments for imports were prohibited (MBR No. 785). On December 22 it was specified that this prohibition related to the private sector only.

August 21. The classification of permitted imports was revised. Many goods were transferred from List I (essential items) to List II (less essential items); among these was gold for the manufacture of jewelry. A number of items were deleted from the lists, including footwear, sugar, pepper, and certain cigarettes; they ceased to be permitted imports (MBR No. 786).

August 22. A surcharge of 60 per cent of the c.i.f. value was imposed on imports of goods on List II. A surcharge inversely related to the payment period and ranging from 5 to 25 per cent was imposed on capital goods in List I when having 360 days or less of external financing; advance payment for such capital goods was prohibited. The principal exemptions from the surcharges were for goods on the National List for LAFTA or the Special List for Paraguay, and for goods covered by decisions of the Cartagena Agreement Commission (Decree No. 738).

August 22. The maximum remaining maturity of export bills eligible for rediscounting at the Central Bank was increased to 360 days. The access of the Export Promotion Fund (Fopex) to Central Bank advances was eased (MBR No. 787).

September 11. The 60 per cent import surcharge on goods in List II was reduced to 30 per cent ad valorem. The surcharge on imports of capital goods was abolished. Imports of raw materials, intermediate goods, and capital goods by industries covered by the industrial incentives legislation were declared exempt from the 30 per cent surcharge. A number of import items were retransferred from List II to List I (Decree No. 786).

September 11. A further reclassification of permitted imports took place. List I was divided into two parts, Group A (essential items) and Group B (semiessential items). A large number of items were transferred from List II to List I-B (MBR No. 790).

September 11. Advance import deposit requirements were reintroduced. The rate of deposit was 30 per cent of the c.i.f. value for goods on List II and 20 per cent for goods in Group B of List I. The deposits were to be maintained for 180 days. Industries covered by the industrial incentives legislation were exempt. Imports for public sector investments financed with international credits also were exempt (MBR No. 788).

September 11. Duties, taxes, and other charges on exports were henceforth collected by the Central Bank at the time of issuing the export license if the goods were sold on deferred payment terms, and either at the time of payment or within 30 days of shipment if they were sold on a cash basis (Decree No. 784).

September 11. The approval and control functions of the Ministry of Industries, Commerce, and Integration, the Central Bank, the Superintendency of Banking, and the Superintendency of Companies with respect to foreign direct investment, transformation agreements, and foreign credits were specified. A Foreign Investment Council was created. It took over the duties of the Superior Foreign Trade Council with respect to foreign investment in Ecuador. The position of investments and loans that had entered the country without authorization or registration had to be regularized by December 12. Decree No. 887 of August 30, 1974 was revoked (Decree No. 788).

September 11. The exemptions from the surcharge requirements, as amended by Decree No. 786, were specified (Decree No. 789).

September 30. The conditions were specified under which banks or insurance companies with foreign capital participation could increase their capital. Direct foreign investment in the establishment of new commercial banks or insurance companies was prohibited. Resolution No. 1 of January 31, 1975 of the Superior Foreign Trade Council was revoked (Resolution No. 849 of the Minister of Industries, Commerce, and Integration).

October 1. Additional exemptions from the import surcharge and the advance deposit requirement were granted (MBRs Nos. 793 and 794).

October 1. A further 15 import items were transferred from List II to List I-B (MBR No. 795). Further transfers between import lists took place on October 8, October 22, and November 12 (MBRs Nos. 798, 801, and 806).

October 10. Direct foreign investment in new finance companies could be authorized up to 25 per cent of the capital for those in Quito and Guayaquil, and up to 49 per cent of the capital for companies to be established in other cities (Resolution No. 850 of the Minister of Industries, Commerce, and Integration).

October 31. Regulations regarding reinvestment of profits under Decision 24 of the Cartagena Agreement were issued (Resolution No. 940 of the Minister of Industries, Commerce, and Integration).

December 1. Firms considered as foreign firms in terms of Decision 24 of the Cartagena Agreement required prior approval in order to participate in the capital of national firms. They could in no case participate in the capital of banks, insurance companies, or finance companies. Prior approval was not required where the foreign firm’s participation would not exceed 10 per cent of the capital of a firm to be established or of a capital increase that an existing firm was undertaking. Resolution No. R-05 of the Superior Foreign Trade Council was revoked (Resolution No. 1012 of the Minister of Industries, Commerce, and Integration).

December 24. The registration deadline of Decree No. 387 (see above) was extended until March 31, 1976 (Decree No. 1080).

Egypt

(Position on December 31, 1975)

Exchange Rate System

On September 18, 1949, a par value for the Egyptian Pound was established by the Arab Republic of Egypt with the Fund. However, exchange transactions no longer take place at rates based on that par value. Most exchange transactions take place at rates based on the official rate of LE 1 = US$2.55555. The Central Bank of Egypt’s official buying and selling rates for the U.S. dollar on December 31, 1975 were LE 0.391305 and LE 0.395218, respectively, per US$1.

Rates of exchange in a parallel market are determined in the light of prevailing foreign exchange considerations. On December 31, 1975 these rates involved a 50 per cent premium (buying) and a 55 per cent surcharge (selling) on the official buying rate, resulting in buying and selling rates for the U.S. dollar of LE 0.586957 and LE 0.606522, respectively, per US$1.1

Official rates for 15 other convertible currencies are based on cross rates quoted in New York.2 Parallel market rates for these currencies are determined by adding the 50 per cent premium or the 55 per cent surcharge. Forward cover in the official exchange market is available for foreign trade transactions, at a charge of 2 per cent.

Banks require prior exchange control approval to deal among themselves in foreign currencies or to engage in arbitrage transactions abroad; such approval is not required, however, for transactions effected through the parallel exchange market or for balances held in specified foreign currency accounts.

Administration of Control

Exchange control is supervised by a Supreme Committee for Foreign Exchange, which is set up by the Minister of Finance. The exchange control laws, ministerial orders, decree-laws, instructions of the Minister of Finance, and decisions of the Supreme Committee are carried out by a Director of Exchange Operations appointed by the Minister. A foreign exchange budget is established annually. Exchange control is implemented under the supervision and instructions of the First Undersecretary of State for Foreign Exchange, Foreign Budget and Finance, and the Director of Exchange Operations. The technical work of exchange control is performed by the Exchange Control Administration attached to the afore-mentioned First Undersecretary. Banks are authorized to execute foreign exchange transactions, within the framework of a general authorization, without need to obtain specific exchange control approval. The Ministry of Trade supervises imports and exports. Imports are controlled by exchange allocations rather than by import licenses. Many imports and exports are carried out by public sector companies.3

Prescription of Currency

Payments for imports normally may be made only to the country of origin. Payments to residents of countries with which Egypt does not have bilateral payments agreements may be made in the currency of the payee’s country when that currency is available; in a convertible currency;2 in Egyptian pounds to the credit of the appropriate nonresident account; or in any other manner permitted by the Exchange Control Administration. Receipts other than those in respect of raw cotton exports may be accepted in the currency of the payor’s country, if it is a currency acceptable to the Central Bank; in any convertible currency; in Egyptian pounds to the debit of an appropriate nonresident account; or in any other manner permitted by the Exchange Control Administration. By virtue of a joint decision of the Central Bank and the General Organization of Egyptian Cotton, the proceeds from exports of raw cotton to convertible currency countries must be received in deutsche mark or Swiss francs, or, if that currency is acceptable to the Exchange Control Administration, the convertible currency of the importing country.

Settlements with countries with which Egypt has payments agreements are made according to the terms of those agreements.4 However, payment for “own exchange” imports from such countries may be made in convertible currencies. Certain settlements with countries with which indemnity agreements concerning compensation for nationalized property are in force are made through special accounts in Egyptian pounds with the Central Bank of Egypt.

Suez Canal dues are expressed in SDRs and may be paid by debiting Canal Dues Accounts, External Nonresident Accounts, or Free Nonresident Accounts. Canal Dues Accounts must be opened in foreign currency and balances are retransferable abroad.

Nonresident Accounts

In addition to the special accounts related to Egypt’s bilateral payments agreements or to the indemnity agreements concluded with certain countries, there are five main types of nonresident accounts in Egyptian pounds: Free Nonresident Accounts, Nonresident C Accounts, Nonresident D Accounts, Convertible Egyptian Pound Accounts, and Goods Accounts.

Free Nonresident Accounts may be opened in the name of any nonresident, irrespective of his country of residence, and by international organizations with headquarters in Egypt. They may be credited with proceeds from the sale of any convertible currency that has been transferred from abroad; with transfers from other Free Nonresident Accounts; with interest on the accounts; and with the Egyptian pound equivalent of any transfer authorized in convertible currency. They may be debited for payments due to residents; for transfers to other Free Nonresident Accounts; for transfers to Nonresident C or D Accounts, or to External Nonresident Accounts in Foreign Currencies; and for payments abroad in any convertible currency.

Nonresident C Accounts may also be opened in the name of any nonresident, irrespective of his country of residence. They may be credited with proceeds from the sale of any convertible currency that has been transferred from abroad; with transfers from Free Nonresident Accounts or other Nonresident C Accounts; and with any amounts authorized to be credited to these accounts by the Exchange Control Administration. They may be debited, subject to exchange control approval, for payments due to residents (except for exports, Suez Canal dues, and ships’ disbursements); for transfers to other Nonresident C Accounts; for transfers to Nonresident D Accounts; and for payments abroad in convertible currencies.

Nonresident D Accounts may be opened in the name of any resident of a payments agreement country (see footnote 4). The account must be designated by the name of the partner country concerned, and transfers from the account of one country to that of any other country may not be made without exchange control authorization. These accounts may be credited with the proceeds from the sale of any convertible currency that has been transferred from abroad; with transfers from a Free Nonresident Account and—provided that exchange control authorization is obtained—with transfers from a Nonresident C Account; with transfers from other Nonresident D Accounts of the same nationality; and with any sum authorized to be credited to the account. They may be debited for payments due to residents, except for exports, Suez Canal dues, and ships’ disbursements, and—provided that exchange control authorization is obtained—for transfers to other Nonresident D Accounts and for payments to the country in whose name the account is designated.

Convertible Egyptian Pound Accounts may be opened by nonresident juridical or physical persons and by Egyptian physical persons regarded as nonresidents for exchange control purposes. These accounts may be credited with the domestic currency equivalent of foreign currency transferred from abroad, based on parallel market rates. They may be debited for payments in Egypt eligible for the parallel market, payments for Egyptian exports eligible for that market, and transfers abroad in convertible currency.

Goods Accounts may be maintained by virtue of Law No. 137 of November 26, 1974 to be credited with the value of goods supplied to residents in accordance with Article 5 of Ministerial Order No. 64 of 1974.

There are also blocked accounts, to which may be credited any payment to a nonresident not remittable under the exchange control regulations. Transfers between blocked accounts require prior approval. These accounts may be debited for amounts up to LE 1,000 a year for living expenses of the account holder or his family in Egypt. They may also be debited, subject to prior approval, for investments in Egyptian Government loans or in registered shares in nominative form of companies established in Egypt, and for subscriptions to increases in capital of Egyptian companies in which the account holder is already a shareholder. Income derived from such investments may be remitted to the nonresident beneficiary. Blocked accounts held by juridical persons may be debited for amounts not exceeding LE 1,000 a year for settlement of obligations due to the Egyptian authorities, payments to residents for services rendered, and expenses incurred in connection with the activities or residence of the holder’s employees or representatives in Egypt.

All accounts held by residents of Rhodesia also are blocked; no transactions on these accounts may take place without prior approval.

External Nonresident Accounts in Foreign Currency may be held by nonresident physical or juridical persons; by physical persons who, for exchange control purposes, are treated as nonresidents; and by physical persons who are Egyptian citizens and are either working abroad or performing services in Egypt for persons abroad. These accounts may be credited with any convertible currency transferred from abroad (including banknotes); transfers from other foreign currency accounts of the same type (as well as existing balances in the four types of foreign currency accounts that were discontinued on June 1, 1974); transfers from Free Nonresident Accounts; and any interest payable on the accounts. They may be debited for payments in Egypt permitted by any pertinent rules and regulations; transfers to other foreign currency accounts of the same type; and transfers abroad in any convertible currency. (Residents may hold Foreign Currency Accounts—Parallel Market/Exports and Foreign Currency Accounts—Parallel Market/ Tourism.)

Imports and Import Payments

Imports of certain goods from any source, and all imports from Israel, Rhodesia, and South Africa, are prohibited. No exchange is allocated in practice for many goods that are considered nonessential or that are also produced locally. Certain commodities, mostly when imported by the private sector, are financed at the parallel market rate.

Most imports from payments agreement countries (except those made under the “own exchange” arrangements), as well as imports of specified goods from any source, are reserved for the public sector.

A Supreme Council for the Planning of Foreign Trade is entrusted with establishing long-term policy for exports and imports, controlling the annual export and import plan, and supervising the execution of the foreign exchange budget. The ministries concerned are responsible for setting priorities regarding imports and their timing, within the framework of quarterly foreign exchange programs. Foreign trade committees in the various ministries and authorities consider import and export offers for the goods within their competence, in the light of specifications, prices, delivery dates, and means of payment. Approval by a foreign trade committee constitutes the necessary authorization for the implementation of import transactions. Private sector imports through the parallel market require approval by the Commercial Agency for the Parallel Market.

For purposes of administration, the economy is divided into several sectors (agricultural, industrial, transportation, etc.). The annual foreign exchange budget provides for a specific quota for each sector, and the authorities in charge of the sector decide upon the goods to be imported within that quota. In drawing up this budget, an estimate is made first of the country’s export proceeds and its earnings from invisibles, as well as the expected availability of foreign loans and other credit facilities. Allowance is then made for the commitments falling due during the fiscal year in respect of foreign debt service and other obligations as well as payments for invisibles. The remaining resources in convertible and bilateral currencies are allocated to the various sectors of the economy in accordance with the priorities given to the import requirements of each.

By virtue of Order No. 478 of 1973, all goods may be imported without an import permit; imports are regulated by exchange allocations rather than by import licenses.

By virtue of Orders Nos. 64 of 1974 and 1058 of 1975, all commodities except those appearing in a special list may be imported without purchase of foreign exchange, as follows: (1) Egyptian citizens receiving funds eligible for the parallel market may transfer these funds to Egypt in the form of the listed goods rather than foreign currency; and (2) alien physical persons and Egyptian citizens can supply the listed goods against payment to the credit of Goods Accounts, provided that they are regarded as nonresidents. No approval is required for such imports by residents where the value is less than LE 5,000. For larger amounts, and in all cases where the importer is a nonresident, a special Determination Committee must first approve the terms of the transaction. Certain imported goods may also be sold for foreign currency to Egyptians and foreigners at special shops.

An economic development tax of 10 per cent of the c.i.f. value is payable on imports; the tax is 5 per cent for certain highly essential foodstuffs imported by the Ministry of Supply. A statistical tax of 1 per cent of the c.i.f. value is payable on all imports except wheat.

Payments for Invisibles

Banks are authorized to provide exchange for payments for certain invisibles in accordance with general authorizations and instructions and up to specific quotas. Egyptian nationals who have deposited earnings from their work abroad, or from services performed for nonresidents, in foreign currency accounts, may use this foreign exchange freely for any travel expenses for themselves, their wives and children, or their parents. Other residents may purchase, through local banks and up to specified amounts, the foreign exchange required for travel expenses and certain other purposes, at the parallel market rate.

Virtually all nongovernment payments for current invisibles due in convertible currency and not related to trade transactions must be settled in the parallel market. The following payments for invisibles take place at the official rate: government payments; specified types of payments relating to shipping; export expenses payable at the official rate; repatriation of amounts brought in at the official rate; dividends accruing to nonresident participants in joint ventures; reinsurance payments and indemnities due from insurance companies; pensions due to nonresidents; bank expenses and commissions due to foreign correspondents for transactions settled at the official rate; consular proceeds; and repayment of public and international commitments as well as the payment of amortization and interest due on transactions settled at the official rate.

Travelers may not export Egyptian pound banknotes. Egyptian nationals working abroad and returning to their place of work may take with them any remaining foreign exchange which they had brought in and declared; foreign travelers leaving Egypt may take out only the balance after deduction of the equivalent of LE 10 for each night spent in Egypt. Residents may not take out foreign exchange in excess of the equivalent of £ stg. 30 without specific permission.

Exports and Export Proceeds

Apart from exports to Israel, Rhodesia, and South Africa, which are prohibited, and commodities required for the national economy, whose export may be restricted, exports may be made free of license. Exports of many products are organized and supervised by foreign trade committees. Cotton, rice, and petroleum are exported by the public sector only. The proceeds in specified convertible currencies from exports other than raw cotton, cotton yarn and cotton textiles, rice, petroleum and petroleum products, potatoes, fresh onions and garlic, cement, and re-exported foreign goods may be retained for six months in domestic foreign currency accounts; the same applies to 50 per cent of any proceeds in convertible currency in excess of the annual export targets for cement, cotton yarn, and cotton textiles. Balances in these accounts may be used by the holder to make payments for certain imports or current invisibles (subject to a commission equal to the difference between the parallel market buying and selling rates) or may be sold to banks at the parallel market rate.

Export proceeds must be repatriated within three months from the date of shipment of the goods. Proceeds from exports to payments agreement countries must be obtained in accordance with the provisions of the relevant agreement. Some exports to specified countries may be settled through indemnity accounts in Egyptian pounds.

Proceeds from Invisibles

The parallel market rate is applied to the following receipts in convertible currencies: foreign currency sold by individuals arriving from abroad; amounts transferred for the benefit of persons engaged in the tourist industry for expenses related to tourist activities; all amounts transferred from abroad to physical persons, unless intended for investment purposes; all interest, profits, commissions, and other income accruing abroad to individuals, professional offices, and public sector companies; donations and subsidies received from abroad by various kinds of nongovernmental organizations and societies; amounts transferred by nonresident physical or juridical persons for credit to a Convertible Egyptian Pound Account; proceeds from temporary license and international trade operations financed from abroad.

Physical persons who are considered nonresidents (including emigrants of Egyptian nationality, Egyptian nationals who have been resident abroad for at least five consecutive calendar years, and foreigners who reside in Egypt) are not obliged to transfer to Egypt any part of their foreign earnings. They may retain these earnings in foreign currency accounts. Egyptian nationals who are working abroad for a period of less than five calendar years or who perform services for nonresidents are not obliged to repatriate or surrender their foreign currency income and may retain it in foreign currency accounts; foreign currency earnings derived from tourist expenditure may be retained in domestic foreign currency accounts for six months, during which time they may be used by the holder for authorized foreign expenditure.

With these exceptions, all persons and legal entities in Egypt are obliged to offer to authorized banks at the rate of exchange quoted by the Central Bank, within one month from the date of their collection abroad, all proceeds in foreign currencies derived from invisibles. Certain travel in Egypt by nonresidents may be financed from Nonresident C Accounts, or, under indemnity agreements with specified countries, from Nonresident T Accounts.

Persons arriving in Egypt from abroad may import up to LE 20 in Egyptian pound banknotes and are permitted to bring in, and to use locally, unlimited amounts in foreign exchange, subject to customs declaration. Foreign travelers must convert into Egyptian currency the equivalent of £ stg. 50 to obtain an entry visa.

Capital

Egyptian nationals who have deposited foreign earnings in foreign currency accounts in Egyptian banks may use this foreign exchange for any purpose, including transfer abroad. With this exception, outward capital transfers by residents are severely restricted. Egyptian emigrants are authorized to transfer funds and/or to take out jewelry and other valuables up to LE 200 a person or LE 500 a family; in addition, they may export freely personal effects and furniture up to LE 200 a person or LE 500 a family.

Nonresidents may purchase freely securities on stock exchanges in Egypt against payment in foreign currencies acceptable to the Central Bank of Egypt or in Egyptian pounds by debiting an appropriate nonresident account. Certain categories of securities may be bought to the debit of blocked accounts (see section on Nonresident Accounts, above). Proceeds from sales of securities held under “nonresident dossier” are credited to blocked accounts. Transfers of securities between nonresidents require prior approval. Transfers abroad are permitted in respect of (1) securities drawn or matured in accordance with the original terms of issue; (2) the value of life or endowment policies on surrender or at maturity; (3) matured mortgages; and (4) accrued alimony under court orders up to LE 5,000.

An amount not exceeding LE 5,000 a family—irrespective of whether the sum is made up of capital or income—may be released from a family’s assets in Egypt to residents of foreign nationality who acquire nonresident status. Any amount above this limit is credited to a blocked account. Any payment of a capital nature not remittable under the exchange control regulations must be credited to a blocked account.

Law No. 43 of June 19, 1974 Concerning the Investment of Arab and Foreign Funds and Concerning Free Trade Zones defines the treatment of new foreign investments. Remittances of dividends covered by this law are eligible for the official exchange rate. Requests for transfers of profits not covered by this law are considered on an individual basis.

Gold

The monetary authorities and authorized industrial users are allowed to hold or acquire gold in any form. Other residents may only hold and acquire gold coins and gold jewelry in Egypt. There is a free market for gold coins in Cairo. With the exception of monetary gold, imports and exports of gold in any form other than jewelry are restricted.

Changes during 1975

January 1. Following the expiration on December 31, 1974 of the bilateral payments agreement with Tunisia, settlements with that country were placed on a convertible currency basis.

January 1. The quarterly allocations of convertible currency in the foreign exchange budget were replaced with semiannual allocations.

April. The President reaffirmed the open-door policy initiated in 1974.

May 7. It was announced that with effect from January 1, 1976 Port Said City would become a free zone.

May 28. Shipping agents and foreign shipowners were permitted to open Canal Dues Accounts for the payment of Suez Canal navigation fees.

June 5. The Suez Canal was reopened; canal charges were expressed in SDRs.

June 12. Twenty public sector companies were authorized to borrow foreign exchange from domestic commercial banks if such borrowing would permit them to increase their export proceeds by an amount at least sufficient to repay the loan.

August 1. Foreign travelers were required to convert into Egyptian currency the equivalent of £ stg. 50 (previously £ stg. 30) to obtain an entry visa. On leaving Egypt they were permitted to take out whatever foreign exchange they had brought in, after deduction of the equivalent of LE 10 (previously £ stg. 5) for each night spent in Egypt.

August 2. Ministerial Order No. 258/1975 of the same date came into force. Persons arriving in Egypt were permitted to bring in LE 20 in Egyptian currency; previously no Egyptian currency could be imported.

August. The GATT was informed that the economic development tax on imports would be maintained until December 31, 1980.

September 15. Foreign nationals residing in Egypt were permitted to buy and own investment bonds issued by the National Bank of Egypt; they could also sell them for Egyptian pounds during their stay in Egypt.

September 18. Law No. Ill of 1975 was proclaimed. It provided for the liquidation of the General Organizations.

September 25. New banking legislation came into force. It shifted certain powers in respect of commercial banks from the Ministry of Finance to the Ministry of Economy and Economic Cooperation, removed the 7 per cent ceiling on interest rates, permitted commercial banks to operate in any field of banking, and facilitated the establishment and operation of joint venture banks with foreign participation. The powers of the Central Bank were expanded. Law No. 250 of 1960 was repealed.

October 22. Ministerial Order No. 1058 of 1975 came into force. The list of goods which could be imported under the “own exchange” arrangements was replaced by a negative list specifying which commodities could not be imported on this basis. The new list included 18 basic commodities reserved exclusively for import by the Government, as well as a small number of other commodities, including footwear. As a result, the range of goods that could be imported with “own exchange” was increased sharply.

October 25. Law No. 118 of 1975 on Imports and Exports came into force. The restriction that commercial exports and imports could be carried out only through public sector companies, subject to approval of prices and quantities by sectoral organizations, was modified substantially. Private sector companies and individuals could henceforth engage in the export trade, provided that they were listed in the Exporters Register of the Ministry of Commerce. However, exports to payments agreement countries of any commodity, as well as any exports of certain basic goods, could be restricted to the public sector at the direction of the Minister of Commerce. The Minister could also establish selective export controls, specifying the terms on which certain goods could be exported. (Initially, all exports of cotton, cotton yarn, rice, cement, and petroleum and petroleum products were reserved for the public sector, as were exports to payments agreement countries of onions, garlic, groundnuts, potatoes, and citrus fruits.) Private sector companies and individuals were also permitted to engage in importation, subject to similar exceptions and within the limits of the foreign exchange budget.

The ceiling of LE 100 on imports for personal use, and not for resale, was removed.

Law No. 9 of 1959, Law No. 203 of 1959, and Law No. 95 of 1963 were repealed.

December 22. Foreign nationals and nonresidents were permitted to acquire real estate in Egypt through inheritance, or, by purchase, when intended for diplomatic missions, personal residence, professional use, or any other purpose deemed either to serve the national interest or to facilitate the work of international organizations.

December 31. The bilateral payments agreements with Hungary, Iraq, and Poland expired.

El Salvador

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.294665 gram of fine gold per Salvadoran Colón. The parity rate for the U.S. dollar is Ȼ 2.50 = US$1. The rates of the Central Reserve Bank of El Salvador for transactions with the public are Ȼ 2.49 buying, and Ȼ 2.51 selling, per US$1. Exchange transactions by commercial banks with the public take place at or within these limits. A stamp tax of 110 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 Ȼ 100,000 the tax is levied at fixed amounts that may be slightly in excess of Mo of 1 per cent.

On November 6, 1946, El Salvador notified the Fund that it was prepared to formally accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Subject to any directives issued by the Monetary Board, exchange control authority is exercised by the Central Reserve Bank through its Exchange Control Department. Authority to approve certain payments, including most import payments, is delegated to the commercial banks. Exchange licenses for imports must be obtained from the Exchange Control Department. The Central Reserve Bank is also empowered to license exports, but this power has not been exercised. Exports of a number of commodities require licenses issued by the Ministry of Economy and Finance or of Agriculture. Exports of coffee are supervised by the Salvadoran Coffee Company and require licenses issued by the Ministry of Economy and Finance.

Prescription of Currency

Payments to Costa Rica, Guatemala, Honduras, and Nicaragua in respect of trade and specified invisibles must be settled in the currencies of those countries or in Salvadoran colones through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. Payments to Mexico are 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 hold nonresident accounts in foreign currency with banks authorized by the Exchange Control Department, provided that such accounts are credited with foreign exchange received from abroad. Banks also may freely open foreign currency accounts, for any period of time and in any amount, in the names of physical persons (whether of foreign or Salvadoran nationality) who reside abroad, and, for a maximum period of six months, in the names of foreign persons staying in El Salvador for a period not exceeding six months. All nonresident accounts may be utilized freely, but the commercial banks must make periodic reports to the Central Reserve Bank of the movements on such accounts. In addition, there are certain facilities for resident accounts in foreign currencies.

Imports and Import Payments

Import licenses are issued by the Ministry of Economy and Finance and are required for only a few items; these are mainly airplanes, firearms, ammunition, military equipment, dynamite, cotton for industrial use, jute sacks, skins, leather, some chemical and pharmaceutical products, coffee for seeding, sugar, and saccharin.

Imports from all countries must be registered with the Central Reserve Bank before orders are placed; orders for imports from countries outside Central America must be approved by the Exchange Control Department. For approval purposes, three classes of imports may be distinguished, as indicated below.

(1) Imports for which no exchange license is required provided that the terms of payment do not exceed a certain maximum period (counted from the date of entry of the merchandise into a customs warehouse), as follows: (a) Imports of raw materials for industry, iron and steel products for the construction industry, hand tools, various spare parts, and greases and lubricants, when the terms of payment do not exceed three years.1 (b) Imports of basic food products and medical and surgical supplies, when the terms of payment do not exceed one year.2 Imports of the following goods are not subject to maximum credit terms: machinery and equipment for agriculture and industry, semiprocessed goods for industrial production, surgical equipment, research and educational equipment, scientific, technical, or cultural books, and fertilizers, insecticides, fungicides, and herbicides.

(2) For certain goods that are considered nonessential, the Exchange Control Department cannot authorize importation unless an advance deposit requirement is met. A prior import deposit in local currency, equivalent to 100 per cent of the c.i.f. value, must be paid for these goods at the time of import registration. They include specified nonessential food products, confectionery, alcoholic beverages, tobacco, perfumes, cosmetics, watches, jewelry, automobiles, furniture, domestic appliances, and certain textiles. Small businesses are exempt from this requirement, subject to certain conditions, for imports up to US$30,000 a year of goods not produced in El Salvador.

(3) The purchase of imports not covered under (1) or (2) above may only be authorized by the Exchange Control Department subject to the condition that the import is paid for before the goods are registered in the customs warehouse.

Imports from countries outside the Central American Common Market that apply discriminatory restrictions against exports from El Salvador also must be paid for before customs clearance, with the exception of industrial raw materials, which may be paid for within three years (medicines from Mexico may be paid for within 90 days; this applies also to imports of spare parts from Mexico by importers that the Central Reserve Bank considers as small enterprises).

The commercial banks are authorized to provide exchange for all import payments, provided that the permissible credit terms are not exceeded, and, up to US$100 for each order, for noncommercial imports (such as medicines, various spare parts, and similar items). When suppliers abroad request payment in advance for commodities covered by (1) or (3) above, a prior deposit of 10 per cent calculated on the value of the advance payment is required from the importer as a guarantee, but industrial and agricultural firms may be exempted. The deposit requirement is 100 per cent of the value of the advance payment for goods covered by (2) above; in this case the deposit serves as a guarantee. (Goods not covered by (2) and valued at US$500 or less are exempt from the 10 per cent deposit on the value of the advance payment.) Guarantee deposits are refunded when the goods arrive in the country, provided that payment in full has been made to the exporter.

Imports from other Central American countries, when covered by the Free Trade Agreement, are exempt from the exchange control regulations set forth above. Imports from Panama that are covered by the Free Trade Agreement of June 2, 1970 are also exempt.

Imports originating outside the Central American Common Market are subject to an import surcharge of 30 per cent of the applicable import duty; the surcharge is not applied to certain industrial equipment and raw materials that are duty free by virtue of the Industrial Incentives Law. Many nonessential goods are subject to a selective consumption tax. The rates of tax are 5, 10, 20, 25, and 30 per cent. Goods of Central American origin are exempt.

Payments for Invisibles

The commercial banks are authorized to sell foreign exchange, without prior authorization from the Central Reserve Bank, for medical and hospital costs abroad, subscriptions to foreign literature, correspondence courses, and memberships in professional clubs and societies. They are also authorized to sell foreign exchange for travel for tourism, business, or health reasons, as indicated below.

The basic exchange allocation which banks may make available for travel outside the Central American area (interpreted to mean the Central American Common Market) for tourism, business, or health reasons is, free from deposit requirements, the equivalent of US$600 a person a trip, on the basis of US$60 a person a day for ten days (US$300 for children under 16 on the basis of US$30 a day). In special cases, the Exchange Control Department may authorize amounts in excess of US$600 a person a trip, up to an additional US$1,200 (amounts in excess of US$300 up to an additional US$600 for children under 16), provided that a guarantee deposit in local currency corresponding to 20 per cent of the excess over the basic allocation is lodged with the Central Reserve Bank; the deposit is released upon the traveler’s return. The Exchange Control Department may also authorize, in special cases, an additional amount up to US$1,800 a person a trip (US$900 for children under 16) for trips exceeding 30 days, against payment of a 30 per cent guarantee deposit; this deposit also is released upon the traveler’s return.3

The Exchange Control Department may authorize the sale of foreign exchange up to US$400 a month (up to US$200 a month for children under 16), for family remittances to Salvadoran nationals abroad, and up to US$300 a month for study abroad. Local banks are authorized to sell exchange in addition to the above quotas for study purposes upon presentation of evidence of installation expenses, tuition, and other expenses.

For Salvadoran nationals traveling to Central American countries, the commercial banks have been delegated authority to provide exchange up to the same amounts in Costa Rican colones, Honduran lempiras, Nicaraguan córdobas, or Guatemalan quetzales, or a cashier’s check in Salvadoran colones (for payment through the Cámara de Compensación Centroamericana). Requests for larger amounts must be submitted for approval to the Central Reserve Bank. International sea and air passages are subject to a travel tax of 10 per cent of the price of the ticket; official or diplomatic travel is exempt.

Insurance and reinsurance premiums may be paid in foreign exchange, provided that the insurance contract was registered with the Exchange Control Department at the time it took effect. Alternatively, insurance companies may receive premiums in colones and periodically obtain from the Exchange Control Department authorization to purchase the foreign currencies they are obliged to transfer abroad. Foreign currencies derived from insurance or reinsurance contracts must be surrendered to the Central Reserve Bank or to an authorized commercial bank.

Travelers may take out Ȼ 200 in domestic notes and coins. This limit is subject to modification, however, to facilitate border trade with other Central American countries. Nonresident travelers may upon departure reconvert Ȼ 200 into foreign currency.

Exports and Export Proceeds

Export licenses are not required except for a number of foodstuffs and other items of which the authorities wish to ensure an adequate local supply, but the proceeds of all exports 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 Ȼ 200 in domestic notes and coins. This limit is subject to modification, however, to facilitate border trade with other Central American countries.

Capital

All exchange receipts resulting from capital transactions must be surrendered to the monetary authorities. Payments abroad representing capital movements require exchange licenses; such licenses are not granted for resident-owned capital except for investments in Costa Rica, Guatemala, Honduras, and Nicaragua. The entry of capital with a maturity in excess of one year in the form of foreign investment must be registered with the Ministry of Economy and Finance. 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 and Finance); (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 and Finance. Foreign investments made in El Salvador prior to June 1, 1961 must also be registered by the Ministry of Economy and Finance or the Exchange Control Department in order to enjoy the same facilities.

The Exchange Control Department authorizes, without restriction, the remittance abroad of foreign currency for the payment of interest and amortization on short-term loans from abroad; foreign loans with a maturity of up to one year must be authorized by the Central Reserve Bank, while foreign loans with a maturity of more than one year must be authorized by the Ministry of Economy and Finance. 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 shareholding interest. For purposes of this Decree, foreign nationals are defined as persons who are not citizens of one of the five countries of the Central American Common Market (CACM).

Gold

Gold coins in denominations of Ȼ 25, Ȼ 50, Ȼ 100, and Ȼ 200 have been issued, which are legal tender but do not circulate. Residents may hold and acquire gold coins in El Salvador for numismatic purposes. With this exception, residents other than the monetary authorities are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Imports and exports of gold in any form other than jewelry require licenses issued by the Central Reserve Bank; such licenses are granted for imports and exports by or on behalf of the monetary authorities and industrial users. In practice, imports of nonmonetary unworked gold are made only by jewelers’ cooperatives acting on behalf of their members and other users.

Changes during 1975

January 16. Additional raw materials of non-CACM origin were exempted from import duty, following similar action in November 1974.

January 28. Certain motorcycles were exempted from the 100 per cent advance import deposit requirement.

March 1. The legalization by consular visa of import invoices ceased to be required, except for goods subject to import restriction.

July 29. Some minor import items were exempted from the 100 per cent advance deposit requirement.

Equatorial Guinea

(Position on December 31, 1975)

Exchange Rate System

The currency of Equatorial Guinea is the Ekuele, which is issued by the People’s Bank of the Republic of Equatorial Guinea (the central bank) and is defined as equivalent to 0.0126953 gram of fine gold. No par value has been established for the ekuele. The currency is at par with the Spanish peseta, which is Equatorial Guinea’s intervention currency. Rates for other currencies are based on those in the Madrid exchange market. There are no forward exchange facilities. Exchange taxes of 17.5 per cent, 25 per cent, and 35 per cent are levied on certain transfers abroad.

Administration of Control

The People’s Bank is in charge of exchange control. Exchange transactions must be carried out through the People’s Bank or through authorized commercial banks; at present, the only authorized bank is the National Deposit and Development Bank. Import and export licenses are issued by the Directorate-General of Foreign Commerce in the Ministry of Commerce; import licenses also require the approval of the President.

Prescription of Currency

Settlements with Spain must be made through payments agreement accounts denominated in U.S. dollars. Settlements with other countries are made in convertible currencies.

Imports and Import Payments

All commercial imports require an import license. Licenses normally are issued within the framework of an annual import program. They do not entitle importers to the necessary foreign exchange until they have been approved by the President, after which, in principle, exchange is automatically made available upon the arrival of the goods in Equatorial Guinea; in practice, certain delays have arisen. A state trading organization, INFOGE, has a monopoly over the importation of pharmaceuticals, flour, rice, sugar, salt, olive oil, jute bags, cement, and all government requirements. Certain imports from the People’s Republic of China are made by state enterprises only.

Payments for Invisibles

All payments for current invisibles require the prior approval of the People’s Bank, which for specified purposes and up to specified amounts has delegated its approval authority to the authorized commercial bank. At present, the approval of most payments and transfers for current international transactions by the private sector is suspended. Residents 1 are in principle granted foreign exchange up to the equivalent of EK 10,000 a person a calendar year for tourist travel abroad. The standard allocation for business travel is the equivalent of EK 2,000 a person a day, subject to a maximum of EK 50,000 a trip. For study abroad, foreign exchange is granted to cover tuition and living expenses; nonresidential students are allowed the equivalent of EK 5,000 a month for living expenses.

In principle, the transfer of wages and salaries by alien residents, and of professional earnings as well as dividends by all residents, is freely permitted up to 60 per cent of taxable earnings when the transfer is made to a country with which a payments agreement is in force, and up to 40 per cent for other countries, provided that annual earnings do not exceed EK 50,000. Larger transfers are permitted when annual earnings exceed EK 50,000. Transfers abroad of professional earnings by nonresidents are freely permitted, but any amounts in excess of 60 per cent of taxable earnings are subject to a transfer tax of 35 per cent on the amount transferred. There are special arrangements for the transfer of earnings of Nigerian workers employed in Equatorial Guinea. In addition, nonresidents as well as nationals residing temporarily abroad are permitted to withdraw up to EK 5,000 a month from their savings accounts for remittance abroad.

The transfer of net investment income, whether by residents or nonresidents, is subject to a tax of 35 per cent of the amount transferred. Subject to this requirement, transfers are fully permitted. In the event of at least 50 per cent of such net investment income being reinvested in approved projects in Equatorial Guinea, the tax is 17.5 per cent of the amount remitted. Transfers abroad in respect of patents, trademarks, and royalties are permitted fully, subject to a tax of 25 per cent of the amount remitted.

Travelers may take out EK 3,000 a person in domestic banknotes.

Exports and Export Proceeds

All exports require an export license. Both specific and general export licenses are granted; the latter are available only to registered exporters. All export proceeds must be surrendered to the People’s Bank or the authorized commercial bank. The Chamber of Agriculture, Commerce, and Industry has a monopoly over most agricultural exports.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the People’s Bank or the authorized commercial bank. Travelers may bring in any amount of foreign banknotes and coins but the import of domestic currency by travelers is prohibited.

Capital

All imports and exports of capital require approval, and the latter are not normally permitted. Capital receipts in foreign currency must be surrendered to the People’s Bank or the authorized commercial bank. The transfer abroad of funds from the sale of fixed assets and financial assets by alien residents or by nonresidents is permitted as follows: 50 per cent of the total amount realized net of taxes may be remitted abroad immediately and the balance in 24 equal monthly installments. The sale of real estate, however, requires prior approval by the Government. Residents, as well as nonresidents living in Equatorial Guinea, are prohibited from engaging in borrowing or lending with nonresidents.

Gold

All purchases and sales of minted gold and gold bars are centralized in the People’s Bank, which also has a monopoly over the import and export of minted gold and gold bars. Commemorative gold coins were issued in 1970 in denominations of Equatorial Guinean pesetas 250, 500, 750, 1,000, and 5,000; these are legal tender. Except for these coins and jewelry, residents are not permitted to hold gold.

Changes during 1975

September 29. A new monetary unit, the ekuele, was issued to replace the Equatorial Guinean peseta in a relationship of one to one. No appreciation or depreciation of the currency was involved.

Ethiopia

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.355468 gram of fine gold per Ethiopian Dollar, corresponding to Eth$2.50000 = SDR 1, and Ethiopia avails itself of wider margins. The intervention currency is the U.S. dollar. The National Bank of Ethiopia (the central bank) does not deal with the public; its dealings in U.S. dollars with the authorized banks take place at the official rate of Eth$2.07 = US$1. Authorized banks in dealing with the public must observe this official rate for the U.S. dollar and prescribed commission charges of 0.75 per cent buying and 2.25 per cent selling; the resulting effective buying and selling rates are Eth$2.05448 and Eth$2.11658 per US$1, and are applied also in the National Bank’s dealings with the Government and certain public sector entities.

Spot exchange rates for other currencies are based on the National Bank’s official rate for the U.S. dollar and the previous day’s closing rates against the U.S. dollar in European exchange markets; a charge equivalent to about 1 per cent, additional to the prescribed commissions, is payable for transactions in currencies other than the U.S. dollar. Authorized banks require the approval of the National Bank to undertake forward exchange transactions.

Administration of Control

All transactions in foreign exchange must be carried out through authorized banks under the control of the National Bank. All payments abroad require licenses issued by the Exchange Controller, whose office is a division of the National Bank; all exports are licensed by the Exchange Controller to ensure the surrender of the foreign exchange proceeds. The Minister of Commerce, Industry, and Tourism has statutory authority to prohibit, restrict, or regulate imports and exports.

Prescription of Currency

Outgoing payments are normally made in convertible foreign exchange appropriate to the country of the recipient or in U.S. dollars. The net proceeds of exports must be received in a foreign currency that is freely convertible, or in any other foreign currency acceptable to the Exchange Controller.

Nonresident Accounts

Nonresidents may, subject to exchange control approval, open nonresident accounts either in Ethiopian dollars or in foreign currencies at authorized banks. Balances in foreign currency 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 Rhodesia and South Africa are prohibited. With minor exceptions, imports of passenger automobiles with an engine capacity of over 1,300 cubic centimeters are prohibited. No import licenses are required. However, payments abroad for imports require exchange licenses; these licenses are generally granted freely in the currency appropriate to the country of origin, or in any convertible currency that may be requested. Payment is normally authorized by letter of credit, mail transfer, telegraphic transfer, or cash against documents at sight or on an acceptance basis; however, goods which were previously subject to advance deposit requirements (about 100 items, mostly consumer goods) may not be financed on an acceptance basis.

Payments for Invisibles

Payments for invisibles require exchange licenses. Invisibles connected with trade transactions are treated on the same basis as the goods to which they relate. Foreign nationals may in principle remit up to 35 per cent of their salaries or annual taxable earned income, provided that they have resided in Ethiopia for less than six years; exceptions may be made, particularly with regard to the time limit, for foreign nationals who are in contractual service with the Ethiopian Government or with certain other public and private institutions, and who have an employment contract specifically entitling them to remit a stated percentage of their earnings, provided this aspect of the contract has been approved by the National Bank. 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; applications are considered on their merits. Subject to proper provision having been made for local taxation and for a reserve prescribed by the Commercial Code, foreign companies may in principle remit dividends on their invested and reinvested capital in any currency.

Persons traveling abroad are in principle allowed foreign exchange equivalent to Eth$125 a day for a maximum period of 30 days in any one calendar year if the journey is made for business purposes, and up to the equivalent of 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 Rhodesia and South Africa are prohibited. Exports of most cereals to any destination other than the French Territory of the Afars and the Issas also are prohibited. All commodities require export licenses from the Exchange Controller and some require in addition the approval of specified public bodies.1 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 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 currency. Foreign exchange need not be declared by travelers on entry, and its re-export is freely permitted. Reconversion of Ethiopian dollars must be supported by documentary evidence of prior exchange of foreign currency.

Capital

Controls over capital movements are designed to restrict undesirable outflows, to preclude an unwarranted accumulation of external debt, and to keep the authorities informed of the country’s external debt position.

All receipts of capital in the form of foreign exchange must be surrendered. Exchange control permits are not required, but registration of capital inflows with the exchange control authorities establishes evidence of receipt, which is required for any later repatriation. There is no discrimination regarding the currencies in which foreign investments are accepted. Foreign capital may participate with the Government in specified areas, such as large-scale construction, tourism, and the exploration for and production of hydrocarbons and most other minerals. Transfers by emigrants who are leaving on termination of their employment contracts with the Government or with private organizations are limited to 40 per cent of the applicant’s total net income; transfers by emigrants who had operated their own business are restricted to Eth$40,000 in any one calendar year.

Borrowing abroad requires exchange control approval and is restricted. Normally, evidence must be presented that all possibilities for domestic borrowing have been exhausted. Authorized banks may freely place their funds abroad, except on fixed-term deposit. They need the prior approval of the National Bank to overdraw their accounts with foreign correspondents, to borrow funds abroad, or to accept deposits in foreign currency.

Gold

Special commemorative gold coins which are legal tender, as provided in Legal Notice No. 318 of 1966 and Legal Notice No. 422 of 1972, have been offered for sale in Ethiopia and abroad 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 Mines, Energy, and Water Resources, the possession or custody, in a quantity in excess of 50 ounces, of raw or refined gold or platinum or of gold or platinum in the form of nuggets, ores, or bullion constitutes an offense. Certain mined gold is sold by the Treasury to the National Bank at a price equivalent to US$42.22 a fine ounce of purely refined gold. Imports and exports of gold in any form other than jewelry require exchange licenses issued by the National Bank. Such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users; those for the import of gold for industrial purposes are issued to registered importers on satisfactory evidence that the gold is destined for direct use in industry.

Changes during 1975

January. The prohibition on livestock exports was terminated; in March the ban on cotton exports was lifted.

January 1. All private banks and insurance companies were nationalized.

February 3. Seventy-two industrial and business enterprises were nationalized, and majority government control was assumed in 29 others.

March 11. Proclamation No. 26 listed the areas in which joint ventures would be permitted; Proclamation No. 39 of June 25 supplemented it with respect to mining. Both Proclamations took effect on February 7.

September 1. Hotels, travel agencies, and tourism-related businesses ceased to be authorized dealers.

September 2. Emigration allowances for persons who had been running their own businesses were reduced to Eth$40,000.

December 5. National Bank Notice No. NBE/EC/1 tightened the supervision over the actual and timely repatriation of export proceeds.

Fiji

(Position on December 31, 1975)

Exchange Rate System

No par value for the Fiji Dollar has been established with the Fund. On February 25, 1974 a central rate of F$0.800000 = US$1 was established, and Fiji availed itself of wider margins. Since April 7, 1975, however, exchange rates have been determined daily on the basis of a weighted average of the currencies of Fiji’s major trading partners. The Central Monetary Authority of Fiji provides official quotations only for the U.S. dollar, which is the intervention currency. For telegraphic transfers, the commercial banks’ buying and selling rates for the U.S. dollar on December 31, 1975 were F$0.8572 and F$0.8690, respectively, per US$1.

Fiji formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement on August 4, 1972.

Administration of Control

Exchange control is administered by the Central Monetary Authority, acting as agent of the Government. The Monetary Authority delegates to authorized dealers (only banks are authorized dealers in Fiji) the authority to approve normal import payments. Except with the specific permission of the Monetary Authority, residents of Fiji are required to offer for sale to an authorized dealer all foreign currencies they receive.1 The Ministry of Commerce, Industry, and Cooperatives is responsible for the issue of import licenses, with the exception of those for gold, which are issued by the Ministry of Finance. Export licenses are issued by the Comptroller of Customs.

Prescription of Currency

Fiji has ceased to be a Scheduled Territory in terms of the U.K. Exchange Control Act, 1947 but under current U.K. exchange control regulations continues to be regarded as a country of the Overseas Sterling Area. Transactions with Sterling Area countries as well as non-Sterling Area countries are subject to exchange control. Settlements with residents of any country may be made in Fiji currency through an External Account or in any foreign currency. The prescribed manner of payment for exports to any destination outside Fiji is payment in Fiji currency from an External Account or in any foreign currency. All payments to Rhodesia are prohibited.

Nonresident Accounts

A nonresident2 may maintain an External Account in Fiji currency or a foreign currency account with an authorized bank; such accounts may be opened without the specific approval of the Central Monetary Authority. These accounts may be credited freely with interest payable on the account, payments from other External Accounts, the proceeds of sale of foreign currency or foreign coin by the account holder, and Fiji currency notes which the account holder brought into Fiji or acquired by debit to an External Account or by the sale of foreign currency in the country during a temporary visit; in addition, External Accounts may be credited with payments by residents for which either a general or specific authority has been given. External Accounts may be debited for payments to residents of Fiji, transfers to other External Accounts, payments in cash in Fiji, and purchases of foreign exchange for travel purposes.

Imports and Import Payments

All imports from Rhodesia are prohibited. Imports of most goods are free under open general license when originating in countries other than Rhodesia. However, import prohibitions are imposed on a few commodities from all sources, mainly for security, health, or moral reasons. Certain commodities can be imported only under specific licenses, including passenger automobiles, seed potatoes, flour, tea, sharps, and gold, and licenses for some of these items are issued restrictively.

Payments for authorized imports are permitted upon application and submission of documentary evidence to authorized dealers. A specific exchange license is not required. Authorized banks may authorize payments for goods which have been imported either under a specific import license or open general license. Authorized banks may authorize advance payments for imports only if the goods have already left the port of shipment; in all other cases advance payment requires the permission of the Central Monetary Authority.

Payments for Invisibles

Payments for invisibles originating in any country (except Rhodesia) are permitted either under a delegated authority to banks or, where large amounts or nondelegated payments are involved, upon application to the Central Monetary Authority. Payments may be made freely for all bona fide current transactions. Residents of Fiji when traveling to other countries may freely obtain from a bank, without reference to the Central Monetary Authority, a foreign currency travel allowance for private or business travel up to the equivalent of F$600 a person a journey; where larger amounts are sought, applications up to F$2,000 a person a trip are approved. For extended visits, a traveler may apply to the Monetary Authority while overseas, through his bank, for funds in excess of F$2,000 a person a trip. There is no restriction on the number of trips a resident may make in any one year. Each traveler may take with him, on his person or in his luggage, F$50 in Fiji currency and the equivalent of F$200 in other currencies, provided that these amounts are not in addition to travel allowances approved by a bank and/or the Monetary Authority.

Exports and Export Proceeds

Exporters are obliged to collect the proceeds of exports within six months of the date of exportation of the goods from Fiji, irrespective of the currency in which the payment is being made. All foreign currencies must be offered for sale to an authorized dealer. Exporters may not grant credit to a nonresident buyer in excess of six months without specific permission.

Exports to Rhodesia are prohibited. Specific licenses are required only for exports of rice, sugar, wheat bran, meal of copra, certain lumber, scrap metals, and a few other items. Irrespective of any export licensing requirements, however, exporters are required to produce an export permit for commercial consignment of all goods with an f.o.b. value exceeding F$1,000; this permit is required for exchange control purposes.

Proceeds from Invisibles

Receipts from invisibles must be surrendered to authorized dealers, irrespective of the currency concerned. Travelers may bring in freely any amount in Fiji notes, other Sterling Area currencies, or non-Sterling Area currencies. Resident travelers are required to sell their holdings of Sterling Area and non-Sterling Area currencies to an authorized dealer within one month of return.

Capital

The inflow of capital is unrestricted but must be registered with the Central Monetary Authority, unless the recipient is an authorized dealer. Foreign investment in Fiji normally is expected to be financed from a nonresident source. Such foreign investment may be given “approved status,” which guarantees the right to repatriate dividends and capital. All capital outflows are subject to prior approval. Capital transfers by residents to finance direct investments require the specific permission of the Central Monetary Authority and are normally permitted only where benefits will accrue to Fiji within a reasonably short period. Banks require the approval of the Central Monetary Authority before any loans are granted to a company or branch in Fiji (other than a bank) which is by any means controlled, whether directly or indirectly, by persons resident outside Fiji or by individuals designated as nonresidents; however, banks do not require such approval to lend up to F$ 1,000—for any period and any purpose—to individual nonresident customers. Banks may not lend foreign currency to any resident of Fiji without the specific permission of the Central Monetary Authority, and nonbank residents require permission from the Central Monetary Authority before they may borrow foreign currency from anyone other than an authorized bank in Fiji or from any source outside Fiji. The transfer of inheritances and dowries which are due to nonresidents is permitted, as is the transfer of the sales proceeds of a house owned by a nonresident. Residents of Fiji are also allowed to make cash gifts equivalent to F$500 a donor a year to nonresidents; additional funds are permitted in compassionate cases. Emigrants may take out their entire net assets on departure.

Residents are permitted to purchase foreign currency up to a maximum of F$ 1,000 a person a year to acquire foreign currency securities with the prior approval of the Central Monetary Authority. The purchase of personal real property outside Fiji is not permitted. Portfolio investment in Fiji by nonresidents requires approval by the Central Monetary Authority if payment is made from a nonresident source; the proceeds of the sale or realization of such investment qualify for repatriation.

Banks require exchange control permission to borrow abroad; they may accept deposits from nonresidents. The net foreign liabilities of banks (that is, the positive difference between balances due to banks abroad and balances due from banks abroad) are subject to a cash reserve requirement of 5 per cent.

Gold

Residents may freely hold gold coins but not gold bullion in Fiji. The export of gold coins, except numismatic coins and collector’s pieces, requires the specific permission of the Central Monetary Authority. Gold imports from all sources require a specific import license issued by the Ministry of Finance; they are restricted to authorized gold dealers. Gold coins are free of customs duty and fiscal tax, while gold bullion is exempt from customs duty but is subject to a fiscal tax of 7½ per cent. Gold jewelry is subject to a fiscal duty of 10 per cent but does not require any license when valued at less than F$200; samples of gold and gold jewelry sent by foreign manufacturers require import licenses regardless of their value.

Authorized jewelry manufacturers are entitled to rebate to the extent of duty paid on gold imports if they prove that imported gold has been manufactured into jewelry in Fiji. Exports of gold jewelry do not require licenses and are free of export duty. All newly mined gold is sold in Australia at free market prices. Gold exports are subject to a 2 per cent export duty.

A commemorative gold coin of F$100 has been issued. It is legal tender but does not normally circulate.

Changes during 1975

January 9. Round steel bars and welded mesh were added to the list of prohibited imports.

April 7. The Fiji dollar ceased to be pegged to the U.S. dollar. The exchange rate henceforth was determined daily on the basis of a weighted average of the currencies of Fiji’s major trading partners. On April 7 the initial buying and selling rates for the U.S. dollar under the new arrangements were F$0.7796 and F$0.7827; previously, rates were based on the central rate of F$0.800000 = US$1.

May 18. Licenses were required for imports and exports of logs, rough and dressed timber, plywood, and blockboard.

May 30. The authority to license imports of gold and gold jewelry was transferred from the Ministry of Commerce, Industry, and Cooperatives to the Ministry of Finance.

July 30. The cash reserve requirement against banks’ net foreign liabilities was increased from 1.5 per cent to 5 per cent.

November 14. The following measures relaxing the exchange control guidelines were announced in the budget proposals for 1976 and became effective immediately: (1) Up to F$ 1,000 a family a year was allowed for overseas portfolio and direct investments. (2) The limit for cash gifts to nonresidents was increased from F$300 to F$500 a donor a year. (3) The maximum allowance for remittances to overseas dependents was increased from F$ 1,000 to F$2,000 a year per remitter. (4) The ceiling of F$2,000 a person a year on overseas travel allowances was replaced by a maximum of F$2,000 a person a trip, while for extended visits applications for further amounts could be submitted to the Central Monetary Agency from overseas, through the applicant’s bank. (5) Emigrating residents were allowed to remit their entire net assets on departure.

Finland

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.211590 gram of fine gold per Finnish Markka. A central rate of Fmk 3.90 = US$1 has been established, and Finland avails itself of wider margins. However, on June 4, 1973 the Bank of Finland ceased to observe the lower exchange rate margin, and the upper margin was suspended on January 8, 1974. The Bank of Finland’s buying and selling rates for the U.S. dollar, the intervention currency, on December 31, 1975, were Fmk 3.841 and Fmk 3.859 per US$1. The rates for the U.S. dollar are applicable also to clearing dollars. Buying and selling rates for the clearing ruble are based on the rates of the State Bank of the U.S.S.R. for the U.S. dollar against the ruble. Quotations for other currencies are based on market cross rates.

The Bank of Finland quotes daily forward rates for the U.S. dollar and the clearing ruble at which authorized banks may cover their contracts with resident customers relating to any type of transaction permitted by the exchange control regulations; otherwise, forward premiums and discounts reflect international forward quotations. Authorized banks may deal among themselves, with resident customers, and with nonresident banks in U.S. dollars and other convertible or externally convertible currencies. The Bank of Finland normally concludes forward transactions for periods ranging from 3 to 12 months.

Administration of Control

The Bank of Finland operates the exchange control system, delegating authority to the authorized exchange dealers (mainly commercial banks). Import and export licensing is administered by an office subordinate to the Ministry of Trade and Industry, the Licensing Office, which is headed by a Licensing Board composed of government officials, including a representative of the Bank of Finland.

Prescription of Currency

For prescription of currency purposes, countries are divided into two groups: the bilateral countries1 and the convertible currency countries (all others). Settlements with the bilateral countries must be made in the currency of the agreement (rubles for the U.S.S.R. and Romania, Finnish markkaa for the People’s Republic of China, and U.S. dollars in all other cases). Settlements with the convertible currency countries may be made in any convertible currency or through Convertible Accounts.

Nonresident Accounts

There are three categories of nonresident accounts: Convertible Accounts, Restricted Accounts, and Capital Accounts.

Convertible Accounts are held by nonresidents in Finnish markkaa or in convertible currencies. These accounts may be credited by an authorized bank with amounts transferred from other Convertible Accounts, Finnish currency received direct from a foreign bank or imported into Finland, amounts which the bank would be authorized to transfer abroad, amounts of convertible currency received by the bank, and interest accrued on funds held in the accounts. These accounts may be debited freely and balances may be transferred abroad freely to any country.

Restricted Accounts are held by residents of countries with which Finland has bilateral payments arrangements, are designated according to the holder’s country of residence, and may be held in Finnish markkaa or the appropriate bilateral agreement currency. They may be credited by an authorized bank with amounts with which the bank may credit a Convertible Account, amounts transferred from Restricted Accounts related to the same country, Finnish currency received from a bank in the country indicated on the account, amounts which the bank is authorized to receive to the credit of a Restricted Account related to the country indicated on the account, currency surrendered to the bank and restricted to the country indicated on the account, and interest accrued on funds held in the accounts. These accounts may be debited freely and balances may be transferred freely to the bilateral country concerned.

Capital Accounts comprise all other nonresident accounts. The assignment of a Capital Account to another nonresident and the transfer abroad of funds held in such an account may be effected only with the permission of the Bank of Finland. A monetary institution may credit a Capital Account with the purchase price of assets other than foreign securities bought from the holder by a resident, funds received as an inheritance or on the basis of a will, redemption payments and interest on matured bonds and debentures quoted on the Helsinki Stock Exchange, rent on property owned in Finland by the holder of the account, proceeds from other assets belonging to the holder of the account and managed by the monetary institution with which the account is held, the amount of a loan based on a contract granting to a nonresident a loan not exceeding Fmk 50,000 in value and to be utilized in Finland, and interest accrued on funds held in the account.

Capital Accounts may be debited freely for noncommercial current expenses in Finland of and for account of the account holder, and funds in Capital Accounts may be used for capital payments for account of the account holder when the transaction does not require authorization or is authorized for transferable funds. The Bank of Finland automatically grants permission for transfers abroad of funds deposited in Capital Accounts to an account holder who has resided abroad during the last calendar year and who continues to do so.

Imports and Import Payments

All imports from Rhodesia are prohibited. Most goods may be imported free of license from the multilateral area or license-free area (i.e., nearly all countries with which Finland does not have bilateral payments agreements),2 provided that the goods are purchased from and originate in that area. Specified consumer durables, however, are temporarily subject to surveillance licensing, irrespective of origin. Certain other goods may be imported from the multilateral area under a global quota system, which provides for import licenses to be issued at least up to the amounts of 11 value quotas for specified commodity groups; no industrial goods are restricted by global quotas. The total value of the global quotas for 1975 was less than 1 per cent of total 1975 imports. Another group of goods also requires an individual license when imported from the multilateral area; these are set out in the discretionary licensing list, which comprises only agricultural commodities, coal, coke, and petroleum products. Thus, the only commodities still subject to quantitative restriction for the multilateral area are agricultural commodities, fuels, and unwrought gold and silver; the consumer durable goods mentioned above are licensed freely.

Import licenses are not required for most commodities originating in and shipped from the U.S.S.R., or originating in and shipped from the four countries with which agreements on the reciprocal removal of obstacles to trade have been concluded (Bulgaria, Czechoslovakia, the German Democratic Republic, and Hungary). Quantitative restrictions on imports from the U.S.S.R. and these four countries have been reduced to the levels applicable to goods originating in the multilateral area. In addition, many commodities originating in and shipped from the other bilateral countries are free of license. Imports under license from the bilateral countries are admitted up to quotas provided for under the relevant trade agreement. All imports of commodities originating in countries classified neither in the multilateral area nor in the bilateral area require individual licenses. The State Granary is the main agency for the import of wheat, rye, barley, oats, and products of these grains for human consumption, but individual importers may also import these commodities under license. There is a state monopoly for imports of alcoholic beverages.

Certain imports are subject, irrespective of origin, to a temporary import deposit requirement. In connection with customs clearance, a domestic currency deposit of 5, 10, 20, or 30 per cent of the c.i.f. value must be lodged with the Bank of Finland, free of interest, for a period of six months. Exemptions include most raw materials and most capital goods not produced in Finland. Special domestic or foreign credit arrangements for the financing of the deposits are not authorized. A temporary vehicle tax is levied on passenger automobiles and motorcycles, whether imported or domestically produced; the charge is equivalent to 20 per cent of the domestic vehicle tax.

Exchange is granted by authorized banks for all permitted imports on presentation of an application form, the import license if required, and the original commercial invoice, provided that the goods are already in the country or there is sufficient evidence to guarantee their importation. Payment for imports must be made within six months after the arrival of goods in the country; if the period of credit exceeds six months, the credit must be authorized by the Bank of Finland but as a rule is approved provided that it is considered normal in the traditions of the trade. Under a temporary “cash payment scheme,” however, payment for specified consumer goods and for passenger automobiles must be made, or the markka equivalent of the purchase price deposited with the Bank of Finland, before the goods are released by the customs authorities.

Payments for Invisibles

With few exceptions (relating to transport and insurance), residents are permitted to conclude transactions involving current invisibles with nonresidents. Payments in respect of authorized invisibles are not restricted. The authorized banks have general permission to effect payments for most current invisibles, subject in some cases to a maximum allowance or other conditions; for amounts in excess of the standard allowances and for purposes for which no standard allowances have been set, exchange licenses are granted freely by the Bank of Finland. All contracts involving payments to nonresidents for which general permission has not been granted must be submitted to the Bank of Finland for approval. For minor payments, authorized banks may grant foreign exchange equivalent to Fmk 300 a calendar month for each remitter.

A Finnish resident going abroad may purchase from commercial banks foreign exchange equivalent to Fmk 3,000 a trip. A Finnish traveler abroad may also withdraw foreign exchange on a bank account passbook or check issued by a Finnish monetary institution, provided that the utilized amount of his travel allocation does not exceed a total of Fmk 3,000. A resident traveler may use a credit card abroad for travel services and make the payment after return. Nonresident travelers may take out Fmk 3,000 a trip in Finnish notes and coins and any amount in foreign notes and coins declared upon entry. Resident travelers may take out foreign or domestic currency, or any combination of these, up to Fmk 3,000. For all types of travel, bona fide applications for additional amounts of foreign exchange are approved by the Bank of Finland.

Exports and Export Proceeds

All exports to Rhodesia are prohibited. Export licenses are required only for exports of scrap metal. Exports of other goods require only an export control declaration, which is approved automatically by the Licensing Office except in a few specified cases. Certain exports to countries not in the multilateral area are restricted. Foreign exchange acquired through commodity exports need not be surrendered to the Bank of Finland or an authorized exchange dealer. Exporters are required to repatriate their foreign exchange proceeds within eight days of collection, which may then be held in a foreign currency account with an authorized bank in Finland or converted into domestic currency.

Proceeds from Invisibles

Foreign exchange receipts derived from current invisibles do not have to be surrendered but must be repatriated within eight days of collection. The exchange may be held in a foreign currency account in Finland. Any unutilized foreign banknotes and travelers checks must be repatriated, but these are exempt from the surrender requirement up to Fmk 3,000 for each resident holder. The import of Finnish and foreign means of payment is unrestricted.

Capital

Most outward transfers of nonresident capital are subject to approval by the Bank of Finland. Inheritances are transferred automatically to the beneficiaries. Persons who during the last calendar year have resided outside Finland and continue to do so may transfer abroad their assets in Finland in one lump sum, subject to the prior approval of the Bank of Finland, which generally is granted.

Nonresidents may purchase through an authorized bank, against convertible currencies, or by debiting a Convertible Account, bonds, debentures, or shares quoted on the Helsinki Stock Exchange. When the securities so acquired by a nonresident are deposited in the custody of the authorized bank, the nonresident purchaser is permitted to sell the securities on the stock exchange through the authorized bank and to repatriate the proceeds of the sale in a convertible currency. The acquisition with funds classified as Capital Accounts of shares, bonds, and debentures quoted on the stock exchange is also permitted automatically, but proceeds from the sale of such securities may not be transferred abroad without the permission of the Bank of Finland. Any other transactions in, and the export of, securities involving nonresident interests require approval. If the securities were acquired with convertible foreign exchange or with markkaa from a Convertible Account, approval for their export can be obtained freely.

The regulations concerning inward direct investment are as follows: All incoming capital transactions must be approved by the Bank of Finland, which considers the foreign exchange aspect. The Bank grants permission liberally, unless the investment is judged to be exceptionally detrimental to the national interest or to be of a purely financial character. Repatriation of authorized direct investments is free. Foreign investments that involve a participation of more than 20 per cent in the share capital of an enterprise require the approval of the Council of State. This approval is usually granted liberally. Direct foreign investment in the forest and mining industries and in certain traditionally regulated activities is not normally permitted.

On demand of the Bank of Finland, residents must declare their foreign assets, including property owned abroad. Proceeds from the sale of securities and real property must be repatriated under the general rule of repatriation. Outward transfers of capital by residents require individual approval; investment by residents in foreign securities or real estate is rarely permitted. Authorized banks, however, are given permission to purchase specified foreign and Finnish securities issued abroad. For direct investment abroad, approval is granted on the merits of each case.

Finnish emigrants are granted an exchange allowance of up to Fmk 50,000 a person, in addition to the basic tourist travel allowance. There is an automatic exchange allowance of Fmk 1,000 a calendar month for each donor for gifts and contributions to nonresidents.

Foreign currency borrowing by Finnish residents, in the form of short-term or medium-term financial credits or by bond issues abroad, requires the specific approval of the Bank of Finland, which exercises surveillance over the terms and timing. Lending to nonresidents is normally restricted to export credits. No permission is needed for customary export credits. Medium-term and long-term borrowing abroad, other than borrowing by the State or import credits, is subject to a selective deposit requirement, the terms of which are set ad hoc by the Bank of Finland.

Gold

Residents may freely hold, buy, and sell gold in any form 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. The global quota list contains a quota for industrial gold, for which licenses are granted freely. Exports of gold are subject to the same regulations as exports of other commodities, i.e., an export control declaration approved by the Licensing Office is usually sufficient.

Changes during 1975

January 1. Import duties on most industrial goods of EEC origin were further reduced in accordance with the free trade agreement with the EEC.

January 1. The supervision over the sale of foreign exchange for travel purposes was tightened. Thus, proof of the purchaser’s identity was required.

January 1. The import regulations for 1975 entered into force. The global quota program consisted of 11 quotas amounting to Fmk 190 million. The import licensing scheme henceforth distinguished between multilateral import treatment; treatment of imports from the U.S.S.R.; treatment of imports from socialist countries with which agreements on the reciprocal removal of obstacles to trade have been concluded; treatment of imports from the People’s Republic of China, the German Democratic Republic, Poland, and Romania; and treatment of imports from other countries.

January 1. The agreements on the reciprocal removal of obstacles to trade signed in 1974 with Bulgaria, Czechoslovakia, and Hungary came into force. A similar agreement with the German Democratic Republic was signed on March 4 and came into force on July 1.

March 12. Pending the introduction of a temporary import deposit scheme, a 15 per cent ad valorem special levy was imposed on all imports. It was abolished on March 24, when the import deposit scheme came into force.

March 24. A temporary import deposit requirement was introduced, which provided that imports from any source of a number of commodities were to be released by the customs authorities only in connection with payment into a special noninterest-bearing account with the Bank of Finland of deposits equivalent to 5, 10, 20, or 30 per cent of the c.i.f. value of imports, depending upon the commodity. Most raw materials were exempt and most consumer goods were subject to the maximum rate of deposit. Deposits were to be repaid after six months.

April 8. The Bank of Finland announced that it would not authorize the raising of foreign credits to finance import deposits, and informed banks that they should not regard the import deposit requirement as grounds for increasing credit to importers.

May 1. The import deposit requirements for a number of commodities were modified. On June 1 deposit requirements for additional commodities were modified.

May 29. The OECD Declaration of May 30, 1974 on Imports, Exports, and Other Current Account Transactions was renewed for one year.

June 1. Certain large wholesalers began to exercise voluntary import restraint in respect of specified products.

September 25. The Bank of Finland announced more restrictive approval criteria for borrowing abroad for investment purposes.

October 15. The Bank of Finland issued new credit guidelines. Among other things, banks were asked to limit their financing of stocks of imported goods. The Bank stated that approvals for capital imports would be granted more restrictively; these would largely be confined to finance for investments that gave support to the balance of payments and improved the prospects for long-term growth.

November 5. Surveillance licensing of imports of passenger automobiles was discontinued.

France

(Position on December 31, 1975)

Exchange Rate System

The par value is 0.160000 gram of fine gold per French Franc, and France avails itself of wider margins. France maintains a maximum margin of 2¼ per cent for exchange rates in transactions in the spot exchange market between the French franc and the Belgian franc, the Danish krone, the deutsche mark, the Luxembourg franc, the Netherlands guilder, the Norwegian krone, and the Swedish krona.1 No announced margins are maintained for other foreign currencies.2 On December 30, 1975, the “representative” rate for the U.S. dollar was F 4.4855 = US$1.

Fixed conversion rates in terms of French francs apply to the currencies of the following countries and territories: the Operations Account countries,3 the French Overseas Territories (except the Territory of the Afars and the Issas), and the Condominium of the New Hebrides. These conversion rates have been maintained at pre-August 15, 1971 levels and are applied irrespective of the nature of payments or receipts.

Authorized banks in France and in Monaco, which may also act on behalf of banks established abroad or in Operations Account countries, are permitted to deal spot or forward in the exchange market in France. Authorized banks may also deal spot and forward with their correspondents in foreign markets in all currencies. Nonbank residents may purchase forward exchange only in respect of imports and of certain merchanting transactions, but their forward sales of foreign currency are free, whether there is an underlying transaction or not. On the import side, forward cover is available for some commodities for 6 to 12 months, and for all others for 3 months.

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

Exchange Control Territory

The exchange control regulations are applicable in all territories of the French Republic except the French Territory of the Afars and the Issas, i.e., in continental France, Corsica, the Overseas Departments (Guadeloupe, Martinique, Guiana, and Reunion), 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;3 payments between France and these countries are free of restriction on the French side and take place at fixed exchange rates. All other countries are considered foreign countries for exchange control purposes;4 all payments between France and foreign countries are subject to exchange control. The Condominium of the New Hebrides is considered a foreign country for exchange control purposes. For imports and exports of gold, the Operations Account countries are also considered foreign countries.

Certain controls that are independent of the exchange control regulations are maintained over inward and outward direct investment and over borrowing abroad; these transaction controls are not applicable to the Operations Account countries or Monaco, and those over direct investment do not apply to member countries of the EEC. Privileged treatment in respect of trade transactions is accorded to (1) the Operations Account countries and (2) Algeria, Cambodia, Guinea, the Lao People’s Democratic Republic, Madagascar, Mauritania, Tunisia, North Viet-Nam, South Viet-Nam, and the Condominium of the New Hebrides.5

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 Cooperation Economique (CCCE).

The Directorate of Insurance of the Ministry of Economy and Finance has certain powers in respect of matters relating to insurance, reinsurance, annuities, etc. The material execution of all transfers has been delegated to authorized banks and stockbrokers and partly to the Postal Administration. The Directorate-General of Customs and Indirect Taxes establishes import and export procedures and controls, within the framework of commercial policy directives given by the Directorate of Foreign Economic Relations; 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.6 Settlements with all other countries may be made in any of the currencies of those countries or through nonresident Foreign Accounts in Francs. Settlements with Algeria, Morocco, and Tunisia, however, normally take place in French francs only. Importers and exporters are free to invoice in any currency.

Nonresident Accounts

A nonresident account in francs may be freely opened by an authorized bank for nonresidents, including French nationals (other than French officials) who have been residing abroad for at least two years. All overdrafts and advances on nonresident-held franc accounts are subject to general or specific permission.

Foreign Accounts in Francs may be freely credited with (1) the franc proceeds of the spot or forward sale of foreign currencies on the French exchange market by a nonresident; (2) the franc proceeds of the sale of foreign banknotes to an authorized bank by a nonresident bank or traveler; (3) the franc equivalent of an authorized bank’s arbitrage in foreign currencies on a foreign market; (4) French banknotes (and those of the Operations Account countries) mailed direct from abroad to the main office of the Bank of France by an authorized bank’s foreign correspondents; (5) transfers from other Foreign Accounts in Francs; (6) any authorized payment by a resident to a nonresident, including interest on balances in Foreign Accounts in Francs; (7) the sales proceeds, income, and amortization from French and foreign securities held in a foreign dossier in France, including securities accruing in France to a nonresident by donation or inheritance; (8) liquidation proceeds of nonresident-held direct investments7 or real estate; and (9) the proceeds of the sale, through the intermediary of a notary public, of real estate belonging to nonresidents. These accounts may be freely debited for (1) spot purchases of any foreign currency on the exchange market by a nonresident; (2) the purchase by a nonresident of foreign banknotes or withdrawals in French banknotes; (3) the equivalent in francs of arbitrage abroad in foreign currencies by an authorized bank; (4) French banknotes (and those of Operations Account countries) mailed by authorized banks direct to their foreign correspondents; (5) transfers to other Foreign Accounts in Francs; (6) approved direct investment in France by nonresidents;7 (7) purchases of real estate from residents, through the intermediary of a notary public; (8) purchases in France of French or foreign securities; (9) interest on and repayment of loans granted in accordance with the relevant regulations by residents; and (10) any payment by a nonresident to a resident.

If French francs accruing to a nonresident are not transferable, or not immediately transferable, they may be credited to a Suspense Account in francs in the name of the beneficiary; balances up to F 50,000 that existed on August 9, 1973 have been released. The unremittable funds of emigrants of French nationality must be retained in resident accounts (comptes Intérieurs) until they become nonresidents (i.e., until they have stayed in a foreign country for two years); emigrants of foreign nationality become nonresidents immediately and therefore may take out all of their assets upon departure.

Imports and Import Payments

Goods originating in and shipped from other parts of the French Franc Area or from certain other countries that are accorded privileged treatment in respect of trade transactions (see section on Exchange Control Territory, above) are generally admitted free of quantitative restriction and individual license. Imports of goods which originate in other countries and are not covered by French import liberalization require individual licenses. Some imports from EEC countries and some other imports from non-EEC countries are subject to minimum prices; these require an administrative visa and sometimes, exceptionally, an import license.

For import control purposes, countries outside the French Franc Area are divided into four groups according to the extent of import liberalization: (1) the former OEEC countries, their dependent territories and certain former dependent territories, Andorra, Canada, Finland, the United States, and Yugoslavia; (2) 49 specified countries;8 (3) the Eastern European countries (Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, and the U.S.S.R.) and the People’s Republic of China; and (4) the German Democratic Republic. Commodities that may be imported free of quantitative restrictions from one group of countries include all the commodities that may be freely imported from the next group of countries plus some other specified commodities. Goods covered by the import liberalization arrangements applicable to one country may be imported freely from another country, provided that the country of origin and the country of shipment both benefit from the same degree of liberalization.

Imports of practically all industrial products from countries in group (1) are free of quantitative restrictions, but such restrictions are applied to a number of agricultural products; there is relatively little difference between the lists of goods which may be imported freely from different countries in this group, these differences relating mainly to Hong Kong and Macao. Imports of certain industrial products from countries in group (2) are restricted, and restrictions are applied to these and to certain additional industrial products from group (3) countries. For some commodities, there are global quotas that are allocated semiannually and apply to all countries other than those having the benefit of bilaterally negotiated quotas or of privileged treatment. Imports from all countries of certain agricultural items and certain raw materials are free of quantitative restrictions.

Imports from non-EEC countries of most products covered by the Common Agricultural Policy of the EEC are subject to variable import levies that have replaced all previous barriers to imports; common EEC regulations are also applied to imports from non-EEC countries of most other agricultural and livestock products.

Liberalized imports are not subject to trade control formalities, only a customs document that constitutes the customs declaration being required; however, as an exchange control measure, the domiciliation of the import transaction at an authorized bank may be prescribed. For some liberalized imports, an administrative visa issued by the central Customs Administration or by the competent technical ministry is required on an import declaration. Imports of the products of the European Coal and Steel Community require licenses when originating in non-ECSC countries.

Other imports generally require individual import licenses. These are granted up to quotas determined on an individual commodity basis or for a group of commodities and applicable to specified countries or areas in accordance with trade agreements or an import plan drawn up for a definite period. Moreover, licenses may be issued under the compensation transaction procedure, which applies mainly to goods of Eastern European origin. Because of the high degree of import liberalization, imports under this scheme are of slight importance.

Payments for imports from foreign countries must be made by credit to a Foreign Account in Francs or with foreign currency purchased in the French exchange market. Import transactions relating to foreign countries and valued at F 50,000 or more must be domiciled (registered) with an authorized bank, to which the necessary import documents must be presented and through which all payments related to the import must be made. The amounts which may be transferred through postal channels are not subject to limitation, but in practice the Postal Administration does not make import payments valued at over F 50,000, as it does not maintain files for purposes of domiciliation.

Authorized banks may without special authorization allow advance payments to be made that are provided for in the commercial contract, up to 30 per cent of the price for capital goods and up to 10 per cent for all other goods. Higher advance payments require prior approval by the Customs Administration. For all imports, importers may purchase spot foreign currency one month before the payment falls due (one month before shipment if a documentary credit is opened). There is no restriction on the use of suppliers’ credit. The import payment itself can be made as soon as the importer can present evidence to his bank of domiciliation that the goods have been dispatched. Three months’ forward cover for import payments can be obtained for any commodity; for the import of specified raw materials and specified foodstuffs (unroasted coffee, corn, rice, etc.) forward cover for six months or one year is available. The foreign currency may be purchased forward at the time of domiciliation, but the maturity of the forward exchange contract must not exceed the date on which the commercial payment is due.

Payments for Invisibles

Payments for current invisibles to foreign countries are controlled but not restricted as to amount. If justifying documents are presented and certain exchange control requirements are met, authorized banks are permitted to approve applications for payments without any limitation for many categories of current invisibles, and up to established limits for certain other categories of current invisibles. Applications for all other payments for invisibles and for amounts in excess of established limits are referred to the Bank of France to prevent unauthorized capital transfers; such applications are approved if a genuine current payment is involved. Any resident may freely and at any time make remittances abroad up to the equivalent of F 1,500 a person without indicating their purpose, provided that the transfers do not constitute installments of payments exceeding F 1,500, are not for purposes subject to special allocation, and do not serve to accumulate funds abroad.

Payments which may be authorized without limitation by authorized banks include those related to approved trade transactions; income accruing to nonresidents in the form of profits, dividends, and royalties; banking commissions, patent fees, and specified categories of taxes; specified insurance payments; fees to medical doctors, lawyers, etc.; alimony in accordance with court decisions; and net salaries or wages of foreigners employed in France, provided that the transfer takes place within three months from the date of payment.

Irrespective of the exchange control regulations, certain transactions between persons or firms in France and abroad are subject to restriction; these include certain transactions relating to insurance, reinsurance, and road and river transport.

The basic exchange allocation for tourist travel to foreign countries by residents (defined for this purpose as including residents of Operations Account countries) is the equivalent of F 5,000 a person a trip, which may be taken up for any number of trips a year. The basic allocation for business travel is the same plus the equivalent of F 500 a person a day. Applications for exchange in excess of the basic allowance for any type of travel are approved by the Bank of France, provided that no capital outflow is involved. Any unutilized foreign currency in excess of the equivalent of F 1,000 must be surrendered upon return to France. Applications for travel exchange cannot be submitted earlier than one month before departure. The use abroad of credit cards issued in France is unrestricted for the settlement of expenditures; in addition, the holder may use them to obtain funds from banks abroad up to F 1,000 a week. All fares for trips starting in France may be paid in francs in France, as may hotel costs and other transportation expenses.

Resident travelers going to foreign countries may take out F 5,000 in French banknotes. These banknotes may be spent abroad, and any amount taken out is charged against the basic exchange allocation of F 5,000. Nonresident travelers may take out F 5,000 in French banknotes and may reconvert in the French exchange market into foreign currency any French banknotes up to F 5,000 obtained by the conversion in that market of foreign means of payment that they declared upon entry or obtained by debit to a Foreign Account in Francs; any remaining French banknotes must be deposited with the customs against issuance of a receipt.

Resident travelers may freely take out the equivalent of F 5,000 in foreign notes and coins when acquired in the French exchange market against a tourist travel allocation, or, if they are leaving on a business trip, the equivalent of F 5,000 in foreign banknotes or in checks. Nonresident travelers may not, in principle, take out more than the equivalent of F 5,000 in foreign banknotes unless they were declared upon entry and the annotated declaration form shows that the amount to be taken out does not exceed that imported minus any amounts exchanged for francs plus any reconversion of francs into foreign currencies. However, nonresident travelers may also freely take out any other means of payment established in their name abroad, as well as, subject to the submission of an authorized bank’s declaration, any amount in foreign banknotes or foreign currency travelers checks acquired in France from an authorized bank by conversion of foreign exchange in the French exchange market, by debit to a Foreign Account in Francs, or by debit to a foreign currency account.

Exports and Export Proceeds

Certain goods on a prohibited export list may only be exported if a special license is issued. Some other exports also require individual licenses; but if the total value does not exceed F 500, these exports may be permitted without any formality, subject to certain exceptions. Regardless of their value, exports through compensation transactions with certain countries9 require licenses if the commodities are those for which export licenses are required.

Exports to foreign countries are subject to exchange control. Payment must be received through the official exchange market. The repatriation10 and, where appropriate, the surrender by sale in the exchange market of proceeds from exports to foreign countries is required, normally within one month of the date on which the payment falls due. Authorized banks may freely extend foreign currency advances to exporters; such advances and their repayment may be settled in the French exchange market, as may the proceeds from the discounting of foreign currency drafts presented by exporters. The due date of the commercial contract (and, therefore, the due date of the export receipts) cannot, except with special authorization or when a guarantee by the Compagnie Française d’Assurance pour le Commerce Extérieur (Coface) has been obtained, be more than 180 days after arrival of the goods at their destination. Export proceeds must not be received in French or foreign banknotes or banknotes issued by an institute of issue maintaining an Operations Account with the French Treasury, or by debit to a postal checking account in France. All export transactions related to foreign countries and valued at F 50,000 or more must be domiciled with an authorized bank; the Director-General of Customs and Indirect Taxes, however, may exempt certain approved firms from domiciliation requirements.

Certain goods purchased in France by persons not normally residing in France are considered as exports even when paid for in French francs, and are exempt from taxes.

Proceeds from Invisibles

Proceeds from transactions in invisibles with Monaco and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be repatriated and, where appropriate, surrendered, within one month from the due date. With minor exceptions for certain types of transactions, services performed for nonresidents do not require licenses.

Resident and nonresident travelers may bring in any amount of banknotes and coins (except gold coins) in French francs, CFA francs, CFP francs, or any foreign currency; however, the exchange of banknotes issued by Algeria, Morocco, and Tunisia is prohibited at the request of those countries. Resident travelers must within a month of entry sell in the French exchange market any foreign banknotes or travelers checks in excess of F 1,000 that they bring in.

Capital

Capital movements between France and Monaco and the Operations Account countries are free of exchange control; capital transfers between France and all other countries are subject to exchange control approval. With the exception of purchases of French and foreign securities abroad, outward transfers of resident-owned capital generally are restricted; capital receipts from foreign countries generally are permitted freely, provided that the foreign exchange proceeds are surrendered by sale in the exchange market (but see below for special controls over borrowing abroad and over inward direct investment). Capital assets abroad of residents are not subject to repatriation. Residents are freely permitted to purchase real estate abroad for personal use as their principal or secondary residence, up to F 300,000 a family unit.11 The transfer abroad of nonresident-owned funds in France, including the sales proceeds of capital assets, is not restricted.

French and foreign securities held in France by nonresidents can be exported, provided that they have been deposited with an authorized bank in a foreign dossier (dossier étranger de valeurs mobilières); French and foreign securities held under a foreign dossier can also be sold in France and the sales proceeds can be transferred abroad. Foreign securities held in France by a nonresident must be deposited with an authorized bank; French securities held in France by nonresidents need not be deposited but cannot be dealt with or exported unless they have been deposited. Foreign securities held in France by residents must be deposited with a qualified bank or broker. Residents may hold French and foreign securities abroad under the control of a French authorized bank or broker. The exportation for the account of residents of French securities held in France is prohibited, except when they are to be sold abroad.

Subject to compliance with the special regulations concerning inward and outward direct investment that are summarized below, residents may freely purchase French and foreign securities on stock exchanges abroad, through authorized banks.12 Such French and foreign securities may be held or sold abroad, but they may also be imported and then either be held or sold on a French stock exchange. The proceeds of the sale abroad of French or foreign securities must be sold on the exchange market within two months of receipt, unless used within that period for reinvestment in securities abroad. Correspondingly, nonresidents holding French or foreign securities abroad (whether acquired before November 24, 1968 or later) may freely import them into France and hold them in a foreign dossier, or sell them on a stock exchange in France and repatriate the proceeds through the French exchange market.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad and over inward and outward direct investment. In principle, these controls relate to the transactions themselves, not to payments or receipts. At present, however, their application is in many instances affected by exchange control requirements. With the exception of the controls over capital issues in France, the transaction controls do not apply to countries whose bank of issue is linked with the French Treasury by an Operations Account. Furthermore, the transaction controls over direct investment are not applicable to member countries of the EEC, direct investment transactions with which are subject to exchange control declaration and exchange control approval only.

Foreign direct investments in France and French direct investments abroad require prior declaration to the Minister of Economy and Finance; in relations with member countries of the EEC, the declaration is required under the exchange control regulations rather than under the special transaction controls, and prior exchange control authorization is required for all direct investment operations liable to involve a capital movement. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent of the capital of a company whose shares are quoted on the stock exchange; any participation in any other type of firm is considered a direct investment. The Directorate of the Treasury, in evaluating the degree of control, takes into account any special relationships resulting from stock options, patents and licenses, commercial contracts, etc. Except in respect of EEC countries, the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. 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. As an exception to the declaration and approval requirements summarized earlier in this paragraph, the making or the liquidation of direct investments abroad by residents is exempt from prior declaration or prior authorization when the amount involved does not exceed F 1 million a year for each beneficiary firm abroad, and provided that the transactions do not involve holding companies, investment companies, investment trusts, unit trusts, mutual funds, or companies whose purpose it is to facilitate the financing or treasury functions of enterprises belonging to one or more groups. Also, certain inward direct investment up to F 1 million a transaction is exempt from prior declaration or authorization.

Foreign issues on the French capital market are subject to prior authorization by the Minister of Economy and Finance. The requirement is applicable also to the Operations Account countries. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the French Government, and (2) shares similar to securities that already are officially quoted on a stock exchange in France.

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in France, or by branches or subsidiaries in France of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Economy and Finance.

The following types of borrowing are, in principle, exempt from this authorization: (1) 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 of goods; (4) loans related to certain international merchanting transactions; (5) borrowing related to the performance of services (other than income from labor or capital), when undertaken to finance operations executed abroad or transactions with foreign countries;

(6) loans contracted by banks expressly permitted to borrow abroad (these include all authorized banks); and

(7) foreign currency borrowing abroad by nonbank firms, when the total amount outstanding of these loans does not exceed F 10 million for any one borrower, provided that the interest rate is a “normal” market rate, that the borrowing is not for the purpose of direct investment, that the foreign exchange proceeds are surrendered, and that each drawing against the loan is separated by at least one year from the corresponding repayment. (During 1974 and the first half of 1975 borrowing from nonresidents, whether in francs or foreign currency, was not normally restricted, but during the second half of 1975 foreign currency borrowing abroad was discouraged and borrowing in the form of bond issues on the Euro-franc market was preferred.) All borrowings in Euro-francs are subject to prior authorization.

The application of the controls over direct investment and borrowing is delegated to the Bank of France insofar as they relate to French firms that are mainly engaged in real estate business.

Lending abroad is subject only to exchange control authorization by the Bank of France, which is given or withheld within the framework of directives issued by the Treasury. Since the imposition of exchange control in 1968, authorized banks have been virtually free to lend foreign currency to nonresidents, subject to certain reservations in respect of the granting of guarantees and varying limitations on their external position, and to resident importers and exporters. Lending to nonresidents in francs, however, is prohibited, with minor exceptions.

Authorized banks’ foreign currency assets and their overall liabilities in francs and foreign currency to nonresidents are free from limitation. Authorized banks may freely sell foreign exchange on the official exchange market for the account of nonresidents, spot or forward. They are allowed to pay interest on nonresident-owned franc or foreign currency deposits. Nonresident-held franc deposits are not subject to reserve requirements, whether on balances held or on increases therein.

Nonresidents may freely purchase French short-term securities, including treasury bills, bons de caisse, and private drafts.

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 and in which normally no official intervention takes place. Imports and exports of gold into or from the territory of continental France require prior authorization by the Bank of France, which is not normally granted for monetary gold but usually is given for industrial gold. Exempt from this requirement are (1) imports and exports of gold addressed to or shipped by the Bank of France; (2) imports and exports of manufactured articles containing only a minor quantity of gold, such as gold-filled and gold-plated articles; (3) imports and exports by private persons of gold objects (other than medals and bars, but including both personal and other jewelry) or numismatic gold coins, provided that their combined weight does not exceed 500 grams; and (4) collectors’ items of gold and gold antiques that are exported under export licenses granted with the approval of the Directorate of Museums. Both licensed and exempt imports of gold are subject to customs declaration. The import and export of certain gold objects that are considered merchandise, such as gold watches, are subject to both the regular import and export licensing arrangements and to licensing by the Bank of France.

A 20-franc gold coin, the napoleon, is legal tender but does not circulate. It is actively traded on the Paris stock exchange. In domestic trading, purchases of monetary gold (bars and coins) are not subject to value-added tax. Imports of monetary gold are exempt from customs duty and value-added tax.

Changes during 1975

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

January 1. The issue of currency in the Comoro Islands was transferred from the Bank of Madagascar and the Comores to the Institute of Issue of the Comoro Islands (Decree No. 74-1177 of December 31, 1974).

January 1. Medium-term and long-term export credit became exempt from the ceiling on the expansion of bank credit. The permissible growth rate for short-term export credits was increased from 22 per cent on a year-to-year basis to 2 per cent a month for the first half of 1975. On June 11 the Bank of France announced that the latter rate was being maintained for the second half of the year.

January 1. A new procedure for the issue and use of import licenses for crude petroleum was introduced.

January 9. The Minister of Economy and Finance stated that current policy on the approval of inward direct investment, as far as take-overs and participations were concerned, was as follows. Such investment from EEC countries was freely permitted. For investment from other countries, the authorities were opposed to take-overs of existing firms but took a positive attitude to minority participation of up to 10 or 15 per cent of the capital.

January 9. It was announced that the export credit insurance facilities for construction activities abroad would be improved. In February, COFACE extended political risk cover to the insurance sector.

January 28. The Government adopted an energy saving plan which envisaged that by 1985 the proportion of imported energy would be reduced to 55-60 per cent of total requirements and energy imports from any single country would be limited to 15 per cent of total requirements.

March 2. Restrictions were imposed on imports of tuna.

March 8. France proposed the creation of a fund to finance guarantees and interest rate subsidies for international loans to overseas countries of the French Franc Area and to other French-speaking countries in Africa; half of the fund would be financed by France and half by the other Franc Area countries. Outline plans for an African Solidarity Fund were subsequently agreed at a meeting of Finance Ministers of the Franc Area, on August 28; it was also decided that the finances of the CCCE would be strengthened.

March 17. It was announced that on April 1 an additional credit facility of F 3 billion would be provided to finance new industrial investment by firms expanding their export capacity or conserving energy. Further details were given on April 23, when the credit facility was increased from F 4 billion to F 7 billion and interest rate subsidies were granted on long-term loans. (In March 1976 a further F 3 billion was made available.)

March 22. Imports of wine from Italy were suspended de facto. The suspension was lifted on April 16.

March 24. An issue of notes by a French public sector enterprise took place in the Euro-franc bond market, on which no new issues had occurred since 1973.

March 31. The French franc replaced the CFA franc issued by the Institute of Issue of the French Overseas Departments as the currency of the Overseas Departments (Article 14 of the Budget Amendment Law for 1974 and Decree No. 74-1130 of December 30, 1974).

April 3. The Minister of Economy and Finance stated that public sector companies had been asked to reduce their borrowings abroad and that the Government would encourage Euro-franc bond issues by foreign companies.

April 4. Imports of additional commodities were liberalized when originating in and shipped from Eastern European countries, the People’s Republic of China, North Korea, or Outer Mongolia.

April 23. It was announced that interest subsidies would be made available to small exporters.

April 25. Until December 31, 1975 liberalized imports of certain cotton yarns from countries in Liberalization Zones I and II (except EEC member states) and of certain cotton or synthetic fabrics from Liberalization Zone I (except EEC member states) became subject to an administrative visa. On December 28 these regulations were extended until January 15, 1976.

May 23. The restrictions of March 2 on imports of tuna were confined to tuna for industrial processing. The regulations were extended on July 9 and October 14 (until December 31, 1975).

May 29. The OECD Declaration of May 30, 1974 on Imports, Exports, and Other Current Account Transactions was renewed for one year.

June 18. A circular was issued liberalizing the regulations governing marchés d’application, which since 1970 had allowed exporters to utilize the foreign currency proceeds of their commercial claims in certain circumstances for payment abroad of their own commercial debts. The main change was that this procedure now was allowed also where a resident had at his disposal foreign currency borrowed abroad or from another resident, and was no longer restricted to commercial transactions. The relevant circular of April 7, 1970, as modified by a circular of January 28, 1972, was revoked.

June 18. A circular was issued modifying the circular of January 19, 1974 regarding borrowing abroad. It specified the conditions under which foreign currency loans could be taken up abroad, without prior authorization, for the financing of commercial and industrial operations. The principal change was that approval ceased to be required for borrowing related to the performance of services (other than income from labor or capital) when undertaken to finance operations executed abroad or transactions with foreign countries.

June 25. The lists of import commodities eligible for 6-months’ or 12-months’ forward exchange cover were revised by the addition of certain goods.

July 1. Improved market access was granted to many imports from specified developing countries, under the terms of the Lomé Convention between the EEC and certain developing countries of Africa, the Caribbean area, and the Pacific region (the ACP countries).

July 10. France resumed its participation in the European common margins arrangement, at the cross parities in force on January 19, 1974, when participation had been suspended.

July 17. It was announced that a F 125 million issue by the ECSC had been sold on the Euro-franc bond market.

July 24. A framework agreement on economic, financial, and technical cooperation was signed with Saudi Arabia.

July 29. It was announced that the amount of authorizations issued in 1974 for financial borrowing abroad was F 25.2 billion (F 12.8 billion for public sector companies and F 10.4 billion for private sector firms); effective drawings recorded in the balance of payments, however, amounted to only F 14.6 billion.

August 1. The Bank of France, in its letter No. 207AF, announced that French firms executing operations abroad could open special foreign currency accounts (comptes de chantier) with banks in the countries concerned. Permitted debits and credits were specified, as well as the relevant exemptions from the repatriation commitments. The Bank of France provided further details in its Note No. 65 of November 24.

August 9. Until December 31, 1975 liberalized imports of certain leather footwear from countries other than the member states of the EEC became subject to an administrative visa. On December 28, this regulation was extended until January 15, 1976.

August 9. Until December 31, 1975 liberalized imports of certain textile products from countries in Liberalization Zone I (except EEC member states) became subject to an administrative visa. On December 28 this regulation was extended until January 15, 1976.

September 11. Decree No. 75-846 introduced a tax of F 1.13 per degree/hectoliter on imports of certain wines from Italy. (The tax was abolished on April 1, 1976.)

September 12. Parliament approved a package of measures announced on September 4 and designed to stimulate economic activity. As regards foreign trade, improvements would be introduced in the credit, credit insurance, exchange rate guarantee, and forward cover facilities for exporters; steps would also be taken to assist small firms in gaining access to foreign markets.

September 19. The Ministry of Economy and Finance announced new measures to promote exports. Additional credit insurance facilities would be made available to French firms exporting to countries with temporary balance of payments difficulties. To encourage exports of certain capital goods, easier credit terms would be extended to foreign customers placing large orders. The Treasury would increase loans granted to developing countries to enable them to purchase more equipment from France. The premium of 0.64 per cent for exchange risk guarantees in respect of exports to countries participating in the European narrow margins arrangement would be reduced to 0.36 per cent. For all other eligible currencies, losses borne by an exporter would be compensated in full if the variation in the exchange rate exceeded 2.25 per cent. Exchange risk guarantees for currencies previously ineligible could now be granted on a case-by-case basis. Coface would be authorized to help firms arrange forward exchange cover for export contracts of less than one year. Export promotion assistance would be extended to firms whose trading abroad accounted for less than 5 per cent of their total business.

September 24. The Ministry of Economy and Finance announced that the Government would exempt from withholding tax investments by foreign monetary authorities, foreign states, and international institutions in French Treasury bonds, and under certain conditions, in bond issues of French enterprises, provided that the investments did not involve direct investment operations.

September 28. It was announced that French non-bank firms would not be permitted to borrow abroad for the remainder of 1975, although exceptions could be granted on a case-by-case basis. On October 7 it was clarified that the suspension related to foreign currency borrowing and did not apply to public issues of Eurobonds denominated in French francs, although private placements abroad of franc bonds and notes also would not be authorized. (The suspension was terminated in February 1976.)

November 1. A decree was gazetted which authorized the CCCE to issue a loan of F 150 million on the French capital market. The proceeds would be lent to Operations Account countries.

December 11. An agreement was signed with Cameroon allowing that country to launch a bond issue of CFAF 5 billion on the French capital market.

December 31. Law No. 75-1337 dealt with the constitutional position of the Comoro Islands. Upon promulgation of the law (January 3, 1976) these islands, with the exception of Mayotte, would cease to be part of the French Republic. (See footnote 6. Decree No. 76-175 of February 19, 1976 provided that with effect from February 23, 1976 the issue of currency in Mayotte would no longer be the responsibility of the Institute of Issue of the Comoro Islands and French currency would be substituted for the CFA franc as legal tender.)

Gabon

(Position on December 31, 1975)

Exchange System

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

With the exception of those relating to gold, 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) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Cameroon, the Central African Republic, Chad, the People’s Republic of the Congo, Ivory Coast, Mali, 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 Economy and Finance 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 Economy and Finance, 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 BEAC. 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 Directorate of External Trade in the Ministry of Economy and Finance.

Prescription of Currency

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

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC banknotes may be credited to Foreign Accounts in Francs when they have been mailed direct to the BEAC agency in Libreville by authorized banks’ foreign correspondents. Otherwise, the crediting to nonresident accounts of BEAC 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 and wheat flour 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 (original member countries only) may be made freely. All imports from other countries are subject to discretionary licensing. In practice, licenses are granted freely. A special licensing procedure is applicable to the import of petroleum products.

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 (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved.

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 200,000 a person a trip (CFAF 100,000 for children under ten) for any number of trips a year; 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 25,000 a day, subject to a maximum of CFAF 500,000 a trip. Tourist and business travel allocations may not be combined. Travelers g