Chapter

Country Surveys

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1975
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Afghanistan

(Position on December 31, 1974)

Exchange Rate System

On March 22, 1963, an initial par value was established of 0.0197482 gram of fine gold per Afghani, corresponding at the time to Af 45 = SDR 1. No exchange transactions take place at the par value. 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 the proceeds of exports of natural gas (which is exported only to the U.S.S.R.); 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 karakul, cotton, and wool. The proceeds from exports of karakul are eligible for settlement either at an effective exchange rate of Af 75 per US$1 (official exchange rate plus exchange subsidy of Af 30 per US$1) or at the free market rate, if lower than Af 75 per US$1. The surrender rate for proceeds from wool exports to the convertible currency area is Af 75 per US$1 (official rate plus subsidy of Af 30 per US$1) or at the free market rate if lower than AF 75 per US$1, while that for wool exported to bilateral countries is Af 60 per US$1 (official rate plus subsidy of Af 15 per US$1). The surrender rate for proceeds from cotton exports to bilateral countries is Af 60 per US$1 (official rate plus subsidy of Af 15 per US$1), while the proceeds from exports of cotton to the convertible currency area are eligible for settlement either at Af 70 per US$1 (official rate plus subsidy of Af 25 per US$1) or the free market rate, whichever is lower. As at the end of 1974, the above-mentioned exchange subsidies on karakul and cotton were inoperative since the free market rate was well below Af 70 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 maintains its operational free market selling rate for the U.S. dollar within Af 2.0 per US$1 of the daily free market rate quoted in the bazaar. On December 31, 1974, 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 56.55 buying, and Af 57.05 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 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 U.S.S.R. clearing dollars was Af 62.00 per US$1 on December 31, 1974, and that for Chinese clearing sterling (the People’s Republic of China) was Af 185.00 per £ stg. 1. On the same date, the selling rate for clearing dollars under the payments agreements with Czechoslovakia and Yugoslavia was Af 66.00 per US$1.

Administration of Control

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

Prescription of Currency

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

Imports and Import Payments

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

Payments for imports through the banking system to payments agreement countries 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. 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$400 a person a trip, 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 are not subject to license. Exports of a few commodities (e.g., opium and museum pieces) are prohibited. Otherwise, control is exercised only over exports to bilateral agreement countries (see section on Imports and Import Payments, above). Karakul is not 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 1974

March 1. Temporary export taxes were imposed on cotton, oilseeds, walnuts, and raisins.

March 20. Revised trade and payments arrangements were agreed upon with the U.S.S.R. Virtually all trade would henceforth take place at prevailing international prices. The swing credit was increased.

March 21. All imports were required to be registered prior to the placing of orders abroad. Registration requirements also were introduced for export transactions.

April 27. The banks were permitted to sell foreign exchange for tourist travel up to the equivalent of US$400 a person a trip.

July 4. The Government issued the Foreign and Domestic Private Investment Law of 1353 (1974). It revoked and replaced, with retroactive effect, the Foreign and Domestic Private Investment Law of 1345 (1967). Foreign investment in Afghanistan henceforth could take place only on a joint venture basis, with foreign participation not to exceed 49 per cent; previously, there was no ceiling on foreign ownership.

Algeria

(Position on December 31, 1974)

Exchange Rate System

The par value is 0.180000 gram of fine gold per Algerian Dinar. Algeria avails itself of wider margins. Since January 21, 1974 Algeria has followed an independent exchange rate policy. Daily buying and selling rates for specified currencies1 are established by the Central Bank of Algeria. On December 30, 1974, the Central Bank’s buying and selling rates for the U.S. dollar were DA 3.9880 and DA 3.9740, respectively, per US$ 1. The Central Bank charges on its transactions in foreign currencies a commission ranging from 0.2 per mill to 0.4 per mill, depending on the nature of the transaction, and a tax of 6 per cent on the amount of the commission. An encouragement premium is granted on the conversion of convertible currencies repatriated by Algerians working abroad.

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

Administration of Control

The Ministry of Finance and the Central Bank have general jurisdiction over exchange control. The Central Bank assists in the formulation of the exchange legislation and regulations and is responsible for their execution and for their application by the authorized banks. In addition, three commercial banks and the Postal Administration have been given authority to carry out many of the details of exchange control. Import and export licenses and global import quotas are issued by the Ministry of Commerce. Import and export licenses require the visa of the Central Bank. The Office National de Commercialisation (Onaco), the Office Algérien Interprofessionnel de Céréales (OAIC), the Office National de Commercialisation des Produits Vitivinicoles (ONCV), the Société Nationale des Tabacs et Allumettes (SNTA), the Société Nationale d’Edition et de Diffusion (SNED), the Société Nationale de Sidérurgie (SNS), the Société Nationale de Constructions Mécaniques (Sonacome), and other similar organizations have a monopoly over the import of a large number of commodities. The Société Nationale pour la Recherche, la Production, le Transport, la Transformation et la Commercialisation des Hydrocar-bures (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. All foreign borrowing requires the prior approval of the Minister of Finance.

Prescription of Currency

Algeria has certain traditional ties with the French Franc Area. 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, Czechoslovakia, Egypt, Guinea, Hungary, North Korea, Poland, 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 until early 1967 in France; most of these accounts are Foreign Accounts in Convertible Dinars or Internal Nonresident Accounts. For residents of other French Franc Area countries, there are three types of accounts in Algerian dinars: Individual Suspense Accounts, Franc Area Accounts, and Final Departure Accounts. Except as described below, all operations through these accounts are subject to authorization.

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

Franc Area Accounts may be opened only with prior authorization from the Central Bank. 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 1,000. 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; all other 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.

Residents and 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 to one eighth of the amounts deposited; for deposits made by persons working in France, 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 contingentées) requires an individual import license (autorisation préalable d’importation or API), unless covered by a global import authorization. Imports made “without payment” (sanspaiemeni), i.e., imports which do not involve compensation of any kind, require the approval of the Ministry of Commerce and are not charged against the global authorizations of public enterprises. 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 educational purposes).

For residents traveling by air or sea to other countries, including countries in the French Franc Area, the foreign exchange allocation is equivalent to DA 300 a person a trip (DA 150 for children under 15) and is issued on presentation of a valid passport and travel documents; for overland travel, the allocation is DA 300 a person a calendar semester for adults and DA 150 for children under 15. These allocations are not applicable to persons living in border areas. 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 rivals up to the equivalent of DA 2,100 a person; the allocation can be taken up in the form of a check by those traveling by air or sea, and in banknotes by those traveling overland. Travelers may take out Algerian dinar banknotes up to DA 50 a person. 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 Central Bank, 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 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 (Expor-tateurs-dinars bilatéraux). Balances are nontransferable and may be used by the holder himself for business travel, certain services of foreign technicians, and imports of spare parts.

Proceeds from Invisibles

Proceeds from invisibles must be repatriated and surrendered. Savings repatriated 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 I’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 1974, 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 1974

January 1. Notice No. 77 of November 27, 1973 of the Ministry of Finance was published. It established procedures for transfers abroad under contracts concluded by the State, local authorities, and public sector agencies of an administrative nature. Notice No. 59 of June 26, 1968 was revoked.

January 21. The fixed exchange rate for the French franc of DA 1 = F 1.12499 (F 1.00 = DA 0.8889) was discontinued. Algeria henceforth followed an independent exchange rate policy and determined the exchange rate for the dinar on the basis of an import-weighted exchange rate index.

January 21. The premium of 12½ per cent of the amount deposited that was granted on deposits in comptes épargne-devises was increased and made flexible for holders of such accounts working in France, so that these persons would at all times receive an exchange rate of F 1 = DA 1 on the conversion of their remittances.

January 30. Ordinance No. 74-11 liberalized the export trade. While existing export prohibitions in respect of certain countries remained in force, exports and re-exports in principle no longer required an export license and the export monopolies in principle were suspended. The Minister of Commerce was empowered to subject exports and re-exports to prior authorization in light of the economic situation and the need to protect the national economy.

January 30. Ordinance No. 74-12 established that commercial imports henceforth would take place within the framework of a “general import program” approved by the Government. There would be only three import regimes: (1) the regime of global import authorizations issued to enterprises; (2) the regime of goods subject to no restriction which could be imported freely, which regime was applicable to all commercial operators; and (3) the regime of quota items (marchandises contingentées) to be imported under the conditions of Decree No. 63-188 of May 16, 1963, which regime would apply only to commercial operators who had received no global import authorizations. Each import commodity could be subject to only one of these three regimes.

Unrestricted goods could be imported without any formality, while restricted goods required an import license. The list of restricted imports was to be established by the Minister of Commerce.

February 23. Notice No. 79 of the Ministry of Finance established that henceforth resident travelers of foreign nationality could upon departure reconvert into foreign exchange any unutilized dinars resulting from the conversion of foreign exchange that had been remitted through the banking system or the Postal Administration.

February 23. Notice No. 81 of the Ministry of Finance modified Notice No. 76 of July 27, 1973 regarding the export of means of payment by travelers. Travelers of Algerian nationality habitually residing abroad could upon return abroad obtain an exchange allocation of one fifth (previously one tenth) of the amount of foreign exchange they had brought in and converted at the border or at an authorized bank; the allocation could not exceed the equivalent of DA 1,000. Any premium obtained on the conversion of the imported foreign exchange had to be returned to the Treasury pro rata upon reconversion of dinars; where the encouragement premium of 12½ per cent had been received, the percentage to be applied to the dinars being reconverted was 11.111 per cent.

March 1. Notice No. 80 of February 23 of the Ministry of Finance increased the basic exchange allocation for private travel by residents from DA 100 a person a trip to DA 300 a person a trip, for travel by air or sea; the allocation for overland travel was increased from DA 100 a person a year to DA 300 a person a calendar semester. The provisions of Notice No. 66 of September 16, 1970 were modified accordingly.

March 4. Instruction No. 27 of the Minister of Finance modified the procedures for the transfer abroad of scholarships.

May 10. Instruction No. 28 of April 20 of the Minister of Finance gave the banks (including the Central Bank) delegated authority to grant travel exchange to government officials and other persons of the public sector when traveling on official business.

July 19. Notice No. 83 of the Ministry of Finance unified the rules applicable to the transfers of wages and earnings received in Algeria by foreign workers, irrespective of nationality or date of entry, having contracts with the State, local authorities, or public sector enterprises or offices.

July 29. Notice No. 84 of the Ministry of Finance established new rules applicable to the transfer of wages and earnings received in Algeria by workers of foreign nationality, other than those active within the framework of technical and cultural cooperation, who were permanently employed in Algeria.

August 8. A new financial agreement with France was signed. It came into force on September 15 and replaced the agreement of December 31, 1962.

September 21. Instruction No. 15 ZF of the Ministry of Finance permitted the transfer abroad of all balances held in comptes départ définitif with the Postal Administration and primary banks by physical persons resident or having resided in Algeria but not having Algerian nationality.

Argentina

(Position on December 31, 1974)

Exchange Rate System

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

All exchange transactions take place in a dual exchange market. In principle, the commercial market covers trade transactions and the financial market all other transactions, but in practice many import and export transactions are settled entirely or in part at the financial exchange rate, and at the end of 1974 the only transactions that took place entirely at the commercial rate were payments for certain essential imports (mainly petroleum and petroleum products, iron ore, and steel). In the commercial market, the Central Bank of Argentina deals with banks and authorized institutions at the rate of $a 5.00 per US$1, buying and selling. In the financial market the exchange rate, which in principle is a fluctuating one, has been stable since May 1972; on December 31, 1974, it was $a 9.98 (selling) per US$1.1

The effective exchange rate for nonpromoted exports (including the basic traditional exports) and for many imports is a mixing rate derived from the conversion of 26 per cent of the amounts concerned at the commercial rate and 74 per cent at the financial rate; the corresponding buying and selling rates are $a 8.65 and $a 8.68 per US$1. Promoted exports (i.e., commodities listed in Decree No. 3255/71, as amended), exports from Tierra del Fuego, all imports of goods in List 2 of Central Bank Circular R.C. 446, imports from LAFTA countries of most goods on the lists of Decrees Nos. 7250/72 and 7251/72, all imports on a compensation basis of goods covered by Decree No. 2618/68, and exports and imports of books, newspapers, periodicals, and gold are settled entirely through the financial market. Imports of pearls, diamonds, platinum, and palladium also are settled entirely at the financial rate, and so are all imports that are exempted by special authorization from the temporary import bans. All foreign exchange received by residents that does not constitute export proceeds must be sold in the financial market.

Sales of foreign exchange to residents for travel purposes (other than official travel) are subject to an exchange tax of $a 2.00 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 individuals and authorized banks or among authorized banks at the prevailing financial rate, subject to freely agreed premiums or discounts. Forward exchange purchases by the public are restricted to those concluded as part of a swap transaction, or to cover import payments made under documentary credit, bank collection, or bank guarantee. Swap operations must be submitted to the Central Bank for prior approval. Forward exchange purchases covering import payments require a 40 per cent deposit3 in local currency for 180 days; this deposit may not be financed by local banks. Forward exchange contracts connected with imports may be extended for a period of up to 180 days from the date of their original maturity; those corresponding to exports may be extended only once, for a period of 30 days (or, where shipment is unavoidably delayed, for the period of the delay). Such contracts may be settled through clearing in the exchange market. The Central Bank intervenes in the financial forward exchange market as a seller of U.S. dollars at a premium which at the end of 1974 was 16 per cent per annum.

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 and exchange houses.

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 public sector require the prior approval of the Ministry of Commerce. Furthermore, certain imports of luxury goods or nonessential goods are prohibited. All imports require a sworn declaration of need submitted by the importer (declaración jurada) to the Ministry of Commerce. Also, sales of foreign exchange for virtually all imports with foreign financing of less than 180 days require the prior approval of the Central Bank; however, cash payment is allowed for imports of LAFTA origin or originating in other developing countries, and for imports of any origin when valued at less than US$10,000. Most goods of LAFTA origin are exempt from the import suspensions.

Independently of these temporary measures, goods imported by official agencies require approval by the Ministry of Economy if payment is extended over a period of more than 180 days. Furthermore, all public sector imports are screened by a special body, the Asesoría de Importaciones del Sector Oficial. Imports of some vehicles, tractors, and engines are prohibited. Imports of capital goods are normally allowed only if there is no local production.

Import taxes include the following: a consular fee of 1½ per cent payable normally in foreign currency on most import invoices; statistical taxes of 1½ per cent or 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. value5 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; 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 nontra-ditional 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 specified capital goods imported by private firms (with the exception mainly of those in lists applicable to LAFTA countries), when valued at over US$10,000 and purchased with foreign or domestic credit, must be made in installments over a period ranging from at least two years to at least five years after the date of shipment, depending on the total value of the goods. Payment in cash at the time of delivery is permitted, however, subject to prior Central Bank approval, if the importer uses exclusively his own funds. The prior approval of the Central Bank is required also when the terms of payment are not in accordance with the prescribed minimum terms or when the amount payable exceeds the equivalent of US$1 million. Advance payments for imports other than capital goods are permitted only in exceptional circumstances.

Payments for Invisibles

With the exception mainly of travel expenses, family remittances, and remittances of profits, dividends, and royalties, payments for invisibles may be made freely through the financial market. However, allocations of foreign exchange for licensing fees, royalties, and technical services are subject to prior approval 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$5,000 for each transaction, but instead are permitted to subscribe to 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$1,500 a person a trip (half of these amounts for children), or, for neighboring countries, US$15 a person a day, subject to a limit of US$450 a person a trip.6 The exchange must be purchased in the financial market and is subject to an exchange tax of $a 2.00 per US$1.7 Of the travel allocation for bordering countries, up to the equivalent of $a 150 may be taken out in the form of U.S. dollar banknotes or travelers checks or the equivalent of $a 600 in banknotes of the country of destination; the limit on banknotes and travelers checks is $a 650 for travel to other countries. 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 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 index value or 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; the proceeds of newspapers and periodicals must be surrendered within 360 days of shipment and the proceeds of books within 18 months of shipment. The full proceeds from promoted exports listed in Decree No. 3255/71 (as amended) and from all goods exported from the special customs territory in Tierra del Fuego are eligible for the financial rate, while all other exports are settled at the mixing rate (74 per cent at the financial rate and 26 per cent at the commercial rate). Certain nontraditional exports are eligible for tax rebates (reintegro and reeṁbolso) or drawbacks.

Many products are subject to export taxes (derechos de exportacíon) calculated on the basis of the f.o.b. sales value or on index values. The tax must be paid before shipment of the merchandise or within the following 30 days when there is a bank aval that guarantees its payment. All exports are subject to a 2 per cent tax on the freight. Certain other taxes on specific exports are also levied. These include a 2 per cent tax, the proceeds of which are destined for the National Institute for Agricultural 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 and consumer durable goods.

Proceeds from Invisibles

Exchange derived from invisibles must be surrendered in the 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 financial market within 30 days of receipt. 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.

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 occur.

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 financial market. Imports by industrial users are subject to a statistical duty of 610 of 1 per cent, and those by others are subject in addition to sales tax. Exports of gold may be carried out by institutions and houses authorized to engage in exchange transactions; they require the prior approval of the Central Bank and the proceeds must be received in convertible currencies.

Changes during 1974

During the year, the buying and selling rates in the commercial market and in the financial market were maintained unchanged, as was the mixing rate applicable to certain imports and exports.

January 1. Resolution No. 1588 increased the sales taxes on imports by 2 percentage points.

January 1. The special tax on exports of agricultural and livestock products was increased from 1.75 per cent to 2 per cent (Decree-Law No. 20340 of May 3, 1973).

January 9. Decree No. 56/74 granted export subsidies of 10 per cent on apples and pears, with effect from January 11.

January 10. Proceeds from exports to Western Europe, Canada, and Japan could again be accepted in U.S. dollars (Central Bank Circular R.C. 487).

January 11. All imports that were exempted by special authorization from the temporary import bans had to be settled entirely at the financial rate (Circular R.C. 488).

January 15. Decree No. 1089/73 of September 11, 1973 extended until the end of 1977 the import prohibitions established by Decrees Nos. 7250/72 (as amended) and 2118/71 (as amended).

January 18. Several import products were exempted from the 180-day deferred payment requirement.

January 20. Decree No. 330/74 lifted the suspension of exports of animal fat and milk fat introduced on August 27, 1973. The Ministry of Economy was authorized to limit the volume exported.

January 24. The tax on fresh fruit exports was removed (Decree No. 273/74).

January 24. Exports of meat meal and bone meal with a protein content higher than 45 per cent were suspended (Decree No. 274/74).

January 25. Decree No. 96 of January 14, together with implementing regulations in Ministry of Economy Resolution No. 98 of January 18 and Central Bank Circular R.C. 489 of January 25, established an optional scheme whereby foreign exchange for the payment of the f.o.b. value of specified imports (certain raw materials and intermediate goods) could be bought entirely in the commercial market instead of at the mixing rate (i.e., 26 per cent of the amounts concerned at the commercial rate and 74 per cent at the financial rate). A special charge, set individually for each eligible product, had to be paid to the Treasury; the charge was calculated to keep the customs value of each product at its June 1973 level. Products benefiting from this option would have to be cleared from customs within 45 days of their arrival. The scheme had retroactive effect for goods shipped after September 15, 1973 and not yet paid for. The overall amount of imports to be admitted under the scheme was to be established by the Central Bank. Among the products affected were industrial raw materials such as chemicals, rubber, and wood, as well as certain steel products. The special charges were phased out during the second quarter of 1974.

January 25. A temporary exemption from advance import deposit requirements was granted, in conjunction with deferred payments (180 days or more), for goods exempted from the deferred payment requirement. Similarly exempted were imports eligible for payment entirely at the commercial rate (Circular R.C. 489) but for which that option was not utilized.

January 25. The National Grain Board was given exclusive rights over the purchase of sunflower seed, as well as over the purchase and export of surplus sunflower oil from the 1973/74 crop (Decree No. 296/74).

January 28. Imports of certain types of wood could no longer be settled at the commercial rate.

January 29. Exports were suspended of all products eligible for import payment at the commercial rate, and of several related products (Decree No. 329/74).

January 30. Exports of frozen chicken were suspended (Decree No. 336/74).

January 30. Exports of certain pig meats were suspended (Decree No. 335/74).

January 30. The conditions for export of specified oil cakes were changed. For each unit of volume sold for domestic production of poultry feed, three units could be exported. The export tax on these oil cakes was reduced from 38 per cent to 20 per cent (Decree No. 334/74).

February 13. Three cooperation and supply agreements were signed with the U.S.S.R. Subsequently it was announced that the U.S.S.R. would extend a line of credit of US$600 million.

February 21. Ministry of Economy Resolution No. 285 added a number of products to the list of goods eligible for import entirely at the commercial rate. One product was deleted from that list. The application of official import prices was suspended for imports eligible for the commercial rate (Circular R.C. 492 of March 5).

February 21. A 25 per cent exchange refund on exports of apples and pears was authorized (Decree No. 613). Export taxes on Virginia-type tobacco were removed (Decree No. 582).

February 22. Decree No. 413/74 implementing Law No. 20557 was issued. Existing and new foreign investments in Argentina had to be registered with the Register for Foreign Investments; new investments required the prior approval of the State Secretariat for the Programming and Coordination of the Economy. For existing companies which elected to remain subject to the previous foreign investment legislation, remittances of profits and dividends would bear a special tax varying between 20 per cent and 40 per cent (see May 20, below). (Law No. 20575 was regulated by Decree No. 414/74 of February 20.)

March 1. Decree No. 680 authorized the export of sheepskins during 1974.

March 1. Decree No. 682 reduced or abolished export taxes on various types of beef and beef products.

March 8. Decree No. 751 regulated Law No. 20545 and provided that imports of capital goods would normally be permitted only if there was no local production.

March 29. The regime under which certain imports could be settled entirely at the commercial rate was suspended.

April 1. Exports of the following were suspended: iron ore, manganese, chrome, various kinds of polyethylene and polypropylene, wood pulp, jute sacking, thermal copper, crude nickel, and unroasted coffee beans.

April 3. The regime under which certain imports could be settled entirely at the commercial rate was reinstated. Nineteen items, however, were taken off the list of eligible commodities (Circular R.C. 494).

April 16. Export duties on dried hides and calf skins were reduced from 46 per cent to 25 per cent.

April 19. Decree No. 1217 extended until May 10 the deadline by which foreign companies were to register their investments in Argentina. (Decree No. 1796 of June 11 extended the deadline to July 1.)

April 24. Resolution No. 43 established the method for calculating the level of imports that would be authorized, based on sales or consumption of imported goods in the previous 4 or 12 months.

April 25. The National Grain Board suspended exports of linseed oil.

April 30. Export taxes on all types of wool were abolished and exchange rebates of 9, 12, and 18 per cent on exports of various types of wool were authorized (Resolution No. 627).

May 9. Decree No. 1387 created an Industrial Supply Office (Oficina de Abastacemiento de Insumos Industriales). It was empowered to authorize the import of certain essential raw materials; when it issued an authorization, no declaración jurada was required. It could also import for its own account.

May 20. Decree No. 1675 provided that exports of meat, meat extracts, and meat offal were to be made only by companies responsible for the processing.

May 20. The Central Bank announced that no applications for the establishment of new foreign exchange agencies would be considered before December 31, 1975.

May 20. Decree No. 1623 imposed a tax of 20–40 per cent on remitted profits and dividends of companies opting not to comply with the new Foreign Investment Law. The tax became payable on May 24.

May 22. Decree No. 1576 authorized the issue on May 15 of the seventh series of U.S. dollar-denominated External Bonds. These could be used for the transfer of overdue dividends, profits, royalties, etc.; such foreign obligations could, however, be transferred through the financial market in amounts up to US$5,000 (Circular R.C. 495 of June 3).

June 5. Raw cocoa was excluded from the optional exchange rate regime of Circular No. 489 (Circular R.C. 496).

June 11. Decree No. 1796 amended Articles 35 and 51 of Decree No. 413/74 (the new Foreign Investment Law) and postponed until July 1 the beginning of the period fixed by Article 2 of Decree No. 1217/74.

June 11. Priority imports were exempted from customs duty.

June 12. Certain imports were exempted from the prior deposit requirement, and import duties on certain goods were suspended.

July. Exports of petrochemicals, cement, paper packaging, some metal products, and certain foodstuffs were suspended.

July. The export tax on corn was reduced from 34 per cent to 8 per cent, and that on sorghum from 45 per cent to zero.

August 2. The exchange allocations for private travel were raised to US$50 a person a day, up to US$1,500 a person a trip (with half of these amounts for children), or for neighboring countries US$15 a person a day, subject to a limit of US$450 a person a trip. Previously, the limits for each trip were US$900 and US$300, respectively. The exchange allocation for study abroad was raised from US$300 to US$500 a month, and that for family assistance from US$50 to US$100 a month for each donor and beneficiary. The allocation for medical treatment abroad also was increased (Circular R.C. 501).

August 5. Central Bank Communication No. 98 stated that the Bank would consider favorably any requests for exemption from the regulations imposed in May 1972, which established a limit of 180 days from the date of the bill of lading to the time of payment for imports. The Bank would allow cash payment for all imports from LAFTA and from other developing countries, and for imports valued at less than US$10,000 from any country.

August 7. A regulation of January 1974 was revoked, which had established that 50 per cent of raw material imports could not be shipped until 90 days after submission of the declaración jurada. Henceforth, 50 per cent of the payments for such imports was to be made 180 days after shipment, and 50 per cent not earlier than 270 days after submission of the declaración jurada.

August. Resolution No. 927 banned the export of copper, aluminum, and tin products.

August. Exports of certain iron and steel products used in the construction industry were banned (Ministry of Economy Resolution No. 1170).

August. Resolution No. 964 established September 15 as the deadline by which investors domiciled abroad had to register their holdings of shares in Argentine companies when having a nominal value of $a 1 million or less, and September 6 as the corresponding deadline where such holdings exceeded either $a 1 million or 5 per cent of the capital of the company concerned.

September. Arrangements were announced whereby foreign owners of shares in Argentine companies could sell the shares to Argentine residents and transfer the full sales proceeds abroad through the financial market.

October 18. Circular R.C. 508 specified provisions governing both the transfer abroad by foreign companies of freight charges paid in pesos in Argentina and the remittances made by Argentine companies to cover their expenses abroad for international shipping. From November 4, bills of lading must specify whether freight charges were paid in Argentina or abroad.

October 28. A Law on the Transfer of Foreign Technology came into force upon publication in the Official Gazette. Contracts relating to patents, licenses, trade marks, etc., henceforth had to be approved by, and registered with, the National Register of Licensing Contracts and Transfers of Technology.

October 31. The deadline expired by which foreign owners of shares in Argentine companies whose total nominal value did not exceed $a 1 million and did not exceed 5 per cent of the capital of the company concerned had to declare their holdings to the Register of Foreign Investments.

November 4. Importers had to submit evidence of customs clearance before banks could effect import payments (Central Bank Telephone Communication No. 3100).

November 8. Exports of most edible oils were suspended.

December 20. Circular R.C. 511 announced new rules for settlements under reciprocal credit agreements, to come into effect on January 1, 1975.

December. Ministry of Economy Resolution No. 64 lifted the ban on exports of dairy products.

December. Ministry of Economy Resolution No. 67 lifted the ban on exports of linseed oil.

December. Ministry of Economy Resolution No. 91 eliminated duties on exports of many meat products and established rebates on such exports.

Australia1

(Position on December 31, 1974)

Exchange Rate System

The par value is 1.09578 grams of fine gold per Australian Dollar. 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 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, 1974, the Reserve Bank’s middle rate for the U.S. dollar was $A 1 = US$1.3270, and the official limits at or within which banks were to effect spot transactions with the public in U.S. dollars were US$1.3295 and US$1.3245 per $A 1. Banks are free to determine their own spot rates for all other currencies, including sterling; rates quoted are based on closing rates in London and New York.

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 not to 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 of Australia. 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 licensing is administered by the Department of Customs and Excise. 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. Under current policy, the balance on an account held by any nonresident may be withdrawn in convertible currency. There are no blocked accounts. Nonresidents may not borrow in Australia.

Imports and Import Payments

With the few exceptions mentioned below, goods may be imported freely without import licenses, and no restrictions are imposed on payments for imports. 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: 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). In addition, import licenses are required for certain types of footwear and certain types of clothing from the Republic of China and Korea. Ships are treated as prohibited imports, and new or secondhand ships may only be imported with the written consent of the Minister for Transport. The treatment accorded to ships also applies to aircraft. 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 up to $A 100 in Australian currency, without special authorization; of this amount, up to $A 4 may be in coins.3

Exports and Export Proceeds

The export of all commodities, unless specifically exempted, requires an export license in terms of the Banking (Foreign Exchange) Regulations, to ensure that the full proceeds are received in a currency and within a period approved by the Reserve Bank; the approved period is within six months prior to or after the date of exportation, but where the value of the goods exceeds $A 10,000 the approved period for receipt prior to the date of exportation is one month, longer periods being allowed only where the prepayment is in accordance with normal commercial practice. 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 are at a reasonable level in relation to export prices in other countries. 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 the orderly marketing of primary products. Provision also exists for government control over the export of defense material. 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 havens 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 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 two years or less, and to purchases by nonresidents of existing securities having two years 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.4 For the time being, 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.

There are some special areas in foreign investments to which the Government has given particular attention. These include the important energy minerals where the policy objective is full Australian ownership. Under announced guidelines for investment in the mining industry in general, the Government has indicated that while Australian participation is sought in minerals exploration, it is more important to secure a high degree of participation at the production stage. All enterprises, Australian and foreign, engaged in the mining industry are required to conform to Australia’s national interest and the Government stands ready to use its powers, including export and exchange control powers, to achieve that objective. However, the promotion of Australian equity and control over resources and industry in the mining sector is viewed as a longer-term objective. The Government has discouraged foreign interests from making significant investments in real estate, particularly for subdivisions for resale for residential purposes and for development in central city areas.

In the fringe banking area, the Government has indicated its view that, generally, there would be little benefit in allowing additional institutions to be established by foreign interests. The Government has also made clear its general objective of preventing increases in foreign ownership and control of existing financial institutions. Furthermore, the Government has said it regards insurance as a “key” industry, and has stated its view that it does not generally favor the establishment of new life and general insurance companies, particularly the establishment of new foreign-controlled companies. The long-standing controls over inward investment in the fields of banking, civil aviation, and radio and television are being continued.

On December 10, 1974 the Government announced a new policy for the control of foreign take-overs. The new policy will enable the Government to examine all take-overs of Australian businesses by foreigners and to prohibit such take-overs found to be against the national interest. It will cover transactions in shares, assets (including mineral rights), and certain other classes of transactions which are means of effecting take-overs and have been used to circumvent the existing foreign take-over legislation. Transactions between foreigners will be treated in the same way as transactions between Australians and foreigners.

Pending the introduction of new legislation, the policy has been put into effect on an administrative basis, and the existing Companies (Foreign Take-Overs) Act, which covers only take-overs effected by acquisition of shares, has been extended until the end of 1975. The existing Act draws in notifications of proposals which, on examination, are shown either not to be foreign take-over proposals or to raise relatively insignificant issues. Within one month of receipt of a notification, the Government is required to decide (1) whether the proposal notified is in fact a foreign take-over proposal, and (2) if it is a foreign take-over proposal, whether it raises issues which require further consideration.

If the Government decides either that a foreign take-over is not involved or that the proposal does not raise issues which require further consideration, then consideration of the proposal under the provisions of the foreign take-over legislation is termination. If the Government decides that a foreign take-over would be involved and that further consideration is required, the proposal is referred for detailed investigation and report within three months. Upon receipt of the detailed investigation report, the Government determines whether the proposal would be against the national interest. The main criterion used in judging a foreign take-over is whether it would lead to sufficient net economic benefits to justify the increase in foreign control of the industry concerned.

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

Gold

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; gold producers in Papua New Guinea are exempt from this requirement. 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. Subject to certain conditions, domestic gold producers are eligible for subsidy under the Gold-Mining Industry Assistance Act; however, at present gold prices the Act is virtually inoperative. 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 goods, including gold jewelry, in excess of a total value of $A 10,000 or when the gold content value of any one article exceeds $A 1,000.

Changes during 1974

January 1. A revised and further liberalized system of tariff preferences for imports from developing countries came into effect.

January 22. The Prime Minister announced certain measures in accordance with the Government’s policy of encouraging Australian direct investment in developing countries where such investment was acceptable to the countries concerned.

February 4. The Government announced substantial reductions, effective immediately, in import duty on domestic appliances and heating and cooling equipment. They were additional to the 25 per cent cut of July 1973. Commonwealth preferences on imports of domestic appliances were eliminated.

February 27. It was announced that quota restrictions on imports of certain types of clothing would be abolished, that Australia would accede to the GATT Arrangement on Textiles, and that a Textiles Authority would be established under the Industries Assistance Commission.

April 10. The Government announced that the customs regulations had been amended to extend the existing export controls on copper and copper alloys to cover goods consisting wholly or principally of copper and/or copper alloy, residues, and other substances obtained from processing copper sulphates and copper oxide.

April 11. New arrangements for imports of handicrafts were announced.

April 22. The Commonwealth Banks Act ceased to apply to Papua New Guinea.

May 28. The amount of money that could be remitted overseas by postal money orders was increased from $A 50 to $A 100 a person a week.

May 30. The Reserve Bank modified its policy with respect to its forward exchange transactions with banks. The discount of 4 per cent per annum on forward purchases of foreign currencies was reduced to zero. The basic forward buying price for U.S. dollars was continued at a discount on the spot rate of 4 per cent per annum. Commercial banks continued to have discretion in determining forward exchange rates for transactions with their customers.

May 30. Australia subscribed to the OECD Declaration on Imports, Exports, and Other Current Account Transactions.

June 12. The Government announced an extension to the system of screening foreign investment proposals to include those which came under notice through the exchange control mechanism and did not involve the take-over of Australian businesses. Existing procedures under which applications for exchange control approval for foreign investment proposals were processed through the Reserve Bank were not affected.

June 17. Traders seeking forward cover in respect of an eligible transaction were required to apply to a bank within seven days of incurring an exchange risk in respect of that transaction. Previously, cover could be written at any time after an exchange risk had been incurred.

June 25. The noninterest-bearing nonassignable deposit required on borrowings for periods greater than two years from overseas lenders was reduced from 33⅓ per cent to 25 per cent. The embargo on foreign borrowings with a maturity of two years or less remained in force.

July 1. An export incentives scheme announced in December 1973 came into effect, to operate for a period of five years.

July 9. Import licensing on certain clothing from the Republic of China was announced.

August 8. The noninterest-bearing nonassignable deposit required on borrowings for periods greater than two years from overseas lenders was reduced from 25 per cent to 5 per cent. The embargo on foreign borrowings with a maturity of two years or less remained in force.

August/September. Export restraint agreements were negotiated with Hong Kong, India, and the People’s Republic of China covering a wide range of knitted and woven goods. Under these agreements, exports of the specified goods to Australia would be stabilized in terms of the import levels established in the 12 months to April 30, 1974.

September 17. It was announced in the budget that companies with overseas borrowings would be liable to a tax on foreign exchange gains.

September 18. Licensing requirements were imposed on imports from Korea covering a range of knitted clothing.

September 25. The fixed relationship between the Australian dollar and the U.S. dollar was discontinued; exchange rates would, until further notice, be determined daily in a manner which ensured that the weighted average value for the Australian dollar remained constant. The par value remained unchanged. The middle rate of $A 1 = US$1.3090 established from September 25 represented a depreciation of 12 per cent vis-à-vis the U.S. dollar.

September 25. The Reserve Bank’s official price for gold was raised from $A 28.35 to $A 32.25 a fine ounce.

September 30. Australia’s interim agreement with New Zealand guaranteeing the tariff preference margins in each other’s markets was extended for a further six months. Motor vehicles and components continued to be excluded from the provisions of the agreement.

October 18. Temporary import restrictions were imposed on certain types of footwear. Such imports would be limited during October 1, 1974~September 30, 1975 to a level 20 per cent greater than imports of each item in the year ended June 30, 1973.

October 30. Legislation was introduced to reconstitute the Export Payments Insurance Corporation as the Export Finance Insurance Corporation (EFIC), to operate as an export financing institution as well as a credit and investment insurer and guarantor. EFIC’s new function would supplement existing financing facilities for the provision of export finance for medium-term and long-term sales of Australian capital goods. EFIC commenced its export financing activities on February 1, 1975.

October 31. The Minister for Minerals and Energy announced details of the Government’s policy on the development of Australia’s uranium resources.

November 3. The Government announced guidelines for foreign equity participation and control in the mining industry. While the Government sought Australian participation in minerals exploration, it was considered more important to secure a high degree of Australian participation at the production, rather than the exploration stage. All enterprises, Australian or foreign, engaged in the mining industry, were required to conform with Australia’s national interest; the mechanism for achieving this objective was the residual powers of export and exchange controls. Where important existing ventures were under foreign control, the promotion of Australian equity and control over resources and industries in the mining sector was viewed as a longer-term objective.

November 11. The noninterest-bearing nonassignable deposit requirement on overseas borrowings for more than two years was suspended. Concurrently, the embargo on overseas borrowings with a maturity of two years or less was modified to apply only to overseas borrowings of less than six months. Modifications to the controls over indirect forms of borrowings and transactions having a similar effect on capital inflow would be announced later. (It was announced on January 14, 1975 that the minimum period for which deposits by nonresidents could be accepted by financial intermediaries had been reduced from two years to six months. There was also a reduction, from two years to six months, in the minimum period to maturity in respect of nonresidents’ purchases of fixed-interest securities. These restrictions applied where the funds tendered by or on behalf of overseas residents were remitted to Australia on or after February 2, 1973. However, they no longer applied to investments by nonresidents aggregating less than $A 10,000 in any 12-month period. Certain other conditions affecting indirect forms of borrowing and transactions having a similar effect on capital inflow remained in effect. These were (1) the provision whereby brokers, solicitors, etc., could hold for a maximum of one month, funds brought in for settlement of specific share acquisitions, etc., subject to the submission of quarterly reports to the Reserve Bank on their holdings of nonresidents’ funds; and (2) the restrictions on deferment of payments due to overseas residents in respect of imports, services, dividends and interest, prepayment for exports, and increases in indebtedness through intercompany accounts.)

November 13. Customs duties on imports of motor vehicles were increased by 10 percentage points. It was announced that the additional duties would be removed when imports of completely built-up vehicles were reduced to 20 per cent or less of total registrations and maintained that proportion for a specified period. (With effect from February 1, 1975 temporary quota restrictions were imposed on imports of completely assembled passenger automobiles and light commercial motor vehicles.)

December. An export restraint agreement was negotiated with Korea covering imports of knitted clothing. The voluntary restraints replaced the system of quotas imposed on such imports from Korea on September 18.

December 3. Tariff quotas were introduced on imports of acrylic yarns, knitted or crocheted fabrics of man-made fibers, and towels. The quotas would be effective for periods of up to two years.

December 9. The Prime Minister announced a program of action for 1975 aimed at reducing pressures on certain industries arising out of import competition.

December 9. Short-term tariff quotas were announced on woven man-made fiber fabrics, polyester, polyamide yarns, and certain clothing items.

December 10. The Treasurer announced that the Companies (Foreign Take-Overs) Act of November 2, 1972 was being extended until December 31, 1975 and that more comprehensive legislation to control foreign take-overs of Australian businesses would be introduced, which would cover not only share transactions, as at present, but also other assets, including mineral rights. In addition, the new legislation would cover transactions between foreigners in the same way as those between Australians and foreigners, and would close a number of loopholes disclosed by the operation of the existing legislation. Take-overs involving assets of less than $A 1 million would not be affected.

December 23. The Banking Act, 1974 and certain sections of the Taxation Administration Act, 1974 came into effect. The Banking Act, 1974 provided for the repeal of Section 39 of the Banking Act, 1959-73 (the exchange control regulation-making power), and the insertion of new provisions designed principally to broaden the scope of exchange control. It validated those acts, transactions, etc., which might have been declared invalid or unexpressible by reason only that the proper exchange control authority had not been obtained. (Such validation does not preclude the right of the authorities to prosecute persons for not having obtained the necessary approval.) It also provided for the extraterritorial application of the regulations. In addition, the Banking Act, 1974, in conjunction with the Taxation Administration Act, 1974, provided a more comprehensive legislative basis for taxation screening arrangements with regard to acts and transactions between Australian residents and countries designated as tax havens. (The countries designated as tax havens are the Bahamas, Bermuda, the British Solomon Islands Protectorate, the British Channel Islands, the British Virgin Islands, the Cayman Islands, Gibraltar, Grenada, Hong Kong, the Isle of Man, Liberia, Liechtenstein, Luxembourg, Nauru, Netherlands Antilles, Panama, Switzerland, and Tonga.) The existing tax screening of both capital and current transactions with the New Hebrides continued to operate, with certain minor exceptions.

December 23. A number of amendments to the Banking (Foreign Exchange) Regulations, primarily of a consequential nature, with regard to the above amendments to the Banking Act, 1959-73, came into operation.

Austria

(Position on December 31, 1974)

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, 1974, the authorized banks’ buying and selling rates for the U.S. dollar were S 17.08 and S 17.18, respectively, per US$1. Forward premiums and discounts are, in principle, left to the interplay of market forces.

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

Administration of Control

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

The customs 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, the purchase of Austrian securities in Austria, or the purchase of real estate in Austria. Balances may be freely converted into any foreign currency. Transfers between these accounts are free.

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

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

Imports and Import Payments

All commodities not included in the Annex to the Foreign Trade Law are free of import licensing and may be imported from any country without quantitative restriction. All goods included in the Annex require licenses. Most of these goods are free of quantitative restriction. For many goods licenses are granted by the customs, at the time of clearance, when they are imported from any country other than Rhodesia.1 Nearly all imports from GATT countries, their associated territories, and some other countries2 are liberalized.3 Some nonagricultural imports are admitted under an automatic licensing procedure when originating in Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland, or Romania. 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 Czechoslovakia and Japan. Discretionary individual licensing is applicable to all other private imports not covered by the procedures listed above. Licenses are usually granted if the imports concerned do not adversely affect domestic industries; in many cases, they are issued in accordance with quotas established in bilateral trade agreements.

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

Most inward capital transfers, most transactions that could lead to such inflows, and most borrowing from nonresidents are at present restricted. Public sector borrowing abroad has been resumed. The acquisition by nonresidents of Austrian securities, shares or participations in Austrian companies or firms, and Austrian real estate is subject to individual approval by the National Bank.4 At present, direct investments by nonresidents normally are permitted only when related to manufacturing, small business (except construction), or the importation and distribution of foreign goods.

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 normally are restricted. Approvals are granted particularly, but not exclusively, for (1) investment credits for producing enterprises and (2) import and export finance. The granting of permissions for commercial credits to finance imports of consumer goods, especially passenger automobiles, is restricted. Only loans from nonresident relatives to residents up to S 260,000 a borrower a year are at present licensed freely.

The short-term foreign assets and liabilities in convertible currencies of authorized banks are not subject to limitation, but any increase in their schilling liabilities to nonresidents over the level of April 30, 1974 is subject to the provisions of a gentlemen’s agreement with the National Bank providing for a supplementary or minimum reserve requirement that sterilizes 75 per cent of such increases.5 Furthermore, the domestic credit institutions are not to repatriate their liquid foreign currency balances or call 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, provided that the proceeds of the credit are not used within Austria, to grant credits secured by mortgages in Austria or abroad. Domestic insurance companies may conclude with nonresidents life insurance contracts in Austria.

Transactions and operations mentioned in the 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 exchanges6 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 afore-mentioned 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 Austrian National Bank is authorized by this law to deal in gold as defined therein; the Bank has granted a number of general permissions widely liberalizing the domestic gold trade, but does not itself buy or sell gold or gold coins, except in transactions with monetary authorities of other countries or with international financial institutions. The Bank has authorized credit institutions, exchange offices, and coin dealers to buy or sell 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 (re-strikes) 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 16 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 1974

During the year, public sector borrowing abroad was resumed.

January 1. Following the expiration of the payments agreement with the German Democratic Republic, settlements with all countries took place in convertible currencies. The exchange control regulations henceforth distinguished two groups of countries, “multilateral member countries” and “multilateral nonmember countries”; the exchange control concept of “bilateral countries” ceased to be applied for the time being.

January 1. In accordance with the free trade agreement with the EEC, import duties on industrial products of EEC origin generally were reduced by a further 10 per cent.

January 1. Additional tariff reductions under Austria’s scheme of generalized tariff preferences for imports from developing countries came into effect.

January 1. The validity of all existing unilateral tariff reductions (introduced under the price containment program that began in 1969) was carried over into 1974.

January 1. The suspension of the liberalization of inward capital movements was extended until June 30, 1974 by Foreign Exchange Announcement DE 8/73 of December 14, 1973.

January 1. A new general license regarding the sale of domestic securities to nonresidents replaced the corresponding general license in effect since October 1, 1973. A new global quota of S 275 million was set for the first half of 1974.

March 1. The reserve requirement under the gentlemen’s agreement of August 18, 1971 between the National Bank and the credit institutions (which called, inter alia, for interest-free deposits with the National Bank equal to 75 per cent of any increase in banks’ schilling liabilities to nonresidents) was eased by a change in the base date for the calculation of the deposit requirement, from August 13, 1971 to December 31, 1973.

May 15. The National Bank concluded a gentlemen’s agreement providing for a continuation of the restrictions on the expansion of domestic bank credit, which, however, would be relaxed from June 30 in two ways—the base date was moved up from December 31, 1973 to June 30, 1974, and new credits in foreign currencies granted to nonbank residents would be excluded from the calculation.

May 17. The margins observed by the National Bank, autonomously and without formal obligation, in respect of the currencies participating in the European common margins arrangement, were widened from 2¼ per cent to 4½ per cent either side of the cross-parities. The “rate” communicated to the Fund remained unchanged at S 1 = SDR 0.0423597. As a result, the schilling was effectively revalued.

May 30. Austria signed the OECD Declaration on Imports, Exports, and Other Current Account Transactions. (On January 8, 1975 Austria informed the Fund that it subscribed to the Voluntary Declaration on Trade and Other Current Account Measures for Balance of Payments Purposes.)

June 19. Foreign Exchange Announcement DE 1/74 continued the suspension of the liberalization of inward capital movements by extending until December 31, 1974 the provisions of Announcement DE 8/73.

June 30. The general license permitting credit institutions to sell a limited amount of domestic securities to nonresidents (up to a global quota of S 275 million) was extended unchanged until December 31, 1974.

June 30. The gentlemen’s agreement of August 18, 1971 between the National Bank and the credit institutions which called, inter alia, for interest-free deposits with the National Bank equal to 75 per cent of any increase in banks’ schilling liabilities to nonresidents was extended until December 31, 1974 and the base date for the calculation of the deposit requirement was changed to April 30, 1974; also, the credit institutions undertook not to sell foreign currency in order to increase their schilling liquidity, and not to repatriate their foreign assets prior to the maturity date.

July. The Austrian authorities announced that they had in recent months introduced certain adaptations of the application of the capital controls, with a view to easing some of the restrictions on inflows; these adaptations concerned the practice of granting licenses for inward direct investment in the secondary sector (i.e., the manufacturing industry and small business, except construction) and of commercial credits granted by nonresidents to residents on exports and imports (except for the financing of imports of consumer goods).

August 8. Further amendments to the scheme of generalized tariff preferences for developing countries were published, which would come into effect on January 1, 1975. 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.

October 18. Under the GATT Arrangement Regarding International Trade in Textiles, Austria concluded an agreement with Egypt, India, the Republic of Korea, and Pakistan according to which exports of cotton textiles from these countries to Austria would be regulated.

December 12. The National Bank announced the temporary suspension with effect from January 1, 1975 of the gentlemen’s agreement requiring 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. 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.

December 17. An agreement was concluded with Czechoslovakia regarding compensation for nationalized Austrian assets in Czechoslovakia.

December 18. It was announced that the restrictions on the expansion of domestic bank credit were being extended until June 30, 1975; credits in foreign currencies to nonbank residents granted after June 30, 1974 would continue to be excluded from the calculation.

December 18. It was announced that the general license permitting credit institutions to sell a limited amount of domestic securities to nonresidents was being 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 considered that applications for additional sales would be granted liberally once the quota had been taken up in full. Any unutilized quotas for the second half of 1974 would be cancelled on December 31, 1974.

December 19. With effect from January 1, 1975, Foreign Exchange Announcement DE 2/74 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 termination of the last clearing arrangement.

December 19. Foreign Exchange Announcement DE 3/74 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 would remain in force on the acquisition by nonresidents of domestic securities and of 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.

Bahamas

(Position on December 31, 1974)

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 and 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, 1974.

The Bahamas notified the Fund on November 28, 1973 in a communication received on December 5, 1973, that it 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 in Grand Bahama and New Providence 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, there being some differences between practices in New Providence on the one hand and Grand Bahama and the Family Islands on the other hand. 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 ¾ 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$5,000 a person a year for genuine business or professional travel.5 The amount of B$ 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. Furthermore, an allowance for family support up to B$3,000 a year a remittor is granted. Temporary residents may remit all 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, but the import of domestic banknotes is subject to the approval of the Central Bank.

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.6

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.

Bahamian securities may be purchased and sold freely by all persons, irrespective of residence, through authorized agents.7 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 nor 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 of 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. 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 (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 for up to 180 days when it is by way of documentary bills in respect of current shipments of goods between the Bahamas and the rest of the world. They may also provide credit to nonresidents for up to nine months to finance the import into the Bahamas within that period of primary products where this has been traditional. 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 10 per cent is imposed on gold jewelry imports from Commonwealth countries (30 per cent for other countries), and a 7½ per cent stamp tax payable to the customs is 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 eight commemorative gold coins in denominations of B$ 10, B$20, B$50, and B$ 100; these are legal tender but do not circulate.

Changes during 1974

June 1. The Central Bank of the Bahamas was established to replace the Bahamas Monetary Authority.

June 30. The administration of exchange controls in Grand Bahama was brought into conformity with that of the Family Islands, by the delegation to authorized banks in Grand Bahama of the approval authority for import payments, travel exchange, and cash gifts.

Bahrain

(Position on December 31, 1974)

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 sterling based on London rates for the U.S. dollar against sterling. On December 31, 1974, the Monetary Agency’s buying and selling rates for sterling were BD 0.915 and BD 0.934 per £ stg. 1, respectively. In their dealings with the public, commercial banks are required to observe the Monetary Agency’s rates, but they are authorized to charge up to BD 0.005 per £ stg. 1, buying and selling. The banks’ rates for other currencies are based on the Monetary Agency’s rates for sterling and the London market rates for the currencies concerned against sterling. On December 31, 1974, their buying and selling rates for the U.S. dollar were BD 0.3955 and BD 0.399, respectively, per US$1.1 The Monetary Agency does not deal with the public.

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. Payments of “unreasonable amounts” to destinations outside the Sterling Area may be examined by the banks and/or the Monetary Agency on a discretionary basis. In practice, however, outward payments are not restricted. 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

No distinction is made between accounts held by residents and those held by nonresidents.2

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 Portugal and 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.

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 1974

January 23. The Bahrain Monetary Agency started operations as successor to the Bahrain Currency Board. In addition to the functions of the latter, the decree of December 5, 1973 creating the Agency bestowed on it the functions of an exchange control authority.

March 19. The embargo on exports of petroleum products to the United States was lifted.

July 10. The embargo on exports of petroleum products to Denmark and the Netherlands was lifted.

Bangladesh

(Position on December 31, 1974)

Exchange Rate System

No par value for the Bangladesh currency, the Taka, has been established with the Fund. The official exchange rate is Tk 18.9677 = £ 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, 1974, the spot buying and selling rates of the Bangladesh Bank (the central bank) for authorized dealers were Tk 18.9521 per £ stg. 1 and Tk 18.9990 per £ stg. 1, respectively. On December 31, 1974, the spot buying and selling rates (telegraphic transfers) of authorized dealers were Tk 18.9365 per £ stg. 1 and Tk 19.0302 per £ stg. 1, respectively.

A buying rate of Tk 30 per £ stg. 1 is applicable to certain remittances made to Bangladesh by Bangladesh nationals working abroad who are not being paid out of Bangladesh resources. An exchange tax of 30 per cent is applied to foreign exchange sold by authorized dealers for travel or stay abroad for specified purposes.

Forward transactions of the Bangladesh Bank are confined to purchases of sterling and U.S. dollars. Forward facilities at authorized banks are available for export proceeds in sterling and U.S. dollars.

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 three 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 agreements1 normally must be effected through clearing accounts specified in the agreements. Settlements in respect of trade with Burma also are made through a special account. 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 convertible foreign exchange,2 or in takas from a Nonresident Taka Account of a bank in any country of the Overseas Sterling Area. All settlements with Pakistan, 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 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.

Bangladesh nationals working abroad are permitted to open Convertible Nonresident Taka Accounts. 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 upon arrival in Bangladesh; and (3) transfers from other Convertible Nonresident Taka Accounts. The accounts may be debited, without restriction, for the following purposes: (1) all local disbursements; (2) transfers to other Convertible Nonresident Taka Accounts; (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 purposes by the account holder, or by any other person authorized by him with the permission of the Bangladesh Bank. The conversion of foreign exchange for credit or debit against the accounts is effected at the authorized dealers’ usual buying and selling rates.

New 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 1974, items permissible for import were classified into three broad categories: (1) consumer goods permitted to be imported by “commercial importers,” including the TCB; (2) raw materials and packing materials permitted to be imported by “industrial consumers” recognized as such under an entitlement system; and (3) items permitted to be imported exclusively by the TCB and/or jointly by the TCB and private sector importers. The list of commodities that could be imported under this import policy comprised some 47 items; 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 Pakistan, 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 Pakistan, Rhodesia, and South Africa. Licenses issued to commercial importers are valid for a period of six months from the date of issuance. There is a list of commercial importers, and items they are permitted to import are specified. Licenses are normally issued to commercial importers for importation of one item only, and the total value of such a license could not exceed Tk 10,000 during the July-December 1974 “shipping” period; licenses issued under bilateral trade or payments arrangements were also counted toward this limit. 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.

All licenses and other forms of import permits are subject to a tax of 20 per cent of the face value. The following goods are exempt: food grains; fertilizers; crude and refined petroleum, oil, and lubricants; pesticides; crude and refined edible oils; baby foods; raw cotton; cotton yarn and cloth; drugs and medicines (including raw materials and packing materials for the pharmaceutical industry); refined coconut oil; and “nondevelopment” imports by the Government.

Irrevocable letters of credit must be opened within three months from the date of issuance of licenses. 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, trucks, fire engines, bus and truck chassis, 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, and for imports financed from balances in Convertible Nonresident Taka Accounts under a Wage Earners’ Scheme.

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, the amount granted is £ stg. 75 for two weeks of business travel, and about £ stg. 400 for medical treatment. An exchange tax of 30 per cent is imposed on sales of foreign exchange for these purposes. 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. 150 a month (net of tax) if the terms of employment have been approved by the Government.

Nonresident travelers may take out 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 150 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 Pakistan, Rhodesia, and South Africa are prohibited. The Bangladesh Jute Export Corporation has a monopoly over the export of raw jute, and the Jute Mills Corporation over exports 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. Exporters of 102 items receive a cash subsidy equivalent to 10, 30, 40, 50, or 75 per cent of the net f.o.b. value. In addition, 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 Convertible Nonresident Taka Accounts. Remittances in convertible currencies made to their dependent relatives by Bangladesh nationals working abroad and not receiving payment out of Bangladesh resources are accorded a premium resulting in an effective buying rate of Tk 30 per £ stg. 1; this treatment also applies to travelers checks and foreign currency notes in convertible currencies brought into Bangladesh by Bangladesh nationals working abroad (provided these were declared upon arrival).

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 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, 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 30 million. Tax holidays are granted for five or 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. 150 a month a person, and savings from earnings, retirement benefits, and personal assets on termination of services or retirement. Repatriation of foreign capital, including capital gains and profits reinvested within the first 10 years from the commencement of production, may take place over a period of 10 years. Government guarantees against nationalization are provided for a period of 15 years, and in the event of nationalization after this period, compensation is to be paid on a fair and equitable basis.

A premium resulting in an effective buying rate of Tk 30 per £ stg. 1 is applied to convertible currency remittances by Bangladesh nationals working abroad of accumulated cash savings and of the sales proceeds from property abroad.

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 1974

January 3. The import policy for the first half of 1974 was announced. Certain luxury items, such as automobiles, air-conditioners, and refrigerators, remained on the banned list. Public sector corporations henceforth were allowed to import their requirements directly, instead of through the TCB.

March 1. The Bangladesh Bank began to rediscount bills of exchange drawn in pounds sterling and U.S. dollars payable at London and New York, provided that they were drawn against irrevocable letters of credit and that the maturity of bills did not exceed 180 days from the date they were purchased by the Bangladesh Bank.

April 11. The requirement that letters of credit must be opened within three months from the date of issue of licenses was waived with respect to licenses relating to the July-December 1973 “shipping” period.

June 28. The Premium Scheme for Home Remittances was extended for another year.

July 1. An exchange tax of 30 per cent was introduced on foreign exchange sold by authorized dealers for travel or stay abroad for the following purposes: education; medical treatment; business; attendance at a seminar, symposium, conference, or meeting; and any other purpose that might be specified by the Government. (No other purposes were specified.)

July 1. An import license tax of 20 per cent of the face value of all licenses and other forms of import permits was introduced. The tax also applied to imports requiring only letters of credit opened against a specific allocation of foreign exchange. The following goods were exempt: food grains; fertilizers; crude and refined petroleum, oil, and lubricants; pesticides; crude and refined edible oils; baby foods; raw cotton; cotton yarn; cotton cloth; drugs and pharmaceuticals; refined coconut oil; and “nondevelopment” imports by the Government.

July 8. Foreign travel by Bangladesh nationals, except for official, business, or study purposes, became subject to an exit permit obtained from the Government.

July 16. A revised industrial investment policy was announced and new industrial investment guidelines were issued. They increased the permissible degree of foreign private investment.

July 20. The import policy for the period July-December 1974 was announced. The main features were as follows: Industrial units engaged in export were issued additional licenses over their normal share of imports, on the basis of their export performance and at a percentage fixed by the Government. Import licenses to commercial importers were issued on a cash, aid/loan/credit, and barter basis, on production of proof of opening of letters of credit against licenses issued to them during the preceding shipping periods. Bangladesh nationals working and earning abroad were permitted to import out of their earnings abroad specified items listed in the import policy.

July 31. Bangladesh nationals working abroad were permitted to open Convertible Nonresident Taka Accounts in Bangladesh. These accounts could 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 upon arrival in Bangladesh; and (3) transfers from other Convertible Nonresident Taka Accounts. The accounts could be debited, without restriction, for the following purposes: (1) all local disbursements; (2) transfers to other Convertible Nonresident Taka Accounts; (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 purposes by the account holder, or by any other person authorized by him with the permission of the Bangladesh Bank. The conversion of foreign exchange for credit or debit against the accounts was effected at authorized dealers’ usual buying and selling rates.

August 19. Bangladesh nationals working or living abroad and visiting Bangladesh temporarily were allowed to retain up to £ stg. 5 a person or £ stg. 15 a family (or an equivalent amount in other foreign currencies), which they could take out again, provided the amount was declared upon arrival in Bangladesh.

August 20. The following additional types of foreign exchange receipts became eligible for the Premium Scheme for Home Remittances, under which an effective buying rate of Tk 30 per £ stg. 1 is applied: (1) travelers checks and foreign currency notes in convertible currencies brought into Bangladesh by Bangladesh nationals working abroad, provided they were declared upon arrival; and (2) remittances by Bangladesh nationals working abroad of accumulated cash savings and of sales proceeds from properties abroad.

November 26. An agreement on trade in jute products was signed with the EEC.

December 3. The cash subsidy scheme for exports, under which exporters of specified products received a cash subsidy equivalent to 30 per cent of the net f.o.b. value of exports, was extended until further notice; for exports of certain products effected on or after September 25, 1974, the rate of subsidy was changed to 10, 40, 50, or 75 per cent.

December 17. Agreement was reached to terminate the trade and payments agreement with India with effect from January 1, 1975. Outstanding contracts for coal, jute, newsprint, tobacco, and fresh fruits, however, were extended up to February 28, 1975, for settlement in Indian rupees. The special clearing arrangement for the financing of travel between India and Bangladesh would be terminated at the same time.

Barbados

(Position on December 31, 1974)

Exchange Rate System

The par value is 0.444335 gram of fine gold per Barbados Dollar, but no exchange transactions take place at the par value. The Central Bank of Barbados maintains a fixed relationship for the Barbados dollar with sterling at the rate of BDSS4.80 = £ stg. 1. Consequently, all exchange transactions other than those in sterling or currencies linked to sterling take place at fluctuating rates.

The Central Bank is authorized to levy a commission charge of up to 1 per cent on inward and outward transfers of sterling. On December 31, 1974, the commission charges in transactions with authorized banks were ⅛ of 1 per cent on inward transfers and ½ of 1 per cent on outward transfers. The commission which may be charged by commercial banks in dealings in sterling with their customers is regulated by the Central Bank. On December 31, 1974 these charges were 316 of 1 per cent buying, and ⅝ of 1 per cent selling, for telegraphic transfers, and ¼ of 1 per cent buying, and ⅝ of 1 per cent selling, for mail transfers and drafts. The Central Bank maintains fixed buying and selling rates at ⅛ of 1 per cent either side of parity for the East Caribbean dollar, the Guyana dollar, and the Trinidad and Tobago dollar, while for the Jamaica dollar the Central Bank’s buying and selling rates are determined on the basis of the prevailing sterling/U.S. dollar rate. Authorized dealers apply commission charges for these currencies of 516 of 1 per cent, buying and selling. Exchange rates for convertible non-Sterling Area currencies are based on the daily buying and selling rates in the London market. On December 31, 1974, the authorized dealers’ buying rates for the U.S. dollar were BDS$200.4 per US$100 for banknotes and BDS$202.1 for checks; their selling rate was BDS$207.1 per US$100.

Under arrangements with the East Caribbean Currency Authority and the Central Bank of Trinidad and Tobago, the Central Bank of Barbados purchases at the parity rates of BDS$1 = EC$1 and BDS$1 = TT$1 banknotes issued by these monetary authorities and repatriates the currency in return for reciprocity of treatment with respect to collections of Barbados notes.

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 to and 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. 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. Amounts standing to the credit of 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, certain petroleum products, certain foodstuffs and beverages, and certain garments. Individual licenses are also required for imports of commodities subject to the provisions of the Oil and Fats Agreement between the Governments of Barbados, Guyana, Grenada, St. Lucia, St. Vincent, Trinidad and Tobago, and Dominica. 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 BDSS500 and Barbados notes up to BDSS100. Nonresident visitors are not permitted to take out any Barbados currency but may freely export any foreign currency previously brought in.

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited and licenses are required for the export of goods to the People’s Republic of China, the CMEA countries, North Korea, Tibet, and North Viet-Nam. Specific licenses are required for the export of certain goods to any country; these goods include rice, cane sugar, rum, molasses, and certain other food products, 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 up to normally 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 set-tling-in allowances from their declared assets at the rate of BDS$24,000 a family unit a year. The Central Bank will also consider applications from foreign nationals who have resided in Barbados and are proceeding to take up permanent residence abroad, provided 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 of Barbados 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

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.

Changes during 1974

January 21. The Central Bank reduced its commission charge on inward transfers of sterling from 516 of 1 per cent to ⅛ of 1 per cent, and increased the charge on outward transfers of sterling from ⅜ of 1 per cent to ½ of 1 per cent.

January 25. The Central Bank’s special arrangements for the purchase of Guyana banknotes were terminated.

January 30. The Central Bank’s special arrangements for the purchase of Jamaica banknotes were terminated.

February 13. Exports of sugar to the United Kingdom were suspended.

February 28. Banknotes issued by the East Caribbean Currency Authority ceased to be legal tender in Barbados.

February 28. Exchange control was extended to transactions with residents of all Sterling Area countries and to transactions in the currencies of those countries. Sterling Area currencies other than the Barbados dollar henceforth were regarded as foreign currencies. Current payments and capital transfers to Sterling Area countries ceased to be exempt from exchange control approval. All securities payable or optionally payable in Sterling Area currencies other than Barbados dollars became foreign currency securities and were subject to deposit requirements.

February 28. Nonresidents’ purchases of real estate in Barbados required exchange control permission. Such purchases for private use were no longer allowed to be financed in part with local credit.

March 1. Any borrowing abroad by authorized dealers to finance their domestic operations henceforth required the approval of the Central Bank; commerical banks’ borrowing in the Euro-currency markets subsequently was restricted.

March 1. Settlements with residents of other Caricom territories henceforth were required to be made in the currency of the territory concerned or in Barbados dollars to the debit or credit of an External Account. Previously, settlements could take place in any Sterling Area currency.

March 1. The Central Bank henceforth would normally accept exchange control applications only from authorized dealers and authorized depositaries, and no longer from attorneys, companies, and individuals.

March 12. The Central Bank was prepared to consider applications for cash gifts to nonresidents in excess of the previous limit of BDS$500 a donor a calendar year, provided there were compassionate grounds or special reasons for the gift.

March 25. Exchange Control Circulars Nos. 10 and II advised authorized dealers regarding the distinction between residents and nonresidents, and set out the conditions under which they could conduct External Accounts for nonresidents.

March 25. Circular No. 12 delegated to authorized dealers the authority to approve specified “sundry payments” which were outside the scope of other circulars. They included “official payments,” up to the amounts certified by the Permanent Secretary, the Accountant General, or the chief executive of the agency or board concerned, income tax refunds, and insurance premiums on policies expressed in foreign currencies (but not East Caribbean dollars) which were issued prior to March 1, 1974.

March 25. Authorized dealers were given authority to release foreign exchange to cover cash gifts up to a limit of BDS$50 a donor a year. The basic exchange allocation for cash gifts remained unchanged at the equivalent of BDSS500 a donor a year, but permission had to be obtained from the Central Bank to utilize this allocation in full.

March 29. Circular No. 15 set out the basic emigration allowance for nationals at BDS$24,000 a family unit a year.

March 29. The basic exchange allowance for private travel abroad by residents was increased from BDS$ 1,000 to BDS$ 1,500 a person a calendar year, and that for business travel from BDS$ 1,000 to BDS$4,500 a person a calendar year. Residents traveling abroad could carry on their person or in their luggage foreign currency in the form of notes and coins up to the equivalent of BDS$500 a person and Barbados notes up to BDS$100.

March 29. Nonresidents traveling outside Barbados could obtain from authorized dealers a travel allowance of the equivalent of BDS$500 a person a calendar year for either private or business travel. They could obtain additional travel exchange if payment was made from an External Account, in any foreign currency, or with the proceeds of foreign currency previously brought into Barbados.

March 29. The exchange allowance for educational expenses abroad was increased from BDS$2,500 to BDS$5,000 a person for an academic year.

March 31. Barbados formally withdrew from the East Caribbean Currency Authority.

April 1. The extension of exchange control to the Sterling Area was ratified by Parliament by adoption of the Exchange Control (Amendment) Act 1974-13.

April 5. The importation of 13 items (mainly foodstuffs) was banned, and the importation of 8 food items was put under specific licensing and made subject to a quota (BDSS4.1 million for 1974). Imports of Caricom origin were exempt.

April 18. Imports of a few trade items (mostly fruits, preserved vegetables, and paper products) from non-CARicoM sources were placed under specific licensing.

April 30. The British Caribbean Currency Board coin ceased to be legal tender in Barbados.

May 17. Circular No. 16 dealt with foreign nationals holding work permits in Barbados and operating bank accounts locally. Where they were treated as nonresidents, their net salaries could be freely credited to an External Account, but debits for transfers to other External Accounts could not without Central Bank permission exceed in any year 25 per cent of the net annual salary credited to the account concerned.

June 10. Circular No. 17 set out directions which should be observed in the granting of loans and overdrafts, the issue of guarantees and indemnities, and the issue of confirmation of bank credits by authorized dealers.

June 10. Circular No. 18 advised authorized dealers that the normal exchange control directions regarding transactions between residents and nonresidents did not apply to persons resident in Portugal, Rhodesia, and South Africa; all applications involving persons resident in those countries had to be referred to the Central Bank.

June 10. Circular No. 19 set out the circumstances in which authorized dealers could maintain Foreign Currency Accounts for residents and nonresidents.

June 13. Exports of groundnuts were placed under license.

July 9. Exports of tortoise shells were placed under license.

August 13. Imports of certain soft drinks from non-CARicoM sources required a specific license.

August 26. Imports of metal bituminous and roofing material required a specific license.

August 30. The de facto embargo on imports from Portugal was lifted.

September 24. Imports of bottles, jars, appliances for use as cooking stoves, and applicances for the refrigeration and freezing of food required a specific license.

October 25. Imports of flour, meal, and flakes of potato required a specific license.

November 25. Imports of cigars, cheroots, and other manufactured tobacco required a specific license.

Belgium-Luxembourg

(Position on December 31, 1974)

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 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. No announced margins are maintained for any other currency. On December 31, 1974 the buying and selling rates for the U.S. dollar in the official market were BF 36.0225 and BF 36.2225, 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-Luxem-bourgeois 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, 1974 the free market rates between banks for the U.S. dollar were BF 36.12 buying, and BF 36.20 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 countries2 and the convertible area (all other countries).

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

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

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

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

Nonresident Accounts

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

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

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.

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

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

Imports and Import Payments

All imports of Rhodesian origin are prohibited. Individual licenses are required for (1) all imports from Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hong Kong, Hungary, Japan, North Korea, Outer Mongolia, Poland, Romania, the U.S.S.R., and North Viet-Nam,5 and (2) a number of imports from all other countries except Luxembourg.6 The commodities for which individual licenses are required include many textile products, certain agricultural products and foodstuffs, coal and petroleum products, and diamonds. All other commodities are free of license and quantitative restriction; only a 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 countries2 must be made by crediting Belgian or Luxembourg francs to a Bilateral Account related to the country concerned; payments to Zaïre, however, may also be made in zaïres through a convertible account in Zaïre. Foreign and domestic banknotes may be exported freely.

Exports and Export Proceeds

The export of all goods to Rhodesia is prohibited in accordance with UN Security Council Resolution No. 253(68) of May 29, 1968. Individual licenses are required for specified exports to all countries except Luxembourg.7 All other exports are free of license; only a 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. 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-ā-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, i.e., coins and bars, are exempt from value-added tax in Belgium.

Changes during 1974

January 1. The negative interest charge (“commission”) levied by banks in Belgium and Luxembourg on accruals to balances in Convertible Accounts was suspended.

January 2. The Japanese yen was included among the officially quoted currencies.

January 21. Official intervention to maintain 2¼ per cent margins in respect of the French franc was suspended.

January 25. A ceiling was imposed on the net foreign asset position of Belgian and Luxembourg banks, i.e., on their net creditor spot positions in foreign currencies on the official market. The individual ceilings were fixed in keeping with a bank’s size and turnover, with a general minimum of BF 20 million, and subject to a 10 per cent “leeway.”

January 28. Outward payments in respect of investment earnings could again be made through either exchange market, at the option of the remittor. (Since May 1971, they had been channeled through the official market.)

January 28. The prohibition of May 11, 1971 on the payment of interest by banks in Belgium and Luxembourg on balances in Convertible Accounts was lifted. Also, banks in both countries were again permitted to accept time or notice deposits on Convertible Accounts, provided the maturity did not exceed one year.

January 28. Residents of Belgium and Luxembourg could again resort freely to credit from authorized banks in foreign currencies on the official market for the execution of payments in favor of nonresidents. Since July 24, 1973 such advances from banks in Belgium and Luxembourg had been subject to individual authorization by the IBLC.

February 1. The gentlemen’s agreement between the National Bank of Belgium and the Belgian financial institutions was extended in modified form, with eased provisions, until March 31. The principal change was that, with effect from February 1, the reserve requirements on Belgian franc holdings in Convertible Accounts (both with respect to their level and any increases or decreases) were revoked; these requirements had been 25 per cent of net liabilities during the base period (August 31-November 1, 1972) plus (minus) 100 per cent of any increase (decrease) since that period. Also, the reserve requirement applicable to the debtor spot position in foreign currencies on the official market was abolished.

February 21. The Luxembourg Banking Control Commissioner reduced to zero the rate of reserve requirements on Convertible Accounts held with banks in Luxembourg.

April 1. The gentlemen’s agreement on reserve requirements between the National Bank and Belgian financial institutions was replaced by “recommendations” by the National Bank to the credit institutions. (Of these recommendations those that were issued to banks were made mandatory under the law of December 28, 1973. This was also the case for the recommendations that were later issued to the banks.) Export credits covered by Créditexport and credits for vital imports were henceforth deductible from the base on which the permissible growth rate of bank credit was calculated.

May 30. Belgium and Luxembourg signed the OECD Declaration on Imports, Exports, and Other Current Account Transactions.

July 15. Imports of cattle and beef from “third” countries were suspended in accordance with a decision of the EEC Ministers of Agriculture.

August 1. Payments and receipts in respect of all transactions in List C could be effected through either exchange market.

August 1. The one-year limit on the maturity of time or notice deposits on Convertible Accounts was removed in Belgium and Luxembourg.

August 1. The maximum term for import payments was increased from three to six months after importation, and the receipt of advance payments for exports was authorized, without any limit on the amount, up to three months prior to the anticipated date of exportation. Previously, advance collection of export proceeds exceeding BF/Lux F 5 million required prior authorization of the IBLC.

August 1. The maximum term between the consummation of a forward purchase of foreign exchange and the use of that exchange to make a payment abroad was increased from 5 working days to 15 working days. (If no such payment was made, the foreign exchange had to be resold on the official market by the bank executing the initial transaction.) It was specified that during that period the foreign exchange could not be used in any direct or indirect way to obtain a remuneration.

August 1. Banks in Belgium and Luxembourg no longer were required to request documentation in addition to written explanations from beneficiaries of payments for invisibles from abroad made through the official market or Convertible Accounts, provided the amount did not exceed BF/Lux F 10 million.

August 1. The maximum amount of export, import, and transit trade transactions for which exchange control documentation was not required was raised from BF/Lux F 10,000 to BF/Lux F 50,000.

August 26. Belgium subscribed to the Fund’s Voluntary Declaration on Trade and Other Current Account Measures for Balance of Payments Purposes.

August 28. Payments for goods of Egyptian origin (other than rice, raw cotton, and crude petroleum) and covered by documentary credit opened with a commercial bank in Egypt on or after this date had to be effected entirely in Belgian francs, and 50 per cent of the total invoice value had to be paid in at the National Bank. These measures applicable in Belgium and Luxembourg implemented an indemnification agreement with Egypt signed on June 16, 1971.

October 15. The Luxembourg Banking Control Commissioner issued guidelines to all banks operating in Luxembourg with respect to foreign exchange dealings. Notably, banks were advised (1) to appoint an executive board member for the daily supervision of foreign exchange operations; (2) to ensure that all oral transactions were written down on the same day and countersigned by the responsible controller; (3) to maintain a clear separation of function between bookkeeping operations and foreign exchange dealings; and (4) to forbid foreign exchange dealers from entering into transactions on their own account.

October 21. With effect from October 28, Belgian and Luxembourg banks were required to report daily both the opening and liquidation of forward exchange contracts in foreign currencies against Belgian or Luxembourg francs, classifying them according to whether they were transacted (1) on the official or free market or (2) with nonresidents, resident banks, or other residents. Total forward exchange transactions between two foreign currencies were also to be reported.

October 22. Banks in Luxembourg were required to submit monthly reports on their forward positions on the free market (claims and liabilities) in all currencies in which the uncovered risk exceeded BF/Lux F 25 million, with effect from October 31.

November 5. Commercial banks in Belgium were permitted to expand medium-term export credits without limit and short-term export credits at a 24 per cent annual growth rate; previously, the maximum growth for both was 14 per cent.

November 7. The IBLC issued a clarification to the effect that the reporting of forward exchange transactions by banks in Belgium and Luxembourg was to include forward operations with a term of five days or less; such transactions had to be indicated separately.

December 4. Investment funds operating in Luxembourg were required to submit quarterly reports on their portfolio holdings.

December 6. Banks in Luxembourg were informed that, with minor modifications, the restrictions on credit granted in francs to Belgian firms and firms established in Belgium were being extended by six months until June 30, 1975 (or until such earlier date as the Belgian restrictions on the growth of bank credit might be terminated).

December 6. The banking agreements in Luxembourg on a special commission and on monetary reserve requirements were extended through the calendar year 1975. The reserve requirement against balances in Convertible Accounts and the special commission on such balances would, until further notice, remain unchanged at zero per cent.

December 17. Banks in Luxembourg were required to submit quarterly reports on the maturity structure of their claims and liabilities in foreign currencies, with effect from the end of February 1975.

Bolivia

(Position on December 31, 1974)

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 the public sector, buying foreign exchange from the Government, the official enterprises, including the Bolivian Mining Corporation (Comibol), and private export firms, and selling foreign exchange to the Banco del Estado, the commercial banks and exchange houses, and the Government and its official agencies. 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, 1974 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.1 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, and Uruguay 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, 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 Economic and Planning Council and to control by the Financing Institute.

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

Payments for Invisibles

Payments for invisibles may be made freely. 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 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. The marketing of minerals is a state monopoly; in practice, Comibol and the medium-sized mines export their own production and Comibol and the Mining Bank most of that of the small mines of the private sector. The small mines may export the rest of their production themselves or through traders.

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 Economic and Planning Council and to control by the Financing 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.

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 29, 1969 further regulated the purchase and sale of gold, silver, and platinum by the Central Bank and the Mining Bank. The Central Bank purchases gold at the free market price, but only as a marketing agency for the Mining Bank, and not for its own account. Comibol exports all the gold it produces at the free market price. One private company and the Mining Bank are also allowed to export gold at the free market price. The Mining Bank is authorized to sell a specified quantity of gold annually to domestic jewelers and dentists and is obliged to sell the remainder to the Central Bank. Residents may freely purchase, hold, and sell gold in any form other than bars in Bolivia.

Changes during 1974

February 13. Supreme Decree No. 11345 provided for rebates on taxes and duties for several industrial inputs. These rebates were to be phased out during 1974 and 1975.

February 18. Supreme Decree No. 11333 reduced export taxes (regalias) on metals. In June, further reductions took place.

February 22. Decree-Law No. 11358 lifted for 90 days the import licensing requirement for certain foodstuffs.

April 22. Supreme Decree No. 11450 permitted foreign financial institutions to establish themselves in Bolivia, provided they promoted productive activities.

June 14. Supreme Decree No. 11520 created a Financing Institute which would be in charge of the coordination, programming, and attraction of external credit.

June 28. Supreme Decree No. 11550 authorized foreign banks in Bolivia to continue to accept deposits beyond the June 1974 deadline set by Decree No. 9998 of 1971.

Botswana

(Position on December 31, 1974)

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. However, no exchange transactions take place at the par value, since an exchange rate policy of independent managed floating has been adopted. The South African Reserve Bank on December 31, 1974 quoted a middle exchange rate for the U.S. dollar of US$1.4500 per R 1. Exchange rates are based on the South African Reserve Bank’s rates for the U.S. dollar against 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 usually licensed in conformity with South Africa’s import regulations. 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 1974

June 24. South Africa discontinued the existing practice of maintaining a fixed rate of exchange between the rand and the U.S. dollar for lengthy periods and, instead, adopted an exchange rate policy of independent managed floating. A new middle rate was set for the U.S. dollar at R 1 = US$1.50 (formerly R 1 = US$1.49). The middle rate was changed in 1974 on a number of occasions.

August 22. Botswana notified the Fund that it accepted the Voluntary Declaration on Trade and Other Current Account Measures for Balance of Payments Purposes.

September 6. It was announced that within two years Botswana would establish a central bank and issue its own currency, which would replace the rand as legal tender. Botswana withdrew from the negotiations with South Africa, Lesotho, and Swaziland on a formalization and revision of the Rand Monetary Area arrangements. Past arrangements would continue, however, until the central bank started operations.

September 6. Swaziland issued its own currency, the lilangeni, which was at par with the rand.

Brazil

(Position on December 31, 1974)

Exchange System

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

Exchange transactions are carried out by the Central Bank, the Bank of Brazil, the authorized banks, and the exchange houses. The Central Bank operates in 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, 1974, the buying and selling rates quoted by the monetary authorities to the public were Cr$7.395 and Cr$7.435 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;1 (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 10 per cent is applied to proceeds from exports of quartz chips.2

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 portion 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, since March 1971, exchange transactions have been 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. Since April 1972 authorized banks have also been 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 inter-ministerial Foreign Loans Commission (Cempex).

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

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

The Customs Policy Council (CPA), established within the Ministry of Finance, is responsible for formulating guidelines for tariff policy, subject to the legal powers of the National Monetary Council and the National Council of Foreign Trade. 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. 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, 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. 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 semipublic sector (direct organs of the Government, autonomous agencies, public enterprises, and companies with mixed public and private participation). All other imports may be grouped into the following two broad categories: (1) imports that are free of any requirement to secure prior administrative documentation, e.g., samples without commercial value, certain educational material, parts and accessories (valued up to the equivalent of US$5,000) for machinery, instruments, ships, and aircraft; and (2) imports that require an import certificate. The bulk of imports falls into the second category. The import certificate is issued subject to the presentation of data on the foreign price of the commodity and other relevant information Cacex may require. Import certificates are issued on an f.o.b. basis; as a rule, they are issued freely and without undue delay and 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.

As a general rule, imports may be cleared through customs before an exchange contract is closed. However, the maximum period for which payments for imports may be delayed is 180 days from the date of shipment; this period may be extended to 360 days at the discretion of Cacex for imports of raw materials, spare parts for direct use by the importer, and capital goods which are not produced domestically. Cash payment on sight is prescribed for goods subject to import duty at a rate of 55 per cent or more.4 Financing arrangements for imports in which credit terms exceed 360 days in amounts over US$500,000 require the prior approval of the Central Bank. Any bona fide interest involved in the above credit arrangements is approved freely. Spot contracts may be closed if the contract is intended to settle drafts, at sight or on maturity, and the appropriate shipping documents are presented. Spot exchange contracts must be settled within 2 working days. Forward contracts, for up to 180 days, may be closed when a letter of credit is being opened, or to pay for goods already shipped. Letters of credit must be opened within 5 working days from the date of the exchange contract. Commercial banks ordinarily require a guarantee deposit for their own protection for forward exchange contracts; the amount of the deposit varies with the credit standing of the customer. When the contracts are liquidated, guarantee deposits may be used for payment of the foreign exchange concerned. In certain cases, interest at about 0.5 per cent a month is charged on the portion of the forward contract not covered by a deposit. 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 nacionals or the establishment of a minimum import price (pauta de valor mínimo) or of a reference price.

Payments for Invisibles

Payments for current invisibles related to income from foreign capital, royalties, and technical assistance are governed by the provisions of the Foreign Investment Law. In addition to certain restrictions on remittances stipulated in that law, limits are placed, by virtue of an internal Central Bank measure of September 18, 1965, on remittances of all royalties and technical assistance fees (see below). Authorized banks may sell foreign exchange up to the equivalent of US$300 a month for personal remittances abroad. The sale of foreign exchange for travel abroad is subject to special regulations as described below. Payments for other current invisibles require the approval of Gecam, 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: (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.

Remittances abroad of foreign capital, income from foreign investments and reinvestments, and remittances in respect of royalties and technical assistance are governed by Decree No. 55762 of February 17, 1965, which contains the regulations implementing the Foreign Investment Law (Law No. 4131, as amended by Law No. 4390). Remittances are allowed only when the foreign capital concerned, including reinvestments, and the contracts for patents and trademarks, and for technical, scientific, and administrative assistance, are registered at Firce in accordance with the established rules (see section on Capital, below). 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. 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 if their average over a three-year period exceeds 12 per cent of the registered capital and reinvestments. For foreign capital that produces goods or services for luxury consumption, remittances of profits are limited to 8 per cent per annum of 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 green coffee are required to surrender, without compensation, a portion of their proceeds in the form of a contribution quota. The cruzeiro proceeds from the contribution quota are transferred to the Coffee Defense Fund. The contribution quota is set from time to time by the IBC and is fixed in terms of foreign currency; on December 31, 1974 it was US$29.76 a bag.5 The contribution quota is 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 quota, at the prevailing official market rate of exchange. Thus, the effective 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, 1974, the minimum registration prices, depending on the grade of coffee and the port of shipment, were US$0.64, US$0.63, US$0.60, and US$0.585 a pound. The corresponding cruzeiro payments a bag, after deduction of the contribution quota, were Cr$404.65, Cr$394.89, Cr$365.61, and Cr$350.97. Thus the exchange rates for proceeds from coffee exports on sales at the minimum registration price were Cr$4.790, Cr$4.749, Cr$4.616, and Cr$4.545 per US$1. The effective exchange rate for coffee exports is higher to the extent that sales are made in excess of the minimum registration price.

A special regime of individual quotas is applied for exports of soluble coffee to all markets. Proceeds of exports of spray-dried soluble coffee in excess of individual quotas are subject to a contribution quota. On December 31, 1974, the minimum registration price for spray-dried soluble coffee was US$1.45 a pound and the contribution quota was US$0.05 a pound. Thus the exchange rate for proceeds from exports of soluble coffee in excess of individual quotas on sales at the minimum registration price was Cr$7.140 per US$1; the minimum registration price for freeze-dried soluble coffee was US$2.15 a pound, and exports were exempt from individual quotas.

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 (but see note 1). 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, one of 5 per cent on export proceeds from tanned or processed hides of wild animals, and one of 10 per cent on export proceeds from quartz chips (but see note 2).

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

Proceeds from Invisibles

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

Capital

Capital inflows in the form of financial loans under Central Bank Resolution No. 63 (as amended) or under the provision of the Foreign Investment Law (Law No. 4131) are subject to ceilings and require the prior approval of the Central Bank. The prior approval of Cempex is also required for borrowing by the public sector, when the foreign funds originate with official financial institutions abroad for borrowing by the private sector, and when the transaction is to be guaranteed by the National Treasury or, on its behalf, by any official credit institution. Moreover, import financing with credit terms exceeding 360 days in amounts over US$500,000 requires the prior approval of the Central Bank. Furthermore, certain borrowing abroad is subject in principle to deposit requirements which as at the end of 1974 were suspended (see below). 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. 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 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.

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 1974 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.

New foreign currency loans in the form of financial credits under Resolution No. 63 and Law No. 4131 are subject in principle to a deposit requirement of 40 per cent of the cruzeiro equivalent of the foreign exchange proceeds of loans. (This deposit requirement has been suspended, however, since February 8, 1974.) When enforced, the requirement is subject to the following regulations. The deposit is held at the Central Bank, which bears the exchange risk on the deposit. The deposit earns no interest, and is returned to the borrower proportionately with each amortization under the loan agreement. Loans registered prior to August 31, 1973 and renegotiated by borrowers 30 days prior to their original maturity are exempt from the deposit requirement. Renewed loans could be contracted with the original lender or with new lenders and must be consistent with the conditions for loans laid down by the Central Bank. Also exempt are loans from international agencies or foreign governments and suppliers’ credits on imports of commodities originating in industrial countries.

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.

Table of Exchange Rates

(as at December 31, 1974)1

(cruzeiros per U.S. dollar)
BuyingSelling
4.545-4.790 (Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)2 Exports of green coffee effected at a price equal to the minimum registration price, for payment at sight.
6.656 (Official Market Rate less 10% Contribution Quota)

Exports of cocoa beans and cocoa products. Exports of raw hides of wild animals. Exports of quartz chips.
7.025 (Official Market Rate less 5% Contribution Quota)

Exports of tanned or processed hides of wild animals.
7.140 (Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)

Exports of spray-dried soluble coffee in excess of individual quotas.
7.395 (“Manual Market” Rate) Foreign banknotes and travelers checks.7.435 (“Manual Market” Rate) Foreign banknotes and travelers checks.
7.395 (Official Market Rate)

All other export proceeds except those from beef exports. Other receipts.
7.435 (Official Market Rate) Imports. Invisibles.3 Capital.

Excluding brokerage fees.

The minimum registration price (in U.S. dollars a pound) varies with the quality of the coffee and the port of shipment. The rates shown make allowance for payment of the contribution quota, which on December 31, 1974 was US$29.76 a bag.

A different effective rate applies to certain remittances of profits and dividends (see section on Payments for Invisibles, above).

Excluding brokerage fees.

The minimum registration price (in U.S. dollars a pound) varies with the quality of the coffee and the port of shipment. The rates shown make allowance for payment of the contribution quota, which on December 31, 1974 was US$29.76 a bag.

A different effective rate applies to certain remittances of profits and dividends (see section on Payments for Invisibles, above).

Gold

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

Changes during 1974

January 1. A new program for exports of coffee came into force which had been announced by the IBC on December 24, 1973, as follows: (1) export shipments during the first half of 1974 would be sharply curtailed, compared with the same period of 1973; (2) the IBC would no longer negotiate sales of coffee with foreign buyers; (3) minimum registration prices for green coffee would be raised over the period January-June, in monthly steps, to US$0.620-0.680 a pound, depending on the grade of coffee and the port of shipment; and (4) contribution quotas on exports of green coffee would be reduced from US$31.45 to US$21.50 a bag in January and would then be raised, in monthly steps, to US$28.50 a bag in June.

January 1. The provisions of IBC Resolution No. 812 of December 24, 1973 came into force. They increased the minimum registration prices for exports of green coffee, in amounts ranging from US$0.035 to US$0.05 a pound for shipments between January and June. The minimum registration prices for shipments in June were established at US$0.68, US$0.67, US$0.64, and US$0.625 a pound, depending on the grade of coffee and the port of shipment. Contribution quotas on exports of green coffee during the first six months of 1974 were established at US$21.50, US$22.35, US$23.35, US$24.85, US$26.55, and US$28.50 a bag for shipments in January, February, March, April, May, and June, respectively. Minimum registration prices for exports of spray-dried soluble coffee were fixed at US$1.33, US$1.34, and US$1.35 a pound for shipments during April, May, and June, respectively. The minimum registration price for exports of freeze-dried soluble coffee shipped from April to June 30 was fixed at US$2.00 a bag. The contribution quota on exports of spray-dried soluble coffee was reduced to US$0.05 a pound for shipments from January 1 to June 30.

January 1. By virtue of IBC Resolution No. 743 of October 3, 1973, the minimum registration prices for shipments during January and February of spray-dried and freeze-dried soluble coffee were increased from US$1.26 and US$1.91 a pound to US$1.28 and US$1.94 a pound, respectively.

January 1. The restrictions on exports of raw groundnuts expired which had been imposed by Cacex Communication No. 450 of November 7, 1973.

January 1. An export quota for 1974 of 80,000 tons of beef came into force which had been established by Central Bank Resolution No. 271 of November 19, 1973.

January 1. The revised customs tariff contained in Decree-Law No. 1295 of December 21, 1973 came into force.

January 1. Decree-Law No. 1299 of December 28, 1973 came into force. It empowered the Customs Policy Council to increase import duties from January 1974 until December 1975. This replaced the Council’s authority under Decree-Law No. 1169 of April 29, 1971 to increase import duties by up to 100 percentage points.

January 1. Cacex Communication No. 461 of December 29, 1973 came into effect. It restricted exports of pinewood; a quota of 500,000 cubic meters was set for 1974.

January 2. CPA Resolution No. 2009 exempted from import duty, until the end of 1974, tires and tubes for trucks and buses.

January 9. The Minister of Mines and Energy announced that the volume of oil imports in the first half of 1974 would be reduced by 5 per cent.

January 9. CPA Resolution No. 1993 suspended for one year the import duties on certain iron and steel products. (This measure was revoked by CPA Resolution No. 2203.)

January 9. CPA Resolution No. 1997 reduced to zero per cent for one year the import duties on certain sizes of tires, especially for agricultural tractors. With effect from February 1, this suspension was extended to other types of tires by CPA Resolution No. 2009.

January 10. Decree-Law No. 1306 extended until the end of 1977 the exemption from customs duties and the industrial products tax on imports by manufacturers for their own use (imports up to 10 per cent of the increase in their export sales during the preceding year).

January 18. CPA Resolution No. 1999 suspended for one year the import duty on a quota of 40,000 tons of aluminum and aluminum alloys.

January 21. A contribution quota of 10 per cent was 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. The export prohibition of April 1971 was lifted (Central Bank Resolution No. 276).

January 30. CPA Resolution No. 2002 increased by 50 percentage points the import duties on a number of consumer goods.

January 31. The buying and selling rates of the monetary authorities were changed from Cr$6.180 and Cr$6.220 per US$1, respectively, to Cr$6.30 and Cr$6.34 per US$1.

January 31. IBC Resolution No. 816 established the minimum registration prices (US$0.6850) and a fixed contribution quota (US$31.60) for exports of green and soluble coffee for shipment during July.

January 31. Agreement in principle was reached that settlements with Greece would be placed on a convertible currency basis. (At the end of 1974, settlements were still being channeled through the clearing accounts.)

February 5. Cacex Communication No. 467 extended the prohibition on exports of groundnuts until November 1974 and specified that groundnut oil exports would be permitted, provided that an equal volume of soybean oil or sunflower-seed oil was imported, and provided that for every kilogram exported 1.5 kilograms would be sold on the domestic market.

February 8. The deposit requirement of 40 per cent of the cruzeiro equivalent of the foreign currency proceeds of borrowing abroad was suspended. Existing deposits were to be released gradually, in accordance with the repayment schedule approved upon registration of each loan. The prescribed minimum maturities for borrowing abroad were maintained unchanged (Central Bank Resolution No. 279).

February 14. The exemption from customs duty for imports of corn expired which had been granted by CPA Resolution No. 1785 of August 14, 1973.

February 19. The price paid by Cacex for soybeans under the system of required domestic sales in proportion to exports was increased from Cr$45 to Cr$51 a bag of 60 kilograms, and for soy bran and cake from Cr$800 to Cr$900 a ton. For every 3 tons of soybeans exported, 1 ton had to be sold to Cacex, and for every 5 tons of soy bran exported, 1 ton had to be sold to Cacex (Central Bank Resolution No. 280).

February 19. The Interministerial Price Council suspended exports of pig iron. The suspension was lifted on October 15 by Cacex Communication No. 491.

February 20. The buying and selling rates of the monetary authorities were changed to Cr$6.415 and Cr$6.455 per US$1, respectively.

February 22. Exports of soy meal and soybeans were made subject to the sale to Cacex of 1 ton for every 5 tons exported and 1 ton for every 3 tons exported, respectively. Exports of soybean oil were not allowed (Cacex Communication No. 470).

February 27. The exemption from customs duty for imports of aluminum expired which had been granted by CPA Resolution No. 1789 of August 27, 1973.

March 4. CPA Resolution No. 2034 suspended for 1974 the import duty on a quota of 2.7 million tons of wheat.

March 4. An export quota of 80,000 tons of raw cotton was established for the 1974 crop year. Previously, exports were suspended (Cacex Resolution No. 471).

March 12. CPA Resolution No. 2058 suspended for two years the import duties on instruments, equipment, and machinery for the mining and construction industries.

March 12. CPA Resolution No. 2060 suspended for 1974 the import duties on engines and parts for agricultural tractors.

March 12. CPA Resolution No. 2061 suspended for 1974 the import duty on a quota of 30,000 tons of jute.

March 12. CPA Resolution No. 2072 increased by 35 percentage points, for a period of two years, the import duties on certain medical and hospital equipment.

March 13. The contribution quota on exports of frozen, chilled, or fresh boneless beef was reduced from US$500 a ton, f.o.b., to US$250 a ton, f.o.b. (Gecam Communication No. 233).

March 19. The President announced that an increased inflow of foreign capital was necessary. Existing legislation governing foreign investment in Brazil would remain in force, and investment of petrodollars was welcomed. New foreign borrowings would be approved as long as the debt-servicing ratio remained acceptable.

March 29. The contribution quota on exports of chilled, fresh, and frozen beef (US$250 a ton f.o.b.) was abolished; that on exports of processed beef (US$250 a ton f.o.b.) also was abolished. Exports of beef remained subject to quota. For exports of processed beef, a quota of 25,000 tons a year was set for 1974 and 1975 (Central Bank Resolution No. 283).

March 31. The exemption from customs duty on imports of oils derived from cotton, corn, soybeans, groundnuts, and sunflower seeds expired which had been granted by CPA Resolutions Nos. 1900 and 1901 of November 7, 1973.

April 10. The domestic sales requirement for exporters of soybeans and soy bran and cake was abolished. It was replaced by a prior registration requirement. Exports of soybean oil remained prohibited (Cacex Communication No. 475).

April 15. IBC Resolution No. 869 established a contribution quota of US$27.80 a bag for exports of raw, roasted, and ground coffee for shipment between April and July.

April 16. The buying and selling rates of the monetary authorities were changed to Cr$6.515 and Cr$6.555 per US$1, respectively.

April 18. The Minister of Finance announced that no new controls would be imposed on private foreign borrowings in 1974.

May 7. Cacex authorized the resumption of corn exports.

May 8. CPA Resolution No. 2121 granted exemptions from import duty for one year on certain components and parts for tractors, road-building machinery, and automobiles. (The exemptions were discontinued for automobiles by CPA Resolution No. 2203 of June 25.

May 15. Pricing policies for coffee exports were modified. Foreign importers were offered a discount in the form of a certificate to be applied to their future purchases of coffee. The discount was US$0.08 a pound for sales registered on May 15, 16, and 17, after which it fluctuated. This bonus scheme expired on June 30.

May 15. Law No. 6045 modified the powers and structure of the National Monetary Council.

May 21. Central Bank Circular Letter No. 113 announced that foreign funds brought in under Resolution No. 63 could no longer be passed on to unincorporated firms; where they had already been passed on to such firms, the borrowings could not be rolled over on maturity.

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

June 3. The export quota for raw cotton was abolished and exports ceased to be restricted but remained subject to license (Cacex Communication No. 476).

June 5. The buying and selling rates of the monetary authorities were changed to Cr$6.640 and Cr$6.680 per US$1, respectively.

June 7. CPA Resolution No. 2201 suspended, for one year, the import duty on newsprint.

June 21. Decree-Law No. 74199 transferred the responsibility for the Commission on Fiscal Incentives for Special Export Programs (Befiex) and its export incentive programs from the Ministry of Finance to the Ministry of Industry and Commerce.

June 24. Foreign financing was prohibited for imports subject to import duty at 55 per cent or more; henceforth these were permitted only against cash payment on sight, i.e., foreign exchange contracts had to be liquidated on the date of customs clearance; previously, credit terms of up to 180 days were permissible for all imports. For goods subject to duty at less than 55 per cent, payment within 180 days was generally prescribed, but for raw materials and capital goods Cacex could allow credit terms of 181-360 days (Central Bank Resolution No. 289 and Gecam Communication No. 238).

June 24. Central Bank Resolution No. 290 prohibited domestic lending by finance companies for the purpose of financing tourist travel abroad.

June 25. The exemption from customs duty for imports of unprocessed hides and skins expired which had been granted by CPA Resolution No. 1713 of June 14, 1973.

June 25. CPA Resolution No. 2203 revoked most of the resolutions providing for temporary suspensions and reductions of import duties. The only goods remaining exempt were fertilizers, newsprint, raw materials for the chemical industry, certain sizes of tires, nonferrous metals, and equipment goods. (Subsequently, import duties were again suspended for a number of essential commodities, including meat and milk.)

June 25. Additional controls were introduced on the import of civil aircraft and their parts, in the form of prior authorization of a committee in the Air Ministry (Decree No. 74.219).

June 25. Decree-Law No. 1334 increased the import duties on some 400 items classified as “superfluous” imports, mainly consumer goods, by 100 percentage points until the end of 1975, except when the goods were of LAFTA origin or where duties had been bound under the GATT. As a result, the maximum rate of customs duty in force was increased to 205 per cent.

June 25. The buying and selling rates of the monetary authorities were changed to Cr$6.775 and Cr$6.815 per US$1, respectively.

June 26. Minimum registration prices of US$1.45 a pound for spray-dried soluble coffee and US$2.15 a pound for freeze-dried soluble coffee were established for August-December (IBC Resolution No. 879).

June 26. Measures were announced to reduce imports of capital goods not financed externally.

June 28. The validity of import certificates for goods with import duties of 55 per cent or more and for certain foodstuffs and raw materials was reduced from 180 days to 90 days, and only one extension of 90 days would be permitted for such items. The validity was reduced to 60 days for goods subject to price controls. Importers could apply to Cacex for an exemption from these limitations (Cacex Communication No. 478, revoked on January 9, 1975 by Communication No. 500).

June 28. IBC Resolution No. 880 reduced the contribution quota on green coffee from US$35.57 to US$24.00 a bag, with effect from July 1, and stated that the quota would be adjusted automatically in line with the fluctuations of the U.S. dollar against third currencies.

June. The Ministry of Industry and Commerce announced that the sale of majority participations in Brazilian-owned companies to foreign groups required prior consultation with the Ministry.

July 1. Minimum registration prices of US$0.68, US$0.67, US$0.64, and US$0.625 a bag were set for shipments of green coffee during July-September, depending on grade and port of shipment. The contribution quota for such shipments was lowered to US$24 a bag.

July 5. The IBC introduced a discount of US$6 a bag on the minimum registration prices for exports of green coffee.

July 8. Decree-Law No. 1335 authorized the Minister of Finance, subject to a number of conditions, to extend the tax incentives for exports to certain sales in the domestic market by producers of locally manufactured machinery and equipment.

July 9. The buying and selling rates of the monetary authorities were changed to Cr$6.845 and Cr$6.885 per US$1, respectively.

July 10. CPA Resolution No. 2207 suspended until June 30, 1975 the import duty on beef and bullocks.

July 11. Cacex Communication No. 480 established an export quota of 110,000 tons for citrus juice for the 1974/75 crop year.

July 18. The Bank of Brazil was authorized to borrow abroad for the purpose of granting financing to domestic government agencies and public companies.

July 23. Decree-Law No. 1338 canceled the concession whereby a reduction or refund of the 25 per cent withholding tax on remittances abroad of royalties, technical assistance fees, or interest on loans was made available to producers who, directly or indirectly, exported manufactured goods.

July 31. IBC Resolution No. 882 established minimum registration prices for exports of green coffee for the period August 1-November 30, fixed the contribution quota on such exports at US$24.64 a bag, and suspended individual export quotas for green coffee from August 1. (At the same time, minimum capital requirements for coffee exporters were announced.)

August 1. The IBC applied a discount of US$0.04 a pound to coffee sales registered from August 1 and shipped by November 30. The permitted maturity for forward sales of green coffee was extended from three months to six months.

August 1. The three-year nonpreferential trade agreement with the EEC came into effect which had been signed on December 19, 1973 (Decree No. 74.421 of August 15, 1974).

August 2. CPA Resolution No. 2209 reduced import duties on machinery for agricultural or industrial use by up to 50 per cent.

August 15. The buying and selling rates of the monetary authorities were changed to Cr$6.980 and Cr$7.020 per US$1, respectively.

August 15. A reciprocal credit agreement was signed with the Dominican Republic. It came into force on September 1.

August 28. Central Bank Circular No. 230 permitted banks to deposit with the Central Bank the amount of foreign loans under Resolutions Nos. 63 and 64 if the latter had not been taken up by a local borrower within a specified period. The Central Bank would pay interest on such funds based on the London Interbank Offer Rate (LIBOR), remit loan interest abroad, and in certain circumstances absorb the withholding tax.

August 28. Central Bank Circular No. 231 permitted the National Bank for Economic Development and commercial and investment banks to borrow abroad, subject to the conditions of Central Bank Resolution No. 229. They were thus enabled to borrow abroad on terms similar to those available to nonbank firms borrowing directly under Decree-Law No. 4131, but with a minimum maturity of three years.

August 28. CPA Resolution No. 2215 suspended, for one year, the import duties on certain iron and steel products imported by specified firms for the purpose of complementing domestic production.

August 29. Cacex Communication No. 486 suspended exports of quartz, including quartz chips. The suspension was lifted on September 26, when export quotas were applied.

August 30. Decree No. 74.479 established an executive secretariat for the Committee for the Coordination of Foreign Purchasing Policy (CCPCE) to supervise the purchase of priority imports by federal agencies, autonomous state institutions, and mixed-capital companies.

September 13. With effect from September 18, the minimum maturity prescribed for foreign loans under Decree-Law No. 4131 and Resolution No. 63 was reduced from ten to five years.

September 13. The minimum maturity for foreign loans that under Decree-Law No. 1215 were exempt from withholding tax (or subject to refund or reduction of this tax) was reduced from 12 to 8 years (Central Bank Resolution No. 300).

September 18. The buying and selling rates of the monetary authorities were changed to Cr$7.090 and Cr$7.130 per US$1, respectively.

September 30. IBC Resolution No. 891 established new minimum registration prices with effect from October 1 for green, roasted, and ground coffee for shipment up to January 31, 1975. It also increased the contribution quota from US$26.77 to US$27.56 a bag with effect from October 1.

September. The Minister of Finance announced plans to facilitate inward portfolio investment. (On February 10, 1975 the Ministry announced that a bill liberalizing the access of foreign investors to the Brazilian stock exchanges would be submitted to Congress.)

October 2. IBC Resolution No. 895 established the guaranteed cruzeiro prices for washed and unwashed coffee for shipment from February 1, 1975.

October 10. Central Bank Resolution No. 302 introduced a contribution quota of 10 per cent of the f.o.b. value on the export proceeds of quartz chips.

October 15. New arrangements for selective discounts on exports of green coffee came into operation.

October 15. Cacex Communication No. 491 revoked the export prohibition for scrap iron that had been introduced by Communication No. 416.

October 24. Central Bank Resolution No. 305 reduced temporarily the withholding tax on the interest, commission, and expenses on foreign currency loans registered with the Central Bank from 25 per cent to 5 per cent. The National Monetary Council ruled that the reduction did not apply to short-term loans and those for financing imports. Firce Communication No. 24 established that the reduction applied only to interest, etc., paid or credited to parties resident or domiciled abroad from October 25, on foreign loans contracted under Resolutions Nos. 63, 125, and 229.

October 24. Decree-Law No. 1351 modified certain income tax regulations. Income tax on loan interest paid to foreign financial institutions was for tax purposes considered as an operational expense of the borrower. The National Monetary Council was empowered to reduce temporarily the withholding tax on interest, commission, expenses, and discounts paid to parties resident or domiciled abroad, in the light of the exigencies of financial and exchange policy.

October 28. The buying and selling rates of the monetary authorities were changed to Cr$7.180 and Cr$7.220 per US$1, respectively.

November 6. Decree-Law No. 1356 granted exemption from import duties until the end of 1979 for raw materials, machinery, and equipment imported for the use of steel mills.

November 11. The President approved the national fertilizer program, which aimed at self-sufficiency in fertilizer production. Annual foreign exchange savings of some US$950 million (at 1974 prices) were expected on completion.

November 19. The buying and selling rates of the monetary authorities were changed to Cr$7.285 and Cr$7.325 per US$1, respectively.

November 19. Decree No. 74.908 prohibited government departments and agencies and firms with majority government participation from importing consumer goods or buying imported consumer goods in the local market, unless by special and specific prior permission from the President’s Office. Public sector imports of capital goods became subject to a special screening procedure designed to maximize the use of goods of domestic origin.

On the same date, the Economic Development Council issued instructions supplementing the provisions of Decree No. 74.908. These instructions provided the following:

(1) In the government sector, priority in purchasing would be given to nationally produced goods and services.

(2) For the fiscal year 1975, imports to be effected by the various federal ministries, either direct or through their subordinate agencies and enterprises, had to be included in programs to be approved by the President.

(3) The governmental bodies referred to in (2) would be required to prepare investment programs for a period of at least four years, which had to be submitted to the President through the Planning Secretariat for approval. These bodies would also be required to follow certain procedures at the direction of the responsible minister. These included measures to facilitate import substitution and coordinate investment programs, and specific requirements to be met before the making of purchases abroad, as follows: (a) the specification of all equipment and materials needed for any project, to enhance the possibility of utilizing domestically produced goods; (b) direct consultation with companies and professional bodies, and submission of the program to Cacex, in accordance with the agreement on participation of national industries; (c) prior consultation with the Central Bank, the National Development Bank, and/or the Bank of Brazil, for information on internal and external financing terms; and (d) consultation with Cacex, or if necessary, the CCPCE, concerning any preference as to supplier country, in the light of the balance of trade with the country concerned, and concerning the prospective benefit of purchases in specific suppliers’ markets in support of Brazilian exports.

Cacex would approve import applications from government organs and agencies only if these instructions were being strictly observed, and without prejudice to the conditions laid down for purchases of petroleum, wheat, and other state monopoly products. Furthermore, state governments were encouraged to adopt a procedure similar to that outlined in the mandatory regulations laid down for imports by the Federal Government and its agencies.

November 26. Decree No. 74.965 regulated the acquisition of land by foreign physical and juridical persons.

November 26. Decree No. 74.966 rationalized the regulations issued under Decree-Law No. 37 of 1966, which governs the duty exemptions or reductions granted for imports, principally of capital goods.

November 28. The Ministry of Industry and Commerce announced that quota and tariff measures would be taken to reduce imports in 1975 by 30-40 per cent below the current level.

November 29. The Bank of Brazil suspended its forward cover facilities in dealings with banks.

December 2. Decree-Law No. 1364 of November 28 extended from the end of 1975 to the end of 1976 the increases in import duty introduced by Decree-Law No. 1334 of June 25, added a large number of consumer goods to those on which duties were increased by 100 percentage points, and increased considerably the duties on a number of other items, including some items on which tariffs had been raised in June and some raw materials and semimanufactured goods. Goods on which import duties had been bound under the GATT were exempt.

December 20. The buying and selling rates of the monetary authorities were changed to Cr$7.395 and Cr$7.435 per US$1, respectively.

December 31. The exemption from customs duty for imports of fresh, chilled, and frozen beef expired which had been granted by CPA Resolution No. 1887 of October 19, 1973.

December 31. Central Bank Resolution No. 315 increased the contribution quota on export proceeds from quartz from 10 per cent to 40 per cent of the f.o.b. value, with effect from January 1, 1975.

Burma

(Position on December 31, 1974)

Exchange Rate System

The par value is 0.186621 gram of fine gold per Burmese Kyat. The central rate is K 4.8138 per US$1, and Burma avails itself of wider margins. On December 31, 1974 the buying and selling rates for the U.S. dollar of the Union of Burma Bank, the sole authorized dealer in foreign exchange, were K 4.7631 and K 4.8583, respectively, per U.S. dollar. The Bank’s buying and selling rates for Sterling on the same date were K 11.2931 and K 11.5189, respectively, per £ stg. 1.1

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 1974

January 18. The Union of Burma Bank increased the “commission” applied to the buying rate for sterling from 15 per cent to 20 per cent. This “commission” was discontinued on July 1.

July 26. Union Bank Notification No. 97 canceled the previous notifications concerning the legal parities of foreign currencies, with effect from August 1. The Union Bank would from time to time certify the appropriate exchange rates, based on the central rate and the prevailing rates in international markets for the currencies concerned.

August 17. A special payments arrangement was concluded with India. Special rupee accounts would be opened by the Punjab National Bank in the name of the Union of Burma Bank, to record payments in respect of a specified amount of imports and exports. The payments arrangement came into operation on September 21.

Burundi

(Position on December 31, 1974)

Exchange Rate System

The par value is 0.00935443 gram of fine gold per Burundi Franc, corresponding to 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 currencies1 which are based either on its quoted rates for the Belgian franc and the official market rates for the currencies concerned in Brussels, or, for the Kenya shilling, the Rwanda franc, the Tanzania shilling, the Uganda shilling, and the zaïre, on their official parities.

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 Portugal, Rhodesia, and South Africa are prohibited.2 All imports except trade samples and merchandise not intended for sale and valued at FBu 20,000 or less require licenses; these are issued freely, except for certain used clothing. Applications for licenses must be submitted to the Bank of the Republic of Burundi on a form entitled Import License and Payment Authorization. The approval of such an application constitutes an authorization also to obtain foreign exchange. With certain exceptions, applications for amounts under FBu 100,000 are approved by the authorized banks. Import licenses must be presented to the customs officials when the goods are cleared through customs. The license is valid for a period of 12 months starting at the end of the month following that of validation (six 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.

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 declared profits after taxes to their foreign nonresident stockholders or to stockholders who are resident foreign nationals; 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 Portugal, Rhodesia, and South Africa are prohibited (but see note 2). 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 1974

February 1. The Uganda shilling was officially quoted.

March 7. Communication No. 67 Rt. A, which revoked Communication No. 37 Rt. A of May 7, 1965, modified and consolidated the regulations regarding payment for travel tickets issued in Burundi.

May-June. Special buying rates ceased to be applied to proceeds from coffee exports surrendered more than 3 months after shipment.

July 11. Communication No. 58 Bis Rt. C/IMP added a provision to Communication No. 58 Rt. C/IMP of October 26, 1970 concerning transportation costs in respect of imports.

July 11. The validity of import licenses was extended from 7 to 12 months, except in the case of imports from neighboring countries, for which the validity was reduced to 6 months.

December 16. The advance import deposit requirement was extended to additional goods.

December 26. Section II of Réglement A was completed by a paragraph H which brought under the control of the Bank of the Republic the disposal by residents of goods, securities, or claims they held outside Burundi, and the acquisition by residents of goods and securities situated outside Burundi or of claims on persons resident outside Burundi.

December 26. Communication No. 69 Rt. A provided definitions of the terms goods, securities, and claims as used in paragraph H of Réglement A. Any of these held abroad had to be declared to the Bank of the Republic within one month, after which date all acts of acquisition or disposal required the prior written authorization of the Bank. The Communication also specified the exemptions from the new obligations.

Cameroon

(Position on December 31, 1974)

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 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 (the Central African Republic, Chad, the People’s Republic of the Congo, Dahomey, 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 to countries of the French Franc Area must be declared to the authorities for statistical purposes.

Administration of Control

Exchange control is administered by the Directorate of Economic Controls in the Ministry of Finance, which also surpervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Cameroon, and inward and outward direct investment. All exchange transactions relating to countries outside the French Franc Area must be effected through authorized intermediaries, i.e., the Postal Administration and authorized banks. Import and export licenses are issued by the Ministry of Industrial and Commercial Development.

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 BEAC agency 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); when these goods are imported from countries other than France or the Operations Account countries of the French Franc Area, they require in addition an import license. Other imports from France and the Operations Account countries in the French Franc Area do not require a license. All other imports are subject to licensing, but licenses are issued freely.

All import transactions relating to countries outside the French Franc Area 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 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 the approval of the Ministry of Finance. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. For tourist travel, residents traveling to countries other than France (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. Remittances for current repair and management of real property abroad are normally limited to the equivalent of CFAF 200,000 every two or three years. The transfer of 20 per cent or 50 per cent of the salary of a foreigner working in Cameroon is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within one month of the pay period concerned. Except in the case of foreigners working in Cameroon temporarily, payments to foreign countries of insurance premiums are not permitted if the same type of insurance is available in Cameroon. Resident and nonresident travelers going to 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 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 relating to countries outside the French Franc Area 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 countries outside the French Franc Area must be collected within 30 days of the date of arrival at their destination and proceeds received in currencies other than those of France or an Operations Account country must be surrendered within a month after collection.

Proceeds from Invisibles

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

Capital

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

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

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

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

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

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

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

Gold

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

Changes during 1974

January 19. The fixed exchange rate of CFAF 1 = F 0.02 was maintained following the announcement of the French authorities that during the next six months, and on a provisional basis, the interventions of the Exchange Stabilization Fund in the official exchange market would no longer aim at limiting the exchange rates between the French franc and certain other currencies within predetermined margins. A joint decision to this effect was taken on February 1 by the Ministers of Finance of the member countries of the BEAC.

February 21. New cooperation agreements were signed with France.

March 7. Circular No. 3/MINFI/CE was issued regarding borrowing abroad.

March 9. Order No. 72/MINFI/CE revoked Order No. 38/MINFI of January 6, 1968. The new Order defined foreign countries as all countries except Cameroon and modified the regulations regarding borrowing abroad and lending abroad.

March 21. Following the abolition of the dual exchange market in France, the dual market arrangements in Cameroon also ceased to operate. The financial franc market and the Financial Accounts in Francs were abolished and settlements with countries outside the French Franc Area henceforth took place only through the official exchange market and through Foreign Accounts in Francs.

April 3. Decree No. 74/249 modified Decree No. 67/DF/365 of August 21, 1967.

August 22. Cameroon advised the GATT that it had ceased to invoke Article XXXV of the General Agreement with respect to Japan.

Canada

(Position on December 31, 1974)

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 prescribed margins, and therefore all transactions, for the time being, take place at a fluctuating exchange rate. The closing free market rate for the U.S. dollar on December 31, 1974 was Can$0.9906 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, for a few agricultural items, including live cattle, fresh beef, and certain cereals, for certain textile products, for natural gas, and for 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, as is the export to the United States of crude petroleum, certain petroleum products, and natural gas. 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, Rhodesia, 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, with the exception of Rhodesia, 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. The Minister of Finance and the Bank of Canada have asked Canadian borrowers to carefully explore the potentialities of the Canadian market before offering securities for sale abroad. 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. By the end of 1974, only the first part of the Act, which deals with foreign take-overs, was in operation. 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.1

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. Under the Emergency Gold Mining Assistance Act of 1948, all mines receiving subsidies are required to sell their newly mined gold to the Royal Canadian Mint at US$42.22 a fine ounce. After refining, this gold is disposed of in the free market to established wholesale dealers by the Bank of Canada, acting as agent for the Government. Unsubsidized mines may 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, Rhodesia, 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) owing to the general embargo on trade with Rhodesia, movements of gold to or from Rhodesia are prohibited. Commercial imports of articles containing minor quantities of gold, such as watches, are unrestricted and free of license.

Changes during 1974

January 1. The export charge on crude oil was raised from Can$1.90 a barrel to Can$2.20. It was increased to Can$6.40 on February 1, reduced to Can$4.00 on April 1, and raised again to Can$5.20 on June 1.

January 13. The temporary surcharge on imports of fresh beef and live cattle was removed in three stages, ending on February 10.

January 17. The Minister of Finance announced that those import duties that had been reduced as an anti-inflationary measure in February 1973, would be restored to their pre-existing levels; for some items this occurred on February 20, and for the remaining items on June 30.

January 30. Following the U.S. announcement on January 29, 1974 of the reduction to zero of the Interest Equalization Tax and the termination of all other balance of payments programs, Canada revoked the guidelines issued in 1966 and 1968 which had been designed to prevent Canada from being used as a “pass through” channel for outflows of U.S. capital to overseas countries. The Minister of Finance noted that his request to Canadian borrowers to explore fully the Canadian capital market before floating issues abroad was not withdrawn. The guidelines withdrawn were:

(1) The request of March 16, 1966 of the Minister of Finance to all Canadian investors not to acquire securities, denominated in Canadian or U.S. dollars, issued by U.S. corporations or their non-Canadian subsidiaries and subject to the U.S. Interest Equalization Tax if purchased by U.S. residents. This request was accompanied by an announcement that the Bank of Canada and the Department of Finance would continue to discourage the issue of securities in Canada by foreign borrowers.

(2) The request addressed by the Minister of Finance to chartered banks on May 3, 1968 to observe three guidelines designed primarily to avoid an increase in their net foreign currency asset position with residents of countries other than Canada and the United States from the level at the end of February 1968.

(3) The request of the Minister of Finance of July 24, 1968, that a guideline similar in effect to that applied to banks be accepted by all other financial institutions.

(4) The guidelines set out on September 19, 1968 by the Minister of Trade and Commerce designed to ensure that the investments of Canadian incorporated nonfinancial corporations outside of Canada and the United States would be compatible with Canada’s unrestricted access to the U.S. capital market. These guidelines consisted of a request by the Minister that companies not make investments in Western Europe involving transfers of capital funds from Canada or the United States unless the transfer resulted in large and early benefit to Canada. Companies were also asked to exercise restraint on such transfers to other developed countries.

April 8. Export restrictions on scrap of iron and steel were tightened. (They were lifted on January 16, 1975, but export permits continued to be required.)

April 9. Canada required certification that imports of beef were from cattle to which the growth hormone diethylstilbestrol had not been administered. Similar certification was required for imports of cattle.

April 9. The first part (dealing with take-overs) of the Foreign Investment Review Act, which had received Royal Assent on December 12, 1973, came into force. The first part of the Act provided for the review by the Government of acquisition of control over a Canadian business enterprise by noneligible persons. The Foreign Investment Review Agency was formally established on April 9 to review applications by noneligible persons. (Early in 1975, no date had yet been set for the proclamation of the second part of the Act dealing 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.)

May 7. An amendment to the Export and Import Permits Act empowered the Government to require additional processing of raw materials before their export.

May 8. Import permits were required for turkeys and eggs, to support the operation of national marketing agencies for these products. The import controls on eggs, which were based on the average imports over the previous five years, were removed on September 16.

May 30. Canada signed the OECD Declaration on Imports, Exports, and Other Current Account Transactions.

July 1. A system of generalized tariff preferences for imports from developing countries came into force.

August 2. Canada and the United States agreed on a certification scheme which permitted a resumption of U.S. cattle and beef exports to Canada. At the same time, Canada announced a beef stabilization program and a global import quota system for imports of cattle and beef for the year August 12, 1974 to August 11, 1975. The import quotas were based on the average imports over the previous five years.

September 22. Guidelines on the export and stockpiling of uranium were issued. A supplemental statement was issued on December 23.

October 10. Canada subscribed to the Fund’s Voluntary Declaration on Trade and Other Current Account Measures for Balance of Payments Purposes.

November 18. The budget statement included a proposal for temporary tariff reductions on consumer goods (for a period until June 30, 1976) covering annual imports of about Can$l billion. The reductions took effect on November 19. The duty-free import privileges for Canadian tourists returning from abroad were increased in December.

November 22. It was announced that exports of crude oil to the United States would be progressively curtailed, beginning January 1, 1975, and phased out by the end of 1983.

December 30. It was announced that during the 60 days beginning January 1, 1975, direct and indirect imports of nylon woven fabrics originating in the Republic of Korea would be restricted to a specified quantity.

Central African Republic

(Position on December 31, 1974)

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 (Cameroon, Chad, the People’s Republic of the Congo, Dahomey, 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.

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 Ministry of Mines and Geology.

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. The National Marketing Office for Agricultural Products has a monopoly over the export of agricultural products.

Proceeds from exports to foreign countries must be collected and repatriated within one month from the due date; the latter 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 abroad4 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires the prior approval of the Ministry of Finance unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investments in the Central African Republic5 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 1974

January 19. The fixed exchange rate of CFAF 1 = F 0.02 was maintained following the announcement of the French authorities that during the next six months, and on a provisional basis, the interventions of the Exchange Stabilization Fund in the official exchange market would no longer aim at limiting the exchange rates between the French franc and certain other currencies within predetermined margins. A joint decision to this effect was taken on February 1 by the Ministers of Finance of the member countries of the BEAC.

March 21. Following the abolition of the dual exchange market in France, the dual market arrangements in the Central African Republic also ceased to operate. The financial franc market and the Financial Accounts in Francs were abolished and settlements with countries outside the French Franc Area henceforth took place only through the official exchange market and through Foreign Accounts in Francs. No exchange control regulations to this effect were issued in the Central African Republic.

April 23. The Central African Republic ceased to invoke Article XXXV of the GATT in respect of Japan.

May 2. A commission of 0.25 per cent was levied on all transactions in banknotes not issued by the BEAC.

May 6. Ordinance No. 74/032 introduced a commission of 0.25 per cent on all remittances to non-BEAC countries.

May 6. Decree No. 74/184 made the BEAC responsible for control over the repatriation of net export proceeds and stated that the due date of an export contract, and hence the due date of the export proceeds, could not be later than 90 days after the arrival of the goods at their destination, unless special authorization was obtained.

May 17. The Government announced the nationalization of petroleum distribution facilities previously operated by certain foreign oil companies. Civil aviation services and three companies operating in other fields were also nationalized.

November 19. Ordinance No. 74/108 revoked, with effect from November 20, Ordinance No. 68/065 of November 27, 1968, which instituted a tax on exchange operations. This action abolished the exchange tax of 2½ per cent levied on most exchange transactions with, and payments to, countries outside the French Franc Area.

Chad

(Position on December 31, 1974)

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 (Cameroon, the Central African Republic, the People’s Republic of the Congo, Dahomey, 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 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 State in Charge of the Modern Economy, Planning, Commerce, and International Cooperation.

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 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.

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.

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 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 Cotontchad.

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

Proceeds from Invisibles

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

Capital

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

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

Direct investments abroad2 require the prior approval of the Minister of Finance unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires the prior approval of the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investments in Chad3 require prior declaration to the Minister of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of direct investments in Chad must also be declared to the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in Chad. Both the making and the liquidation of direct investments, whether these are Chadian investments abroad or foreign investments in Chad, must be reported to the Minister of Finance within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent of the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in Chad requires prior authorization by the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Chadian Government and (2) shares similar to securities whose issue, advertising, or offering for sale in Chad has previously been authorized.

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

Lending abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in Chad, or by branches or subsidiaries in Chad of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans granted by registered banks; and (2) other loans, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one lender. The making of loans that are free of authorization, and each repayment thereon, must be declared to the Minister of Finance within 20 days of the operation, unless the amount of the loan is less than CFAF 500,000, provided, however, that the total outstanding amount of all loans granted abroad by the lender does not exceed CFAF 5 million. 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 thay 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 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 1974

January 19. The fixed exchange rate of CFAF 1 = F 0.02 was maintained following the announcement of the French authorities that during the next six months, and on a provisional basis, the interventions of the Exchange Stabilization Fund in the official exchange market would no longer aim at limiting the exchange rates between the French franc and certain other currencies within predetermined margins. A joint decision to this effect was taken on February 1 by the Ministers of Finance of the member countries of the BEAC.

March 21. Following the abolition of the dual exchange market in France, the dual market arrangements in Chad also ceased to operate. The financial franc market and the Financial Accounts in Francs were abolished and settlements with countries outside the French Franc Area henceforth took place only through the official exchange market and through Foreign Accounts in Francs. No exchange control regulations to this effect had been issued in Chad by March 1975.

May 1. A commission of 0.25 per cent was introduced on capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury.

Chile

(Position on December 31, 1974)

Exchange Rate System

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

There are two exchange markets: the official market (known as the banking market) and the brokers’ market. Only the Central Bank 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. Outward transfers through both markets are controlled. The rates of exchange in both markets are set by the Central Bank and are adjusted periodically. Through the banking market pass government transactions, all trade and trade-related transactions, all capital transactions, and most invisible transactions other than travel. Only travel expenditures, royalties, and a few residual transactions in invisibles are conducted through the brokers’ market.

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 export proceeds (other than those from copper, nitrate, and iron and a few minor exports) may be sold forward. For both types of transaction, settlement in escudos 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 escudos for settlement on a letter of credit basis or on a documentary collection basis, respectively); banks must sell the exchange to importers on the same terms.

On December 31, 1974 the exchange rate in the banking market was E° 1,870 per US$1. In the brokers’ market, the basic exchange rate was E° 2,000 per US$1; the application on the selling side of three exchange taxes totaling 13.15 per cent, together with a commission fee and a tax on the commission amounting to 1.3 per cent, resulted in an effective selling exchange rate of E° 2,289 per US$1. In both markets, commissions were permitted only on sales of exchange, and these could not exceed 410 of 1 per cent in the banking market or 510 of 1 per cent in the brokers’ market. Most transfers of profits and dividends are settled in the banking market, subject to an exchange tax of 18.5 per cent.

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. Imports for the public sector are supervised by the interministerial Import Committee for the Public Sector, on which the Central Bank is also represented.

Prescription of Currency

Settlements with Argentina, Bolivia, Brazil, Colombia, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made through accounts maintained with each other by the Central Bank of Chile and the central bank of the country concerned, within the framework of the LAFTA multilateral clearing system. 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 be normally 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.

Imports on deferred payment terms (cobertura diferida) require prior authorization of the credit terms by the Central Bank. 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. Settlements in escudos 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 escudo payment (i.e., from the date on which the importer buys his exchange forward, see section on Exchange Rate System, above). 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, while travel and certain residual invisible transactions are settled in the brokers’ market. Payments through this market may be effected up to established limits for a number of purposes: for tourist travel (in addition to fares; all allocations are subject to a tax at a rate of 13.15 per cent) the equivalent of US$500 for travel to neighboring countries; the equivalent of US$1,000 for travel to other parts of Latin America (defined to include the Bahamas, Curaçao, Jamaica, and Puerto Rico); the equivalent of US$2,000 for travel to Canada, the United States, Europe, and other countries (for trips of over 30 days to countries in this group, an extra allowance of US$60 for each additional day is available, up to a maximum of US$1,000); for purchases of books and periodicals US$100 a person a year. At the end of 1974 the basic allocation for family remittances remained suspended.

Banks may sell up to US$1,200 a person a year for payment of insurance premiums contracted prior to November 20, 1970 in foreign currency with national insurance companies or 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. Payments for medicines and pharmaceutical products may only be made provided that the product in question is not available in Chile. A number of transactions conducted in the banking market are also subject to established limits: student registration fees, US$50 a person a year; students abroad on scholarship, US$95 to US$400 a person a month; other students abroad, US$125 to US$175 a person a month. 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.

All purchases of exchange in the brokers’ market are subject to a tax of 14.45 per cent; this tax is the sum of three exchange taxes of 10 per cent, 3 per cent, and 0.15 per cent, and a commission and tax thereon (totaling 1.3 per cent). 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 E° 50,000 a trip.1

Exports and Export Proceeds

With minor exceptions for humanitarian reasons, exports to Rhodesia are prohibited. Exports of arms and related equipment to South Africa also are prohibited. Additionally, exports of some items are prohibited or are subject to quota irrespective of destination.

All exports must be registered with the Foreign Trade Department of the Central Bank and the sale proceeds of exports are subject to surrender requirements. Commercial banks are authorized to purchase on a spot or a forward basis foreign exchange proceeds from exporters. In the case of forward purchases, the forward period cannot be under 10 days nor over 120 days; banks may sell this exchange forward to importers for up to 120 days for letter of credit terms or up to 90 days for documentary collection terms. Receipts from major exports (including copper) and from a few minor exports 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.

Proceeds from Invisibles

All foreign exchange proceeds from invisibles must be surrendered. Proceeds from productive services rendered by residents, from most insurance transactions by national insurance companies or by foreign insurance companies authorized to operate in Chile, and from certain commercial services (news agency fees, royalties, copyrights, etc.) must be sold in the banking market. Exchange received from communication agencies’ fees, nontrade-related transport services, tourist expenditure, foreign student remittances, and a few other invisible transactions must be sold in the brokers’ market.

Capital

Capital inflows are free, but most outflows are restricted. All capital transactions and remittances of dividends, profits, and interest are settled in the banking market. 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. Foreign capital may enter Chile under one of three different arrangements depending on the purpose and type of the investment.

(1) Article 14 of Decree No. 1272 of September 7, 1961 stipulates that capital brought into the country in the form of foreign exchange (aporte de capital) may be sold freely through authorized banks when the investor (individual or corporation, national or foreign) has registered with the Central Bank. Such capital may only be repatriated with the prior approval of the Central Bank. The same is true for the transfer of interest and profits on such capital. Repatriation is only allowed in accordance with the amortization schedule established at the time of registration.

(2) According to Article 16 of the above Decree, the investor may enter into a loan agreement with a Chilean individual or corporation or into an agreement with a national enterprise with a view to capital participation. The Central Bank guarantees access to the banking market, both for the servicing of loans and the re-export of capital, and for the remittance of interest and profits. The guarantee is given subject to certain conditions, one of which is a minimum investment period of three years. As an application and extension of Article 16, the Executive Committee of the Central Bank on November 3, 1963 took a decision to create an additional regime to further foreign investment in Chilean export industries. Under this regime, capital may be brought in for the promotion of exports of agricultural, industrial, and mining products and it may be repatriated, provided that the amount repatriated is financed from the increase in the volume of exports resulting from the investment. The regime is implemented through individual investment agreements in accordance with Article 16. Repatriation of the invested capital may start two years after entry and may amount to 12½ per cent annually of the invested capital. In addition, the remittance of interest or profits is permitted annually up to 7 per cent of the invested capital. The above privileges are granted only to firms that will not purchase foreign exchange in the banking market to acquire abroad any machinery, equipment, or capital goods on a cash payment basis.

In a further extension of the regime under Article 16, on June 2, 1966, the Central Bank announced that it would guarantee the foreign exchange for repatriation of, and earnings on, imported capital, provided that certain conditions were met. These were (a) the investment must be deemed to be of importance to the Chilean economy; (b) it must amount to at least US$100,000 or the equivalent in other currencies; (c) the capital must remain in the country for at least three years, and subsequent repatriation must not be more than 20 per cent a year, on a noncumulative basis; (d) the exchange must be sold in the banking market; and (e) the interest rate on credit to Chilean firms must not be higher than that in the domestic market.

(3) 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 must 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 Articles 14 and 16 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

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.2 The Central Bank has exclusive power to purchase, sell, negotiate, or transfer gold in any form for any purpose, except in the form of jewelry. All import and export of gold contained in minerals is subject to special authorization by the Central Bank. Gold bars are imported and exported only by the Central Bank. The import of gold coins and of gold dust, gold leaf, and gold wire for industrial use is subject to a 10,000 per cent advance deposit requirement; the import of gold coins is not normally permitted.

Changes during 1974

January 7. Central Bank Circular No. 2035 revised the export regulations. The clearance of shipping documents, previously delegated to commercial banks, was again undertaken by the Central Bank. The requirement that exporters furnish a power of attorney entrusting an authorized bank with the collection of export proceeds was revoked. Banks were permitted to sell to exporters foreign exchange for insurance premiums on c.i.f. sales (in addition to foreign exchange for the freight).

January 7. The Minister of Finance announced that the import policy of the new Government would be based on freedom of importation and a reduction in protection.

January 9. Circular No. 2036 added payments for correspondence courses to the list of permissible invisible payments of Circular No. 1993; the applicable exchange market was the brokers’ market.

January 16. Circular No. 2038 modified Circular No. 1980. Banks were authorized to purchase forward the export proceeds of commodities not yet exported (in addition to those of goods already shipped, as covered by Circular No. 1980), but not earlier than 90 days before the prospective shipping date, and not for periods shorter than 10 days or longer than 180 days. The facility was not applicable to copper, iron, nitrates, and certain other commodities.

January 16. Circular No. 2040 replaced Circular No. 1946 and modified the lists of currencies in which import and export transactions must be contracted.

January 16. Circular No. 2039 extended the validity period (until shipment) of import registrations for payment on a collection basis to 240 days from their date of issue.

January 16. Circular No. 2041 established that domestic sales of unworked copper and copper by-products by companies subject to the special exchange rate for copper (Circular No. 2008) must be settled in foreign exchange. The Central Bank would make the exchange available to resident national firms at the banking market rate specified in Circular No. 1972 (E° 280 per US$1).

January 16. Circular No. 2043 established norms regarding permissible interest payments on imports on a collection basis and on deferred credit (cobertura diferida) terms. For the former, the term was limited to the period between date of shipment and the maturity date of the forward sale, and the rate to 1½ per cent over the New York prime rate on the date of shipment. For imports on deferred credit terms, the interest rate would be that approved by the Central Bank when considering the application. No interest would normally be allowed on imports on consignment. Circular No. 1833 was revoked.

January 17. Circular No. 2044 regulated foreign exchange and import transactions under Decree-Law No. 110 of November 2, 1973, as amended by Decree-Law No. 176 of December 10, 1973, the amnesty arrangements for funds held abroad (blanqueo de capitales); the foreign exchange for which the benefit of these arrangements was sought had to be deposited with an authorized bank before January 31. The deposits could be held as foreign currency time deposits, used by the holder for his own imports of specified goods (subject to a tax payable in foreign exchange and ranging from 1 per cent to 260 per cent), converted into a deposit account available for specific payments (generally those eligible for the brokers’ market, including family remittances), or converted immediately into escudos (but only half the amount of foreign exchange, and provided the remainder was kept on deposit for at least six months). The interest rate for the first 180 days would increase gradually from zero per cent to 6 per cent; thereafter, the rate would be set by the Central Bank but could not be less than the U.S. prime rate or the London Interbank Offer Rate (LIBOR).

Similar facilities would be available to other persons depositing their foreign currency holdings with banks before January 31. Circular No. 1929, which had allowed diplomats and Chilean and foreign juridical persons to establish foreign currency demand and time deposits in Chile, was revoked. (The principal benefits of Circular No. 2044 were on January 24 extended to existing holders of foreign currency accounts by Circular No. 2048.)

January 17. With effect from January 18, Circular No. 2045 changed the exchange rate in the banking market from E° 360 to E° 385 per US$1.

January 17. Ministry of Economy Decree No. 23 eliminated the refunds of taxes and other charges (drawbacks) for all minor exports.

January 31. With effect from February 1, Circular No. 2053 changed the exchange rate in the banking market to E° 405 per US$1.

January. A program of import duty reductions was initiated by Decree No. 453.

February 1. Circular No. 2052 provided regulations regarding the expenditures and sales of passages of foreign shipping companies operating in Chile.

February 6. Circular No. 2054 revoked Circular No. 1784 which had limited the travel exchange allocation for passengers with pasaje liberado to 40 per cent of the normal travel allocations. Such passengers were now entitled to the full travel exchange allocations.

February 6. Circular No. 2056 changed the rate for copper exports from E° 130 to E° 200 per US$1, with immediate effect.

February 7. Circular No. 2057 ruled that purchases of exchange proceeds from exports of copper and by-products would be made in the banking market, as follows: (1) the special copper rate defined in Circular No. 1972 (section 8) was applicable to exports of copper ore of the large copper companies, the Andean Mining Company, and some medium-sized copper companies; and (2) the banking market rate was applicable to smelting ore or the value-added portion of exports. Circular No. 2041 was revoked.

February 21. With effect from February 22, Circular No. 2061 changed the exchange rate in the banking market to E° 450 per US$1.

February 21. Circular No. 2062 was issued regarding inward and outward transfers of capital under Article 14 of Decree No. 1272 of 1961. The circular took into account the provisions of Decree-Law No. 326, published in the Official Gazette on the same day, which revised Article 14 of Decree No. 1272. The conversion of imported foreign exchange into escudos required the prior authorization of the Central Bank, which would issue to the person or firm concerned a nominative and nontransferable certificate stating the amount converted. Such capital could be freely exported 18 months from the date of conversion, again subject to prior Central Bank approval. Profits on such capital were freely exportable once a year, subject to Central Bank authorization. Where the capital was imported in the form of a credit, interest on foreign credits could be transferred semiannually, subject to a ceiling of 2 per cent over the New York prime rate or the LIBO rate. These foreign credits do not entitle the holder of the transfer certificate to remit profits. Capital inflows would be converted at the banking rate on the day of conversion, and outward remittances of capital, profits, and interest would also be made through the banking market, at the rate prevailing on the day of the outward transfer. The regulations applicable to the re-exportation of capital and the remittance of profits and dividends would be those that were in force on the day when the foreign exchange was converted into escudos.

March 8. With effect from March 11, Circular No. 2068 changed the exchange rate in the banking market to E° 470 per US$1 and the rate for copper export proceeds to E° 235 per US$1.

March 18. Circular No. 2071 added certain commodities to those that could be imported under Circular No. 2044. The taxes, payable in foreign exchange, on these items were 1 per cent, 50 per cent, or 150 per cent.

March 19. Decree No. 446 of the Ministry of Finance reduced one of the exchange taxes on sales of foreign exchange in the brokers’ market from 50 per cent to 10 per cent and left in force the exchange taxes of 3 per cent and 0.15 per cent. The total applicable exchange tax thus was reduced from 53.15 per cent to 13.15 per cent.

March 20. With effect from March 21, Circular No. 2073 changed the exchange rate in the banking market to E° 525 per US$1, the exchange rate in the brokers’ market to E° 740 per US$1, and the rate for copper export proceeds to E° 263 per US$1.

April 5. Circular No. 2076 suspended, with minor exceptions, the requirement of a 10,000 per cent prior import deposit previously applicable to goods under more than 2,500 tariff headings. The Central Bank was authorized to maintain the 10,000 per cent deposit requirement for public sector imports of goods that were also domestically produced, until a decree-law had been issued which would subject public sector imports to the same customs duties as private sector imports. Also, all imports of capital goods henceforth could be made on a cash payment basis, and all existing requirements that the visa of a public sector agency be submitted prior to import registration were revoked.

April 5. With effect from April 8, Circular No. 2077 changed the exchange rate in the banking market to E° 550 per US$1.

April 10. Circular No. 2082 modified the exchange allocations for travel abroad. The new allowances were (1) US$15 a person a day, subject to a limit of US$60 a trip, for destinations within 500 kilometers of the Chilean frontier and for all destinations in Argentina except the cities of Buenos Aires, Bahía Blanca, and Comodoro Rivadavia; (2) US$20 a person a day, subject to a limit of US$200 a trip, for the rest of Latin America (including Curaçao, Jamaica, Puerto Rico, and the Bahamas); and (3) US$30 a person a day, subject to a limit of US$540 a trip, for the United States, Canada, Europe, and other countries. (Half of these amounts were available for children under seven.) Travel exchange could not be purchased earlier than seven days prior to the trip. The Central Bank could in certain cases grant larger amounts, e.g., for business trips or travel for medical reasons. The allocations were applicable only to residents not receiving any income in foreign currency.

April 11. Circular No. 2079 allowed banks to purchase spot or forward, on behalf of the Central Bank, the foreign exchange proceeds from exports of worked and semiworked copper and copper by-products. Such foreign exchange had to be sold to the Central Bank on the day of purchase.

April 11. Circular No. 2083 simplified some of the requirements for the sale of travel exchange to residents.

April 29. With effect from April 30, Circular No. 2092 changed the exchange rate in the banking market to E° 580 per US$1.

May 3. Circular No. 2095 stated that black and white television receivers had been added to the list of permitted imports and made these subject to an advance deposit of 10,000 per cent, which would be released automatically.

May 8. Circular No. 2097 established that imports made under Decree-Law No. 110 (blanqueo de capitales) could exceed by 10 per cent the amount deposited by the person or firm concerned. The additional foreign exchange had to be purchased at the time the import payment was made, at the prevailing brokers’ market rate.

May 9. Circular No. 2098 increased the foreign exchange allowances for travel abroad to the following amounts: (1) for destinations within 500 kilometers from the Chilean border or within Argentina (except Buenos Aires, Bahía Blanca, and Comodoro Rivadavia), US$20 a person a day, subject to a maximum of US$100 a trip; (2) US$30 a person a day, subject to a limit of US$360 a trip, for other Latin American countries (including Curagao, Jamaica, Puerto Rico, and the Bahamas); and (3) US$40 a person a day, subject to a limit of US$720 a trip, for the United States, Canada, Europe, and other countries.

May 9. Circular No. 2099 modified Circular No. 1972 and provided that banks had to sell any excess over their permitted overbought foreign exchange positions to the Central Bank at the end of each week, or at shorter intervals if a bank so desired. The Central Bank could at any time require banks to sell to it all or part of their exchange positions.

May 9. Circular No. 2100 allowed banks to open import letters of credit in amounts 10 per cent in excess of the c.i.f. value listed in the import registration.

May 10. Circular No. 2103 authorized the customs authorities to accept imports shipped after the expiration of the import registration. The delay, however, could not exceed 30 days.

May 10. With effect from May 13, Circular No. 2104 changed the exchange rate in the banking market to E° 620 per US$1 and the rate for copper proceeds to E° 300 per US$1.

May 13. Circular No. 2105 added aircraft for civil use to the list of permitted imports. They were exempt from advance deposit.

May 13. Circular No. 2106 replaced Circular No. 1993 and provided a new listing of payments and receipts in respect of invisibles according to the exchange rate applicable. Among the changes was the shifting of transfers of royalties and technical assistance payments from the banking market to the brokers’ market.

May 23. Circular No. 2108 replaced Circular No. 2030 and authorized commercial banks to sell spot foreign exchange in the banking market to importers and exporters for payment of insurance premiums to insurance companies authorized to operate in Chile. The foreign currency concerned was transferable only for specified purposes, such as payment of indemnities and reinsurance transactions.

May 24. Circular No. 2109 revoked Circular No. 1980 and reduced the terms at which the Central Bank would sell foreign exchange forward to banks from 180 days to 150 days (after settlement in escudos) for imports under letter of credit and from 180 days to 90 days for imports on a documentary collection basis (including cobertura diferida quotas). The 90-day term was applicable also to those invisible payments that had to be settled forward in the banking market. Banks had to sell such foreign exchange on the same terms. The term at which banks could purchase forward the export proceeds of national exporters could not be less than 10 days or more than 150 days; this foreign exchange could be sold by banks at a term not exceeding 150 days for imports on a letter of credit basis, or not exceeding 90 days for imports on other terms.

May 24. Circular No. 2110 authorized commercial banks to sell foreign exchange in advance to cover interest and amortization payments on suppliers’ credits (coberturas diferidas) maturing prior to January 1, 1975. Banks could purchase the necessary exchange from the Central Bank. Similar arrangements were applicable to certain foreign loans managed by the Central Bank.

May 24. With effect from May 27, Circular No. 2112 changed the exchange rate in the banking market to E° 660 per US$1, that in the brokers’ market to E° 720 per US$1, and the rate for copper export proceeds to E° 330 per US$1.

May 31. Circular No. 2117 amended Circular No. 2106 by substituting “profits and dividends” for “profits” in certain payment and receipt items under code numbers 25 and 75.

June 4. With effect from June 5, Circular No. 2118 changed the exchange rate in the banking market to E° 720 per US$1 and that in the brokers’ market to E° 790 per US$1.

June 4. Circular No. 2119 announced the issuance by the Central Bank, for sale to the public through the banking system, of bearer certificates denominated in U.S. dollars and usable for import payments or other payments eligible for the banking market rate (certificados para cobertura en mercado bancario or CEPACs). The certificates were valid for one year from the date of issue, and could be used beginning 30 days after the date of issue; within the validity period, the Central Bank would make 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 were redeemable in escudos only, for the amount initially paid. The denominations were US$500, US$1,000, US$5,000, and US$10,000. Banks could purchase certificates 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 might be established by the Central Bank, plus a 2 per mill commission charge; banks, in turn, could add a 2 per mill commission charge to this total. The certificates could also be used by importers as collateral for the opening of letters of credit.

June 5. Circular No. 2120 authorized commercial banks to engage in foreign exchange operations relating to specified invisible transactions, without express approval from the Central Bank. For most of these, exchange could be made available up to the amount of bills or invoices, while specific exchange allocations were set for some; these included education expenses (US$30 a month) and imports of medicines (US$100 a month).

June 6. Circular No. 2122 exempted motorcycles from the 10,000 per cent advance import deposit.

June 12. Circular No. 2125 eliminated the 10,000 per cent advance import deposit on 11 items, including certain clothing and footwear.

June 12. Circular No. 2126 amended Circular No. 2039 by extending to 240 days the validity of import registrations for goods imported under letter of credit or without foreign exchange (sin cobertura). The maximum shipment period for imports financed with suppliers’ credit or foreign loans remained 360 days.

June 12. Circular No. 2128 modified Circular No. 2038 and allowed the proceeds from exports of semimanufactured copper to be purchased forward before shipment.

June 12. Circular No. 2129 exempted certain tires and tubes from the 10,000 per cent advance import deposit.

June 12. Circular No. 2130 denied access to the CEPAC market to financial institutions, including the Banco del Estado and the commercial banks.

June 13. Circular No. 2131 provided that banks no longer had to require the submission of a travel certificate issued by the Internal Revenue Service before selling travel exchange to the public.

June 13. Circular No. 2132 allowed banks to transfer foreign exchange abroad directly for transactions with short-term commercial financing with Czechoslovakia and Yugoslavia. As a result, the requirement of transfer of foreign exchange to the Central Bank (in accordance with Circular No. 2032) was limited to transactions with Bulgaria, the German Democratic Republic, Hungary, Poland, and the U.S.S.R.

June 17. Circular No. 2133 permitted banks to accept foreign currency time deposits from Chilean and foreign physical and juridical persons, at freely agreed interest rates, that could not exceed the following: for deposits of one year or more, two thirds of the prime rate or the LIBO rate, whichever was lower at the time of settlement, and for deposits at two years or more, the prime rate or the LIBO rate, whichever was lower at the time of settlement. The regulations governing foreign currency deposits made under Decree-Law No. 110 (Circulars Nos. 2044 and 2048) were modified.

June 17. With effect from June 18, Circular No. 2135 changed the exchange rate in the banking market to E° 750 per US$1 and that in the brokers’ market to E° 825 per US$1.

June 18. Circular No. 2134 normalized payments abroad in respect of the servicing of certain financial debts that had fallen due prior to January 1, 1974 and related to capital imported either under DLF No. 258 of 1960 or under Articles 15 and 16 of Supreme Decree No. 1272 of 1961.

July 3. Circular No. 2143 extended by 90 days the validity of all import registrations that were valid on January 16, 1974 or June 12, 1974, for purposes of Circulars Nos. 2039 and 2126.

July 3. Circular No. 2145 amended Circular No. 2120 with respect to remittances of consular fees collected for export transactions.

July 5. Circular No. 2146 announced new operating rules governing the placement, use, and redemption of CEPACs. They superseded the annex to Circular No. 2119.

July 5. With effect from July 8, Circular No. 2147 changed the exchange rate for proceeds from copper exports to E° 550 per US$1.

July 7. Decree-Law No. 600 containing a new Foreign Investment Law was promulgated.

July 10. Circular No. 2148 excepted obligations vis-ä-vis Finland, Israel, Liechtenstein, and Portugal from the provisions of Circular No. 2032 regarding the suspension of payments in respect of capital and interest on medium-term and long-term operations maturing in 1974.

July 11. With effect from July 12, Circular No. 2149 changed the exchange rate in the banking market to E° 800 per US$1 and that in the brokers’ market to E° 880 per US$1.

July 15. Circular No. 2152 listed certain modifications in the list of permitted imports introduced by Decree No. 371 of the Ministry of Economy, and specified the advance deposits required.

July 24. With effect from July 25, Circular No. 2155 changed the exchange rate in the banking market to E° 830 per US$1 and that in the brokers’ market to E° 910 per US$1.

July 25. Circular No. 2156 informed banks that the Central Bank would no longer purchase Italian or Spanish banknotes.

July 30. With effect from July 31, Circular No. 2159 changed the exchange rate in the banking market to E° 860 per US$1 and that in the brokers’ market to E° 950 per US$1.

August 6. Circular No. 2163 changed the exchange rate for the proceeds from copper exports with immediate effect to E° 860 per US$1. This action unified the spot exchange rates in the banking market.

August 6. Circular No. 2164 provided that up to 80 per cent of travel exchange allocations could henceforth be granted in the form of travelers checks; the portion that could be sold in the form of foreign banknotes remained at 20 per cent. Circular No. 2082 was amended accordingly.

August 7. Decree No. 1130 of the Ministry of Finance reduced import duties on capital goods to 10 per cent when payment was made on a cash basis.

August 12. Circular No. 2167 modified Circular No. 2109 and reduced the term at which the Central Bank would sell exchange forward from 150 to 120 days for imports under letter of credit. The term at which banks could purchase export proceeds forward was also reduced to 120 days.

August 12. With effect from August 13, Circular No. 2168 changed the exchange rate in the banking market (including that for copper exports) to E° 900 per US$1; the rate in the brokers’ market was changed to E° 970 per US$1.

August 12. Circular No. 2169 announced new operating rules for the placement, use, and redemption of CEPACs. They superseded those in the annex to Circular No. 2146.

August 14. Circular No. 2171 made jeep-type vehicles subject to the 10,000 per cent advance deposit requirement.

August 21. Circular No. 2175 authorized commercial banks and the Banco del Estado to determine freely the interest rates on time deposits in foreign exchange to be received from their customers or the public; interest and principal would be freely transferable in foreign currency. Deposits under Decree-Law No. 110 remained subject to Circular No. 2133.

August 21. Circular No. 2176 instructed banks, when selling travel exchange to persons going to Italy or Spain, to make the exchange available in the form of banknotes of the country concerned.

August 26. With effect from August 27, Circular No. 2178 changed the exchange rate in the banking market to E° 930 per US$1 and that in the brokers’ market to E° 990 per US$1.

September 2. With effect from September 3, Circular No. 2181 changed the exchange rate in the banking market to E° 990 per US$1 and that in the brokers’ market to E° 1,050 per US$1.

September 6. Circular No. 2183 exempted 32 items from the 10,000 per cent advance import deposit.

September 12. Circular No. 2185 provided that banks could sell Argentine currency in the brokers’ market only at the exchange rates fixed daily by the Central Bank. The exchange allocations for travel to Argentina could henceforth be granted entirely in Argentine banknotes.

September 12. Circular No. 2186 revoked Circulars Nos. 2057 and 2079 and authorized the commercial banks and the Banco del Estado to purchase the foreign exchange proceeds from exports of worked and semi-worked copper and copper by-products. These purchases would be subject to the regulations applicable to other exports.

September 12. Circular No. 2187 announced that the Central Bank stood ready to sell pounds sterling forward to commercial banks and the Banco del Estado, where there was an underlying transaction eligible for the banking market.

September 12. Circular No. 2188 released banks from the obligation of reporting daily on the use, availability, and repayment of their lines of credit.

September 12. Circular No. 2189 lifted the suspension of payments on short-term commercial transactions with the German Democratic Republic, insofar as shipment had taken place after October 1, 1973.

September 12. Circular No. 2190 defined the concept of “payment on a cash basis” for imports of capital goods (see August 7, above).

September 12. Circular No. 2191 replaced Circular No. 1791 and contained new regulations for the import and re-export of goods entering under private storage or temporary admission status, as well as for the related payments.

September 13. Circular No. 2192 repeated the instructions given by the Central Bank in a circular letter of January 7, 1974 regarding the purchase of Argentine banknotes from Argentine tourists. Purchases could not exceed the equivalent of US$300 a person over 12 (US$150 for children between 3 and 12). The Central Bank would take these banknotes over once a week from banks, travel agencies, etc.

September 13. Circular No. 2194 increased by 20 per cent the travel allowance for trips to Argentina, provided the allowance was taken up entirely in Argentine pesos.

September 16. With effect from September 17, Circular No. 2195 changed the exchange rate in the banking market to E° 1,050 per US$1 and that in the brokers’ market to E° 1,110 per US$1.

September 20. Circular No. 2197 modified the exchange control regulations applicable to foreign transportation companies laid down in Circulars Nos. 2007 and 2052.

September 20. Circular No. 2198 modified item No. 10 of Circular No. 1972 and revoked Circular No. 2029.

September 26. Circular No. 2204 modified Circular No. 1972 and allowed the banks to charge a commission of 410 of 1 per cent on sales of exchange in the banking market and of 510 of 1 per cent on those in the brokers’ market.

September 26. Circular No. 2205 increased the exchange allowances for travel abroad. For neighboring countries, the allowance was US$500, for other Latin American countries (including the Bahamas, Curaçao, Jamaica, and Puerto Rico), US$1,000; and for Canada, Europe, the United States, and other countries, US$2,000. If trips to the last group of countries exceeded 30 days, banks were authorized to sell US$60 for each additional day, up to a maximum of US$1,000. (Exchange for travel to Tacna and Río Gallegos was made available only in Peruvian soles or Argentine pesos, respectively.) The full allocations could be taken up in banknotes or in negotiable documents, and the allocations were the same for adults and children.

September 26. With effect from September 27, Circular No. 2206 changed the exchange rate in the banking market to E° 1,100 per US$1 and the rate in the brokers’ market to E° 1,180 per US$1.

September 30. Circular No. 2208 revoked Circular No. 1723, dealing with the import regime applicable in Arica.

September 30. Circular No. 2210 provided that exchange allocations for travel to Italy and Spain could be provided as indicated in Circulars Nos. 2082 and 2205 whenever the Central Bank was unable to supply commercial banks with Italian or Spanish banknotes.

October 2. Circular No. 2213 modified Circular No. 1476 and permitted banks to pay out foreign currency against any type of foreign currency remittance received from abroad and against balances in current accounts denominated in foreign currencies and held with them.

October 2. Circular No. 2214 allowed the import without prior registration of goods on the permitted list up to US$200 f.o.b. per shipment, on a sin cobertura basis and for noncommericial purposes.

October 3. Circular No. 2215 revoked Circulars Nos. 2040 and 2066 and issued new rules regarding the currencies in which import and export contracts must be expressed. The New Zealand dollar was included among the permissible currencies, and for import transactions the U.S. dollar and the pound sterling were permissible for all countries (with the exception that the latter could not be used in transactions with countries with which reciprocal credit agreements were in force).

October 3. Circular No. 2216 applied the procedure under item 2 of Circular No. 2134 to deposits and remittances in respect of financial debts contracted under Articles 15 and 16 of the Foreign Exchange Law and under DFL No. 258 which had fallen due, or would fall due, in 1974.

October 9. Circular No. 2218 expanded the scope of forward transactions in the banking market. Banks could sell foreign exchange forward to importers as follows: (1) for 10-120 days for transactions under letters of credit; (2) for 10-90 days for import transactions under other payment methods (and for invisibles that must be settled in the forward banking market); (3) for up to 120 days when the exchange was derived from export proceeds sold forward for a period exceeding 120 days; such export proceeds could also be sold to the Central Bank, at terms exceeding 120 days.

Banks could purchase foreign exchange forward from exporters as follows: (1) in general, the term could not be less than 10 days or more than 120 days; (2) banks could also purchase forward at terms exceeding 120 days and not more than 180 days, but not earlier than 120 days before shipment; (3) only proceeds from minor exports were eligible, and those from copper, iron ore, and nitrates could only be sold spot, under previously existing arrangements.

Banks were assigned maximum overbought and oversold positions in the forward banking market.

October 9. Circular No. 2220 supplemented Circular No. 2197 on the regime applicable to foreign transportation companies and revoked Circular No. 2052.

October 14. Decree-Law No. 694 extended to November 30, 1974 the deadline for presentation of import registrations under Decree-Law No. 110.

October 16. With effect from October 17, Circular No. 2224 changed the exchange rate in the banking market to E° 1,250 per US$1 and that in the brokers’ market to E° 1,350 per US$1.

October 18. Circular No. 2227 permitted the transfer abroad of foreign exchange registered by means of aporte de capital certificates issued under the old text of Article 14 of the Foreign Exchange Law and re-registered under Decree-Law No. 326 of February 24.

October 25. Circular No. 2231 provided that transactions with the People’s Republic of China were to be settled in convertible currencies, with the exception of those initiated before October 4, 1974, which could still be settled in renminbi.

October 30. Circular No. 2234 stated that the Central Bank had decided to discontinue invoking the safeguard clause of Chapter VI of the Montevideo Treaty and of Chapter IX of the Cartagena Agreement. As a result, certain restrictive measures in respect of imports ceased to be applicable to goods originating in LAFTA countries and countries of the Andean Group.

November 5. Circular No. 2237 made certain chassis for trucks subject to the 10,000 per cent deposit.

November 6. Circular No. 2239 contained directives to banks aimed at ensuring that the rate of interest payable on their foreign credit lines did not exceed the New York prime rate or the LIBO rate by more than 1.5 per cent per annum.

November 6. With effect from November 7, Circular No. 2243 changed the exchange rate in the banking market to E° 1,340 per US$1 and that in the brokers’ market to E° 1,450 per US$1.

November 15. Codelco’s monopoly over copper exports was terminated for the production of small and medium-sized mines.

November 18. Circular No. 2246 stated that the prior visa of the Ministry of Agriculture no longer was required for the registration of imports of fertilizers.

November 25. With effect from November 26, Circular No. 2251 changed the exchange rate in the banking market to E° 1,450 per US$1 and that in the brokers’ market to E° 1,560 per US$1.

December 6. Circular No. 2258 revised the instructions to banks regarding credit lines with foreign correspondents. The principal change was that banks were freely permitted to contract such credit lines, provided the norms of Circular No. 2239 were observed. With respect to banks in Argentina, the regulations of Letter No. 1183 of November 7, 1974 remained in force.

December 9. With effect from December 10, Circular No. 2261 changed the exchange rate in the banking market to E° 1,680 per US$1 and that in the brokers’ market to E° 1,800 per US$1.

December 11. Circular No. 2262 (as amended by Circular No. 2265 of December 12) specified December 27 as the date for the remittance abroad of the installment to be settled in 1974 on financial debts outstanding under the former Article 14 of Decree No. 1272.

December 19. Circular No. 2270 extended the validity of existing and future import registrations to 360 days.

December 27. Circular No. 2274 instructed banks on the procedures to follow with respect to payments due on medium-term and long-term foreign debts, including those on cobertura diferida imports, and those under the short-term financing arrangements with Eastern European countries.

December 30. With effect from December 31, Circular No. 2275 changed the exchange rate in the banking market to E° 1,870 per US$1 and that in the brokers’ market to E° 2,000 per US$1.

Republic of China

(Position on December 31, 1974)

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. 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 of China. The Ministry of Finance has general jurisdiction over foreign exchange laws and regulations, and is in charge of government remittances. The Foreign Exchange Department of the Central Bank of China is responsible for the overall management of foreign exchange, for the determination of the official buying and selling rates of exchange, and for the supervision of the 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 17 appointed banks and their branches. Export applications are screened, and export permits are issued, by 29 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.3 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, pounds sterling, 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 Payments4

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 Poeple’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. 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 759 items on the permissible list (see below) are allowed only when the goods originate outside Asia.

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;5 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, 1974, of 15,261 classified import items, 13 were prohibited, 471 were controlled, and 14,777 were permissible; on the same date, only 84 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 has been introduced 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 submitting import licenses which are automatically approved. On December 31, 1973, the system applied to 10,271 items, and on December 31, 1974 to 14,693 items.

Special regulations apply to 6 commodities normally imported in bulk shipments.6 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 of China. Payments for invisibles directly related to trade are permitted freely when the basic trade transaction has been approved. The transfer of interest, profits, and earnings on authorized foreign investments in the Republic of China may be made without restriction. Residents may at any time (but not more often than four times a year) make outward transfers up to the equivalent of US$200 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$3,600 a year in the second to fifth academic years. Residents are granted an exchange allowance equivalent to US$1,000 a person a trip (US$500 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$1,200 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$400 in foreign currencies. Nonresident travelers who have stayed in the Republic less than six months may take with them any unspent portion of the foreign currency which they registered upon entry, and may in addition convert local currency into foreign currency upon submission of the foreign exchange memorandum evidencing their acquisition of local currency by sale of exchange.

Exports and Export Proceeds7

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, of fertilizers, paper and pulp, logs, cement, steel, and scrap of iron and steel, is either prohibited or suspended. There are ceilings on the export of textiles and stainless flatware to specified countries.

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

With minor exceptions, exporters are required to surrender exchange earnings accruing from exports immediately after their collection. Most exports to any permitted destination may be made on a consignment or collection basis, provided that payment is not deferred for more than 180 days from shipment. Subject to approval, bona fide gifts and commodity samples up to the value of US$200 may be sent abroad. When leaving the Republic of China, tourists are allowed to take out domestic products valued up to US$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 person. 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 open tenders conducted by 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 at auction 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 1974

January 23. The suspension of exports of wheat flour was continued for another year.

January 25. Import duties on crude petroleum and petroleum products were reduced by 50 per cent, for a period of one year.

January 27. The ruling of April 1, 1973, suspending the acceptance by domestic importers and manufacturers from foreign suppliers or foreign banks of short-term financing and/or usance letters of credit of less than 180 days, was revoked.

January 27. The ruling of April 1, 1973, that imports of machinery and equipment had to be made on a cash settlement basis by using domestic bank financing when the amount involved was less than US$3 million and the terms of repayment were less than five years, was revoked.

January 27. Advance settlement requirements for imports were revised. For sight letters of credit, the requirement was reduced from 25 per cent to 20 per cent of the value of the letter of credit. For usance letters of credit and letters of credit financed by self-provided exchange the requirement was increased from 15 per cent to 20 per cent.

February 21. Tariff reductions of 50 per cent introduced in August 1973 for imports of nine industrial raw material products were extended for one year.

February 25. Tariff reductions of 50 per cent introduced in February 1973 for imports of ten items (including barley, corn, soybeans, wheat bran, and scrap iron and steel) were extended for one year.

March 1. Remittances abroad by foreign technicians were reduced from 70 per cent to 60 per cent of monthly salary.

April 13. Tariff reductions ranging from 15 per cent to 35 per cent introduced in 1973 for imports of certain industrial raw materials and some iron products were extended for one year.

May 15. Imports from all sources of completely assembled sedans, jeeps, and station wagons were prohibited.

May 15. Imports of color television sets originating in Japan were prohibited.

June 1. The duration of domestic currency export loans that authorized banks could grant to local exporters in advance of settlement in foreign exchange was extended from 90 days to 180 days after the date of issuance of the certificate authorizing advance settlement. The daily amount up to which individual banks could make such loans without prior approval from the Central Bank was increased from US$500,000 to US$1,000,000.

June 13. Import duties on certain animal and vegetable fats and oils were reduced by 50 per cent for one year.

June 15. The limits on the export and import of domestic banknotes by travelers were increased from NT$ 1,000 to NT$2,000 and NT$4,000, respectively.

July 9. Most of the tariff reductions of 25-50 per cent introduced in December 1973 for a period of one year were made permanent with their incorporation into the tariff law. Those not so incorporated were in December 1974 extended for another year.

November 15. Borrowing abroad in the form of foreign currency loans for conversion into new Taiwan dollars to be used as working capital was allowed again, with the permissible amount to be decided on a case-by-case basis by the Central Bank. Approvals for such borrowing had been suspended since January 15, 1973.

November 15. Advance settlement requirements for imports under sight letters of credit, usance letters of credit, letters of credit financed by self-provided exchange, and letters of credit on an installment basis were reduced from 20 per cent to 15 per cent.

November 15. It was announced that, taking into account international price levels, applications to import raw materials also produced locally would be screened in light of the possibility of substituting local raw materials; the review would be subject to negotiation between manufacturers, the Board of Foreign Trade, and suppliers of raw materials.

December 10. The official buying and selling rates for the U.S. dollar were changed from NT$37.90 and NT$38.10, respectively, to NT$37.95 and NT$38.05.

December 16. The policy of encouraging local manufacturers to use locally produced instead of imported goods was applied to picture tubes for black and white television sets, enamel-coated wires, and printed circuit boards.

December 16. Imports of 17 kinds of fish were prohibited for one year for health reasons.

December 21. Imports from Asian countries of 759 items, including footwear, various textile products, air-conditioners, radio receivers and amplifiers, tape recorders, domestic refrigerators, motorcycles, cosmetics, glassware, pottery, and toys, were prohibited. These items remained on the permissible list.

December 21. Imports from all countries of 14 kinds of old or waste textile products were shifted from the permissible to the controlled list.

Colombia1

(Position on January 1, 1975)

Exchange Rate System

On December 17, 1948, a par value for the Colombian Peso was established by Colombia with the Fund. However, exchange transactions no longer take place at rates based on that par value. All exchange transactions are effected through the Bank of the Republic (the central bank) or the authorized banks in the official market—the exchange certificate market, in which the rate fluctuates. On January 1, 1975, the average selling rate in the certificate market was Col$28.74 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$26.00 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 deposit requirement against foreign exchange sold for travel purposes, or 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 January 1, 1975, the fluctuating buying rate for proceeds from coffee exports (after taking into account a 19 per cent exchange tax) was Col$23.19 per US$1, and that for most other exports about Col$30.01 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; different effective rates, however, arise from the application of advance payments deposits for purchases of exchange for certain import payments and for many other purposes. A fixed rate of Col$20.00 per US$1 applies to certain petroleum transactions.

The Bank of the Republic stands ready to sell to the public, against payment in pesos at the certificate market selling rate ruling on the date of issue, exchange warrants (títulos canjeables por certificados de cambio or títulos de divisas). These warrants, which are expressed in U.S. dollars, 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); such exchange must take place between 45 and 180 days after the date of issue. Within the period mentioned, warrants may also be sold to the Bank of the Republic for pesos, at the certificate market buying rate ruling on the date of repurchase and subject to a commission of 1 per mill. Warrants bear interest at 7 per cent per annum. Warrants held for more than 180 days but less than two years may be resold to the Bank at the certificate market rate ruling 180 days after issue. They become null and void two years after issue. Foreign payments made with certificate exchange that has been acquired against warrants are exempt from the 100 per cent advance payments deposit that must otherwise be lodged for many types of outward transfers. Between 45 and 180 days after issue, warrants may also be used to purchase exchange for travel purposes.

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, and these deposits are freely available to the holders, but any foreign currency deposits that they may wish to convert into Colombian currency must be sold to the Bank of the Republic. Before releasing the accounts of nonresidents, banks must obtain 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 this last 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 48.8 per cent of 1974 reimbursable imports.2 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 $100 (in some cases Col$5) plus a consular invoice tax of 1 per cent (with a minimum of US$4). Advance import deposits (consignaciones) in Colombian currency of at least 40 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. 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.

The following are among the main exemptions from prior deposits (consignaciones): nonreimbursable imports;2 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 five 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 San Andrés or 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 nonnegotiable noninterest-bearing title (título de divisas) 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, free of the 100 per cent advance payments deposit (see below), 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 40 per cent of the registration amount.

A prior exchange license issued by the Exchange Office is required for payments for imports. At least 20 days prior to filing an application for an exchange license, the importer must provide an advance payments deposit (depósito provisional) in pesos equivalent to 100 per cent of the exchange requested, 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). Exemptions include import payments made not later than 30 days after customs clearance (including import payments made in advance of shipment), import payments by the government departments, municipalities, and official agencies, and payments for imports financed with foreign credits extended to the Bank of the Republic, goods for general consumption imported by Idema, payments for the crude oil acquired by the national petroleum company (Empresa Colombiana de Petróleos—Ecopetrol) for refining in Colombia, imports financed by credits from the U.S. Agency for International Development (AID), payments for imports from Spain when settled under the bilateral payments agreement with that country and financed by the Bank of the Republic, and import payments made with titles corresponding to advance import deposits.

Import duties are calculated at the Ministry of Finance exchange rate. In addition to customs duties, there is an ad valorem tax on imports equal to 5 per cent of the c.i.f. value. Of the amounts collected, 3½ per cent goes to the Export Promotion Fund, while the remainder goes to the National Treasury. Exempt from this tax are imports by public entities, goods of LAFTA origin, and imports under the Vallejo Plan.

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

Payments for Invisibles

Payments for invisibles are made at the exchange certificate rate. In principle, all payments for invisibles are subject to exchange licenses, which are granted according to officially established priorities determined by the Monetary Board; however, the Bank of the Republic may make payments abroad on behalf of credit institutions without prior exchange license, and commercial banks in cities where Exchange Offices are located may sell exchange directly for the purpose of foreign travel and may also transfer without prior approval payments for a few other current invisibles, including the monthly allowances of students studying abroad with government support. No advance payments deposit is required for invisibles, but purchases by residents of foreign currency for travel purposes are subject to a guarantee deposit of Col$10 per US$1, which is retained for six months. 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. 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

Certain exports are prohibited. No export licenses are required.3 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 (CATs) in an amount corresponding to a specified percentage of the total earnings surrendered, converted at the Ministry of Finance exchange rate. This ratio is 110 of 1 per cent, 5 per cent, or 7 per cent, depending on the commodity (the rate of 5 per cent is calculated on value added for exports of manufactured goods 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. At the end of 1974 certificates just issued were quoted at a discount of about 11 per cent.

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$107.50 per 70-kilogram bag. (2) Exporters pay a tax in foreign exchange at the rate of 19 per cent ad valorem. Of this tax, 4 percentage points are paid to the National Coffee Fund while the remainder provides revenue for the Treasury’s Special Exchange Account, of which the net product forms a contribution to the national budget. The Special Exchange Account is credited at the Bank of the Republic’s accounting rate of Col$26.00 per US$1. (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) or pay the Federation the peso equivalent. (4) Exports of coffee are subject to an additional tax of 6 per cent ad valorem (pasilla tax); the tax must be paid, either in kind or in pesos, to the Federation. (5) A committee composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation establishes a domestic buying price for export-type coffee, expressed in pesos per arroba of 12.5 kilograms. (6) Whenever the domestic support price, net of taxes and freight, exceeds a level corresponding to a spot New York price of US$0.57 a pound, the excess (net of taxes and levies) is shared among producer, Coffee Fund, and local producers’ committees at a ratio of 35:30:35; in that event, the retención is to be increased and the proceeds of the increase are paid to the Coffee Fund and the producers’ committees.

Anticipated export proceeds from coffee may be provisionally surrendered in advance of actual surrender (when prefinanced by foreign buyers) provided that the latter takes place within 60 days of the provisional surrender, at the prevailing exchange rate in the certificate market.4 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 cotton, bananas, meat, tobacco, 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.

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 non-bank residents,5 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.6 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.

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 1½ 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.

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 principal investment at the prevailing certificate market rate. Exports of capital by residents are restricted and such exports by private individuals are not normally permitted.

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.

Table of Exchange Rates (as at January 1,1975)
(pesos per U.S. dollars)
BuyingSelling
20.00 (Fixed Rate)

Purchases of crude oil from foreign-owned companies in Colombia for domestic refining.1
23.19 (Certificate Market Rate less 19 per cent Exchange Tax, Fluctuating Rate) Coffee exports.2
26.00 (Accounting Rate of Bank of the Republic) Conversion of Government’s receipts from exchange tax on coffee exports.26.00 (Accounting Rate of Bank of the Republic) Government’s purchases of exchange for servicing of public debt, diplomatic expenses, official travel, etc.
28.63 (Certificate Market Rate, Fluctuating Rate) Net proceeds from exports of crude oil and petroleum derivatives.3 Exports from free ports. All receipts from invisibles and capital transfers.28.74 (Certificate Market Rate, Fluctuating Rate) All imports. All other transactions.4
28.66 (Certificate Market Rate plus Tax Credit Certificates for 1/10 of 1 percent 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, other precious stones, and gold).5
30.01 (Certificate Market Rate plus Tax Credit Certificates for 5 percent of Export Value Converted at Average Certificate Market Rate of Previous Month, Fluctuating Rate)

Specified agricultural exports.5,6
30.56 (Certificate Market Rate plus Tax Credit Certificates for 7 per cent of Export Value Converted at Average Certificate Market Rate of Previous Month, Fluctuating Rate)

All other exports.5,6,7,8

This rate is also used as a computation rate to determine the price in pesos which ECOPETROL and foreign-owned companies receive for domestic sales of crude petroleum.

Advance surrender of export proceeds from coffee may result in a different effective rate; see section on Exports and Export Proceeds, above.

Receipts from exports of crude oil by foreign-owned companies need not be surrendered.

Different effective rates arise from the application of the 100 per cent advance payments deposit required for purchases of exchange for many purposes; from the guarantee deposit of Col$10 per US$1 required for purchases of exchange for foreign travel; and from the 12 per cent tax collected by the Exchange Office on certain nonrecurrent remittances.

Tax credit certificates traded immediately after issue were quoted at a discount of 12.5 per cent. The average rate in the certificate market in the previous month (December 5, 1974-January 4, 1975) as determined by the Ministry of Finance was Col$27.60 per US$1.

For cotton, bananas, meat, tobacco, and textiles, advance surrender of export proceeds may result in different effective rates.

The central bank purchases gold from domestic producers at a price corresponding to the world market price of gold, calculated at the same effective rate as for exports of commodities eligible for that buying rate (i.e., at Col$30.56 per US$1 on January 1, 1975).

Except specified exports of manufactured goods, for which tax credit certificates are granted on the basis of value added rather than export value; this practice results in additional effective exchange rates.

This rate is also used as a computation rate to determine the price in pesos which ECOPETROL and foreign-owned companies receive for domestic sales of crude petroleum.

Advance surrender of export proceeds from coffee may result in a different effective rate; see section on Exports and Export Proceeds, above.

Receipts from exports of crude oil by foreign-owned companies need not be surrendered.

Different effective rates arise from the application of the 100 per cent advance payments deposit required for purchases of exchange for many purposes; from the guarantee deposit of Col$10 per US$1 required for purchases of exchange for foreign travel; and from the 12 per cent tax collected by the Exchange Office on certain nonrecurrent remittances.

Tax credit certificates traded immediately after issue were quoted at a discount of 12.5 per cent. The average rate in the certificate market in the previous month (December 5, 1974-January 4, 1975) as determined by the Ministry of Finance was Col$27.60 per US$1.

For cotton, bananas, meat, tobacco, and textiles, advance surrender of export proceeds may result in different effective rates.

The central bank purchases gold from domestic producers at a price corresponding to the world market price of gold, calculated at the same effective rate as for exports of commodities eligible for that buying rate (i.e., at Col$30.56 per US$1 on January 1, 1975).

Except specified exports of manufactured goods, for which tax credit certificates are granted on the basis of value added rather than export value; this practice results in additional effective exchange rates.

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 1974

During the year the selling rate in the certificate exchange market was gradually depreciated from Col$24.89 per U.S. dollar to Col$28.74 per U.S. dollar. Imports were further liberalized, the rates of subsidy for nontraditional exports were reduced, and certain forms of borrowing abroad were resumed, but the use of foreign bank credit and suppliers’ credit for imports was discouraged.

January 1. Decree No. 1996 of September 29, 1973 came into effect. It modified the valuation basis for the tax credit certificates granted on specified exports of manufactured products (under the Vallejo Plan) from total export value to value added, when the latter was less than 40 per cent of the export value. The same decree empowered Idema to act as sole exporter of any agricultural product when this was deemed advisable in the light of prices abroad.

January 1. Decree No. 1988 of September 29, 1973 came into effect. It reduced the rates of tax credit certificates on exports of timber, tanned hides and skins, platinum, emeralds, dairy products, and live animals (except fish) to 1 per cent.

January 1. Decree No. 2719 of December 28, 1973 came into effect. It exempted foreign-owned commercial banks and other financial institutions from the provisions of Article 42 of Decree-Law No. 1900 of 1973, which put into force Decision No. 24 of the Cartagena Agreement (prohibiting new direct foreign investment in the banking sector). The decree also exempted firms engaged in domestic trading operations from a similar prohibition, and it empowered the National Council for Economic and Social Policy to amend the rules of Article 37 of Decree-Law No. 1900 for foreign companies involved in the production of basic goods.

January 23. Monetary Board Resolution No. 5 increased the advance deposit requirement (consignación) from 35 per cent to 40 per cent of the total value of the registered import transaction (with effect from January 25), raised the percentage up to which the deposit could be used to make payments for imports other than the registered import transaction from 50 per cent to 100 per cent, and extended the exemptions from the deposit (1) to all imports into the free ports of San Andrés and Providencia when originating in bilateral payments agreement countries, and (2) to imports by firms located in economically backward regions.

January 29. Decree No. 129 charged the Bank of the Republic with the collection of the 1½ per cent ad valorem tax on imports levied for the benefit of Pro-expo.

January 30. The price at which the Bank of the Republic purchased domestic gold was raised from US$38 to US$42.2222 an ounce. Foreign mining companies selling gold to the Bank of the Republic would be paid one half in foreign exchange and one half in domestic currency; all other sellers would receive the entire payment in domestic currency. Peso equivalents were calculated at the certificate market buying rate (Monetary Board Resolution No. 6).

February 5. Additional commodities were prohibited from export, including flour, unprocessed grains (except rice), various other food products, and iron bars (Incomex Resolution No. 006).

February 20. A special rediscount facility of US$30 million was established at the Bank of the Republic for the financing of imports of manufacturing machinery and equipment for new industrial projects, provided the payment terms did not exceed five years (Monetary Board Resolution No. 10).

March 1. For all imports financed through nonresident financial institutions the advance payment deposit was increased from 40 per cent to 100 per cent; for all nonexempt imports not so financed the deposit remained at 40 per cent. Importers not obtaining financing from approved resident financial institutions were in addition required to lodge a payment guarantee amounting to 10 per cent of the registered import transaction with the Exchange Office. The maximum term for import payments was made one year for capital goods (with possible extension up to three years with approval of Incomex) and six months for other goods (Monetary Board Resolution No. 14).

March 6. Exchange licenses for the payment of maritime freight for export shipments (other than petroleum and its derivatives, raw cattle hides, and coffee) required a 20 per cent payment to the Bank of the Republic in pesos at the time of application, with the balance to be deducted from the export proceeds, at the time of exchange surrender, by the Bank of the Republic (Monetary Board Resolution No. 15).

March 6. Banks were empowered to make payments abroad for transactions covered by Resolutions Nos. 58 and 68 of 1970, with the following exception: Applicants for exchange licenses for the payment of interest, commissions, or other finance charges with respect to foreign bank credit or suppliers’ credit, were required to present documents to the Exchange Office of the Bank of the Republic when applying (Monetary Resolution No. 16).

March 6. It was announced that the amount of import registrations that would be accepted had been increased from US$100 million to US$125 million a month.

March 7. Decree No. 387 provided specific rules for the implementation of Decree No. 2719 of December 28, 1973 concerning the establishment and operation of foreign-owned commercial banks and other financial institutions in Colombia.

March 12. The prohibition of exports of raw sugar was lifted for certain sales to the United States and in case the Ministry of Agriculture should determine that production exceeded domestic consumption (Incomex Resolution No. 014).

March 26. Additional commodities were prohibited from export, including paper, certain combustible gases, and certain petroleum products. Exports of certain other petroleum products were made a monopoly of Ecopetrol (Incomex Resolution No. 017).

March 27. A deposit requirement was reintroduced for purchases of travel exchange. The guarantee deposit was Col$2 per US$1 and had to be made by residents at the time of application for exchange licenses for the purchase of foreign currency for travel abroad (Monetary Board Resolution No. 19).

March 27. The Bank of the Republic tightened the supervision over the surrender of export proceeds (Monetary Board Resolution No. 18).

March 28. Decree No. 515 of the Ministry of Finance reduced import duties on some 2,000 tariff items.

April 9. The export of potatoes was prohibited (Incomex Resolution No. 018).

April 10. The minimum surrender price per 70-kilogram bag of coffee was raised from US$104.50 to US$114 (Monetary Board Resolution No. 21).

April 27. An import category named “minor imports” was established, for which no registration or prior import license was required. It included small shipments of spare parts, transport materials, and certain chemicals; and shipments valued at US$100 or less of certain medical supplies, films, books, music, and stamps. Also, urgently needed replacement items and spare parts could, with the approval of the Director-General of Customs, be cleared from customs without full documentation, provided that this was presented to the Customs Office within 60 days of customs clearance (Decree No. 745 of the Ministry of Finance and Public Credit).

April27. Imports henceforth could not qualify under the Vallejo Plan unless the export commodity for the production of which the import was used had at least 40 per cent local value added (Decree No. 741 of the Ministry of Development).

May 2. New maximum periods were set within which imports had to be paid. These were 9 months after shipment for consumer goods and raw materials; 15 months for imports under the Vallejo Plan; and three years for capital goods and equipment. The Foreign Trade Council could, however, approve periods up to five years for capital goods. Importers of goods financed in borrowed foreign currency by resident financial institutions also became subject to the 10 per cent guarantee deposit (Monetary Board Resolution No. 23).

May 2. Monetary Board Resolution No. 23 of April 24 amended the deposit requirements of Resolution No. 14 as follows: (1) For imports financed by a resident financial institution, 40 per cent advance deposit plus 10 per cent guarantee deposit. (2) For imports financed by a foreign financial institution, 100 per cent advance deposit or, at the importer’s option, 40 per cent advance deposit plus 10 per cent guarantee deposit. (3) For imports financed by the foreign supplier, 100 per cent advance deposit plus 10 per cent guarantee deposit.

May 8. In addition to U.S. dollars, the Bank of the Republic was henceforth authorized to receive exchange surrender, and to sell exchange for imports, in the following currencies: Belgian francs, Danish kroner, deutsche mark, French francs, Italian lire, Japanese yen, Netherlands guilders, pounds sterling, Swedish kronor, and Swiss francs. Importers and exporters wishing to make or receive payment in any other currency required the prior approval of Incomex. Payments and surrenders had to be made in the currency in which the registration was expressed. For coffee exports, the Bank of the Republic would determine the form in which surrender was to take place, taking into account both the minimum price fixed by the Monetary Board and exchange rate quotations abroad (Monetary Board Resolution No. 24).

May 8. Minimum surrender prices were introduced for exports of bananas (Monetary Board Resolution No. 26).

May 13. The period within which exporters were required to surrender their exchange proceeds henceforth could be extended to 360 days after shipment for capital goods and for goods for which suppliers’ credit had been extended (Incomex Resolution No. 0335).

May 15. Monetary Board Resolution No. 29 modified the domestic currency premiums paid by the Bank of the Republic to gold producers in implementation of Decree-Law No. 444 of 1967. A premium in pesos was granted equivalent to the difference between the official purchasing price and the average price in London and Zurich during the week preceding the purchase; the Bank of the Republic was authorized to distribute an extraordinary premium to stimulate domestic production.

May 22. The special rediscount facility set up in Resolution No. 10 of February 20, 1974 was extended to cover import financing up to US$8 million for certain tractors and cargo airplanes (Monetary Board Resolution No. 30).

May 22. Imports on credit terms exceeding five years became exempt from advance deposit requirements (consignaciones and guarantee deposits) (Monetary Board Resolution No. 30).

May 29. Resolution No. 1514 of the Banking Supervisory Office tightened the procedures for the sale of travel exchange by banks and of foreign exchange for the sale on credit terms of transportation services by air and sea transport enterprises.

June 4. Exports of tires, fabrics used in the production of tires, and certain rubber products were prohibited (Incomex Resolution No. 025).

June 4. The application of the import free list was extended to goods purchased on a transit basis from countries other than the country of origin (Resolution No. 027 of the Foreign Trade Council).

June 19. Decree No. 1144 created an industrial and commercial free zone in Santa Marta.

June 25. A total of 221 tariff items were transferred from the prior consultation list to the free import list (Incomex Resolution No. 033).

June 26. Parts for the assembly and repair of vehicles for public transportation were freed from advance deposit requirements (Monetary Board Resolution No. 36).

June 26. Certain small passenger planes could be financed under the rediscount facility of Monetary Board Resolution No. 10 of February 20 and No. 30 of May 22 and were freed from advance deposit requirements (Monetary Board Resolution No. 37).

June 28. Decree No. 1245 replaced the Col$5 tax (per troy ounce) on domestically produced gold by an ad valorem tax of 2 per cent on the total sales proceeds of the miner concerned. The decree also introduced a tax of 4 per cent on the value of the production of platinum.

July 1. Exports of crude petroleum were suspended. The suspension was still in effect on January 1, 1975.

July 3. In order to ensure exchange surrender, exporters (other than coffee exporters) were required with effect from August 1 to place with Incomex, prior to export registration, a personal bond or bank guarantee equal to 20 per cent of the export registration. For exports already registered, the bond had to equal 100 per cent of any exchange proceeds outstanding, up to 20 per cent of the amount registered (Monetary Board Resolution No. 38).

July 3. As an alternative to the provisions of Resolution No. 15 of March 6, 1974, exporters were authorized to obtain exchange licenses for 100 per cent of advance freight payments for export sales registered on a c.i.f. or c. & f. basis if they placed with the Exchange Office of the Bank of the Republic a personal bond equal to the value of the freight payment; this bond would be released by the Exchange Office upon surrender of the export proceeds (Monetary Board Resolution No. 39).

July 3. The special rediscount facility of Monetary Board Resolution No. 10 of February 20, 1974 and Resolution No. 30 of May 22, 1974 was extended to cover certain aircraft purchased by the public sector, and these were exempted from advance deposit requirements (Monetary Board Resolution No. 40).

July 8. Several items were added to the list of “minor imports,” including certain medical products and films (Decree No. 1324 of the Ministry of Finance and Public Credit).

July 17. The export of flowers to the United States became a monopoly of Idema. Under the tax credit certificate scheme, 2.8 per cent of the relevant export subsidy went to the producer, 10.2 per cent to Idema, and 2 per cent to the Instituto Colombiano Agropecuario (Decree No. 1418 of the Ministry of Agriculture).

July 23. The export of rice became a monopoly of Idema.

July 26. Decree No. 1487 empowered the National Council for Economic and Social Policy to regulate the amortization of foreign investments in the mining sector.

August 2. The bond (guarantee) required with import registration for imports not financed by resident financial institutions (Resolution No. 23) was waived for import registrations by the national government, local governments, and public enterprises. For registration of private sector imports of goods subject to an advance deposit of 40 per cent or more and financed by resident financial institutions, a bond equal to 10 per cent of the difference between the registered amount and the amount of the advance deposit became required. For private sector imports exempt from prior deposit, the bond was set at 10 per cent of the registered amount. Importers could lodge individual or global guarantees (Monetary Board Resolution No. 48).

August 21. Exchange licenses for imports of public sector agencies financed by suppliers’ credits in excess of one year required the presentation of the executive resolution authorizing the borrowing (Monetary Board Resolution No. 55).

September 2. The minimum surrender price for a 70-kilogram bag of coffee was reduced from US$114 to US$107 (Monetary Board Resolution No. 56).

September 4. Exchange licenses for “minor imports” henceforth required only the submission of the commercial invoice (Monetary Board Resolution No. 58).

September 10. The export of raw sugar and corn became a monopoly of Idema and the prohibition on corn exports was revoked (Incomex Resolution Nos. 049 and 052).

September 10. Incomex was empowered to approve, in special cases and in noncommercial quantities, exports of goods on the export prohibition list (Incomex Resolution No. 051).

September 10. Ministry of Finance Circular No. 00002 provided that the 12 per cent tax on remittances of profits abroad was to be levied on the balance remaining after deduction of the 20 per cent withholding tax, or, for remittances exempt from the latter, on the full amount of the remittance.

September 17. A state of economic emergency was declared for 45 days (Decree No. 1970). Subsequently, important modifications were made in the income tax, the sales tax, and the tax credit certificate scheme.

September 18. Decree No. 1978 made the exploration and exploitation of natural gas subject to the exchange and trade regulations applicable to crude petroleum. (On September 23, Decree No. 1999 clarified that this applied to new investments only. See also September 23, below.)

September 18. The advance deposit required of residents traveling abroad was increased to Col$10 per US$1 of foreign currency purchased, and would henceforth be retained for six months (Monetary Board Resolution No. 60).

September 18. Monetary Board Resolution No. 51 of 1973 and Nos. 10, 30, 37, and 40 of 1974 were revoked. Transportation equipment, machinery, and other equipment for the manufacturing industry ceased to be eligible for the rediscount facility (Monetary Board Resolution No. 61).

September 18. The system for payment of freight on exports on a c.i.f. or c. & f. basis was altered. For freight payments on export shipments, the exporter could lodge a personal bond for the total value of estimated freight payments as described in Resolution No. 39 of July 3. He could also apply to the Bank of the Republic to set up a rotating fund for up to six months for the estimated value of the freight payments; from this fund withdrawals could be made, in foreign exchange, for freight payments as they fell due. The personal bond required in this case was 30 per cent of the value of the payments. Exporters could also request approval to open a current account in foreign exchange out of which freight payments may be made (Monetary Board Resolution No. 63).

September 18. Certain liquid foreign assets of banks became subject to a 100 per cent reserve requirement payable in pesos (Monetary Board Resolution No. 62).

September 18. Decree No. 1979 revoked the exemption from import duties granted to central and local government agencies, except for capital goods for companies providing certain approved public services.

September 23. Decrees Nos. 1978 and 1999 made the exploration and production of natural gas subject to the foreign exchange treatment applicable to petroleum.

September 24. With effect from January 1, 1975, Ministry of Finance Decree No. 2004 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.

September 27. Resolution No. 18 of the Council for Economic and Social Policy established special rules for foreign investment in the nickel mining sector.

September 30. Ministry of Finance Decree No. 2086 provided that, with effect from January 1, 1975, 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.

September 30. Decree No. 2053 reformed the taxes on income and wealth. The Exchange Office was authorized to collect a supplementary tax of 12 per cent on the remittance abroad of occasional nonrecurrent earnings or profits.

October 2. Monetary Board Resolution No. 66 extended until November 30, 1974 the deadline for the final liquidation of advance exchange surrenders against future coffee shipments, provided the exporter could show his stocks were at least equivalent to the advance exchange surrender.

October 9. The minimum surrender price for coffee exports was reduced from US$107.00 to US$100.00 per 70-kilogram bag (Monetary Board Resolution No. 67).

October 9. The retención on coffee exports was reduced from 35 per cent to 30 per cent (Decree No. 2159 of the Ministry of Finance).

October 16. The exchange rate for advance surrender of proceeds from future coffee exports was increased from Col$20.50 to Col$22.00 per US$1 (Monetary Board Resolution No. 69).

October 16. The special rediscount facility for Proexpo at the Bank of the Republic for the provision of working capital to enterprises producing, storing, or selling goods (other than coffee and petroleum and its derivatives) destined exclusively for export was increased from Col$ 1,900 million to Col$2,340 million (Monetary Board Resolution No. 70).

October 16. With effect from November 1, the local-currency holding requirement on certain foreign currency accounts was phased out over a period of six months (Monetary Board Resolution No. 71).

October 16. The maximum periods for import payments set in Resolution No. 23 were changed to six months for consumer goods and raw materials (15 months when imported under the Vallejo Plan); and three years for capital goods and equipment (up to five years with special authorization of the Foreign Trade Council). At the same time, resident banks were now permitted to finance these payment terms with borrowed foreign funds; the interest rate could be agreed freely between importer and bank. For imports into free trade areas these periods ran from customs clearance rather than shipment. The guarantee deposit to ensure timely payment for private sector imports was increased from 10 per cent to 20 per cent. The resulting requirements were (1) for imports subject to consignación of 40 per cent or more, a guarantee of 20 per cent of the difference between registered amount and consignación; (2) for private sector imports exempt from consignación, 20 per cent of the registered amount; and (3) no guarantee for public sector imports (Monetary Board Resolution No. 71).

October 21. Certain borrowing abroad by nonbank physical or juridical persons of the private sector was again permitted. Foreign loans could be contracted for the purpose of providing working capital or financing investment programs of companies producing industrial, mining, or agricultural goods for export. The minimum maturity was set at five years, with repayments not to exceed one fifth every 12 months, and the maximum rate of interest set at 1½ per cent above the New York prime rate or the London interbank rate. Unless otherwise approved by the Exchange Office, debts had to be serviced in the currency initially borrowed. Credits had to be registered with the Exchange Office within 45 days of the sale of the exchange to the Bank of the Republic, and the foreign currency proceeds had to be sold to the Bank of the Republic within 20 days of receipt (Monetary Board Resolution No. 73).

October 21. Decree No. 2247 raised to 20 per cent the remittance tax on profits obtained by foreign companies through branches established in Colombia. The decree also increased to 40 per cent the withholding tax on dividends paid by Colombian companies to nonresident foreign companies (20 per cent for companies domiciled in countries where dividends are taxed at not less than 30 per cent, and for companies 75 per cent of whose capital belongs, either directly or through other companies, to foreign individuals not resident in Colombia).

October 28. Decree No. 2310 provided that in future the exploration and development of hydrocarbons would be undertaken either directly by Ecopetrol or through contracts between Ecopetrol and private companies. No further concessions would be granted, but those in force on October 28 would remain valid.

October 31. With effect from January 1, 1975, Presidential Decree No. 2374 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. From October 31, 1974, the 1½ per cent import tax previously credited to the National Coffee Fund would be credited entirely to the National Government.

October 31. Decree No. 2366 increased the import tax levied for the benefit of the Fondo de Promoción de Exportaciones from 1½ per cent to 3½ per cent of the c.i.f. value for the period from November 12, 1974 to September 30, 1975, when it would be raised to 5 per cent. The decree also authorized Proexpo to promote nontraditional exports by providing financial and technical assistance, as well as storage and transport facilities. In addition, the decree eliminated with effect from November 12 the granting of tax credit certificates on freight, insurance, and other services by stipulating that such certificates would be issued on the f.o.b. value of exports.

November 1. The withholding tax on loan interest was increased from 20 per cent to 40 per cent. Exempt from this increase were (1) foreign loans with a maturity of under one year; and (2) foreign loans with longer maturities when taken up for the production of exports.

November 20. The Bank of the Republic was authorized to purchase exchange from foreign credits obtained by cotton exporters for the purpose of buying cotton for export. The interest rate for such financing was subject to approval by the Exchange Office. The export had to take place within three months of the date on which the exchange was purchased by the Central Bank (Monetary Board Resolution No. 79).

November 20. Monetary Board Resolution No. 79 revoked Resolution No. 69 and thus abolished with immediate effect the special exchange rate for the advance surrender of the proceeds of future coffee exports. As in the case of cotton, exporters would receive the certificate market rate prevailing at the time of advance surrender.

November 27. The minimum surrender price per 70-kilogram bag of coffee was increased from US$100.00 to US$107.50 (Monetary Board Resolution No. 80).

December 10. The Ministry of Development announced that exporters would again be permitted to borrow abroad and that they would be eligible for interest subsidies on such borrowing. Also, the ceiling on the rediscount facilities for exporters would be raised by US$10 million and export restrictions would be relaxed.

December 11. With effect from January 1, 1975, the Bank of the Republic was required to deduct the amount required 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).

December 18. Monetary Board Resolution No. 83 changed the accounting exchange rate of the central bank from Col$23.70 per US$1 to Col$26.00 per US$1, to be applicable for the first time to the balance sheet for December 1974.

December 18. The definitive exchange surrender for exports other than coffee henceforth had to be effected within 180 days after approval of the registration. For goods sold on a commission basis, capital goods, or other goods which by their nature and in accordance with international practice require longer payment terms, Incomex was entitled to grant a longer delay for final settlement. For banana exports, 50 per cent of the value had to be surrendered within 30 days after registration, and the remaining 50 per cent within 60 days after registration. Any adjustments due to price variations were to be made upon payment of the final installment. Exporters availing themselves of advance exchange surrender for freight and/or insurance payments under Monetary Board Resolution No. 39 of July 3, 1974 had to guarantee the definitive surrender of the f.o.b. value of exports only (Monetary Board Resolution No. 84).

December 20. Monetary Board Resolution No. 86 permitted the Bank of the Republic to purchase foreign exchange at the Ministry of Finance exchange rate from exporters of cotton, bananas, meat, tobacco, and textiles, for up to 80 per cent of the value of exports, upon presentation of the export registration. Within four months the exporter then had to provide evidence of customs clearance and shipment and supply the remaining 20 per cent of the exchange proceeds, in order to qualify for the exchange differential between the Ministry of Finance exchange rate and the certificate rate prevailing four months after the initial exchange sale (or at the conclusion of the export operation, if the latter is consummated before that date—ajuste cambiario).

December 20. Monetary Board Resolution No. 87 limited access to Proexpo’s rediscount facility (see Monetary Board Resolution No. 70 of October 16, above) to the working capital and investment capital needs of enterprises producing, storing, or selling export products other than cotton, sugar, bananas, coffee, meat, tobacco, or petroleum and its derivatives. Proexpo was authorized to discount with the Bank of the Republic irrevocable letters of credit of up to 180 days’ maturity which had been endorsed by a foreign bank of prime standing; for capital goods, the maturity could exceed 180 days.

The following changes took place on January 1, 1975:

January 1. Presidential Decree No. 2374 of October 31, 1974 came into effect (see above). The tax on the exchange proceeds from coffee was reduced from 20 per cent to 19 per cent.

January 1. Presidential Decree No. 2004 of September 24, 1974 came into effect (see above). The tax credit certificate rates for exports were reduced.

January 1. Ministry of Finance Decree No. 2086 of September 30, 1974 came into effect (see above).

January 1. Monetary Board Resolution No. 81 of December 11, 1974 came into effect (see above).

People’s Republic of the Congo

(Position on December 31, 1974)

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 (Cameroon, the Central African Republic, Chad, Dahomey, 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 outside 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 1 per cent, subject to a minimum of CFAF 100; 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 Portuguese or Rhodesian origin are prohibited. Imports from all non-EEC countries outside the French Franc Area are subject to licensing in accordance with an annual import program; the program, also includes indicative quotas for a few commodities from EEC countries other than France. This program is determined by a joint French-Congolese Committee. The import program does not include petroleum imports, for which a joint quota is set for the countries of the Central African Customs and Economic Union (UDEAC). Also outside the program are imports for the Goverment 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, 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 may 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 abroad3 require the prior approval of the Minister of Finance; the full or partial liquidation of such investments also requires the prior approval of the Minister. Foreign direct investments in the Congo4 require the prior approval by the Minister of Finance, unless they involve the creation of a mixed economy enterprise. The full or partial liquidation of direct investments in Congo must be declared to the Minister. Both the making and the liquidation of direct investments, whether these are Congolese investments abroad or foreign investments in Congo, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise.

The issuing, advertising, or offering for sale of foreign securities in Congo requires prior authorization by the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) borrowing backed by a guarantee from the Congolese Government and (2) shares similar to securities whose issue, advertising, or offering for sale in Congo has previously been authorized.

Borrowing by residents from nonresidents requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment in Congo for which prior approval has been obtained as indicated above; (2) loans contracted by registered banks; and (3) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 10 million for any one borrower. The contracting of loans that are free of authorization, and each repayment thereon, must be reported to the Office of External Financial Relations within 20 days of the operation.

Lending by residents to nonresidents is subject to exchange control, and all lending in CFA francs to nonresidents is prohibited unless special authorization is obtained. In addition, lending to nonresidents requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans in foreign currencies granted by registered banks; (2) other loans in foreign currencies when the total amount outstanding of these loans does not exceed the equivalent of CFAF 5 million for any one lender; and (3) foreign currency loans whose interest rate does not exceed 5 per cent a year and whose maturity is two years or less. The making of loans that are free of authorization, and each repayment thereon, must be reported to the Office of External Financial Relations within 20 days of the operation.

Under the Investment Code of April 26, 1973 (Ordinance No. 11/73), a number of privileges may be granted to approved foreign investments. The Code provides for four categories of preferential treatment.

Gold

By virtue of Decree No. 66/236 of July 29, 1966, as amended by Decree No. 66/265 of August 29, 1966, residents are free to hold 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 1974

January 1. New cooperation agreements were signed with France.

January 13. A law was enacted providing for the nationalization of certain distributors of petroleum products.

January 19. The fixed exchange rate of CFAF 1 = F 0.02 was maintained following the announcement of the French authorities that during the next six months, and on a provisional basis, the interventions of the Exchange Stabilization Fund in the official exchange market would no longer aim at limiting the exchange rates between the French franc and certain other currencies within predetermined margins. A joint decision to this effect was taken on February 1 by the Ministers of Finance of the member countries of the BEAC.

January 23. Order No. 292 required residents to collect and—where payment was made in foreign exchange—to surrender all proceeds from claims subject to repatriation requirements within one month of the due date. For exports, this date normally could not be later than 180 days after arrival of the goods at their destination.

January 23. Circular No. 12 revised the regulations regarding forward sales and purchases of foreign currency by residents. Forward purchases were permitted only for import transactions for a maximum of three months.

January 23. Circular No. 13 prohibited all lending in CFA francs to nonresidents, unless specifically authorized by the Office of External Financial Relations.

March 21. Following the abolition of the dual exchange market in France, the dual market arrangements in the People’s Republic of the Congo also ceased to operate. The financial franc market and the Financial Accounts in Francs were abolished and settlements with countries outside the French Franc Area henceforth took place only through the official exchange market and through Foreign Accounts in Francs. The relevant exchange control regulations were not issued in Congo.

April 12. Order No. 1847 required prior authorization for all imports from the French Franc Area.

April 15. Notice to Importers No. 545 of March 28 made all imports from and exports to the French Franc Area subject to prior authorization.

Costa Rica

(Position on December 31, 1974)

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. As a transitional measure, certain exchange transactions continue to take place at the pre-April 1974 official market buying and selling rates of Ȼ 6.62 and Ȼ 6.68 per US$1; these include certain student remittances, and the servicing of debts existing on April 25, 1974 of commercial banks.

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. Purchases and sales of official market exchange are made through the Central Bank or through commercial banks acting as its agents. Licensed exchange houses are permitted to deal in travel exchange and other exchange that is not subject to surrender requirements. Commercial banks deal in this market only as agents of the Central Bank, for its account and at its risk.

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; the documents must be expressed in colones and require approval by the Central Bank. The central banks of these four countries may also convert Costa Rican notes and coins, up to the equivalent of US$10,000 a month for Nicaragua and up to the equivalent of US$5,000 a month for each of the other countries. 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. There are no special arrangements with Mexico for the conversion of Costa Rican notes and coins.

Imports and Import Payments

There is no import licensing and all import payments may be made freely,1 subject to submission of documentary evidence (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, imports must be registered with the Central Bank within 60 days of arrival at a national port. This registration serves as an application for official exchange. In principle, the Central Bank grants authorization to purchase foreign exchange at the time of registration (but see note 1).

In addition to any applicable customs duty, there are levied on imports (1) a stamp tax of 3 per cent of the customs duty on commodities not covered by the common external tariff of the 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 10-50 per cent ad valorem on imports from outside the CACM and at lower rates on CACM imports.2 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 Central Bank has delegated to its agent banks the power to sell exchange up to the equivalent of US$300 a remittance for many current invisibles, subject to submission of evidence as to purpose by the applicant. Sales of exchange for higher amounts must be approved by the Central Bank. The delegated authority for private travel is for US$1,000 a person a trip; the Central Bank generally approves additional amounts of US$75 a person a day, up to a total additional amount of US$3,000 a person a trip. 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.

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, so that shipments under the sugar quotas may be controlled); lumber and root of ipecacuanha (from the Institute for Lands and Colonization); beans, rice, potatoes, onions, cotton, meat, and purebred and other cattle (from the National Council of Production); airplanes (from the Civil Aviation Board); Indian art objects made of gold, stone, or clay (from the National Museum); tobacco (from the Tobacco Defense Board); 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; and 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 to licensed exchange houses (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. Foreign and domestic capital transferred from abroad may freely be deposited as time deposits with agent banks in the form of specified foreign currencies3 or be invested in certificates of deposit denominated in colones; such funds may be retrans-ferred abroad upon maturity at the official exchange rate.

Outward transfers of national capital are restricted. Agent banks are empowered to sell to any physical or juridical person foreign exchange up to US$300 a remittance, provided the purpose is indicated, for donations or gifts. They also 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 1974

March 13. Payments for imports of petroleum and petroleum products and of certain machinery, transport equipment, and capital goods were shifted from the official exchange market to the free market. Henceforth, the only import payments eligible in principle for settlement entirely at the official rate were those for basic cereals and pharmaceuticals.

April 25. The dual exchange market was unified by the elimination of the free market. The unified exchange rate was the rate previously ruling in the free market. Previously, the official buying and selling rates in the official market had been Ȼ 6.62 and Ȼ 6.68 per US$1. (Certain existing claims and obligations would continue to be settled at the old official rate, as well as export proceeds from the 1973/74 coffee crop. Certain student expenses would also be settled at that rate through the end of the school year.) (Law No. 5519 of April 24, which also amended Article 94 of the Central Bank’s Charter).

April 25. The par value was changed from 0.134139 gram to 0.0859580 gram of fine gold per colón, corresponding to Ȼ 10.3384 per SDR 1. The effective parity relationship for the U.S. dollar became Ȼ 8.57 = US$1, and the official buying and selling rates were set at Ȼ 8.54 and Ȼ 8.60, respectively, per U.S. dollar.

April 25. All existing exchange restrictions on payments at the official rate were lifted; prior to unification, payments through the free market had been unrestricted.

April 25. The period within which export proceeds must be surrendered was reduced from 60 days after exportation to 15 days after receipt.

April 25. The following were declared exempt from surrender requirements: salaries and similar receipts of members of the diplomatic and consular corps and staff members of international institutions, as well as all receipts from tourism, family remittances, insurance claims (provided the premiums had been settled at the free market rate), inflows of unregistered foreign capital not sold in the official exchange market, and of domestically owned capital repatriated from abroad. These exempted receipts would be considered as “free market exchange.” Such “free market exchange” could be used freely.

April 25. Ad valorem export taxes ranging between 1 per cent and 18 per cent were introduced to eliminate windfall profits on traditional exports. Taxes of 2-7 per cent were levied on nontraditional exports sold mainly within Central America. The tax was 13 per cent for coffee, meat, sugar, and cacao (Decree No. 3719).

April 25. Borrowing abroad by the public sector, with the exception of the state banks, became subject to the prior approval of the Ministry of Finance.

May 3. Decree No. 3761-MEIC prohibited the export of processed hides. (Exports of raw and semiprocessed hides and skins had been prohibited since September 1972.)

May 23. Decree No. 3802-MEIC made exports of fertilizers subject to authorization by the Directorate-General of Internal Commerce.

May 24. Regulations for the application of the ruling exchange system were published. They provided essentially a consolidation of the rules, as amended on April 25, in respect of the surrender of exchange receipts, the exceptions to the surrender requirement, the licensing of exports, and the allocations for invisibles.

June 27. Decree No. 3957-MEIC established that the Directorate-General of Internal Commerce could authorize the export of raw, semiprocessed, and processed hides and skins when domestic needs were satisfied.

July 1. An export tax of US$0.25 a box was imposed on bananas (Decree No. 3923-H, implementing Law No. 5515 of April 19, 1974).

August 29. Decree No. 4049-MEIC added to the Export Incentive Law (No. 5162) a chapter concerning exports to countries maintaining quantitative import restrictions.

September 30. Additions to the Regulations of May 24 (see above) were published. These included the introduction of restrictions on outflows of resident-owned capital.

Article 33 specified the transactions for which agent banks could sell foreign currency, subject to evidence of purpose. These were listed as (1) payment of direct commercial obligations, including freight and insurance on imports; (2) servicing of foreign loans (amortization and interest); (3) repatriation of foreign capital and payment of dividends on such capital; (4) exporters’ expenses in respect of advertising and other services; (5) student expenses and family remittances; (6) expenses of tourism and other travel; (7) remittances in respect of subscriptions, medical expenses, professional services, insurance and reinsurance of the National Insurance Institute, royalties, and gifts; (8) expenditures abroad of the Government and state institutions; (9) investments by Costa Rican enterprises in Central America, provided they were approved by the Ministry of Economy, Industry, and Commerce, as well as the Central Bank; (10) majority investments of Costa Rican enterprises in subsidiaries of non-Central American companies, provided they were approved by the Ministry and the Central Bank; and (11) other remittances subject to the judgment of the Central Bank.

Article 34 provided that any physical or juridical person could freely purchase foreign exchange up to US$300, subject to a declaration for statistical purposes as to the purpose of the remittance. For the purposes listed in Article 33, higher amounts could be obtained if the remittor gave satisfatory evidence to the Central Bank as to the use of the foreign exchange. Travelers could obtain up to US$1,000 subject to presentation of passport and travel ticket; they could also obtain higher amounts, subject to the submission to the Central Bank of evidence regarding the length of their stay abroad.

Article 35 provided that the Central Bank would authorize the sale of foreign exchange for all payments abroad, except for transfers of capital without actual obligation abroad or where, although there was an actual obligation abroad, the Central Bank considered the transfer to be an unjustified transfer of national capital.

These additions to the Regulations came into effect on October 1. For private travel, the Central Bank generally made available, in addition to the basic quota of US$1,000 a person a trip that agent banks could sell, an amount of US$75 for each day in excess of ten days, up to a total additional amount of US$3,000 a person a trip.

October 1. Various measures to stimulate capital inflows came into force. Nonresidents’ time deposits in deutsche mark, French francs, pounds sterling, Swiss francs, and U.S. dollars would earn interest at 8-11 per cent, depending on maturity. The interest rate on resident and nonresident-held savings deposits denominated in U.S. dollars was increased to 3 per cent and that on certificates of deposit denominated in colones to 14 per cent. Banks were exempted from reserve requirements on deposits originating abroad.

October 15. The Central Bank directed that payments for imports originating in other CACM countries must be effected exclusively by checks denominated in colones and certified by agent banks, for settlement through the Cámara de Compensación Centroamericana.

November 8. The Central Bank issued regulations regarding installment and credit sales of goods and services. Minimum downpayments and maximum credit terms were prescribed for specified goods and services (31 items, 11 of which were subdivided into two groups, domestically produced and imported). They included automobiles, refrigerators, radios, television receivers, washing machines and dryers, motorcycles, and travel passages. For domestically produced goods the minimum down payment ranged from 10 per cent to 40 per cent and the maximum payments term was 24 months, while imported goods had to be fully paid in cash. Imported goods and services covered by free trade treaties would be treated in the same manner as goods of national origin. It was subsequently decided that these regulations would come into force on March 1, 1975.

December 3. Transitional regulations for installment and credit sales of goods and services were issued, for the period until March 1, 1975, when the regulations of November 8 would come into force. Minimum down-payment terms and maximum credit terms were set for 29 commodity groups, without distinction between domestically produced and imported goods. Maximum downpayment terms of 40 per cent were prescribed for automobiles, boats, motorcycles, electric equipment, and certain other goods (mainly imported goods).

December 23. It was announced that with effect from January 15, 1975 a system of prior import registration would be established; such registration would be a prerequisite for obtaining foreign exchange for import payments.

December 24. Decree No. 4431 lowered the rates of the ad valorem export taxes established by Decree No. 3719, except for cocoa and sugar. For coffee the tax was reduced to 5 per cent and for all other commodities to 1 per cent.

December 25. The sales tax was increased from 5 per cent to 8 per cent ad valorem.

Cyprus

(Position on December 31, 1974)

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, 1974 was US$2.7980 buying, and US$2.7950 selling, per £C 1, and that for sterling was £ stg. 1.1950 buying, and £ stg. 1.1900 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 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 currency2 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 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, only for the purpose of preventing illicit capital outflow. For study abroad, the lower limit is £C 700 a year, and the upper limit is £C 2,200 a year; the amount allowed depends on the cost of living in the country concerned—e.g., for study in countries in the Middle East (defined as Egypt, Greece, Israel, Lebanon, and Turkey), £C 700; in the United States and Canada, £C 2,200; in other countries, £C 1,400. Higher amounts for student allowances may be granted on presentation of documentary evidence. However, allowances are granted only for study at 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.

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 1974

January 15. Authorized banks were permitted to open foreign currency deposit accounts in the name of nonresidents, provided that such deposits were for a period exceeding one month. For the opening of foreign currency accounts for shorter periods, the prior approval of the Central Bank was required. Foreign currency accounts could be operated in the same manner as External Accounts.

July 12. Import duties on a number of items, including certain luxury consumer goods, were increased.

August 24. The annual basic exchange allowance for tourist travel was reduced from £C 350 to £C 150 a person for the rest of 1974; any amount in excess of £C 200 already granted was deducted from the new limit of £C 150. Henceforth, the allowance could only be granted to persons submitting a valid travel ticket (in addition to a passport and, where prescribed, an exit permit).

August 26. Foreign exchange allowances for education abroad henceforth were granted only for study at universities or comparable institutions. Also, they could no longer be provided prior to the production of documentary evidence of enrollment.

August 26. A limit of £C 1,000 for each transaction was placed on the transfer abroad of funds resulting from estates and intestacies and of the sale proceeds of real estate. The emigration allowance was reduced from £C 10,000 to £C 1,000 for both Cypriots and repatriating foreign nationals. Releases of funds from Blocked Accounts were reduced from £C 5,000 to £C 1,000 for each account holder during a calendar year.

August 26. The enforcement of the exchange control regulations was tightened by a more careful screening of applications for foreign exchange for business travel and for medical treatment abroad.

August 26. Until further notice, the Central Bank was prepared to allow acceptance of drafts and payments for imports beyond the period of 180 days previously in force.

August 27. The import of Cyprus currency notes was prohibited, with the exception that travelers to Cyprus were allowed to bring in on their person or in their baggage up to £C 10; previously, the import of domestic currency by travelers was unrestricted. The Central Bank announced that it was prepared to consider applications for the import of, and payment in external funds for, reasonable quantities of Cyprus currency notes already purchased by foreign financial institutions from bona fide travelers.

August 28. New procedures for payments for imports were introduced on a temporary basis. They were intended to ensure that goods paid for were actually imported.

September 17. The delivery of foreign currency notes to nonresidents in Cyprus against External Accounts or foreign currency accounts by authorized dealers was prohibited. However, authorized dealers were allowed to sell foreign currency notes against External Accounts or foreign currency accounts to nonresident individuals, to members of foreign embassies, and to members of the United Nations forces in Cyprus, for travel purposes only, up to the equivalent of £C 50 a person a trip. The selling of foreign notes to foreign embassies required individual Central Bank approval.

October 3. Authorized dealers had to refer to the Central Bank all cancellations by foreign remitters or issuers of transfers or negotiable instruments in favor of persons in Cyprus. They were reminded that the beneficiaries of foreign remittances and the holders of negotiable instruments expressed either in foreign currency or in local currency with reimbursement in external funds could not, except with special permission, cancel, return, agree to the cancellation or return of the amount involved, or otherwise export such foreign negotiable instruments.

October 10. Transactions in foreign exchange could no longer take place directly between authorized dealers but were required to be channeled through the Central Bank.

Dahomey

(Position on December 31, 1974)

Exchange System

No par value for the currency of Dahomey 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 for transfers within the West African Monetary Union and a commission of 2.50 per mill for transfers to countries outside the Union. 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, Dahomey’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 Dahomey 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-General of Economic Affairs in the Ministry of Industry, Commerce, and Tourism, which also supervises borrowing abroad, the issuing, advertising, or offering for sale of foreign securities in Dahomey, inward direct investment, all investment in foreign countries, and the solicitation of funds in Dahomey for placement in foreign countries. The 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-General of Economic Affairs in the Ministry of Industry, Commerce, and Tourism. 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-General of Economic Affairs.

Prescription of Currency

Dahomey is an Operations Account country of the French Franc Area, since the BCEAO maintains an Operations Account with the French Treasury; settlements with France (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 and Ghana, however, are made through special accounts.2 All settlements with Portugal, Rhodesia, and South Africa are prohibited.

Nonresident Accounts

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

Imports and Import Payments

All imports originating in or shipped from Portugal, Rhodesia, or South Africa are prohibited. Certain imports, such as narcotics, are prohibited from all sources. The Société de Commercialisation et de Crédit Agricole du Dahomey (Socad) has a monopoly over the importation of sugar, rice, wheat, wheat flour, and condensed milk. 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-Daho-mean 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 and 1974.) 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-General of Economic Affairs, 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 Dahomey 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 Dahomey is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Travelers going to foreign countries may take out up to a maximum of CFAF 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-General of Economic Affairs. 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 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 Dahomey and Portugal, Rhodesia, and South Africa are prohibited. Capital movements between Dahomey 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 Dahomey; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over foreign securities, these control measures do not apply to France (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 Dahomey require prior authorization by the Minister of Industry, Commerce, and Tourism.3 Foreign direct investments in Dahomey4 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 Dahomean investments abroad or foreign investments in Dahomey, 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 Dahomey requires prior authorization by the Minister of Industry, Commerce, and Tourism. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Dahomean Government, and (2) shares that are similar to or may be substituted for securities whose issuing, advertising, or offering for sale in Dahomey has previously been authorized.

Borrowing by residents from nonresidents requires prior authorization by the Minister of Industry, 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 Industry, 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 Industry, 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 Cis 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 Dahomean 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 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 Dahomey. Imports and exports of gold from or to any other country require prior authorization by the Minister of Industry, 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 1974

January 19. The fixed exchange rate of CFAF 1 = F 0.02 was maintained following the announcement of the French authorities that during the next six months, and on a provisional basis, the interventions of the Exchange Stabilization Fund in the official exchange market would no longer aim at limiting the exchange rates between the French franc and certain other currencies within predetermined margins. An official decision to this effect was taken by the Council of the West African Monetary Union on January 24.

March 21. Following the abolition of the dual exchange market in France, the dual market arrangements in Dahomey also ceased to operate. The financial franc market and the Financial Accounts in Francs were abolished and settlements with countries outside the French Franc Area henceforth took place only through the official exchange market and through Foreign Accounts in Francs. The relevant exchange control regulations were issued in Dahomey on April 8 and June 6.

April 8. Order No. 286/MEF revoked order No. 28/MEF/DGAE of June 21, 1972. All purchases and sales of foreign currencies (spot or forward) and all payments between Dahomey and foreign countries or between a resident and a nonresident henceforth had to be made through the official exchange market.

April 8. Circular No. 39 substituted in Circular No. 15 of January 20, 1969 (and in all related circulars) the term “official exchange market” for “financial franc market,” and the term “Foreign Account in Francs” for “Financial Account in Francs.”

April. The Government took over the importation of hydrocarbons.

June 6. Circular No. 914 modified Circular No. 15 of January 20, 1969 concerning nonresident accounts in francs and foreign securities dossiers in light of the abolition of the dual exchange market.

December 5. It was announced that the State was taking full or partial control of certain economic sectors; these were banking, transportation, and the distribution of petroleum products.

Denmark

(Position on December 31, 1974)

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 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 16 currencies that are used most often.1 On December 31, 1974, the buying and selling rates for the U.S. dollar were DKr 5.6460 and DKr 5.6540, respectively, per US$1.

Authorized exchange dealers may engage in arbitrage both spot and forward for up to 12 months with one another and with their foreign correspondents in all currencies, including Danish kroner. Special rules apply, however, for the forward sale of foreign currencies against Danish kroner to foreign correspondents. Forward premiums and discounts are generally left to the interplay of market forces, but the central bank has from time to time sold U.S. dollars forward to authorized banks. Forward transactions with residents must cover contractual payments for goods and services or payments on authorized loans and credits, the payments covered being due not more than two years from the date of the forward contract.

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 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 and some of the stock exchange brokers who are members of the Copenhagen Stock Exchange.2 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. Virtually all payments in favor of residents of Rhodesia, however, must be credited to a South Rhodesian Account. Pursuant to UN Security Council Resolution No. 253 (1968), restrictions for security reasons are applied to virtually all payments and transfers to, or for the benefit of, Rhodesia, and to certain receipts from Rhodesia.

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 credit balance in any one account does not exceed DKr 75,000; any amounts 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 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, Czechoslovakia, the German Democratic Republic, Hungary, Poland, Romania, or the U.S.S.R. Special licensing provisions are in force for most items originating in or purchased from the People’s Republic of China, the Republic of China, North Korea, Mongolia, or North Viet-Nam. No licenses are granted for the importation of goods originating in or purchased in Rhodesia.

With these exceptions, imports are free of license, provided that for Japan, the Republic of Korea, and the state trading countries the country of origin and the country of purchase are identical.

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 with regard to the term the payments are in conformity with normal commercial practice for 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 remittor’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, 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 commodities that require a license when exported to member countries of the EEC are gold and waste and scrap of iron and steel. 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 be offered for sale to the National Bank or to an authorized exchange dealer without undue delay.

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. 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. Loans and credits granted by exporters or banks and made in connection with the sale of goods or services are normally permitted for 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. Such bonds 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 expenditure made within 6 months prior to the date the loan is contracted or to be made within 12 months following that date, for the establishment, expansion, or equipment of the borrower’s own business and /or industrial premises and for the acquisition of plant, machinery, and transport equipment to be used for its own business and/or industrial activities. Finally, they may grant loans up to DKr 200,000 a borrower in a calendar year to members of the nonresident’s family.

Municipalities and public utility companies may as a rule issue debenture loans abroad without special permission of the National Bank, but their foreign borrowing is subject to control by the competent executive department of the Government.

Transfers of proceeds from the sale or liquidation of all types of investments and transfers of all other liquid funds in Denmark owned by nonresidents other than newly emigrated persons are permitted freely, irrespective of when and how the original investment was acquired. Interest and repayment of principal on authorized loans, credits, and deposits received from persons and firms who are nonresidents at the time of receipt may be paid freely, with the proviso that loans and credits obtained from a nonresident generally must not be amortized or repaid in full more than 30 days before the amortization payment or repayment is due, or before the customary date in the trade.

Inheritances and gifts to relatives may normally be transferred to any country without limitation. Individual payments above DKr 3,000 as gifts to persons other than relatives 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 quota has been set (DKr 400 million for 1975) up to which they 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. The largest exchange dealers have been allocated subquotas, and for the others there is a residual subquota. 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. Bank advances to customers financed by foreign credit taken up under these quota 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.

Gold

Residents may freely buy, hold, and sell gold coins in Denmark; they may also import gold coins from most countries. Otherwise, residents other than the monetary authorities and authorized industrial users are not allowed to acquire gold abroad. Imports and exports of gold normally require licenses issued by the Ministry of Commerce; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users. Imports of gold in bars or coins, unless made by or on behalf of the monetary authorities, are subject to value-added tax at a rate of 15 per cent but not to customs duty. Domestic transactions also are taxed at a rate of 15 per cent.

Changes during 1974

January 1. The bilateral payments arrangement with the German Democratic Republic was discontinued and all payments between Denmark and the German Democratic Republic henceforth took place in convertible currencies. The special East German Krone Accounts were redesignated convertible Krone Accounts. At the same time a comprehensive and reciprocal liberalization of trade between Denmark and the German Democratic Republic came into effect.

January 1. Acting in concert with the central banks of the other EEC member countries, the National Bank eased the rules governing demand and time deposits on convertible Krone Accounts held by specified financial institutions of the EEC, as well as the rules concerning their investments in listed Danish krone bonds.

January 1. The rules governing the net “commercial” foreign position of authorized foreign exchange dealers were continued unchanged. All banks collectively could incur a negative net “commercial” foreign position up to DKr 250 million, subject to the rules introduced on January 1, 1973. The quota for 1974 was divided into subquotas for the 26 largest exchange dealers and a residual quota of DKr 9 million for the others.

January 1. As the quota of DKr 85 million for the fourth quarter of 1973 for sales of krone bonds to nonresidents had not been taken up fully, the period within which that quota could be used was extended until further notice.

January 1. The taking up of financial loans abroad, which had been permitted for certain categories of business firms since 1968, was made subject to more stringent conditions. Henceforth, such loans could generally be raised abroad only provided the entire proceeds were used exclusively to finance expenditures made within six months prior to the date of the loan transaction, or to be made under contractual obligations within six months following that date, for the establishment, extension, 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 the borrower’s own business and/or industrial activities. Every borrower was required to declare in writing that his prospective financial loan would meet these conditions; previously, such loans were often taken up for general liquidity purposes. The maximum permitted amount remained unchanged at DKr 5 million a borrower a year. Special rules were applicable to financial loans raised by affiliates from their parent companies or vice versa, or from other affiliates of the same parent company.

January 1. Denmark’s scheme of generalized tariff preferences was superseded by the EEC scheme.

January 19. The French franc ceased to be included among the currencies in respect of which the National Bank observed margins of 2¼ per cent. The official buying and selling rates for the French franc were suspended.

March 19. A new quota of DKr 100 million was established for the period to June 30 for sales to nonresidents of Danish bonds denominated in Danish kroner. It was extended on that date until further notice. On September 13 a new quota of DKr 150 million was set for the rest of the year; additional sales could be made with the prior approval of the National Bank. At the end of October, the Government announced that sales to nonresidents were being fully liberalized with effect from December 1.

March 28. Certain imports from the Republic of China, the People’s Republic of China, North Korea, Mongolia, and North Viet-Nam were liberalized. Furthermore, with respect to imports, Turkey would be treated in the same manner as the EEC countries.

April 2. A new banking law was enacted. One of its provisions made it possible under certain conditions for foreign banks to establish branches in Denmark. The law was to come into effect on January 1, 1975.

May 2. An Executive Order freed exports of gold coins to non-EEC countries from licensing.

May 17. Certain increases in purchase tax came into force. They affected mainly automobiles and other consumer durables.

May 30. Denmark signed the OECD Declaration on Imports, Exports, and Other Current Account Transactions.

September 13. The ceiling of DKr 5 million a borrower a year on financial loans taken up abroad was raised to DKr 20 million, and the conditions for raising such loans were eased somewhat.

September 13. The ceiling on the negative net “commercial” foreign position of authorized foreign exchange dealers was raised from DKr 250 million to DKr 400 million. This increase in the foreign borrowing quota of the credit institutions was to be used only for the financing of Danish foreign trade.

September 24. Denmark subscribed to the Fund’s Voluntary Declaration on Trade and Other Current Account Measures for Balance of Payments Purposes.

September 27. It was announced that an export credit institution would be formed in cooperation between the National Bank and the commercial banks. Moreover, the National Bank announced immediate improvements in its facilities for refinancing export credits of over two years, and export credits became exempt from the banks’ lending ceiling.

December 1. Sales to nonresidents of Danish bonds dealt in on stock exchanges and denominated in Danish kroner were fully liberalized.

Dominican Republic

(Position on December 31, 1974)

Exchange Rate System

The par value is 0.736662 gram of fine gold per Dominican Peso, corresponding to RD$1 = US$1. The intervention currency is the U.S. dollar. 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 of 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.

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, Colombia, Mexico, and Venezuela may be effected through special accounts established under reciprocal credit agreements;1 payments for oil imports, however, may not be made through these accounts. 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 some 80 categories of goods, including automobiles with an f.o.b. value in excess of RD$2,000, are prohibited. Imports of certain other commodities are restricted by quotas. All commodities are exempt from quota and prohibition when they are financed with the importer’s own foreign exchange; such imports are also exempt from prepayment of import taxes and surcharges. Licensing controls are maintained over a few commodities, however, for reasons of health or security. The import controls involve exchange allocations. All payments for imports require the approval of the Central Bank, except those made with the importer’s own exchange. Insurance on imports must be effected with companies authorized to operate in the Dominican Republic.

Commodities subject to quantitative restrictions can be imported and settled with official exchange only against a fully prepaid letter of credit. The same requirement applies to some other goods that are not subject to quantitative restrictions, including many types of smoked, dried, or canned fish, alcoholic beverages, Venetian blinds, some perfumes and cosmetics, electric ovens, freezers and refrigerators, record players, and certain construction materials. Some 20 other import items not subject to restrictions must be covered by regular letters of credit. The commercial banks transmit to the Central Bank each day a list of applications for all imports against letters of credit. After the Central Bank approves an application, 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.

Nonresidents working in the Dominican Republic 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 Latin America, up to US$250 for Spain, up to US$270 for the United States and Canada, and up to US$300 for other European countries. 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 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, in connection with the operation of export quotas established under the International Sugar Agreement, and for coffee, cocoa, and tobacco. Within two working days of receiving payment, exporters of Dominican products must surrender through the commercial banks to the Central Bank foreign exchange equal to 100 per cent of the f.o.b. or c.i.f. value of their exports. For the purpose of exchange surrender, declared export prices must equal or exceed the minimum export prices published by the Central Bank. Exempt from the exchange surrender requirements are foreign mining companies, and firms operating in industrial free zones, which are only required to convert sufficient foreign exchange to cover local costs and taxes. All exports of sugar and sugar by-products are subject to prior authorization by a committee consisting of the Minister of Finance, the Governor of the Central Bank, and the Executive Director of the Sugar Institute. Exporters may not extend credit for more than 90 days from the date of embarkation without authorization by the Central Bank.

Proceeds from Invisibles

The foreign exchange proceeds from invisibles are subject to surrender requirements and must be surrendered to the Central Bank through the commercial banks. The import of Dominican banknotes and coins is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. Inward capital remittances must be registered with the Central Bank and must be converted into pesos at that Bank. 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 1974

January 1. A reciprocal credit agreement with Mexico signed on December 3, 1973 came into operation.

February 7. Imports of motor vehicles by government departments were prohibited.

August 15. A reciprocal credit agreement was signed with Brazil. It came into force on September 1.

October 22. Law No. 48 charged the Dominican Export Promotion Center (Cedopex) with the centralization of all controls, quotas, regulations, and licenses in respect of exports of commodities other than coffee and sugar and its by-products.

December 12. Monetary Board Resolution No. 3 extended the system of import controls until December 31, 1975.

December 12. Monetary Board Resolution No. 34 exempted from the letter of credit requirement all commodities explicitly excluded from the system of quotas and prohibitions on imports.

December 19. Monetary Board Resolution No. 5 exempted from quota and letter of credit requirement imports of textiles when intended as raw materials for the importer’s own use.

Ecuador

(Position on December 31, 1974)

Exchange Rate System

The par value is 0.0355468 gram of fine gold per Ecuadoran Sucre. A central rate of S/ 25.00 = US$1 has been established, corresponding 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 in order to maintain the rate within the margins applicable to the official rate. Transactions eligible for the free market may alternatively be effected at the Central Bank, at its official market buying and selling rates.

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 Foreign Trade, Industry, 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.

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 and semiessential goods, and List II, consisting of less essential and luxury goods. All goods not included in these two lists are prohibited. 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 have been paid, that the required prepayments of 80 per cent of import duties have 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 permitted, subject to approval by the Central Bank. 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.

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.

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, but for all outward transfers in excess of US$10,000 documentation as to the purpose must be submitted to the Central Bank. 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 to ensure 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 coffee beans, cocoa beans, and crude petroleum, and one of 12 per cent on sugar. 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, but for all outward transfers 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 Ecuador1 must be registered with the Central Bank in order to be entitled to foreign exchange at the official rate for remittances of interest, profits, dividends, and amortization; new investments require the prior authorization of the Ministry of Foreign Trade, Industry, and Integration. 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. 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 (Finance, Natural Resources and Tourism, or Production) 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 and all pertinent documentation. Thereafter, taking into account the interests of the Ecuadoran economy and priorities established in the country’s development plans, the General Management of the Central Bank must approve or deny the registration within an additional 30 days. In certain cases, where all documentation has been submitted, the Central Bank can provisionally register the investment for a period of up to 90 days.

Similarly, loans in foreign exchange granted to the Government or to official entities must be registered with the Exchange Department of the Central Bank; for private loans registration is required for statistical purposes. In the case of suppliers’ credits and similar credit for financing the importation of merchandise, no special registration procedure is required; all the pertinent information on terms of payment, etc., is contained in the import license, and that provides the basis for purchase of exchange for remittance of interest, charges, and scheduled amortization. Foreign nationals are prohibited from owning rural properties and from owning or operating mining industries within 30 miles of Ecuador’s coastline or borders.

Foreign exchange at the official rate may be obtained for the withdrawal of foreign investment from Ecuador five years after the date of registration, on the basis of a schedule agreed by the Central Bank. Profits accumulated in previous years may be repatriated also on the basis of a schedule agreed by the Central Bank for investments which have completed the registration procedure. For investments registered on a provisional basis, 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. Gold bars are exempt from import duty, while that on semiworked gold is 70 per cent ad valorem.

Changes during 1974

January 9. Decree No. 1445 of December 28, 1973 was published, which established new reference prices for petroleum exports, with effect from January 1, 1974.

January 17. Supreme Decree No. 65 reduced the ad valorem export tax on sugar from 15 per cent to 12 per cent.

January 30. Monetary Board Resolution No. 701 established with immediate effect the minimum surrender requirements for the exchange proceeds from exports of crude petroleum. Resolution No. 691 of November 21, 1973 was revoked.

January 31. The new Mining Law of January 24, 1974 (Decree No. 101) came into force.

February 1. Decree No. 108 modified the export duties on silver, gold, and platinum.

February 6. The Monetary Board issued a Regulation for the administration of its Regulation No. 698 of December 20, 1973 regarding the program for external supplies of inputs and raw materials for agriculture, fisheries, and the processing industry.

February 28. Decree No. 850 of the Banking Super-intendency modified the regulations governing the exchange houses.

March 15. Decree No. 294-D empowered the Central Bank to grant credit, and extend guarantees, in foreign currency for the purpose of ensuring payments for imports, including advance payments.

March 15. Decree No. 294-F provided a definition of the net international monetary reserves of the Central Bank by specifying the constituent assets and liabilities.

March 25. Decree No. 316 imposed with immediate effect a variable exchange tax on foreign credits. The tax was payable to the Central Bank at the time of conversion. The rate of tax ranged from 2 per cent for maturities of less than one year to 6 per cent for maturities exceeding 30 months. The following borrowings were exempt: (1) credits from foreign governments and international financial organizations; (2) credits given to public and semipublic agencies; (3) investment credits with a maturity longer than three years destined for the agricultural and fishing sectors; (4) credits with a maturity longer than three years destined for the importation of machinery and capital goods; and (5) suppliers’ credits which do not constitute an inflow of foreign exchange.

April 4. A new customs tariff (Decree No. 198-M) came into force, which consolidated specific and ad valorem duties into a new schedule of ad valorem import duties. The overall average tariff rate was reduced considerably. At the same time, the 5 per cent tax on List II imports was reduced to 1 per cent, the rate applicable for List I imports (Monetary Board Resolution No. 709).

April 4. Resolution No. 709 reclassified import Lists I and II according to the Nabandina tariff code and revoked the previous classification in Resolution No. 627 of July 19, 1972.

April 14. Resolution No. 712 empowered the Central Bank to grant advances against future export proceeds.

May 14. Decree No. 497 modified the structure of the Monetary Board.

May 22. Resolution No. 713 fixed at S/ 25 = US$1 the exchange rate for the conversion and the servicing of loans granted to the Government and to official agencies by foreign governments and international financial institutions.

June 5. Resolution No. 725 provided that all imports had to be paid for with foreign exchange obtained from the Central Bank.

July 10. Resolution No. 728 of the Monetary Board authorized the Central Bank to make official exchange for interest available at interest rates up to 3 percentage points over the prime rate in the lending country or, in the case of export credit, the exporting country. Previously, the corresponding limits were 7½ per cent per annum for financial credits and 7 per cent for suppliers’ credits.

July 23. Decree No. 745 clarified the provisions of Decree No. 316 of March 25. The registration tax of 2-6 per cent was the only tax applicable to foreign loans, and these were exempt from withholding tax.

July 29. The contracting of external commercial debt at a fluctuating rate of interest was prohibited (Resolution No. 74–003).

August 14. A new Hydrocarbons Law (Law No. 803 of August 6) was published. It was a recodification of existing legislation.

August 30. Decree No. 887 specified the powers of the Supreme Foreign Trade Council, the Central Bank, the Ministry of Foreign Trade, Industry, and Integration, the Superintendency of Companies, and the Banking Superintendency, with respect to authorizations and contracts covered by the Cartagena Agreement provisions on investments of foreign capital. The Decree came into force on September 5 and revoked Supreme Decree No. 1323 of November 26, 1973.

October 2. Resolution No. 743 authorized private banks to extend lines of credit for imports of raw materials and other industrial inputs.

November 13. Decree No. 890 authorized banks to make available the necessary foreign exchange for import shipments that exceeded by up to 20 per cent the value or quantity specified in the import license.

Egypt

(Position on December 31, 1974)

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, 1974 were LE 0.391305 and LE 0.395218, respectively. An exchange tax of 5 per cent is applied to most outward remittances of invisibles and capital at the official rate.

An exchange rate of approximately US$1.70 buying, and US$1.65 selling, per LE 1, is applicable to transactions in specified convertible currencies1 in a parallel exchange market conducted through authorized commercial banks where the buying and selling rates are LE 0.586957 and LE 0.606522, respectively, per US$1.

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 Undersecretary of Finance for Budget and Control of Foreign Exchange and the Director of Exchange Operations. The technical work of exchange control is performed by the Exchange Control Administration attached to the afore-mentioned Undersecretary. Banks are authorized to execute foreign exchange transactions, within the framework of a general authorization, without need to obtain specific exchange control approval. The General Control Authority for Exports and Imports supervises imports and exports. Imports are controlled by exchange allocations rather than by import licenses. Most imports and exports are carried out by public sector companies.

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;1 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. 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.2 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 must be paid in Egyptian pounds by debiting a Shipping Account No. 1. Balances on this type of account may be created by selling a convertible currency to an authorized bank in Egypt or by debiting a Free Nonresident Account.

Nonresident Accounts

In addition to the special accounts related to the bilateral payments agreements of Egypt or to the indemnity agreements concluded with certain countries, there are four main types of nonresident accounts in Egyptian pounds: Free Nonresident Accounts, Nonresident C Accounts, Nonresident D Accounts, and Convertible Egyptian Pound 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 or Nonresident C or D Accounts; 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.2 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, and the domestic currency equivalent of the value of consumer goods imported under the parallel market arrangements. 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.

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 nonresident; 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); 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 are made by publicly owned commercial companies affiliated with the General Organization for Foreign Trade. Some imports may also be made by certain industrial and other public sector establishments. Private sector imports are handled by a Foreign Trade Company.

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, other than those for the tourist industry, require approval by the Commercial Agency for the Parallel Market and, for orders for standardized commodities of a value exceeding LE 5,000, approval by the Determination Committee 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. An External Financing Committee has been established in accordance with Ministerial Decree No. 607 of 1971. It coordinates foreign exchange requirements and available resources by drawing up quarterly programs for the implementation of the annual foreign exchange budget.

By virtue of Order No. 478 of 1973, all goods may be imported without an import permit; imports are regulated by exchange allocations rather than by import licenses.

By virtue of Order No. 64 of 1974, commodities 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 Convertible Egyptian Pound Accounts, provided that they are regarded as nonresidents for exchange control purposes. 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.

A 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.

Payments for invisibles due in convertible currency must be settled in the parallel market, with the exception of the following, which 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; 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.

An exchange tax of 5 per cent is applied to all payments for invisibles at the official rate, except students’ remittances, government payments, and transfers of funds for pilgrimages.

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 £ stg. 5 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 export targets for cement and for 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 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 obliged, in principle, to repatriate fixed percentages of their foreign income and may retain the balance in foreign currency accounts. 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. Suez Canal dues must be received in Egyptian pounds from a Shipping Account No. 1, which may be credited only with the proceeds from sales of convertible currencies or by transfers from a Free Nonresident Account. 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 not import Egyptian pound banknotes but 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. 30 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. Capital transfers abroad are subject to an exchange tax of 5 per cent.

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 1974 defines the treatment of new foreign investments. 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 1974

February 10. The Agency for Arab and International Economic Cooperation was established as an independent organization attached to the Minister of Finance, Economy and Foreign Trade. Among the agency’s functions were the supervision of foreign investment, foreign debt, and relations with international financial organizations.

March 24. Convertible currency proceeds from exports of dehydrated onions and garlic were shifted from the official market to the parallel market.

April 8. The regulations on the use of “own exchange” for imports of automobiles were modified. Customs duties on cars and motorcycles for personal use and on cars for use as taxicabs were reduced. Moreover, Egyptians were permitted to import, each year, one car for personal use and another one to be offered as a gift, provided that a specified sum in convertible currency (the equivalent of £ stg. 100 for a four-cylinder car or £ stg. 150 for a car with more than four cylinders) is converted into Egyptian pounds at the official rate.

April 8. A decree was issued exempting from customs duties and other forms of taxation imports for low-cost housing projects upon the request of the minister concerned. In addition, certain imported goods could again be sold for foreign currency to Egyptians and foreigners at the free markets and all other shops authorized to sell goods for foreign currency. (This facility had been discontinued two years earlier.)

April 26. The Ministry of Finance, Economy and Foreign Trade was replaced by a Ministry of Finance and a Ministry of Foreign Trade. The Ministry of Finance was given charge of exchange control and the foreign exchange budget. The Agency for Arab and International Economic Cooperation was given the status of a separate ministry.

June 1. Order No. 64 (see also below) provided that exchange rates in the parallel market would be determined in the light of the prevailing foreign exchange considerations and indications.

June 1. Order No. 65 created a committee charged with the determination of the effective exchange rates in the parallel market. It was to operate on the principle that any rate adjustments would serve to promote the liberalization of imports, but that the premium and surcharge applied to the official buying rate would not be reduced from the existing levels of 50 and 55 per cent.

June 1. Order No. 64 revoked Ministerial Order No. 477 of 1973, which had created the parallel market, and set new ground rules for that market. In addition to Egyptian commercial banks, those permitted to operate the parallel market henceforth included tourist companies, hotels, free markets, and shops selling goods for foreign currency; banks were now permitted to keep parallel market funds abroad, to arbitrage and invest such balances abroad, and to deal among themselves in foreign currency eligible for the parallel market. A precise listing was given of the transactions eligible for the parallel market, on the supply side as well as on the demand side. On the supply side, there was a considerable increase in types of eligible funds, by the addition of (1) all amounts transferred from abroad to physical persons, unless intended for investment purposes; (2) all interest, profits, commissions, and other income accruing abroad to individuals, professional offices, and public sector companies; (3) donations and subsidies received from abroad by various kinds of nongovernmental organizations and societies; and (4) amounts transferred by nonresident physical or juridical persons for credit to a new type of domestic currency account, the Convertible Egyptian Pound Account.

Appendix I listed the goods whose export proceeds were not eligible for the parallel market as raw cotton; cotton yarn and cotton textiles; rice; petroleum and petroleum products; fresh onions; fresh garlic; potatoes; cement; and re-exported foreign goods. This was subject, however, to the reservation that, as previously, 50 per cent of any convertible currency proceeds in excess of export targets from cotton yarn and cotton textiles did qualify for the parallel market, and the same now became applicable to cement. Appendix II listed the goods that individuals could supply under certain arrangements. Such goods were subject to two different provisions; Egyptian citizens receiving funds eligible for the parallel market could transfer these funds to Egypt in the form of the listed goods rather than foreign currency; alien physical persons and Egyptian citizens could supply the listed goods to the credit of Convertible Egyptian Pound Accounts, provided in either case that they were regarded as nonresidents for exchange control purposes.

Among the effects of the new regulations were the following: (1) 50 per cent of the proceeds from exports of cement above the target for cement exports settled in convertible currencies was shifted from the official market to the parallel market; and (2) importation against settlement through the parallel market was simplified, when a large number of commodities could be imported without an import license, either with “own exchange” or exchange earned by the importer through the parallel market.

Important provisions that remained unchanged included the following: (1) the period within which foreign currency must be used by the holder or sold to a commercial bank was six months; (2) outward transfers in respect of capital, family remittances, and travel expenditures were not subject to the 5 per cent exchange tax when settled through the parallel market; and (3) transactions in this market were exempt from exchange licenses and import licenses.

June 1. Order No. 66 created a single type of external nonresident account in foreign currency, to replace the four existing types of foreign currency accounts (External Accounts of Nonresident Aliens, External Accounts of Resident Aliens, External Accounts of Egyptian Citizens, and Foreign Currency Resident Accounts of Egyptian Citizens). The new accounts could be opened for (1) nonresident physical or juridical persons; (2) physical persons who for exchange control purposes are treated as nonresidents; and (3) physical persons who are Egyptian citizens and are either working abroad or performing services in Egypt for persons abroad. These accounts could be credited with (1) any convertible currency transferred from abroad (including banknotes, subject to rules to be issued later); (2) transfers from other foreign currency accounts of the same type (as well as existing balances in the four types of accounts that were being discontinued); and (3) any interest payable on the accounts. They could be debited for (1) payments in Egypt permitted by any pertinent rules and regulations; (2) transfers to other foreign currency accounts of the same type; and (3) transfer abroad in any convertible currency.

June 11. A special Determination Committee was created to consider offers of goods to be imported, where either the supplier is a nonresident, or the value of the transaction financed by residents exceeds LE 5,000.

June 17. Regulations were issued by the Ministry of Finance for the implementation of Order No. 64. They contained, among others, the following new provisions:

(1) Payments for invisibles due in convertible currency had to be settled in the parallel market, with the exception of the following, which were to 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; 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.

(2) For trade transactions to be settled in the parallel market, the amount eligible was the f.o.b. value in the case of exports and the c.i.f. value in the case of imports.

(3) Egyptian commercial banks, which already had been allowed to keep with their correspondents abroad any foreign currency related to the parallel market, now were also authorized, for purposes of the operation of this market, to deal among themselves in foreign currencies; to engage in foreign currency arbitrage abroad; and to invest their balances abroad.

(4) Two new types of domestic foreign currency accounts were created in which resident exporters, travel agencies, and hotels could hold with local banks any foreign currency receipts eligible for the parallel market: Foreign Currency Accounts-Parallel Market /Exports and Foreign Currency Accounts-Parallel Market/Tourism. Permitted debits and credits were listed, which corresponded essentially to the previous regulations.

(5) Rules were issued for the operation of the new Convertible Egyptian Pound Accounts created by Order No. 64. Such accounts could be opened with local banks by (a) nonresident juridical or physical persons and (b) Egyptian physical persons regarded as nonresidents for exchange control purposes. The accounts could be credited with (a) the domestic currency equivalent of foreign currency transferred from abroad and (b) the domestic currency equivalent of the value of consumer goods imported under the parallel market arrangements. They could be debited for (a) payments in Egypt eligible for the parallel market, (b) payments for Egyptian exports eligible for that rnarket, and (c) transfers abroad in convertible currency.

(6) Payments for current invisibles through the parallel market remained subject to existing limitations and allocations, including those for travel abroad. Where allocations were expressed in Egyptian pounds, the number of foreign currency units that could be acquired in the parallel market was calculated at the official exchange rate.

June 19. The President issued a new foreign investment law, Law No. 43 of 1974. The law defined the fields in which investment was particularly required (industrialization, mining, power, tourism and transportation, land reclamation, housing, banking, and reinsurance). Foreign and Arab capital in specified fields was exempt from requirements of Egyptian participation. Approved investments would not be confiscated or nationalized, neither would they be sequestrated or seized other than through due process of law. Preferential treatment was provided for in respect of taxes and duties. The invested capital could be repatriated, subject to the approval of the investment authority, once five years had elapsed since the date of registration, or when the firm could not continue in business for reasons beyond its control. Funds could also be transferred within Egypt or abroad to another investor, or transferred abroad in the original currency in five equal annual installments.

July 16. Four U.S. commercial banks were licensed to open banking offices in the duty-free industrial zones in Egypt. Two of the banks were also permitted to form commercial banks in Cairo to be jointly owned with Egyptian banks. At the same time, the investment agreement with the United States was reactivated. Subsequently, a joint commission was set up with the U.S. Government.

July 27. The Central Bank changed the selling rate for the U.S. dollar from LE 0.393652 to LE 0.395218.

August 22. A new commodity list containing a wide range of goods was substituted for Appendix II attached to Ministerial Order No. 64.

September 5. The bilateral payments agreement concluded on August 2, 1973 with Czechoslovakia to replace that of March 21, 1962 came into force.

October 1. The bilateral payments agreement with the Syrian Arab Republic expired.

December 31. The bilateral payments agreement with Tunisia expired.

El Salvador

(Position on December 31, 1974)

Exchange Rate System

The par value is 0.294665 gram of fine gold per Salvadoran Colón, corresponding to 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 110 of 1 per cent.

On November 6, 1946, El Salvador notified the Fund that it was prepared to formally accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Subject to any directives issued by the Monetary Board, exchange control authority is exercised by the Central Reserve Bank through its Exchange Control Department. Authority to approve certain payments, including most import payments, is delegated to the commercial banks. Exchange licenses for imports must be obtained from the Exchange Control Department. The Central Reserve Bank is also empowered to license exports, but this power has not been exercised. Exports of a number of commodities require licenses issued by the Ministry of Economy or of Agriculture. Exports of coffee are supervised by the Salvadoran Coffee Company and require licenses issued by the Ministry of 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 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) The Exchange Control Department may only authorize the purchase of goods whose 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 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 100 per cent deposit requirement.) 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 (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 in the form of foreign investment may be registered with the Ministry of Economy. Registration ensures (1) free remittance of net profits on foreign capital invested in industrial enterprises, enterprises engaged in the extraction of nonrenewable natural resources, and enterprises in the sphere of tourism; (2) the remittance of net profits of enterprises engaged in other activities up to a limit of 10 per cent a year of the registered capital (larger amounts may be authorized in special cases by the Ministry of Economy); (3) repatriation of the proceeds from the total or partial liquidation of the enterprise (after payment of taxes) in proportion to the participation of foreign capital in the total capital; (4) remittance of the sales proceeds of shares and other instruments representing investments or participations, including capital gains; and (5) with respect to loans, interest and amortization as determined at the time of registration. In the cases under (3) and (4) there is required, in addition to the approval of the Exchange Control Department, the prior approval of the Ministry of Economy. Foreign investments made in El Salvador prior to June 1, 1961 must also be registered by the Ministry of Economy or the Exchange Control Department in order to enjoy the same facilities.

The Exchange Control Department authorizes, without restriction, the remittance abroad of foreign currency for the payment of interest and amortization on short-term loans from abroad; foreign loans with a maturity of up to one year must be authorized by the Central Reserve Bank, while foreign loans with a maturity of more than one year must be authorized by the Ministry of Economy. The Central Reserve Bank controls the short-term foreign liabilities of the commercial banks 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.

Gold

Gold coins 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 1974

February 27. A trade agreement was signed with Hungary.

May 2. A trade agreement and an economic cooperation agreement were signed with Romania.

July 10. Basic exchange allocations for travel were reduced and the related guarantee deposit requirements were increased. The basic allocation for tourist, business, or health travel was reduced from US$2,100, at US$70 a day, to US$600, at US$60 a day, for each person 16 years or over. The deposit requirement for additional amounts was raised from 10 per cent to 20 or 30 per cent.

July 19. The Central Reserve Bank added to the list of goods whose importation required at the time of import registration an advance deposit equivalent to 100 per cent of the c.i.f. value, all those goods that were still on the list of commodities requiring cash payment at the time of customs clearance. These were nonessential items such as automobiles, furniture, domestic appliances, and certain foodstuffs and textiles.

July 19. The volume of import credit granted by domestic banks was frozen for imports of the private commercial sector; specified groups of commodities, mostly raw materials and capital goods, were exempt. The volume of domestic credit for the domestic whole saling and retailing of specified import items also was frozen.

July 19. The volume of domestic bank credit granted to finance air fares was frozen.

July. Exports of cement were suspended.

August 23. A selective consumption tax was introduced on a wide range of nonessential goods, whether imported or domestically produced; they included foodstuffs, cosmetics, household linen, jewelry, household electrical appliances, and passenger automobiles. The rates of tax were 5, 10, 20, 25, and 30 per cent. Imports from countries of the Central American Common Market were exempt, when specifically exempted from taxation under the relevant preferential treaties.

September 16. A trade agreement was signed with Bulgaria.

October 8. An Export Promotion Law came into force.

November 19. Imports of many raw materials from countries outside the Central American Common Market were exempted from import duties and other import charges.

November 19. An export tax on sugar was introduced.

November 21. A trade agreement was signed with the U.S.S.R.

Equatorial Guinea

(Position on December 31, 1974)

Exchange Rate System

The currency of Equatorial Guinea is the Equatorial Guinean Peseta, 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 Equatorial Guinean peseta. 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 authorized commercial banks abroad; 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. Residents1 are in principle granted foreign exchange up to the equivalent of EG Ptas 10,000 a person a calendar year for tourist travel abroad. The standard allocation for business travel is the equivalent of EG Ptas 2,000 a person a day, subject to a maximum of EG Ptas 50,000 a trip. For study abroad, foreign exchange is granted to cover tuition and living expenses; nonresidential students are allowed the equivalent of EG Ptas 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 EG Ptas 50,000. Larger transfers are permitted when annual earnings exceed EG Ptas 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 EG Ptas 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 EG Ptas 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 EG Ptas 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 1974 No significant changes took place.

Ethiopia

(Position on December 31, 1974)

Exchange Rate System

The par value is 0.355468 gram of fine gold per Ethiopian Dollar, corresponding to Eth$2.07237 = US$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 may freely undertake forward exchange transactions. Exporters may cover their exchange risk in Ethiopia or abroad.

Administration of Control

All transactions in foreign exchange must be carried out through authorized banks and authorized dealers under the control of the National Bank. All payments abroad require licenses issued by the Exchange Controller, whose office is a department 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 Portugal and its overseas territories, 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 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 remit dividends on their invested and reinvested capital in any currency.

Persons traveling abroad are in principle allowed foreign exchange equivalent to Eth$75 a day for a maximum period of six weeks in any one calendar year if the journey is made for business purposes, and up to the equivalent of Eth$600 a year for persons 16 years of age or over and Eth$420 a year for those under 16 if the journey is made for pleasure. Travelers may take with them a maximum of Eth$100 in Ethiopian banknotes.

Exports and Export Proceeds

All exports to Portugal and its overseas territories, Rhodesia, and South Africa are prohibited. Exports of most cereals to any destination other than the French Territory of the Afars and the Issas and of most livestock to any destination also are prohibited.1 All commodities require export licenses from the Exchange Controller and some require in addition the approval of specified public bodies. 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 banknotes. 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.

Capital2

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. Special concessions are made to approved new enterprises involving an investment of at least Eth$200,000 financed by domestic or foreign capital: these concessions include exemption from income taxes for a period of five years, admission of imports of machinery free of duty, and a guarantee of permission to foreign investors to remit abroad earned profits after taxation. Upon liquidation, transfer of the entire imported capital and reinvested profits is permitted in any currency, provided that the capital inflow has been registered; for large amounts, transfers may be phased over a reasonable period of time. Foreign physical or juridical persons require government permission to purchase land in Ethiopia; such permission is not normally withheld. Transfers of emigrants’ allowances, legacies, and savings of foreign employees upon retirement are in principle permitted up to the equivalent of Eth$70,000 in foreign currency. Sums in excess of this amount are authorized up to a total of Eth$70,000 in any subsequent 12-month period. Repatriation of nonregistered capital is subject to the same limits.

Borrowing abroad requires exchange control approval and is restricted. Normally, evidence must be presented that all possibilities for domestic borrowing have been exhausted. External borrowing by the Central Government and public sector agencies requires parliamentary approval, as does private sector borrowing abroad when covered by a government guarantee. 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, are 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,3 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 Eth$87.50 (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 on behalf of the Ministry of Mines. 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 1974

March. A ban was imposed on the export of live cattle, sheep, and goats. Prior commitments, however, could continue to be met. The ban was lifted in January 1975.

October 4. With minor exceptions, imports of passenger automobiles with an engine capacity of over 1,700 cubic centimeters were prohibited. On October 24 the ban was extended to virtually all cars with a capacity of over 1,300 cubic centimeters; prior commitments, however, could continue to be met.

Fiji

(Position on December 31, 1974)

Exchange Rate System

Fiji has not yet established a par value for its currency, the Fiji dollar, with the Fund. A central rate of F$0.800000 = US$1 has been established, and Fiji avails itself of wider margins. The Central Monetary Authority 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, 1974 were F$0.7915 and F$0.8086, 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. 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, and imports originating in the CMEA countries3 require individual licenses. Imports of most goods are free under open general license when originating in countries other than those mentioned. 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, butter, flour, tea, sharps, cement, 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 traveling to other countries are entitled to a foreign currency travel allowance for private or business travel up to the equivalent of F$600 a journey, or up to the equivalent of F$60 a person a day (subject to a maximum of F$2,000 for each 12-month period, but F$4,000 a person may be accumulated for each 24-month period). In addition, each traveler may take with him F$50 in Fiji currency, and the equivalent of F$200 in other currencies. Additional foreign currency required for travel purposes is granted in exceptional circumstances, on application to the Central Monetary Authority, provided the Authority is satisfied that the additional amount is required to meet expenditures such as those related to illness. Travelers may not take out more than F$50 in domestic currency notes and F$l in domestic coins.

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 pearl shell and turtle shell. 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 and for private consignment of goods with an f.o.b. value exceeding F$2,000; 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 30 days 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 term. 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 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 specific 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 FS300 a donor a year to nonresidents; additional funds are permitted in compassionate cases. Emigrants may take out the equivalent of up to F$30,000 on departure; the balance of their assets may be remitted in three equal installments over the following three years.

Residents are not permitted to purchase foreign currency to acquire foreign currency securities without 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 may freely borrow abroad and 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 1.5 per cent.

Gold

Residents may freely hold gold coins but not gold bullion in Fiji. The export of gold coins requires the specific permission of the Central Monetary Authority. Gold imports from all sources require a specific import license issued by the Ministry of Commerce, Industry, and Cooperatives; 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.

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 FS100 has been issued. It is legal tender but does not circulate.

Changes during 1974

January 1. A single-line customs tariff came into effect. Preferential duties on goods of Commonwealth origin were abolished and many specific duties were replaced by ad valorem duties. Gold coins became free of import duty and fiscal tax. Gold bullion also became free of import duty but was subject to a fiscal tax of 7½ per cent.

January 29. Imports of tea required specific licenses.

February 25. A central rate of F$0.800000 = US$1 was established, corresponding to 0.920828 gram of fine gold per Fiji dollar or SDR 1.03619 = F$l. Fiji availed itself of wider margins. The fixed exchange rate for sterling of £ stg. 1 = F$ 1.88 was discontinued. The Central Monetary Authority henceforth quoted fixed intervention rates for the U.S. dollar and daily dealing rates for sterling; previously, it quoted fixed intervention rates for sterling and dealing rates, which could vary daily, for the U.S. dollar.

March 28. Exports of rice and sugar required specific licenses.

April 10. The requirement of individual import licenses for goods originating in the People’s Republic of China was abolished.

April 11. Imports of passenger automobiles with an engine capacity of 2,000 cubic centimeters or more were prohibited with minor exceptions. A reduced quota for 1974 of 1,500 units was set on imports of automobiles under 2,000 cubic centimeters. Imports of light commercial vehicles and heavy earth-moving equipment were made conditional on genuine requirement by the end-user. Imports of electric water heaters were restricted to those for industrial use. Import duties on air conditioners were increased.

August 2. Exchange for travel purposes in excess of F$600 a person a trip could no longer be approved by authorized banks and applications had to be referred to the Central Monetary Authority.

August 2. Restrictions were imposed on the transfer of emigrants’ assets. The allocation upon departure was set at the equivalent of F$30,000.

August 2. The annual exchange allocation for cash gifts was lowered from F$500 to F$300 for each donor.

August 2. All private capital inflows received by non-bank residents had to be registered with the Central Monetary Authority.

October 10. The issue of a legal tender commemorative gold coin of F$100 was announced.

November 12. The Central Monetary Agency ceased to quote sterling officially but was prepared to provide a dealing rate in that currency if requested to do so, a facility similar to that offered for the Australian dollar.

Finland

(Position on December 31, 1974)

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 authorities 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, 1974 were Fmk 3.542 and Fmk 3.560 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 Gosbank’s rates 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 U.S.S.R. 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 cross rates. Authorized banks may deal among themselves, with resident customers, and with nonresident banks in U.S. dollars and other convertible or externally convertible currencies. Forward transactions may be concluded freely for periods not exceeding 12 months and the Bank of Finland may in special cases grant cover to the authorized banks for up to 24 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 ad hoc import 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 1974 was less than 1 per cent of total 1974 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., and for many commodities originating in and shipped from the other bilateral countries; all commodities liberalized for import from the bilateral area are among those already liberalized for import from the multilateral area.3 Other imports from the bilateral countries are admitted under licenses up to quotas provided for under the relevant trade agreement. All imports of commodities originating in countries classified neither in the multilateral area nor in the bilateral area require individual licenses. The State Granary is the main agency for the import of wheat, rye, barley, oats, and products of these grains for human consumption, but individual importers may also import these commodities under license. There is a state monopoly for imports of alcoholic beverages.

Exchange is granted by authorized banks for all permitted imports on presentation of an application form, the import license if required, and the original commercial invoice, provided that the goods are already in the country or there is sufficient evidence to guarantee their importation. Payment for imports must be made within 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 scheme, however, payment for specified consumer goods 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 remittor.

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 up to Fmk 100,000 for each beneficiary, while authorization by the Bank of Finland is required for larger amounts. 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. Commercial imports of articles containing gold require licenses issued by the Licensing Office; for most such articles, these are granted freely. Exports of gold are subject to the same regulations as exports of other commodities, i.e., an export control declaration approved by the Licensing Office is usually sufficient.

Changes during 1974

January 1. The import regulations for 1974 entered into force. The global quota program consisted of 11 quotas amounting to Fmk 57.2 million.

January 1. The free trade agreement with the EEC, signed on October 5, 1973, entered into force.

January 21. A law concerning export levies entered into force. It empowered the Government to collect export levies where export prices rose exceptionally as a result of marked changes in the rates of exchange, serious disturbances in international price levels, or other comparable developments.

January 22. The Bank of Finland cancelled its decision of September 12, 1973, to restrict the acceptance of advance payments for exports of wood and articles made of wood.

February 2. A law for the safeguarding of Finland’s external trade and growth entered into force. It provided the Government with powers to introduce import ceilings and tariff quotas. The Ministry of Finance was empowered to introduce special equalization charges or supplementary customs duties on imports in order to counter dumping or market disruption. (This enabling law was not invoked, however.)

February 8. The Bank of Finland issued regulations concerning domestic credit for new exports, aimed at strengthening the competitiveness of new export industries.

February 19. A law concerning price equalization and price freeze entered into force. The Government was empowered to levy price equalization payments on imports of specified consumer durables. The maximum permitted levy was 25 per cent of the “price equalization value” of the goods concerned, to be retained for one year at most. (This enabling law was not invoked, however.)

April 2. Quantitative restrictions on imports from the U.S.S.R. were reduced to the levels applicable to the multilateral area.

April 26. An Agreement on the Reciprocal Removal of Obstacles to Trade was signed with Bulgaria. Similar agreements were signed with Hungary on May 2 and with Czechoslovakia on September 19. The agreements provided, among other things, for the progressive removal of Finnish duties on industrial products (generally by July 1, 1977) and for the relaxation of Finnish quantitative restrictions to the levels applicable to the multilateral area (generally also by July 1, 1977). The agreements were subject to ratification and came into force on January 1, 1975.

May 25. The temporary import licensing system for certain consumer durable goods, introduced on August 29, 1973, ceased to be applied restrictively. It was retained for surveillance purposes only.

May 30. Finland signed the OECD Declaration on Imports, Exports, and Other Current Account Transactions.

July 1. The Government announced its intention to sterilize Fmk 300 million of the export earnings of the wood processing industries. An implementing agreement was concluded with the Central Association of Forestry Industries on August 15. It provided that the Fmk 300 million would be raised in three equal installments at the end of October and December 1974 and February 1975; half of the proceeds would be returned to the depositing companies not later than by the end of 1975, while the remainder would be used for specified purposes.

August 1. The Bank of Finland began to quote forward rates for the ruble.

September 12. A new five-year agreement governing the exchange of goods and payments with the U.S.S.R. during the years 1976–80 was signed. The swing credit was increased.

France

(Position on December 31, 1974)

Exchange Rate System

The par value is 0.160000 gram of fine gold per French Franc, and France avails itself of wider margins. Since January 19, 1974, no predetermined margins have been maintained between the French franc and any other currencies.1 On December 31, 1974 the rate for the U.S. dollar was F 4.445 = US$1.

Fixed conversion rates in terms of French francs apply to the currencies of the following countries and territories: the Operations Account countries,2 the French Overseas Departments,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 these represent export proceeds or other receipts. On the import side, forward cover is available for some commodities for 6 to 12 months, and for all others for 3 months. On the export side, an underlying contract is required and cover is available for the full maturity of the export contract or up to 1 month after the date on which the proceeds are collected.

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;2 payments between France and these countries are free of restriction on the French side and take place at fixed exchange rates. All other countries are considered foreign countries for exchange control purposes;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, Guinea, the Khmer Republic, Laos, the Malagasy Republic, Mauritania, Morocco, Tunisia, North Viet-Nam, the Republic of 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 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 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; imports valued at less than F 10,000 may also be paid for through postal channels.

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. 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. 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 residence, up to F 300,000 a family unit. The transfer abroad of nonresident-owned funds in France, including the sales proceeds of capital assets, is not restricted.

French and foreign securities held in France by nonresidents can be exported, provided that they have been deposited with an authorized bank in a foreign dossier (dossier étranger de valeurs mobilières); French and foreign securities held under a foreign dossier can also be sold in France and the sales proceeds can be transferred abroad. Foreign securities held in France by a nonresident must be deposited with an authorized bank; French securities held in France by nonresidents need not be deposited but cannot be dealt with or exported unless they have been deposited. Foreign securities held in France by residents must be deposited with a qualified bank or broker. Residents may hold French and foreign securities abroad under the control of a French authorized bank or broker. The exportation for the account of residents of French securities held in France is prohibited, except when they are to be sold abroad.

Subject to compliance with the special regulations concerning inward and outward direct investment that are summarized below, residents may freely purchase French and foreign securities on stock exchanges abroad, through authorized banks.11 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