Chapter

Country Surveys

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1972
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Afghanistan

Exchange Rate System

The par value is 0.0197482 gram of fine gold per Afghani. The Afghanistan Bank (the central bank) charges commissions ranging from 110 of 1 per cent to ½ of 1 per cent on exchange transactions. The Bank’s official buying and selling rates for the U. S. dollar are Af 44.70 and Af 45.30, respectively. The official selling rate applies to certain foreign exchange payments by the Central Government. The official buying rate applies to the proceeds of exports of karakul (which is exported only to the convertible currency area), wool (except cashmere wool exported to the convertible currency area), cotton, and natural gas (which is exported only to the U. S. S. R.); to 30 per cent of the foreign currency salaries of foreign employees of the Government, government enterprises, and domestic companies; and to purchases of bilateral agreement currencies for maintenance in Afghanistan of embassies and state trading organizations by the respective bilateral partner countries. Exchange subsidies are applied to the official buying rate as follows: Af 3 per US$1 for export proceeds from cotton when payment is received under a bilateral payments agreement; Af 10 per US$1 for proceeds in convertible currencies from exports of wool; Af 25 per US$1 for proceeds in convertible currencies from exports of cotton; and Af 20 per US$1 for proceeds from exports of karakul.

All other transactions take place at free market rates through either the banks or the bazaar; proceeds from the export of walnuts received over bilateral payments accounts are subject to an exchange tax of 9.5 per cent. The Afghanistan Bank maintains its operational free market selling rate for the U. S. dollar within Af 2.0 per US$1 of the daily free market rate quoted in the bazaar. On December 30, 1971, the free market rate of the Afghanistan Bank was Af 78.00 buying, and Af 78.50 selling, per US$1, and the free market rate in the bazaar was Af 77.45 buying, and Af 77.95 selling, per US$ 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 that 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 60.50 per US$1 on December 30, 1971, and that for mainland China clearing sterling was Af 206.20 per £ stg. 1. On the same date, the selling rate for clearing dollars under the payments agreements with Bulgaria, Czechoslovakia, Poland, and Yugoslavia was Af 55.50 per US$1.

Administration of Control

Foreign exchange is controlled by the Government through the Afghanistan Bank. The control is facilitated by the existence of relatively large companies, some of them government owned or government controlled, specializing in the export of such commodities as karakul, cotton, wool, and carpets. However, these companies do not exercise a monopoly over the export of such commodities.

Prescription of Currency

Settlements with countries with which Afghanistan has bilateral payments agreements 1 must be made in the foreign currencies specified in the agreements. The proceeds from exports of karakul, wool, and cotton to other countries must be obtained in convertible currencies. There are no other prescription of currency requirements.

Imports and Import Payments

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

Exchange is provided at the official rate for imports by the Government. Payments for imports through the banking system may be made only under letters of credit, against which a deposit of 100 per cent of the value of the imports in afghanis calculated at the prevailing free market rate, or in foreign exchange, is required upon establishment of the letter of credit. Such deposits may be used as collateral to obtain loans from commercial banks. The Afghanistan Bank is authorized to refuse to sell foreign exchange for the importation of a group of consumer goods that are regarded as nonessential. However, exchange for these items may be purchased either from the commercial banks or in the bazaar.

Payments for Invisibles

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

Exports and Export Proceeds

Exports are not subject to license. Exports of a few commodities (e.g., opium and museum pieces) are prohibited. Otherwise, control is exercised only over exports to bilateral agreement countries (see section on Imports and Import Payments, above). However, exporters of cotton are required to sell at least 20 per cent of their total exports to countries from which payments will be received in convertible currencies. Karakul is not exported to payments agreement countries.

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

Export receipts from cotton are subject to an exchange subsidy at the rate of Af 25 per US$1 for convertible currency receipts and Af 3 per US$1 for exports settled under bilateral payments agreements. Convertible currency receipts from wool exports are paid an exchange subsidy at the rate of Af 10 per US$1 and those from karakul exports are paid an exchange subsidy of Af 20 per US$1.

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

Proceeds from Invisibles

Thirty per cent of the foreign currency salaries of foreign employees of the Afghan public and private sectors must be converted into afghanis at the official rate, but the remaining 70 per cent may be remitted abroad or exchanged at the free market rate. Except in the case of India, receipts over bilateral payments agreement accounts from the embassies and state trading organizations of the countries concerned for their local expenses in Afghanistan are converted at the official rate. All other receipts from invisibles are sold at free market rates through either the banks or the bazaar. Travelers entering Afghanistan may bring in Afghan banknotes not exceeding Af 500.

Capital

Foreign investment in Afghanistan requires prior approval and is administered, as is domestic private investment, by an Investment Committee composed of five cabinet ministers. The Foreign and Domestic Private Investment Law (February 10, 1967) provides for a number of benefits, which include (1) income tax exemption for five years, beginning from the date of the first sales of products resulting from the new investment; (2) exemption from import duties on essential imports for five consecutive years after approval of the investment; (3) exemption from taxes on dividends for five years after the first distribution of dividends, but not more than eight years after the approval of the investment; (4) exemption from personal income tax and corporate tax on interest on foreign loans which constitute part of an approved investment; (5) exemption from export duties for ten years after the approval of the investment; and (6) mandatory purchases by government agencies and departments of their requirements from enterprises established under the law where such products are substantially competitive with imports in price and quality. The law also establishes that an investment approved by the Investment Committee shall require no further license to operate in Afghanistan.

Principal and interest installments on loans from abroad may be remitted freely to the extent of the legal obligation involved. Profits may be repatriated freely, and capital may be repatriated after five years at an annual rate not exceeding 25 per cent of the total registered capital. All the foregoing transfers are made through the free market. Joint ventures of foreign and Afghan capital are encouraged, but no specific percentages of domestic participation are prescribed and 100 per cent foreign-owned investments are not precluded by law.

Gold

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

Changes during 1971

March 29. The middle rate for free mainland China clearing sterling was raised from Af 198 to Af 205.60 per £ stg. 1.

August 16. The Afghanistan Bank’s official buying and selling rates and other exchange market arrangements remained unchanged.

September 13. The prohibition on the export of meat was terminated.

December 20. The Afghanistan Bank’s official buying and selling rates and other exchange market arrangements remained unchanged.

Algeria

Exchange Rate System

No par value for the currency of Algeria has been established with the Fund. The official unit of currency is the Algerian Dinar, which is defined as having a gold content of 0.18 gram of fine gold. The exchange rate for the French franc is a fixed rate of DA 1 = F 1.12499; this rate is applied irrespective of the exchange market for which the settlement is eligible in France. The effective parity relationship for the U. S. dollar is DA 4.54729 = US$1. The Central Bank of Algeria deals in French francs and the other French Franc Area currencies at fixed rates, free of commissions or charges. Buying and selling rates for specified currencies of countries outside the French Franc Area 2 are established by the Central Bank of Algeria, generally on the basis of par values and central rates. The exchange rate applicable to “agreement dollars” is the average rate for the U. S. dollar in the Paris official exchange market on the day preceding the entry on the clearing account. The Central Bank charges on its transactions in non-Franc Area currencies a commission ranging from 0.2 per mill to 1.5 per mill, depending on the nature of the transaction, and a tax of 6 per cent on the amount of the commission. The foreign exchange reserves are centralized in the Central Bank; authorized banks must clear their foreign currency position with their correspondents in the French Franc Area at the end of each day but they are under certain conditions permitted to hold outside the French Franc Area cover for documentary credits. There are no forward exchange facilities.

Administration of Control

The Ministry of Finance and the Central Bank have general jurisdiction over exchange control. The Central Bank of Algeria assists in the formulation of the exchange legislation and regulations and is responsible for their execution and for their application by the authorized banks. In addition, three commercial banks and the Postal Administration have been given authority to carry out some of the detail of exchange control. Import and export licenses for all commodities are issued on the advice of the competent ministry by the Ministry of Commerce and require the visa of the Central Bank. The Office National de Commercialisation (ONACO), the Office Algerien Interprofessionnel de Céréales (OAIC), the Office National de Commercialisation des Produits Viti-vinicoles (ONCV), the Société Nationale des Tabacs et Allumettes (SNTA), the Société Nationale d’Edition et de Diffusion (SNED), the Société Nationale de Sidérurgie (SNS), the Société Nationale de Constructions Mécaniques (SONACOME), and other similar organizations have a monopoly over the import of a large number of commodities. The Société Nationale pour la Recherche, la Production, le Transport, la Transformation et la Commercialisation des Hydrocarbures (SONATRACH) has a monopoly over imports and domestic sales of petroleum and petroleum products. Investment of foreign capital in excess of DA 500,000 in Algeria requires approval by a National Investment Committee in order to obtain the benefits of the Investment Code. All foreign borrowing requires the prior approval of the Minister of Finance.

Prescription of Currency

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

Nonresident Accounts

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

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

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

Final Departure Accounts may be opened, without prior authorization, in the name of any person residing in Algeria, but not of Algerian nationality, who intends to leave Algeria for another country in the French Franc Area. These accounts may be credited freely with an amount equivalent to the holdings at October 20, 1963 in the account of the person concerned; with the proceeds from sales of real estate of the account holder, provided that the sales are made through the intermediary of a notary public; and with any other payments, up to DA 1,000. The Central Bank may authorize the crediting of other payments. These accounts may be debited without prior approval for certain payments in Algeria on behalf of the account holder; outward transfers require individual approval.

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

Imports and Import Payments

Imports from Israel, Portugal, Rhodesia, and South Africa are prohibited. Certain imports are prohibited regardless of origin. All imports from bilateral payments agreement countries require a license. All imports from other countries also are subject to quantitative restriction, with the exception that holders of an import monopoly do not require a prior import authorization for the goods covered by their monopoly. The Government has the monopoly over the importation of many commodities through ONACO, OAIC, SNTA, ONCV, SNED, SNS, SONATRACH, SONACOME, and other similar organizations.

Imports are, in principle, licensed in accordance with an annual import program which is based on global quotas.

All imports valued at over DA 10,000 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. Import licenses require the visa of the Central Bank.

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

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

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

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

Payments for Invisibles

All payments for invisibles to all countries require the approval of the Central Bank. However, when supporting documents are presented, approval may be granted by authorized banks, or sometimes by the post office, either freely or up to specified limits for certain payments such as (1) those relating to approved trade transactions and maritime contracts, (2) travel expenses, (3) transfers of salaries and wages, (4) educational expenses, (5) advertising expenses, and (6) payments relating to government transactions with foreign companies. For payments for which the approval authority has not been delegated, the granting of exchange must be authorized by the Central Bank. The transfer of family remittances is suspended. All insurance must be concluded with Algerian companies.

Residents of other French Franc Area countries working in Algeria under the program for technical cooperation may transfer abroad a certain percentage of their net salaries: 50 per cent for single persons or married persons having their families in Algeria; 70 per cent for persons having their families abroad; and 100 per cent for employees who spend their vacations abroad (the transfer being limited to the duration of their absence from Algeria). For other workers from French Franc Area countries who have contracts with employers and hold the necessary employment documents, the amounts that may be transferred are 30 per cent, 50 per cent, and 100 per cent, respectively, for the groups enumerated above. Residents of other countries who are employed in Algeria under the program of technical cooperation are permitted to transfer abroad, 30, 50, and 100 per cent, respectively. For workers from other countries, who have contracts with employers and hold the necessary employment documents, the corresponding percentages are 25, 45, and 100. The payments must be transferred once a month on the basis of the 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 the French Franc Area, the foreign exchange allocation is equivalent to DA 100 a person a trip (DA 50 for children under 15) and is issued on presentation of a valid passport and travel documents, including the approval of the wali of his place of domicile; for overland travel, the allocation is DA 100 a person a year for adults and DA 50 for children under 15. These allocations are not applicable to persons living in border areas. Algerian workers who hold a card of the Office National de la Main-d’Oeuvre (ONAMO) are entitled to the equivalent of DA 200 a person a trip. Foreign exchange for private business travel is subject to authorization by the Central Bank of Algeria and allocations cannot exceed DA 1,500 a trip.

Pilgrims traveling to Saudi Arabia may obtain Saudi Arabian riyals up to the equivalent of DA 1,500 a person; the allocation can be taken up in the form of a check by those traveling by air or sea, and in banknotes by those traveling 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, Portugal, Rhodesia, and South Africa are prohibited. Certain exports, including used equipment and machinery, livestock, firearms, ammunition, explosives, and certain radio equipment, are prohibited regardless of destination. Some exports to the French Franc Area, all exports to countries outside the French Franc Area that are not included in the free export list, and all exports to countries with which Algeria has bilateral payments agreements require licenses. The export of specified products is reserved for certain state trading organizations.

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

The proceeds of exports of commodities other than hydrocarbons, including those to the French Franc Area, must be repatriated immediately after the payment becomes due; 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 full proceeds from their exports of hydrocarbons but they may place the counterpart in Convertible Dinar Accounts in Algeria; up to 24.5 per cent of the proceeds from sales made domestically can be transferred abroad subject to authorization of the Central Bank. The other petroleum companies holding mineral rights must repatriate 50 per cent; one company, however, is subject to special arrangements.

Proceeds from Invisibles

Proceeds from invisibles must be repatriated and surrendered.

There are no restrictions on the import of foreign banknotes, coins (except gold coins), checks, and letters of credit, but foreigners must declare such holdings when they enter Algeria. Resident travelers may reimport Algerian dinar banknotes up to DA 50 a person. Nonresident travelers are not permitted to bring in Algerian banknotes.

Capital

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

A new Investment Code, superseding that of 1963, was promulgated by Ordinance No. 66-284 of September 15, 1966. It provides for state guarantees in respect of foreign investments of more than DA 500,000 in the industrial and tourist sectors. The new code provides for a retransfer guarantee in respect of the sale or liquidation proceeds of invested foreign capital, and establishes that profit remittances on such investments will be permitted up to 15 per cent annually of the foreign capital originally invested. Tax facilities may also be granted, and investments of more than DA 5 million may be given exclusive rights in a specified geographic area and may be accorded tariff protection. Remittances of profits and 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 distributed by the Agence Nationale pour la Distribution et la Transformation de l’Or et des Autres Métaux Précieux (AGENOR). This agency is also authorized to purchase in Algeria, and to hold, process, and distribute any other precious metal, and, within the exchange control regulations, to import and export any precious metal, including gold. Commercial imports of jewelry and of other articles containing gold are prohibited.

Changes during 1971

January 2. By virtue of the budget law published on December 31, 1970 (Ordinance No. 70-93), the last remaining tariff preferences for goods of French origin were eliminated. The import tariff henceforth comprised only the minimum preferential tariff, for goods of EEC origin; the normal tariff, for goods originating in countries that accord Algeria most-favored-nation treatment; and the general tariff, with rates three times those of the normal tariff, for goods originating elsewhere (including Hong Kong and Japan).

February 13. Note No. 71/1 of the Ministry of Finance clarified the regulations on the sale of air, sea, and rail passages specified by Notice No. 68 of December 18, 1970.

February 17. Decree No. 71-62 of the Ministry of Commerce dissolved GAIRLAC, the only remaining “professional association,” and transferred its functions to ONACO.

February 24. By Ordinances Nos. 71/8-11 the Government acquired majority control of the French-owned oil companies operating in Algeria and nationalized the Algerian oilfields. On the same date, Decree No. 71-64-66 transferred the expropriated assets to SONATRACH.

February 24. Instruction No. 6HC of the Ministry of Finance required those petroleum companies holding mineral rights in which the Algerian Government had on February 24 acquired majority control to repatriate at least 75.5 per cent of the proceeds from their liquid hydrocarbon exports; repatriation had to take place in the manner prescribed by Instruction No. 5HC of June 23, 1970. It also provided that such companies could apply to the Central Bank for permission to transfer abroad up to 24.5 per cent of the proceeds from any sales made in Algeria.

February 24. Instruction No. 7HC of the Ministry of Finance prescribed prior domiciliation for all liquid hydrocarbon exports by the petroleum companies referred to in Instruction No. 6HC and specified the permitted methods of payment and of repatriation of the proceeds.

March 17. Ordinance No. 71/62 created the Entreprise Nationale du Commerce et d’Utils de Quincaillerie et d’Equipement Ménager (ENCOM).

March 17. Ordinance No. 71/13 created the Société Nationale de Commercialisation et d’Application Techniques (SONACAT).

March 18. Notice No. 69 of the Ministry of Finance provided that the proceeds from exports other than hydrocarbons must be repatriated immediately after the due date of the export contract; and that the due date could not be later than 60 days after shipment, except with the prior authorization of the Central Bank. Notice No. 65 of August 12, 1970 was revoked.

April 9. Ordinances Nos. 71/16 and 71/19 created Société Nationale de Manutention (SONAMA) and the Société Nationale de Travaux d’Infrastructure et Télécommunications (SONATITE).

April 12. Ordinance No. 71/22 regulated oil prospecting and exploitation activities by foreign companies and ruled that they must be made under minority partnership with SONATRACH.

April 13. Instruction No. 9HC of April 9 of the Ministry of Finance required the petroleum companies referred to in Instruction No. 6HC to repatriate the full proceeds from their exports of hydrocarbons. Convertible Dinar Accounts could freely be opened for these companies at authorized banks to enable them to meet their normal commitments in foreign currencies. These accounts were to be credited with the amounts that Instruction No. 6HC had allowed them to keep abroad and that now had to be repatriated. They could also be credited, subject to Central Bank authorization, with amounts up to the 24.5 per cent of proceeds of their local sales mentioned in Instruction No. 6HC. Convertible Dinar Accounts could freely be debited at the end of each quarter for transfers of foreign currency abroad, provided that the holder had met all price, tax, and repatriation requirements.

May 6. A Ministry of Finance Order authorized the Caisse Nationale d’Epargne to open nonresident savings accounts in foreign currency; these would bear interest at 4.5 per cent free of tax.

May 21. The Société Nationale Nouvelles Galeries Algériennes (SNNGA) was granted a monopoly over certain imports.

June 4. Decree No. 71-165 of the Ministry of Finance provided for certain benefits to be granted to emigrants purchasing equipment bonds.

June 5. All imports from countries with which no bilateral payments agreement was in force henceforth required a prior import license (API) from the Ministry of Commerce. The requirement was applicable also to public sector imports. Furthermore, existing import restrictions were intensified.

June 10. A Ministry of Finance Order introduced a premium of 5 per cent of the nominal value on five-year equipment bonds purchased by emigrants with foreign currency (10 per cent for ten-year bonds).

July 6. Instruction No. 10HC of the Ministry of Finance modified the repatriation requirements for the proceeds from liquid hydrocarbon exports made by a specified company. This company was exempted from the restrictive measures of Instructions Nos. 6HC, 7HC, and 9HC. Repatriation had to take place in U. S. dollars and not later than 30 days after shipment, on the basis of a minimum barrel price set by the Government. The company was required, however, to deposit in Algeria the amounts necessary to cover all its obligations.

July 9. Monopoly holders no longer required a prior import authorization for imports from non payments agreement countries of commodities covered by their monopoly.

July 15. Ordinance No. 71/48 granted SONATRACH an import monopoly for chemicals, petrochemicals, and hydrocarbon by-products.

July 15. Ordinance No. 71/49 granted SNED and SONIC an import monopoly for paper and related products.

July 15. Ordinance No. 71/50 granted SONAREM an import monopoly for mineral products.

July 15. Ordinance No. 71/51 granted SNMC an import monopoly for construction materials and related products.

July 15. Ordinance No. 71/52 granted SONACOME an import monopoly for mechanical products.

July 15. Ordinance No. 71/53 granted SONELEC an import monopoly for electrical goods.

August 5. Ordinance No. 71/60 regulated the conditions of employment of foreign nationals in Algeria.

August 9. In accordance with Letter No. 4355 of August 4 of the Ministry of Finance, Central Bank Instruction No. 71/57 reduced the maximum importable quantity of gold for dentistry purposes from 500 grams a quarter to 250 grams a quarter for each registered dental surgeon.

August 13. A Central Bank Note to Authorized Banks abolished the EFAC (Exportations-Frais Accessoires) accounts, in which exporters and certain other recipients of foreign currency had been able to retain a portion of their exchange proceeds, and provided for the transfer of outstanding balances to resident accounts (internal accounts) in dinars. Funds for private exporters’ business travel, which could previously be financed with EFAC funds henceforth had to be applied for at the Central Bank, which limited its allocations to the equivalent of DA 1,500 a person a trip. All other expenditures that previously could be financed with EFAC balances became subject to prior exchange control approval.

August 23. The fixed exchange rate for the French franc was maintained unchanged. Rates for other foreign currencies were derived from those in the financial franc market in Paris. As a result, the Algerian dinar began to appreciate in terms of the U. S. dollar, the pre-August 15 parity relationship for which had been DA 4.93706 = US$1.

August 30. For accounting purposes, Central Bank Circulars Nos. 41 and 41 bis instructed authorized banks to screen and register all settlements in French francs between Algeria and France, in accordance with the application of the dual exchange market regulations in France, either on Foreign Accounts in Francs or on Financial Accounts in Francs; a corresponding separation had to be made for settlements over Foreign Accounts in Dinars held by residents of France. These recording requirements did not apply to payments and receipts in third currencies (e.g., petroleum proceeds received in U. S. dollars). The Central Bank continued to settle all French franc transactions with residents of Algeria at the fixed rate of DA 1 = F 1.12499, irrespective of the exchange market in which settlements took place in France; any resulting losses or profits were absorbed by the Central Bank.

October 6. The Central Bank announced measures to make the exchange rates quoted for foreign banknotes and travelers checks uniform throughout Algeria.

November 22. Letter No. 2058 of the Minister of Finance exempted from technical visa the transfer applications of public and private firms dependent on the Ministry of Industry and Energy.

December 1. The import regime was reorganized. Certain importers were granted annual import licenses for the products in which they usually traded. Holders of import monopolies no longer required prior import licenses for the goods concerned. The June import restrictions were eased for certain commodities not subject to an import monopoly; these could be imported by monopoly companies and private importers up to DA 1 million a year.

December 7. Imports of certain nonessential goods were prohibited; they included gold jewelry and other articles made of precious metals.

December 20. The gold content of the Algerian dinar was maintained unchanged at 0.18 gram of fine gold per dinar. The fixed exchange rate for the French franc remained unchanged at DA 1 = F 1.12499. The effective parity relationship for the U. S. dollar became DA 4.54729 = US$1.

Argentina

Exchange Rate System

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

All exchange transactions take place in a dual exchange market. In principle, the commercial market covers trade transactions and trade-connected invisibles, and the financial market all other transactions. In the commercial market, the Central Bank of Argentina deals with banks and authorized institutions at the official rate of $a 5.00 per US$1, buying and selling. In the financial market the exchange rate fluctuates; on December 31, 1971 it was about $a 8.25 per US$1. The effective exchange rate for major exports and for virtually all imports is a mixing rate derived from the conversion of 70 per cent of the amounts concerned at the commercial rate and 30 per cent at the financial rate. The effective exchange rate for promoted exports is a mixing rate based on conversion of 60 per cent at the commercial rate and 40 per cent at the financial rate. Exports of books, newspapers, and periodicals are settled entirely through the financial market. Sales of foreign exchange to residents for travel purposes are subject to an exchange tax of $a 0.50 per U. S. dollar. Exchange transactions between banks and individuals, other than transactions in banknotes, are subject to a tax of 310 of 1 per cent.

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 deposit in local currency for a period of 180 days; this deposit may not be financed by local banks. Forward exchange contracts connected with imports may be extended for a period of up to 180 days from the date of their original maturity; those corresponding to exports may be extended only once, for a period of 30 days (or, where shipment is unavoidably delayed, for the period of the delay). Such contracts may be settled through clearing in the exchange market. The Central Bank intervenes in the forward exchange market as a seller of U. S. dollars at a premium which at the end of 1971 was 22 per cent per annum.

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

Administration of Control

All exchange transactions must be carried out through banks and institutions authorized expressly for this purpose. These include exchange agencies and exchange houses.

Prescription of Currency

Transactions with other countries must be settled in convertible currencies. 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, within the framework of the LAFTA multilateral clearing system.

Nonresident Accounts

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

Imports and Import Payments

Imports are in principle free of import and exchange licensing; at the end of 1971, however, all imports of specified nonessential commodities were prohibited, as were all imports by the public sector, unless in the latter case the prior approval of the Ministry of Commerce was obtained. Independently of these temporary measures, goods imported by official agencies require approval by the Ministry of Finance 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 Official. Imports of some vehicles, tractors, and engines are prohibited. All maritime imports are subject to a tax of 10 per cent on the freight.

Virtually all commodities, irrespective of the country of origin, are subject to an additional import surcharge of 15 per cent ad valorem. 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; taxes ranging from 4 per cent to 10 per cent on imports of paper products, certain types of timber and timber products, and forest products; and taxes ranging from $a 0.02 to $a 0.2 a kilogram on imports of iron and steel for the Steel Program.

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. The same requirement applies when documents submitted do not specify the date of payment, or if the date originally indicated by the correspondent has been changed, and when bills or drafts expire more than five days prior to the date on which the transfer is required.

An advance import deposit of 40 per cent of the c. & f. value is required on many goods from all sources except when imported by the public sector, by some firms being established in the Province of Tucumán, by certain institutions, or according to the intended use of the goods; goods imported from LAFTA countries are exempt if the goods are included in Argentina’s concession lists (including the special lists for Bolivia, Ecuador, Paraguay, and Uruguay). The commodities that do not require an advance deposit include most raw materials and fuels, many capital goods, and many semimanufactured goods for the production of nontraditional exports. The deposit is payable in pesos and calculated at the current exchange rate 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$20,000 and purchased with foreign or domestic credit, must be made in installments over a period ranging from at least two years to at least five years after the date of shipment, depending on the total value of the goods. Payment in cash at the time of delivery is permitted, however, if the importer uses exclusively his own funds. The prior approval of the Central Bank is required when the terms of payment are not in accordance with the prescribed minimum terms or when the amount payable exceeds the equivalent of US$1 million. Advance payments for imports other than capital goods are permitted only in exceptional circumstances.

Payments for Invisibles

With the exception of remittances of profits, dividends, and royalties, and a few items of relatively minor importance, payments for invisibles may be made freely through the appropriate exchange market, in most cases the financial market. Persons and firms eligible for remittances of profits, dividends, and royalties are not granted foreign exchange but instead are permitted to purchase negotiable five-year U. S. dollar-denominated external bonds issued by the Government. These may be freely exported and imported. The sale of exchange for travel abroad is left to the discretion of authorized institutions, who must take into account the reasonableness of the application in light of the duration of the trip and the traveler’s destination. The exchange must be purchased in the financial market and is subject to an exchange tax of $a 0.50 per US$1. Of the travel allocation to bordering countries, up to the equivalent of $a 100 may be taken out in the form of foreign banknotes or travelers checks; the limit is $a 500 for travel to other countries. Travelers may take out any amount in domestic banknotes and coins except gold coins.

Exports and Export Proceeds

Exports are generally free of direct controls but minimum export prices are established for many agricultural and livestock exports as a basis for the payment of duties and the surrender of export proceeds. 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 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; their proceeds must be surrendered within 360 days of shipment and are settled entirely in the financial market. For promoted exports, surrender takes place for 40 per cent of the proceeds at the financial market rate, and for traditional exports, 30 per cent of the proceeds is sold in the financial market; in either case, the balance must be sold in the commercial market.

Many products are subject to export taxes (derechos de exportatáon) calculated on the basis of the f. o. b. sales value or on index values. The principal export taxes range from 11 per cent to 36 per cent. The tax must be paid before shipment of the merchandise or within the following 30 days when there is a bank aval that guarantees its payment.

All exports are subject to a 2 per cent tax on the freight. Certain other taxes on specific exports are also levied. These include a 1.5 per cent tax, the proceeds of which are destined for the National Institute for Agricultural Technology, on exports of agricultural and livestock products.

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. This system provides financing for 80-85 per cent of their value, depending on the nature of the commodity or service, with terms of up to eight and one half years for capital goods, three years for durable and semidurable goods, and up to one and one half years for other goods. The same terms apply to the freight and insurance premiums involved, provided that Argentine means of transport and services are used. The National Export Credit Insurance Commission provides credit insurance for exports of capital goods and consumer durable goods.

Proceeds from Invisibles

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

Capital

There are no limitations on inward capital transfers by residents or nonresidents. Outward capital transfers are restricted. Sales of exchange in connection with investments, placements, or deposits within Argentina or abroad require the prior approval of the Central Bank. Argentine industrial or commercial firms require the authorization of the Central Bank to enter into swap operations under which loans may be accepted in a convertible currency.

A Foreign Investment Law (Law No. 19151 of July 31, 1971) provides that all new foreign investments must have government approval and must be registered. Profits and dividends may then be remitted from the end of the first year of operation. The firms concerned are permitted to receive domestic short-term credit up to 50 per cent of their registered capital and accumulated reserves; this limitation does not apply to export credit. Foreign companies established in Argentina prior to the promulgation of the law are 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.

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 coins are unrestricted and free of duty; they must be settled through the financial market. Imports of gold bars are subject to the exchange regulations applicable to imports of other commodities and are settled in the commercial market; imports by industrial users are subject to a statistical duty of 310 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 1971

January 25. Exchange agencies and exchange houses were permitted to resume their operations after having been closed since October 15, 1970. A new type of institution, the exchange office, authorized to deal in foreign exchange was created.

March 23. The exchange market was closed except for transactions related to foreign trade.

March 29. Exchange sales were permitted for travel abroad and for the servicing of foreign loans. Exchange agencies and exchange houses were allowed to resume their activities. Exchange allocations were established for travel; these were US$200 a person a trip (for each 30-day period) for bordering countries and US$1,000 a person a trip (for the same period) for other countries (Central Bank Telephone Communication No. 2467).

April 6. A flexible exchange rate policy was introduced. The Central Bank’s buying and selling rate was depreciated from $a 4.00 to $a 4.04 per US$1.

April 16. Exchange sales were resumed for a number of additional purposes, including freight and passages on foreign ships and airlines, study abroad, and insurance premiums (Central Bank Telephone Communication No. 2469).

April 26. The special tax on freight was raised from 4 per cent to 10 per cent for imports but remained unchanged at 2 per cent for exports.

May 3. The exchange rate was depreciated from $a 4.04 to $a 4.12 per US$1.

May 3. Decree No. 901 extended tax rebates for the first time for exports of wool, sheepskins, lambskins, and wool tops.

May 10. Exchange sales were resumed for additional purposes, including family assistance, and interest and charges on documentary credits, bills, or collections in respect of imports (Central Bank Telephone Communication No. 2474). Among the items for which the granting of exchange remained suspended were remittances of profits and dividends.

May 27. The exchange market was closed. It reopened on May 29.

June 7. The exchange rate was depreciated from $a 4.12 to $a 4.20 per US$1.

June 25. The exchange rate was depreciated from $a 4.20 to $a 4.40 per US$1.

June 30. Decree No. 2118 prohibited for a period of one year the import of many commodities considered nonessential.

July 29. The exchange market was closed. It reopened on July 30.

July 29. It was announced that external dollar bonds would be issued in order to encourage the repatriation of resident-owned capital and to facilitate meeting certain obligations in respect of remittances abroad.

July 29. The exchange rate was depreciated from $a 4.40 to $a 4.70 per US$1. A tax of $a 0.30 per US$1 was levied on the exchange proceeds from nonpromoted exports.

July 30. The travel allocations set on March 29 were reduced to US$150 and US$500 a person a trip (for each 30-day period) for neighboring countries and other countries, respectively. Remittances in respect of family assistance were restricted; they became subject to a limit of US$100 per remittor for each calendar month. Letters of credit covering imports of capital goods could no longer be opened if they provided for payment in cash or for terms of less than 90 days.

July 30. Swap transactions required the prior approval of the Central Bank.

July 31. A Foreign Investment Law, Law No. 19151, came into force. All new investments of foreign capital in Argentina required approval and registration; dividends would be remittable from the end of the first year of operation at the official rate of exchange. Existing foreign investments also had to be registered; profit remittances or capital repatriation would not be permitted until registration had taken place.

August 3. A tax of $a 0.50 per US$1 was levied on sales of exchange for travel abroad.

August 24. Decree No. 3255 substituted a new export promotion scheme for the existing one.

August 25. The exchange rate was depreciated from $a 4.70 to $a 5.00 per US$1. The tax levied on the exchange proceeds from nonpromoted exports was increased from $a 0.30 to $a 0.45 per US$1.

September 13, Authorized banks were prohibited from opening documentary credits or processing any banking instruments in respect of new import transactions and from transmitting documentary credits abroad (Central Bank Telephone Communication No. 2509).

September 15. Law No. 19231 provided for stricter control over licensing agreements with nonresidents and for the registration, beginning in 1972, of all new and existing agreements of this nature.

September 16. Remittances of profits, dividends, and royalties, all of which had been suspended since March 29, 1971, henceforth could be effected, but only through the purchase of negotiable five-year U. S. dollar-denominated external bonds issued by the Government. These bonds could be freely imported and exported. Purchases were to be settled at the closing selling rate quoted by the Banco de la Nación Argentina in the financial market on the day before subscription. They were first made available on October 30.

September 19. Law No. 19242 prohibited all imports until October 31, 1971, except when originating in LAFTA countries. Subsequently, certain exemptions were granted from this prohibition. On October 29 it was announced that the ban was being extended to imports for the public sector.

September 20. A dual exchange market was reintroduced. In the commercial market, settlements in respect of trade transactions (except promoted exports) and trade-connected invisibles continued to be effected at the rate of $a 5.00 per US$1. All other transactions were channeled through a financial market in which the rate was allowed to fluctuate. Promoted exports were settled at a mixing rate, with 90 per cent of the proceeds negotiated at the commercial rate and 10 per cent at the financial rate.

September 20. The limits on the sale of travel exchange were abolished. Total disbursements of exchange for travel purposes were left to the discretion of authorized banks, which had to take into account the reasonableness of the amount requested in light of the duration of the trip and the traveler’s destination. The exchange had to be bought at the financial market rate.

October 1. A reciprocal credit agreement with Brazil came into operation.

October 22. Authorized banks were required to clear with the Central Bank, inter alia, all payments in respect of imports for which no banking documents could be submitted (Central Bank Telephone Communication No. 2522).

October 25. All settlements in respect of imports and exports took place at a mixing rate calculated by applying the commercial rate to 80 per cent of the total amount and the financial rate to 20 per cent.

November 1. The ban on the opening of documentary credits was lifted in respect of private imports, but was continued regarding public imports, except with prior authorization from the Government.

November 1. Upon the expiration of Law No. 19242, Law No. 19326 prohibited all imports by the public sector. (The import restrictions on nonessential goods that had been introduced at the end of June were maintained for both the public and private sectors.)

November 1. Law No. 19327 introduced an additional import surcharge of 15 per cent ad valorem on virtually all commodities, irrespective of country of origin.

November 2. Law No. 19328 brought all foreign borrowing by the public sector under the control of the Ministry of Finance; this also applied to imports with payment terms in excess of 180 days. The Ministry’s prior approval was also required for all borrowing of foreign funds for which the Argentine Government gave its guarantee or aval. All borrowing from the IBRD and the IDB required the prior approval of the Planning Board.

November 3. Decree No. 5062 listed the commodities considered as promoted exports.

November 4. Exporters of promoted products were permitted to negotiate 60 per cent of their exchange proceeds at the commercial rate and 40 per cent at the financial rate.

November 8. A trade agreement with the EEC was signed.

December 9. The mixing rate for the exchange proceeds from nonpromoted exports and for payments for imports was depreciated by a reduction from 80 per cent to 70 per cent in the portion settled at the commercial rate. Imports and exports of books, newspapers, and periodicals were shifted to the financial market, as were imports of gold.

December 16. Export duties on most traditional exports were increased by Decree No. 5970; those that had been exempt became subject to duty at a rate of 11 per cent.

December 20. The commercial buying and selling rates for the U. S. dollar were maintained unchanged at $a 5.00 per US$1.

December 20. The exchange taxes of $a 0.30 and $a 0.15 per US$1 on proceeds from nonpromoted exports were eliminated.

December 30. The proceeds from promoted exports had to be surrendered within 180 days of shipment.

Australia1

Exchange Rate System

The par value is 0.995310 gram of fine gold per Australian Dollar. Australia avails itself of wider margins of up to 2¼ per cent and from time to time sets the official limits within which banks must effect spot transactions with the public in U. S. dollars, the intervention currency; on December 31, 1971 these limits were US$1.1934 and US$1.1886 per $A 1. Banks are free to determine their own spot rates for all other currencies, including sterling, on the basis of closing rates in London and New York. Forward exchange cover may be arranged through the authorized banks for periods appropriate to the nature of the transaction in respect of most exchange risks arising out of trade transactions and transactions in invisibles of a noncapital nature. Banks are free to determine their own forward rates for all currencies.

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

With the few exceptions mentioned below, goods may be imported freely without import licenses, and no restrictions are imposed on payments for imports, provided that the prescription of currency requirements are observed. Import licenses are required for 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); and specified knitted garments (except when of New Zealand origin and shipped direct from that country). Current licensing of knitted garments has been imposed pending government negotiation of voluntary restraints with the principal low-cost supplying countries. 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 transfers to specified bodies in Viet-Nam and remittances to Rhodesia (except in certain circumstances), they are not restricted; the control operates primarily to prevent unauthorized capital transfers, although there are some restrictions maintained for security reasons. 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 a basic exchange allowance of $A 4,000 in any 12 months for any kind of travel in any country; additional amounts may be obtained on application, provided that the exchange control is satisfied that the exchange is to be used for bona fide travel expenses and not for an unauthorized capital transfer. Limits are placed on remittances for family maintenance and gifts; however, applications for such transfers are treated liberally, and amounts beyond the normal limit for family maintenance are approved on application. 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 6 months of entry, provided that they brought the notes into Australia. Other travelers may take out up to $A 100 in Australian currency, without special authorization; of this amount, up to $A 4 may be in coins.

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

All transfers of capital from Australia require approval. Transfers abroad 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. Although proposals for investment overseas must be considered on a case-by-case basis, for most practical purposes restrictions on capital outflow are limited to portfolio investment. Approval is normally granted for the repatriation of capital by nonresidents, but no advance commitments are given.

No restrictions are placed on the receipt of capital funds from abroad, although inward equity investment from Hong Kong and from countries outside the Sterling Area requires approval, and residents must obtain approval before borrowing foreign currency, including Sterling Area currency, or incurring a liability to a resident of a country outside the Sterling Area. For the time being, Australian banks are required to sight specific Reserve Bank approval for all inward capital remittances of $A 250,000 or more.

Under the Government’s guidelines policy, all enterprises in which more than 25 per cent of the equity is held directly or indirectly by overseas interests are requested to consult the Reserve Bank in respect of proposals to borrow in Australia. The guidelines provide for reasonable access to Australian borrowings for financing normal requirements of funds for working capital and for approval to be readily given to borrowings to finance export transactions. Local borrowing to finance capital investment is determined in terms of formulas which take into account primarily the percentage of the equity in the company concerned held by Australians and the amount of increases in its funds employed.

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 in foreign securities among themselves. The export of securities and certain transactions in foreign securities are subject to approval. All foreign securities that are situated in, and in respect of which the principal or interest is payable in the money of, a country included in the Sterling Area are exempt from the requirement that a person shall not, without the Reserve Bank’s authority, acquire for valuable consideration, dispose of, or otherwise deal with any foreign security.

Gold

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

Changes during 1971

January 1. Additional items were added to the list of imports from New Zealand attracting preferential rates of duty under the terms of the New Zealand-Australia Free Trade Agreement. A further extension of the list took effect from July 1.

May 6. Banks suspended quotations for dealings in Western European currencies, Japanese yen, and a few currencies tied to European currencies. Normal dealings in these currencies were resumed on May 11.

July 1. A simplified customs tariff schedule became operative and new rates of duty were introduced for certain goods as a consequence of a reduction by over 25 per cent in the number of trade classifications. Concessions to developing countries were modified marginally to adapt them to the new tariff; changes included an extension of the product coverage of certain existing preferential tariff rates and tariff quotas, but there was no increase in preferential tariff quota allocations.

August 17. The Reserve Bank temporarily withdrew the general authority of banks to deal in foreign exchange. The banks remained free, however, to assist Australian residents to settle amounts contractually due in foreign exchange under trade transactions, and to meet the reasonable needs of travelers. The Reserve Bank suspended its forward cover facilities.

August 23. The Reserve Bank announced some technical changes for banks’ dealings in foreign exchange. Since 1939 all foreign exchange dealings in sterling and dealings based on sterling had been handled by banks as agents for the Reserve Bank. The changes enabled banks to enter into these transactions with their customers on their own account, as they had done for some years with transactions in U. S. dollars and Canadian dollars. In dealings with the public the banks were required to observe the same rates of exchange for sterling previously laid down by the Reserve Bank ($A 2.1429 and $A 2.1514). A limit would be placed on the amount of each bank’s overall commitment in foreign exchange, and facilities to cover the risk would be available at the Reserve Bank. Foreign exchange reserves continued to be centralized in the Reserve Bank and the banks still had to comply with existing exchange control requirements.

August 24. The Reserve Bank announced that the August 17 restrictions on foreign exchange dealings by banks were being eased. Trading in spot transactions was restored to the banks, but not for capital transactions. Until further notice banks were authorized to undertake foreign exchange transactions to meet: (1) all normal trade transactions; (2) other current account transactions contractually due; and (3) reasonable requirements of travelers. It was not yet possible, however, to restore full facilities for forward cover, even for the above categories of transactions. Rates of exchange for both spot and the limited forward facilities would be available daily from the banks under arrangements with the Reserve Bank. The rates would be based fundamentally on developments in the London and other main foreign exchange markets abroad. The spot rates for sterling remained unchanged. The Australian dollar began to appreciate in terms of the U. S. dollar.

August 27. The range of transactions for which Australian banks could deal in foreign exchange was expanded to include amounts contractually due (inward or outward) in respect of capital transactions entered into by residents before August 16, 1971 and for which any necessary exchange control authority had been obtained. Exchange rates for banks’ transactions with the public in sterling were fixed by the Reserve Bank but banks were free to determine their own rates for transactions in other currencies. The Reserve Bank would provide for the banks cover facilities for spot and forward positions in sterling, U. S. dollars, and Canadian dollars, up to three months forward, at rates which would be set by the Reserve Bank from time to time. The exchange rates applying to banks’ spot and forward transactions in sterling remained the same as those ruling before August 16.

September 5. The Australian and New Zealand Governments exchanged letters setting out the principles that should be followed in promoting the rationalization of industry between the two countries. The exchange provided for greater flexibility in furthering the objectives of the New Zealand-Australia Free Trade Agreement.

September 13. The August ban on inward and outward capital transfers was lifted, subject to continuing Reserve Bank surveillance. For the time being, banks would have to obtain specific Reserve Bank approval for all inward capital remittances of $A 250,000 or more, before converting them into Australian currency.

September 27. The three months’ limitation on Reserve Bank forward exchange facilities for the banks to cover their net positions in sterling and U. S. and Canadian dollars was removed. The Reserve Bank again made facilities available to the trading banks in these currencies to enable them to provide full cover to their customers for all periods for which deferred payments arrangements had exchange control approval. At the same time, the Reserve Bank’s rates to the banks for forward sterling cover were increased to $A 0.25 per £ stg. 100 a month; the previous rate of $A 0.10 per £ stg. 100 a month had been unchanged since 1964. The banks were given discretion to deal with their customers in sterling forward exchange at rates determined by them; previously, they had to apply the standard Reserve Bank rate. It was also announced that banks were being given a limited measure of freedom to vary the exchange rates at which they deal with the public in spot transactions in sterling. Previously, such transactions had been carried out at rates of $A 2.1429 and $A 2.1514 laid down by the Reserve Bank. In future, the Reserve Bank would fix the outer limits of the sterling rates and the banks would be free to deal with the public within these limits; initially, the limits were set at the previous spot dealing levels of $A 2.1429 and $A 2.1514. Banks also were authorized to determine their own spot and forward rates for all other currencies.

December 14. An increase in assistance to large producers of gold under the Gold-Mining Industry Assistance Act was announced, to take effect from January 1, 1972.

December 17. The Government announced changes in arrangements for duty exemptions to automobile manufacturers in the light car range. The objective was to increase the local content and to reduce in stages the duty-free concessions, which would be totally eliminated within a few years.

December 20. The authority of the banks to engage in foreign exchange transactions was temporarily suspended.

December 22. It was announced that Australia would maintain the existing gold parity of the Australian dollar and would adopt wider margins of up to 2¼ per cent either side of parity in foreign exchange transactions. The effective parity relationship of the U. S. dollar, the intervention currency, became $A 1 = US$1.21600. The Australian dollar would no longer have a fixed relationship with sterling (previously, the currency was pegged at $A 2.1429 = £ stg. 1) but would in future be quoted on the basis of a fixed relationship with the U. S. dollar; sterling rates would be quoted on a daily basis. Until further notice, the midpoint for buying and selling rates would be US$1.1910 = $A 1. The Reserve Bank set the new margins within which banks must deal with the public at US$1.1934 = $A 1 and US$1.1886 = $A 1. Banks were free to determine their own rates for other currencies, including sterling. Forward exchange facilities remained unchanged.

December 23. Banks were authorized to resume foreign exchange business on the basis of the new arrangements outlined above. The Reserve Bank would inform them from time to time of the rates at which it was prepared to deal with them in sterling and U. S. dollars. There was virtually no change in the forward cover facilities available at the Reserve Bank or commercial banks.

Austria

Exchange Rate System

The par value is 0.0359059 gram of fine gold per Austrian Schilling. A central rate of S 23.30 per US$1 has been established, and Austria avails itself of wider margins. The official limits for the U.S. dollar, the intervention currency, are S 22.78 buying, and S 23.82 selling, per US$1—rates at which the Austrian National Bank will buy or sell. The rate for the U. S. dollar fluctuates in the exchange market between these limits. Market rates for other currencies vary between limits which result from combining the official limits for the U. S. dollar maintained by Austria and such limits in force in the country of the other currency concerned. “Agreement dollars” are quoted at par with the U. S. dollar. Effective costs may deviate in switch transactions. Forward premiums and discounts are in principle left to the interplay of market forces, but special forward facilities have been introduced for U. S. dollars and clearing dollars constituting the proceeds of exports of goods and services under certain contracts concluded before October 15, 1971.

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

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

Prescription of Currency

Settlements with the countries with which Austria maintains bilateral payments arrangements1 are made through clearing accounts expressed in U. S. dollars. Settlements with all other countries may be made either in convertible currencies or through Free Schilling Accounts. 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), “multilateral nonmember countries” (other countries with which settlements are in convertible currencies), and “bilateral countries” (with which clearing arrangements are in force).

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. 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 many payments for 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.

Imports and Import Payments

All commodities not included in the Annex to the Foreign Trade Law are free of import licensing and may be imported from any country without quantitative restriction. All goods included in the Annex require licenses. Most of these goods are free of quantitative restriction. The liberalization depends on the group of countries from which they are imported; for such liberalized goods, licenses are issued by the customs at the time of clearance.2 Nearly all imports from GATT countries, their associated territories, and other countries 3 are liberalized. Many nonagricultural imports are admitted under an automatic licensing procedure when originating in Bulgaria, Czechoslovakia, Eastern Germany, Hungary, Poland, or Rumania.

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

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

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

Grains, milk and butter, cattle, pigs, and horses for slaughter and products from these animals for human consumption, and certain fertilizers are imported in accordance with a special system of controls and regulations maintained under Agricultural Marketing Laws.

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

Payments for imports from, and originating in, countries with which Austria makes settlements in convertible currencies do not require exchange licenses.4 Payments for imports from, or originating in, countries with which Austria maintains bilateral payments agreements (see footnote 1) require exchange licenses, which are granted without restriction if the payments are made in the appropriate bilateral currencies; payments for licensed imports shipped from and originating in one and the same bilateral country are covered by a general permission.

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 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 the terms of existing bilateral payments arrangements and other 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 (to bilateral countries only through the appropriate bilateral channel). Other payments abroad up to S 1,000 may be made freely and at any time. The remaining payments to “multilateral nonmember countries” and to bilateral 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 a short-term advance from nonresidents in multilateral countries up to the equivalent of S 26,000 for each trip. Residents may buy travelers checks, etc., up to the equivalent of S 26,000 a trip from authorized banks in agreement currencies or local currencies for travel to bilateral countries. Should a resident require more foreign exchange for traveling, the increase may be authorized by the National Bank. In addition, Austrian residents may arrange for trips abroad through travel agents and pay in schillings to cover expenditures for hotels and food as well as transportation. Persons leaving Austria may take with them S 15,000 in Austrian notes and coins and any amount in foreign notes and coins.

Exports and Export Proceeds

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

Export claims 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. Deposits in bilateral clearing currencies may be used in accordance with the terms of an individual or general payments license.

Proceeds from Invisibles

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

Capital

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

Residents are freely permitted to obtain from nonresidents loans and credits as follows: (1) loans with maturities of five years or more, to be used by producing enterprises for the expansion of production equipment; (2) refinancing of export claims; (3) loans to be used abroad for definite merchandise imports; (4) loans to be used by enterprises in Austria in which the nonresident creditors participate, provided the loans are appropriately related to the size of the nonresidents’ shares in those enterprises; and (5) loans from relatives up to S 260,000 a borrower a year. The short-term foreign assets and liabilities in convertible currencies of authorized banks are in practice not subject to limitation, but any increase in their schilling liabilities to nonresidents over the level of August 13, 1971 is subject to the provisions of a gentlemen’s agreement with the National Bank. A number of authorized banks are permitted to accept from abroad and to employ abroad funds in convertible currencies for a period of up to five years.

The Austrian National Bank permits the transfer abroad of (1) proceeds from the liquidation of various foreign investments in Austria (shares or participation in Austrian enterprises, Austrian securities, 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 may be reinvested. Residents also are permitted to acquire real estate abroad (provided that it is intended for the personal use of the buyer within one year), to grant commercial or investment credits, to grant direct investment loans (provided that the resident can actually exert influence on the management of the nonresident enterprise), and to grant credits secured by mortgages in Austria or abroad. Domestic insurance companies may conclude with nonresidents life insurance contracts in Austria.

Transactions and operations mentioned in the four preceding paragraphs are licensed upon documentation, provided that they are concluded with residents of countries 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 quoted on stock exchanges 5 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 to authorized credit institutions for resale to the public. Residents may hold gold in any form, including bars, in Austria, and they may acquire in Austria any gold coins that are not legal tender and any gold medals or medallions; furthermore, domestic trading between residents in gold with a fineness of less than 0.585 is unrestricted. With the exception of coins, medals, and gold with a fineness of less than 0.585, the acquisition from residents of gold subject to the Foreign Exchange Law is reserved for the monetary authorities, authorized industrial users, dentists, and jewelers; the Mint, gold refiners, and jewelers are permitted to trade or exchange among themselves gold in any form.

Where the Foreign Trade Law prescribes import licenses for gold imports (e.g., for gold sheets), the license is either issued by the Ministry of Trade, Commerce, and Industry, which usually grants any license applied for by industrial users, or by the customs office concerned, which issues licenses automatically for certain gold imports within its competence. Where this law does not require an import license for imports (e.g., for the import of gold bars), the Foreign Exchange Law prescribes a license issued by the National Bank covering the purchase of gold; such licenses are issued after consideration of the merits of each case. Exports of gold in any form other than jewelry require authorization by the National Bank; the 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 1971

January 1. The bilateral payments agreement with the U. S. S. R. was terminated.

January 1. The reduced tariffs previously reserved for imports from contracting parties to the GATT were extended to goods imported from non-GATT countries.

January 1. The 10 per cent purchase tax on automobiles and trucks was abolished.

January 1. The agreed list of Japanese goods subject to quota in Austria was reduced from 80 items to 62 items. (Restrictions on goods of Japanese origin were further reduced on January 1, 1972.)

January 1. The temporary price-containment measures which were to expire at the end of 1970 were extended for another six months. The number of items on which customs duties were temporarily waived or reduced was increased to some 220 tariff items. Items included in 24 other tariff categories were exempted from import equalization levies.

March 31. The last antidumping ordinances expired; they covered certain printed cotton fabrics and certain garments.

May 5. The exchange market was closed. It reopened on May 10.

May 10. (May 9, Washington time.) The par value was changed from 0.0341796 to 0.0359059 gram of fine gold per Austrian schilling, i.e., from S 26.00 to S 24.75 per US$1. The official margins for the buying and selling rates for the U.S. dollar were widened from 0.769 per cent to 0.97 per cent either side of parity; the new maximum and minimum rates were S 24.99 and S 24.51.

May 10. The central bank concluded a gentleman’s agreement for the months of May and June with the credit institutions providing, inter alia, that the banks (in addition to meeting their normal reserve requirements) must place interest-free deposits with the National Bank equal to 40 per cent of any increase since May 3, 1971 in their schilling liabilities to nonresidents; in addition, banks were not to repatriate any foreign assets for the purpose of improving their schilling liquidity. This agreement expired at the end of June 1971.

June 16. The implementing regulations issued over the years under the Exchange Control Law of 1946 were reissued in revised form in 12 separate notifications which became effective July 1, 1971. The liberal aspects of the exchange system were accentuated by many undertakings to issue licenses on application, the granting of additional general permissions, and by a number of increases in ceilings on freely permitted payments or transactions. Foreign countries were divided into three groups: member countries of the IMF and OECD which settle payments in freely convertible currencies (“multilateral member countries”), other countries settling in convertible currencies (“multilateral nonmember countries”), and “bilateral countries.” Blocked Accounts for nonresidents in the first group of countries henceforth were considered Interim Accounts and most transfers from such accounts were freely permitted. The permitted periods for forward exchange transactions were lengthened from 6 months to 12 months. A new provision was that the central bank could fix maximum interest rates for residents’ foreign currency accounts with domestic banks. For the first time a general license was issued permitting residents to make payments for a large number of commercial transactions to residents of “bilateral countries.” Other general permissions, covering, for example, the transfer of the sales proceeds of Austrian securities held by nonresidents, provided these had been purchased with convertible currency were confirmed; and loans up to S 260,000 a person a year to or from relatives would be freely permitted.

The regulations relating to gold transactions were eased. Dealing in gold coins that are not legal tender was permitted for all credit institutions and between all other residents, and another general license allowed resident travelers to take out, when going to “multilateral member countries,” gold coins that are not legal tender up to a value of S 1,000 a person a trip; nonresident travelers could take out up to 200 grams a person a trip to any country.

It was also announced that in addition to the publication of these regulations, a large number of general licenses had been issued to the credit institutions, and that the authorities would follow a more liberal policy than in the past in granting individual exchange licenses to the public.

July 1. Further import liberalization measures within the framework of the temporary price-containment measures of 1969 went into effect, to be in force until October 1. In all, 92 items were liberalized, mainly goods that could be expected to be supplied by Eastern European countries and Japan. Moreover, imports of nonliberalized commodities from these countries would be licensed liberally.

The temporary price-containment measures were extended to the end of 1971 and a total of 190 items were added to the existing list of items eligible for reduction in customs duties.

August 16. The exchange market was closed. It reopened on August 24.

August 23. It was announced that the authorities would attempt to keep the schilling stable in terms of the average rates for the currencies of the main industrial countries of Europe. In this context, special weight was being given to the currencies of neighboring industrial countries.

August 24. The official buying rate for the U. S. dollar (S 24.51) was suspended, while the official selling rate (S 24.99) continued in effect. As a result, the schilling began to appreciate in terms of the U. S. dollar. The same was true for clearing dollars.6

August 24. A gentlemen’s agreement was concluded between the National Bank and the credit institutions which called for interest-free deposits with the National Bank equal to 75 per cent of any increase over August 13 levels in their schilling liabilities to nonresidents. The banks also undertook not to improve their schilling liquidity by selling foreign currency or by early repatriation of foreign assets. The agreement was initially valid until October 31, when it was extended to January 31, 1972. It was later extended to June 30, 1972. (In connection with the February 1972 renewal, the credit institutions undertook to appeal to their large customers not to borrow abroad.)

August 24. Exchange rates for all foreign currencies could be freely agreed.

August 24. Specific central bank approval was required for the crediting to Free Schilling Accounts—other than for current payments—of schilling proceeds arising from sales of freely convertible foreign currencies for the account of nonresidents.

August 27. A gentlemen’s agreement between the central bank and the commercial banks went into effect, which provided that the latter must deposit with the central bank, free of interest, the full schilling counterpart of any foreign currency credits taken up abroad by banks to cover exchange risks of exporters. On September 9 the sterilization requirement was reduced to 75 per cent. On September 16 it was terminated.

September 9. A long-term trade agreement with Poland was signed which provided that imports from that country would be fully liberalized by January 1, 1975, after further relaxation of restrictions in stages. The agreement came into force on January 1, 1972.

October 29. The National Bank issued a general license by which exporters were permitted to offer for forward sale to the central bank, through their own banks and until November 12, their claims in U.S. dollars (including clearing dollars) arising from contracts concluded before October 15 covering exports of goods and services and due for settlement within a period of over one year but not more than five years. Forward cover would be based on the November 15 middle rate for the U. S. dollar on the Vienna exchange. The total purchases of dollars by the National Bank would be limited to the amount needed by the authorities to cover their long-term foreign payments commitments (between US$100 million and US$130 million), and a rationing system might be applied.

November 23. The bilateral payments agreement with Hungary was terminated.

December 22. A central rate of S 23.30 = US$1 was established. Austria availed itself of wider margins. The official limits for the U. S. dollar were set at S 22.78 buying and S 23.82 selling per U. S. dollar, at which rates the central bank stood ready to deal, using the U. S. dollar as the intervention currency. The buying and selling rates for clearing dollars were the same as those for the U. S. dollar.

December 31. The bilateral payments agreements with Bulgaria, Czechoslovakia, and Poland were terminated.

December 31. The use of clearing dollars under the bilateral payments agreement with Eastern Germany ceased for new transactions. With effect from January 1, 1972, settlements would take place over schilling accounts at the Oesterreichische Kontrollbank and the Deutsche Auszenhandelsbank.

December 31. The National Bank ceased to engage in direct foreign exchange transactions with the public.

Barbados

Exchange Rate System

The par value is 0.444335 gram of fine gold per East Caribbean Dollar. Barbados is a participant in the East Caribbean Currency Agreement of 1965, which established the East Caribbean Currency Authority to issue and manage a common currency in its member countries.1 The Currency Authority maintains a fixed relationship for the East Caribbean dollar with sterling, the intervention currency, at the rate of EC$4.80 = £ 1.

The East Caribbean Currency Authority is authorized to levy a commission charge of up to 1 per cent on inward and outward transfers of sterling. On December 31, 1971 the commission charges in transactions with authorized banks were 516 of 1 per cent on inward transfers and ⅜ of 1 per cent on outward transfers. The authorized banks apply the same commission charges in dealings in sterling with their customers, although they may levy an additional charge on mail transfers and drafts. The East Caribbean Currency Authority maintains fixed buying and selling rates at ⅛ of 1 per cent either side of parity for the Guyana dollar, the Jamaica dollar, and the Trinidad and Tobago dollar. The authorized banks apply commission charges for these currencies of ¼ 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, 1971, the banks’ buying and selling rates for the U. S. dollar were EC$184.3 and EC$189.9 per US$100.

Under an arrangement with the central banks of Jamaica and Trinidad and Tobago, the East Caribbean Currency Authority purchases at par notes and coins issued by the monetary authorities of the countries concerned and repatriates the currency in return for reciprocity of treatment with respect to collections of East Caribbean dollars. The currency of Guyana is purchased at EC$0.9211 per Guyana dollar.

Administration of Control

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

Prescription of Currency

Barbados is a member of the Sterling Area and maintains prescription of currency requirements similar to those of the United Kingdom. Settlements with residents of other parts of the Sterling Area 2 may be made in any Sterling Area currency. Authorized payments to residents of countries outside the Sterling Area other than Rhodesia may be made in any non-Sterling Area currency or by crediting an External Account in East Caribbean dollars. Receipts from residents of countries outside the Sterling Area other than Rhodesia may be received to the debit of an External Account or in any foreign currency.

Nonresident Accounts

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

With the permission of the Exchange Control Authority, authorized banks may maintain Foreign Currency Accounts and External Accounts in the names of residents of non-Sterling Area countries. Residents of the Sterling Area may also hold Foreign Currency Accounts. Permission to open Foreign Currency Accounts, which are maintained in non-Sterling Area currencies, is given on the basis of the anticipated frequency of receipts and payments in foreign currency. Certain receipts and payments may be credited and debited to Foreign Currency Accounts, subject to the conditions of approval at the time the account was opened. Other credits and debits require individual approval.

External Accounts may be opened, with exchange control approval, for nonresidents of the Sterling Area and are maintained in East Caribbean dollars. They may be credited with proceeds from the sale of foreign currencies or gold and with transfers from other External Accounts. Other credits require individual approval. They may be debited for payments to other residents of the Sterling Area, for transfers to other External Accounts, and, in some cases, for the purchase of non-Sterling Area currencies. Other debits require individual approval.

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

Imports and Import Payments

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

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

Payments for Invisibles

Payments for invisibles originating in countries outside the Sterling Area require the approval of the authorities. Except for transactions involving residents of Rhodesia, the following applies. Payments for all commercial transactions are permitted freely when the application is supported by appropriate documentary evidence. Authority has been delegated to authorized dealers to provide basic allocations of foreign exchange for certain payments of a personal nature. These include foreign travel, for which up to EC$ 1,000 a person may be allocated for each travel year, expenses of education abroad (EC$2,500 a person a year after the first year), and subscriptions to newspapers, magazines, etc. With the exception of tourism, applications for additional amounts or for purposes for which there is no basic allocation are approved by the authorities, provided that no unauthorized transfer of capital seems to be involved.

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

All capital transfers to countries outside the Sterling Area require exchange control approval.

Direct investments in non-Sterling Area countries by residents of Barbados require exchange control approval; when permission is granted, such investments must be channeled through the investment currency market in the United Kingdom. The purchase by residents of Barbados of non-Sterling Area securities and of real estate for private purposes outside the Sterling Area is not normally permitted. When permission is granted, however, the purchase of non-Sterling Area securities or of real estate situated outside the Sterling Area must be financed through the investment currency market in the United Kingdom. Certificates of title to non-Sterling Area securities held by residents of Barbados must be lodged with an authorized depository in Barbados and earnings on these securities must be repatriated and surrendered to an authorized dealer.

Personal capital transfers such as inheritances to residents of non-Sterling Area countries require exchange control approval, which is granted subject to the payment of estate and succession duties. Dowries in the form of settlements, and cash gifts up to EC$500 a year may be transferred, with exchange control approval, to residents of countries outside the Sterling Area.

Direct investment in Barbados by residents of countries outside the Sterling Area may be made with exchange control approval. The remittance of earnings on, and liquidation proceeds from, such investment is permitted, subject to the submission of documentary evidence that the amount to be remitted is accurate, to the discharge of any liabilities related to the investment, and to the registration of the original investment with the Exchange Control Authority.

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

Gold

Residents who are private persons are permitted to acquire and hold gold coins for numismatic purposes only. Otherwise, any gold acquired in Barbados must be surrendered to an authorized dealer unless exchange control approval is obtained for its retention. Residents other than the monetary authorities, authorized dealers, and industrial users are not permitted to hold or acquire gold in any form other than jewelry or coins for numismatic purposes. Imports and exports of gold by residents are permitted for industrial purposes and are exempted from customs duties, charges, and other taxes. Licenses to import and export gold are issued by the Ministry of Trade, Industry, and Commerce. Official institutions in Barbados do not purchase gold.

Changes during 1971

February 17. The Miscellaneous Controls (General Open Import License) Regulations 1971 replaced the Exports and Imports (General Open Import License) Order 1968, as amended, retaining the same provisions regarding the requirement to obtain a license for imports from specified countries and for imports of certain listed commodities irrespective of the country of origin.

August 9. An initial par value of 0.444335 gram of fine gold per East Caribbean dollar, equivalent to EC$2 = US$1, was established. No appreciation or depreciation of the currency was involved.

August 16. Transactions in foreign exchange were suspended.

August 23. Transactions in foreign exchange were resumed. As a result of the statutory link to sterling, which was maintained, the East Caribbean dollar began to appreciate in terms of the U. S. dollar.

December 22. It was announced that there would be no change in the par value of the East Caribbean dollar in terms of gold. As a result, the effective parity relationship for the U.S. dollar became EC$ 1.84211 = US$1.

December 22. It was announced that exchange control was being extended to the Sterling Area. The decision, however, was not implemented.

Belgium-Luxembourg *

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 44.8159 = US$1 and avail themselves of wider margins, except in respect of the Netherlands guilder. 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.

In the official exchange market, only authorized banks may carry out exchange transactions permitted in that market.1 The spot exchange rate for the U. S. dollar, the intervention currency, fluctuates within official limits of BF 43.8075 buying, and BF 45.8250 selling, per US$1. The rates for the other convertible currencies except the Netherlands guilder fluctuate between limits which result from combining the official limits for the U. S. dollar maintained by Belgium-Luxembourg and such limits in force in the country of the other currency concerned. The exchange rate for the Netherlands guilder in the official market is maintained within margins of 1½ per cent either side of the cross-parity of f. 1 = BF 13.812 or BF 100 = f. 7.24. The rate for the zaïre fluctuates between limits of 2¼ per cent either side of BF 89.6318 (US$2), i.e., between BF 87.6150 buying, and BF 91.6500 selling, per Z 1. Most exchange transactions are settled through the official market. For all inward and outward payments in excess of BF 10 million through that market, supporting documents must be submitted to the Belgo-Luxembourg Exchange Institute (Institut Belgo-Luxembourgeois du Change or IBLC).

In the free exchange market, all currencies (including domestic and foreign banknotes) may be bought and sold at freely fluctuating rates. On December 31, 1971, the free market rates between banks for the U. S. dollar were BF 44.76 buying, and BF 44.79 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 five 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, conferred on the Belgo-Luxembourg Administrative Commission the authority to license trade transactions; this Commision 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 presciption of currency requirements operate mainly to ensure that settlements with foreign countries are made, according to their nature, through the appropriate exchange market or, where payments in Belgian or Luxembourg francs are involved, through the appropriate category of nonresident account.

Foreign countries are divided into two groups: the bilateral countries 2 and the convertible area (all other countries).

All inward and outward transactions are classified in four groups, which may be summarized as follows: List A covers merchandise, transport expenses, industrial expenses (e.g., costs of processing), and other commercial expenses, including insurance; List B covers settlements of travel firms, salaries, pensions, fees, subscriptions, taxes, and public administration payments; List C covers (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). As regards transactions in List C, outward payments for some of these (administration expenses and investment earnings) are channeled through the official market (or Convertible Accounts), while outward payments for all others and all inward payments can be transferred through either the official or 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.

Summary of Permissible Methods of Settlement for Foreign Payments
Transaction ListCountry GroupForeign CurrencyExchange MarketNonresident Account In Francs
Outward Payments
A, B, C(1), C(2)ConvertibleConvertibleOfficialConvertible
C(3)ConvertibleAnyOfficial or freeConvertible or Financial
DConvertibleAnyFreeFinancial
A, B, C, DBilateralBilateral3
Inward Payments
A, BConvertibleConvertibleOfficialConvertible
CConvertibleConvertible OtherOfficial or free FreeConvertible or Financial
DConvertibleAnyFreeFinancial
A, BBilateralConvertibleOfficialBilateral or Convertible 3
CBilateralConvertible OtherOfficial or free FreeBilateral or Convertible 3
DBilateralAnyFreeBilateral3

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.5 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 only in the form of sight accounts (demand deposits) and balances may not bear interest except for amounts originating from documentary credits established by banks resident in specified countries.

2. Financial Accounts. These accounts may be opened only for residents in convertible area countries,6 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 financial market, and they may be credited freely with proceeds from the sale by a nonresident of gold or any currency in the free market. Domestic banknotes and proceeds from the sale in the free market of foreign banknotes, when deposited with authorized banks by foreign travelers in Belgium-Luxembourg or by persons residing abroad, may be credited freely to Financial Accounts. Transfers between Financial Accounts are free. Balances on these accounts may be used to purchase gold or any currency negotiated on the free market.

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

Imports and Import Payments

All imports of Rhodesian origin are prohibited. Individual licenses are required for (1) all imports from Albania, Bulgaria, mainland China, Czechoslovakia, Eastern Germany, Hong Kong, Hungary, Japan, North Korea, Outer Mongolia, Poland, Rumania, the U.S.S.R., and North Viet-Nam,7 (2) a number of imports from all other countries except Luxembourg.8 The commodities for which individual licenses are required include many textile products, certain agricultural products and foodstuffs, and coal and kerosene. All other commodities, which constitute about four fifths of total imports, are free of license and quantitative restriction; only a simple form completed by the importer giving notification of the payment (payment declaration) is required when payment is made through an authorized bank. Many commodities subject to individual licensing are also admitted without quantitative restriction.

Imports from non-EEC countries of most products covered by the Common Agricultural Policy of the EEC are subject to variable import levies which have replaced all previous barriers to imports; common EEC regulations are also applied to imports from non-EEC countries of most other agricultural and livestock products. Certain agricultural imports of non-Benelux EEC origin or originating in third countries are subject to compensatory levies.

No exchange control documentation is required for imports not exceeding BF 10,000 in value. The authorized bank is required to make certain that payment is made by one of the methods laid down in the regulations (see section on Prescription of Currency, above) and that foreign exchange is not acquired until the import payment is due. If these requirements are not fulfilled, the authorized bank submits a request to the central exchange control authority for special permission. Prior examination of supporting documents by the IBLC is required for payments exceeding BF 10 million, and exchange control approval is required for payments for imports more than three months before or after the date of customs clearance. Payments for 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, B, and subcategories (1) and (2) of List C 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 subcategory (3) of List C may be made through either the official market (alternatively, by crediting Belgian or Luxembourg francs to a Convertible Account) or through the free market (alternatively, by crediting Belgian or Luxembourg francs to a Financial Account, or in foreign or domestic banknotes); payments for items in List D must be made through the free market (alternatively, by crediting Belgian or Luxembourg francs to a Financial Account, or in foreign or domestic banknotes). Payments to bilateral countries (see footnote 2) must be made by crediting Belgian or Luxembourg francs to a Bilateral Account related to the country concerned; payments to Zaïre, however, may also be made in zaïres through a convertible account in Zaïre. Foreign and domestic banknotes may be exported freely.

Exports and Export Proceeds

The export of all goods to Rhodesia is prohibited in accordance with UN Security Council Resolution No. 253(68) of May 29, 1968. Individual licenses are required for specified exports to all countries except Luxembourg.9 All other exports are free of license; only a simple form completed by the exporter giving notification of the export is required.

No exchange control documentation is required for exports not exceeding BF 10,000 in value. The authorized bank is required to make sure that export proceeds are received in accordance with the regulations (see section on Prescription of Currency, above). Special authorization is required to collect export proceeds more than six months after the date of exportation. Export proceeds in convertible currencies must, within eight days of receipt, be surrendered to an authorized bank, or, alternatively, they may be deposited in a Controlled Resident Account in Foreign Currency with an authorized bank if they are to be used later for current payments authorized to be made in these currencies. Advance collection of export proceeds exceeding BF 5 million in value 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 not subject to limitation.10

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 1971

January 1. A value-added tax was introduced in Belgium; among the exemptions were transactions in monetary gold, i.e., coins and bars. In Luxembourg, both the general and the reduced rate of value-added tax were increased.

January 1. A temporary export tax of 1.75 per cent was introduced in Belgium. (The tax was abolished on January 1, 1972.)

January 1. A new Economic Expansion Law, providing various incentives to stimulate domestic and foreign investment in development areas, entered into effect in Belgium.

February 1. The agreement concerning the unification of the Benelux customs territory came into force. Border formalities in trade with the Netherlands were further simplified.

February 8. A Royal Decree was issued implementing the law of December 31, 1970, which had amended the charter of the Office National du Ducroire and had enabled it to cover the political and transfer risk of certain new Belgian investments abroad.

March 24. Authorized banks in Belgium were requested with immediate effect not to allow their net external spot debtor position to deteriorate below amounts calculated for a specified base period. The ceilings for banks in Belgium and Luxembourg on their net spot position in foreign currencies relating to the official market and on mail credits on Convertible Accounts were maintained.

April 29. The authorized banks’ reporting requirements with respect to their long spot positions in foreign currencies in the official market and their mail-credit advances on nonresident Convertible Accounts were terminated. The ceilings on these positions and advances, as imposed on October 1, 1969 and modified on May 20, 1970, were maintained.

May 5. The exchange markets were closed. They reopened on May 11.

May 11. The IBLC announced its decision to separate the official market and the free market completely and to avoid the accumulation by nonresidents of balances in convertible Belgian francs and Luxembourg francs in excess of amounts required to execute current transactions. Previously, transactors in the BLEU exchange markets enjoyed a considerable degree of freedom in choosing between the official and free markets. Virtually all outward payments for current transactions and some outward payments for capital transactions could be made through either market at the option of the payor; there was a similar choice with respect to a limited number of inward payments (mainly all capital inflows and most investment income), so that in effect all payments could be switched to the free market and all receipts to the official market. Henceforth, it was no longer permitted to transfer to the official market foreign currency purchased in the free market (freedom to do so had been the only direct link between the two markets), and the options between the two markets were virtually eliminated for outward payments and reduced for incoming payments. The effect was that most current payments could only be made and received through the official market (the main exceptions being travel expenditures and settlements in respect of transactions on commodity markets abroad or transactions in monetary gold) and that virtually all capital transactions had to be settled in the free market. Nonresident banks remained free to convert foreign currency in the official market for credit to Nonresident Convertible Accounts, and to reconvert balances on such accounts into foreign currency through the same market.

May 11. Residents of the BLEU, including authorized banks, were no longer permitted to sell on the official market, or to deposit to Controlled Resident Accounts in Foreign Currency, foreign currencies acquired on the free market or held as free balances. As a result, foreign currencies, which previously could not go to a discount in the free market, henceforth could go to a discount as well as a premium.

May 11. Residents of the BLEU were no longer permitted to purchase or use free market balances of foreign currencies, make deposits to Nonresident Financial Accounts, or use Belgian, Luxembourg, or foreign banknotes to effect payments in favor of nonresidents in respect of imports of goods; transit purchases of goods; or operations shown in Lists A and B or shown under the headings “administration expenses” and “income” of List C of the IBLC regulations. As a result, all these payments could only be made at the official market rate.

May 11. Residents of the BLEU were no longer permitted to sell foreign currencies on the official market or to deposit such currencies to Controlled Resident Accounts in Foreign Currency, or to receive payments in Belgian francs or Luxembourg francs to the debit of a Nonresident Convertible Account, in settlement of operations shown in List D (which included dealings in gold and transactions on foreign commodity markets) or income the due date of which preceded the date of collection by more than six months. As a result, all these receipts could only be settled at the free market rate.

May 11. Residents of the BLEU were no longer permitted to receive advance payments through the official exchange market or to the debit of Nonresident Convertible Accounts, except in respect of exports or transit transactions the value of which did not exceed BF/Lux F 5 million.

May 11. Authorized banks were no longer permitted to credit Nonresident Financial Accounts, or to sell foreign currencies on the free market, or to deliver Belgian, Luxembourg, or foreign banknotes, as counterpart to purchases of foreign currencies on the official market or to debits to Nonresident Convertible Accounts. Banks were authorized to cash travel instruments or checks (in Belgian or Luxembourg francs) drawn on a Nonresident Convertible Account and presented by a foreign traveler, up to a maximum of BF/Lux F 20,000 for each Convertible Account.

May 11. For any purchase of foreign currencies from a resident of the BLEU on the official market, any deposit of such currencies to a Controlled Resident Account in Foreign Currency, and any debit to Nonresident Convertible Accounts in favor of a resident of the BLEU, authorized banks were required to submit to the IBLC for prior examination the documents and any written information submitted to them in support of the operation, when the amount involved exceeded BF/ Lux F 10 million.

May 11. Authorized banks were no longer allowed to open for nonresidents time or prior-notice Nonresident Convertible Accounts, or to pay interest on Nonresident Convertible Sight Accounts.

May 11. Interest owed in foreign currency by banks to residents or nonresidents had to be settled from their free market balances, and interest received by banks in foreign currency had to be added to their free market balances.

May 18. The IBLC simplified the control procedure for certain types of transactions for which banks could pay out Belgian or Luxembourg francs to residents against foreign currency received through the official market or to the credit of a Controlled Resident Account or received in Belgian or Luxembourg francs to the debit of a Nonresident Convertible Account (as well as amounts up to which they could do so).

The circular also specified the freely permitted debits and credits to Assimilated Resident Accounts.

Transfers to Nonresident Financial Accounts from Bilateral Accounts related to Burundi, Rwanda, or Zaïre, which previously were allowed up to BF/ Lux F 100,000, were no longer permitted.

May 26. Accounts in Belgian francs or Luxembourg francs opened by stockbrokers in the names of foreign physical and juridical persons could no longer be credited with the proceeds of coupons payable in Belgian or Luxembourg francs and collected for the account of nonresidents, or with transfers from Nonresident Convertible Accounts held with authorized banks. The coupons referred to had henceforth to be collected by an authorized bank, and their proceeds could only be paid out in Belgian or Luxembourg francs to the credit of a Nonresident Convertible Account with the bank concerned or in foreign currencies purchased on the official market, subject to confirmation by the stockbroker that the owner of the securities resided outside the BLEU.

June 3. Authorized banks were advised to deposit in a special noninterest-bearing blocked account with the National Bank of Belgium an amount equivalent to the excess over the ceiling on their net foreign debit position established on March 24.

June 8. Authorized banks were permitted to debit Nonresident Convertible Accounts up to an amount of BF/Lux F 50,000 for each transaction in execution of payments for specified services included in List D.

June 8. Authorized banks were permitted to make transfers from Nonresident Convertible Accounts held by residents of Burundi, Rwanda, and Zaïre to the holder’s Assimilated Resident Account, up to the balance on the Nonresident Convertible Account on May 10.

June 8. Authorized banks were permitted to pay interest on balances in Nonresident Convertible Accounts deriving from the establishment of documentary credits by banks located in specified countries.

June 8. No documentation was required for payments to nonresidents of amounts up to BF/Lux F 50,000. Previously, the limit was BF/Lux F 10,000.

July 1. Generalized tariff preferences on specified commodities originating in most developing countries went into effect.

July 14. A most-favored-nation treaty and a long-term trade and payments agreement between Benelux and the U. S. S. R. were signed. They came into force on August 1, when the BLEU’s bilateral payments agreement with the U. S. S. R. was terminated. Settlements with that country were placed on a convertible currency basis. As a result, the U. S. S. R. on August 2 was included in the “convertible area.”

July 19. The existing regulations concerning Special Nonresident Accounts of employees of specified international organizations and Assimilated Resident Accounts of BLEU nationals residing in Burundi, Rwanda, and Zaïre were replaced by regulations governing the use of three types of special accounts denominated in Belgian or Luxembourg francs: Assimilated Resident Accounts, Convertible Accounts of International Organizations and Diplomatic Representations, and Special Convertible Accounts.

August 16. The exchange markets were closed. They reopened on August 23.

August 23. The previous exchange rate margins in the official market ceased to be observed, except in respect of the Netherlands guilder. The Belgian franc and the Luxembourg franc began to float in the official market, where they appreciated in terms of the U. S. dollar; previously, the effective parity relationship for the U.S. dollar had been BF 50.00 = US$1. Transactions in the official market in Netherlands guilders, however, were resumed on the basis of the pre-May 9 cross-parity (f. 1 = BF 13.81215 or BF 100 = f. 7.24), within the pre-May 9 margins of approximately 1.5 per cent either side of the cross-parity; to maintain this parity and the margins, the two central banks would intervene in each other’s currencies. The new exchange rate arrangements were also applicable, mutatis mutandis, to the Luxembourg franc, which remained at par with the Belgian franc. The free market continued to function as before.

August 24. Imports of most agricultural products from France, Germany, and Italy required a license. Imports of the same commodities from France and Italy also became subject to a deposit requirement. These requirements were continued into 1972.

September 16. The limits on authorized banks’ net external debtor position established on March 24 were suspended until further notice. The blocked account arrangements of June 3 were terminated and accumulated balances would be definitely released during October (certain balances were released immediately).

September 23. The direct controls on bank credit (encadrement du crédit) were lifted with effect from September 30.

October 1. The rate of the temporary export tax was selectively reduced for specified products. A further reduction took place on November 20.

November 26. The ceilings established on October 1, 1969 and modified on May 20, 1970 for each authorized bank on the long spot position in foreign currencies relating to the official market, and on mail credits on Nonresident Convertible Accounts, were suspended until further notice.

November 26. Authorized banks were permitted to execute payments abroad by residents in the form of checks drawn in Belgian francs or Luxembourg francs up to a maximum of BF/Lux F 50,000 without prior authorization by the IBLC, provided that the payor submitted required documentation, and that the counterpart be deposited in a Nonresident Convertible, Financial or Bilateral Account in accordance with the prescription of currency regulations.

December 20. The exchange markets were closed. They reopened on December 21.

December 21. Belgium and Luxembourg established central rates of BF 44.8159 = US$1 and Lux F 44.8159 = US$1. Both countries availed themselves of wider margins. The Belgian intervention limits for the U. S. dollar in the official market were set at BF 43.8075 buying and BF 45.8250 selling. The free market continued to function as before. The “joint float” of the Benelux currencies was continued, with margins remaining at 1½ per cent. The intervention limits for the zaïre, which prior to August 15, 1971 had been BF 99.25–100.75 per Z 1, were replaced by limits of BF 87.6150–91.6500 per Z 1.

Bolivia

Exchange Rate System

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

For operational purposes, the free market is divided into two sectors: the public sector and the private sector. The 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 exchange rate of the Central Bank on December 31, 1971 was $b 11.875 buying, and $b 11.885 selling, per US$1. All sales of foreign exchange are subject to a 1.6 per cent exchange tax and a 2 per mill stamp tax.

Bolivia 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 Bulgaria, Hungary, and Poland are channeled through special accounts. Otherwise, there are no prescription of currency requirements. Settlements are usually made in U. S. dollars or other convertible currencies. Payments between Bolivia and Argentina, Chile, Colombia, Ecuador, Mexico, and Peru may be made through accounts maintained with each other by the central banks.

Imports and Import Payments

All imports by public sector agencies require the prior authorization of the Ministry of Industry and Commerce; they are not permitted to import commodities also available in Bolivia. Private imports of certain commodities also require such prior authorization; these goods include live cattle, various foodstuffs, raw cotton, and petroleum and petroleum products. The import of cigarettes, cement, and certain other locally produced goods is prohibited. All other goods may be imported freely. Exchange to pay for imports may be purchased in the free market; commercial banks make exchange available the first business day after receipt of the application. All foreign credits, including suppliers’ credits, are subject to authorization by the Stabilization and Development Council.

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

Payments for Invisibles

Payments for invisibles may be made freely through the free market; commercial banks make exchange available the first business day after receipt of the application. Buyers of foreign exchange in excess of US$100, however, must indicate the purpose of their purchase. 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 subject to licensing. All proceeds from exports of the public and private sectors must be sold to the Central Bank within 15 days of receipt, with the exception of reasonable amounts deducted for foreign exchange expenditures undertaken to effect the export. The marketing of minerals is a state monopoly; in practice, COMIBOL and the medium-sized mines export their own production and the Mining Bank that of the small mines of the private sector.

Proceeds from Invisibles

Exchange derived from invisibles may be sold in the free market.

Capital

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

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law of December 16, 1971. The law is administered by the National Investment Institute. Investments in petroleum and mining are governed by the Petroleum Code and the Mining Code.

Gold

By virtue of Supreme Decree No. 07771 of August 2, 1966, imports and exports of gold and domestic trading in gold are subject to regulation by the Central Bank. The Decree also designated the Central Bank to purchase, for its use or for export in the form of gold bars, the total national production of gold. 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 a limited amount of gold at the free market price from the foreign-owned company and the Mining Bank, which buys from the smaller producers on behalf of the Central Bank. COMIBOL exports all the gold it produces at the free market price. The foreign-owned 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 1971

March 31. Private firms ceased to be required to deposit their dividends and profits for a minimum period of one year. The requirement had already been relaxed in 1970 when Decree No. 9286 authorized private firms to distribute dividends and profits up to $b 20.000 for each beneficiary.

April 21. Supreme Decree No. 09680 introduced a progressive travel tax requiring outgoing travelers to pay $b 150 for the first and second trips in any calendar year, $b 1,200 for the third trip, $b 6,000 for the fourth trip, and $b 10,000 for any subsequent trips. Nonresident travelers were exempt for the first two trips. The tax replaced the lower travel taxes that were in effect previously.

May 7. Supreme Decree No. 09710 amended Supreme Decree No. 09680 by providing special facilities in respect of the progressive travel tax for personnel of cultural and scientific institutions.

June 3. A reciprocal credit agreement was signed with Ecuador. It came into force on July 1.

June 19. A trade and payments agreement providing for settlements through special accounts was signed with Bulgaria. It came into force immediately.

June 30. Bolivia ratified the Foreign Investment Code of the Andean Common Market.

July 9. The Central Bank required all import payments to be made through commercial banks.

August 16. The Central Bank maintained unchanged its buying and selling rates for the U. S. dollar.

October 1. Supreme Decree No. 09939 repealed the progressive travel tax.

December 3. The travel taxes in force prior to April 21, 1971 were reinstated.

December 16. A new investment code, Law No. 10045, was enacted. It provided incentives for both domestic and foreign investments in Bolivia. The existing Investment Law (Decree No. 07366 of October 20, 1965) was revoked.

December 21. The Central Bank maintained unchanged its buying and selling rates for the U. S. dollar.

Botswana

Exchange and Trade System

Botswana’s currency is the South African Rand. The par value of the rand is 1.09135 grams of fine gold per rand, which corresponds to R 1 = SDR 1.23. The effective parity relationship for the U.S. dollar is US$1 — R 0.75. Exchange rates are based on South Africa’s fixed rates for sterling against rand and on international market rates for the currencies concerned.

Botswana is part of the Sterling Area and also forms part of the rand currency area, which comprises 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. Transfers of funds within the Sterling Area are normally approved if the Botswana authorities are satisfied, inter alia, that Botswana is not being used by residents of other Sterling Area countries as a channel for transfers to non-Sterling Area countries. Where the export of funds to a country outside the Sterling Area is concerned, the authorities coordinate the exercise of their exchange control powers by such consultation with the South African Reserve Bank as is necessary to ensure smooth and mutually satisfactory operation within the rand currency area. Inward and outward capital transfers require exchange control approval, and the relevant rulings depend on whether the applicant is a foreign national temporarily resident, a nonresident, or a resident.

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. 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 1971

August 23. The gold parity of the rand and the existing parity relationship for the U. S. dollar of R 1 = US$1.40 were maintained. The rand was repegged from sterling to the U. S. dollar.

December 21. The par value of the rand was changed from 1.24414 to 1.09135 grams of fine gold. The effective parity relationship for the U. S. dollar became R 1 = US$1.33 or US$1 = R 0.75.

December 22. The rand was repegged from the U. S. dollar to sterling. The Reserve Bank quoted fixed exchange rates for sterling and ceased to quote fixed buying and selling rates for the U. S. dollar.

Brazil

Exchange System

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

Exchange transactions are carried out by the Central Bank, the Bank of Brazil, the authorized banks, and the exchange houses. The Central Bank operates in exchange in Rio de Janeiro and Sao 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 foreign exchange from the banks and to sell exchange to the banks on an adequate basis, for approved transactions; such purchases and sales are made at the official rate. On December 31, 1971, the buying and selling rates quoted by the monetary authorities to the public were Cr$5.600 and Cr$5.635 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). Exchange rates for other currencies (including “agreement currencies” used for settlements with bilateral agreement countries) are based on the U. S. dollar rates in Brazil. With specified exceptions, foreign exchange transactions are subject to brokerage fees, calculated on a sliding scale, which for the rates listed above result in effective rates within 1 per cent on either side of the rates of the monetary authorities.

On the buying side, other effective rates result from the following arrangements: (a) Special regulations apply to coffee exports (see section on Exports and Export Proceeds, below), (b) A 15 per cent contribution (“contribution quota” or quota de contribuição) is levied on proceeds from exports of cocoa beans and cocoa paste, (c) A 5 per cent contribution is levied on proceeds from exports of cocoa derivatives.

On the selling side, a different effective rate arises from the provision of the Foreign Investment Law (see section on Payments for Invisibles, below), which specifies that the sum of profits and dividends effectively remitted to persons and companies resident abroad is subject to a supplementary income tax when the average of actual remittances in any three-year period, from 1963 onward, is in excess of 12 per cent a year of registered capital and reinvestment.

The Bank of Brazil, acting on its own behalf or on behalf of the Central Bank, carries out a 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 are surrendered to the Bank of Brazil. All public sector agencies carry out their exchange operations through the Bank of Brazil. 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 50 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 Sao Paulo; such transactions must be carried out by cable on a spot basis and must be executed within two working days. The “manual market” is conducted mainly by exchange houses, which are not permitted to maintain a sold position and are not entitled to obtain exchange cover from the monetary authorities.

Administration of Control

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

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

Coffee exports are regulated by the Brazilian Coffee Institute (IBC), which is an autonomous body 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.

Prescription of Currency

Prescription of currency is in principle related to the country of origin of imports or the country of final destination of exports, unless otherwise specifically prescribed or authorized. Settlements with payments agreement countries are made in clearing dollars through the relevant agreement account. These accounts are maintained with Bulgaria, Eastern Germany, Greece, Hungary, Israel, Poland, Rumania, and Yugoslavia. There is a reciprocal credit agreement between the Central Bank of Brazil and the Central Bank of Iceland.

On the basis of provisions for the settlement of outstanding balances or transactions under the terminated bilateral agreement with the U. S. S. R., a few payments with that country are still settled in agreement dollars. All trade with Bolivia, except Brazilian exports of coffee and cocoa, is settled in cruzeiros under a border trade agreement. Settlements with other countries with which Brazil has no payments agreements or arrangements are made in U. S. dollars or other convertible currencies. Reciprocal credit agreements providing for settlements through accounts denominated in U. S. dollars have been signed with Argentina, Bolivia, Chile, Colombia, Ecuador, Mexico, and Peru, but those with Bolivia and Chile have not yet come into operation. 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 over US$3,500 and of commodities originating in or shipped from Cuba and Rhodesia is prohibited. All other imports may be grouped into the following two broad categories: (1) imports that are free of any requirement to secure prior administrative documentation, e.g., samples without commercial value, certain educational material, parts and accessories (valued up to the equivalent of US$3,000) 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 180 days. For a number of specified imports in the second category, the import certificate may be obtained after the disembarkation of the commodity in Brazil, e. g., live plants, fish, various minerals, and paper. For certain other imports in the second category the prior approval of CACEX is required; these include goods imported by public bodies, 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.

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. 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.

Special procedures are applicable to certain imports of petroleum and petroleum products and of wheat. For petroleum and specified petroleum by-products, Petrobrás concludes a “global foreign exchange contract” with the Bank of Brazil once every four months for its estimated requirements. The contract is concluded at the official market rate prevailing 10 days prior to the closing of the contract. At the same time, the Bank of Brazil concludes a foreign exchange contract with the Central Bank, to cover its position, for an amount equivalent to the value of the “global contract” at the exchange rate at which the Central Bank sells foreign exchange to commercial banks; the rate applicable is again the one prevailing 10 days prior to the conclusion of the “global contract.” Individual exchange contracts for petroleum shipments made during the life of the global contract are then closed at the exchange rate on which the latter is based. Payment by Petrobrás against such contracts is made in the following manner: 30 per cent of the value of an individual contract is deposited 15 days from the date of shipment, and the remaining 70 per cent 110 days after shipment. The liquidation of each individual contract 110 days after shipment is accompanied by the liquidation, up to an equivalent value, of the exchange contract signed by the Bank of Brazil with the Central Bank; the liquidation of this latter exchange contract also takes place at the exchange rate at which the contract was originally signed. For some commodities, the application of import duties may be affected by the existence of similares nacionais or the establishment of a minimum import price (pauta de valor mínimo) or of a reference price. Certain imports are subject to customs surcharges.

Payments for Invisibles

Payments for current invisibles related to income from foreign capital, royalties, and technical assistance are governed by the provisions of the Foreign Investment Law. In addition to certain restrictions on remittances stipulated in that law, limits are placed, by virtue of an internal Central Bank measure of September 19, 1965, on remittances of all royalties and technical assistance fees (see below). Authorized banks may sell foreign exchange up to the equivalent of US$300 a month for personal remittances abroad. The sale of foreign exchange for travel abroad is subject to special regulations as described below. Payments for other current invisibles require the approval of GECAM, which authorizes remittances freely, subject to the presentation of supporting documents as evidence that a bona fide current transaction is involved.

Sales of foreign exchange to meet personal expenses connected with travel abroad are permitted up to US$1,000 a person a trip, without the prior approval of the Central Bank, on the following terms: (1) in banknotes up to US$100, and (2) in payment orders or travelers checks for the remainder. Applications for purchases of travel exchange in excess of US$1,000 must be submitted to the Central Bank, which considers each case on its merits; amounts in excess of US$1,000, when authorized, may be taken up in the form of payment orders only. Foreign residents in transit in Brazil are permitted to purchase foreign currency up to the equivalent of the amount they sold during the period of their stay in Brazil; however, purchases in excess of 30 per cent of the amount previously sold require the approval of the Central Bank. Each purchase transaction is registered and the records of these operations, which must contain the 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). Remittances are normally authorized in the currency of registration. Remittances of interest on loans and credits and of related amortization payments are permitted freely in accordance with the terms stipulated in the respective contract and recorded in the certificate of registration. A progressive supplementary income tax is levied on such remittances of earnings on foreign capital if their average over a three-year period exceeds 12 per cent of the registered capital and reinvestments. For foreign capital that produces goods or services for luxury consumption, remittances of profits are limited to 8 per cent per annum of the registered capital. Remittances of royalties are not permitted by a branch or subsidiary established in Brazil to its head office abroad when at least 50 per cent of the local firm’s voting capital is directly or indirectly held by the foreign principal firm or when the majority of the firm’s capital in Brazil belongs to the recipients of the royalties abroad. 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. Most exports are free of controls, but exports of certain commodities require prior approval of CACEX, while exports of specified commodities are prohibited. 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 beef are subject to an annual quota. Exports of coffee are subject to authorization by the Brazilian Coffee Institute.

The Brazilian Coffee Institute does not grant the authorization to export coffee unless the sale contract is based on a price per pound that is at least equal to the minimum registration price (in U. S. dollars per pound, f. o. b.) fixed from time to time by the Institute. The minimum registration price varies with the quality of the coffee and the port of shipment. Exporters of green coffee are required to surrender, without compensation, a portion of their export 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 Brazilian Coffee Institute and is fixed in terms of foreign currency; on December 31, 1971 it was US$21.87 per bag. The contribution quota is adjusted whenever the exchange rate is changed in order to ensure that exporters’ returns in cruzeiros, at the minimum registration price, remain unchanged. Brazil makes available annually for purchase by U. S. producers of soluble coffee a specific quantity of green coffee free of the contribution quota (see below). Exporters may convert exchange proceeds, after deduction of the contribution quota, at the prevailing 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 per pound), and (3) the free market rate of exchange. On December 31, 1971 minimum registration prices, depending on the grade of coffee and the port of shipment, were US$0.40, US$0.39, US$0.36, and US$0,345, per pound. The corresponding cruzeiro payments per bag, after deduction of the contribution quota, were Cr$ 170.21, Cr$165.82, Cr$143.64, and Cr$132.55. Thus the exchange rates for proceeds from coffee exports on sales at the minimum registration price were Cr$3,224, Cr$3,221, Cr$3,023, and Cr$2,911 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. At times, sales are permitted to be made at a negotiated discount on the world market price.

Under an agreement signed in April 1971 by the Government of Brazil and the United States, Brazil agreed to make available annually, for purchase by U. S. soluble coffee producers, a specific quantity of green coffee free of the contribution quota. The quantity set for the initial 12-month period, from April 15, 1971, was 560,000 bags. Proceeds of exports of soluble coffee are not subject to the contribution quota and the exporter receives his full proceeds converted at the prevailing free market rate.

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

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

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 for export, particularly the production of manufactures.

Proceeds from Invisibles

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

Capital

Capital inflows in the form of financial loans under Central Bank Resolution No. 63 or SUMOC Instruction No. 289 and other financial loans in foreign currency 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. Otherwise, inward transfers are unrestricted and free of 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 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 and that does not participate directly in capital risk is considered to be a loan. Any loan obtained to purchase capital goods abroad, whether conceded by the manufacturer himself or 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 financed imports and for investments made in the form of goods, registration is made in the currency of the country of domicile of the creditor or investor (or of its head office) or, in special circumstances, in the currency of the country of origin of the goods or of the credit. To register loans that are made in foreign currency it is necessary to certify that the interest rate corresponds to that prevailing in the country of the lender, that the amortization schedule is not disproportionately heavy in the early stages of repayment, and that the prices of the imported goods correspond to the prices of comparable goods in the country of origin. If the terms of financing are approved, CACEX examines the applications for some foreign borrowing in the light of the price and essentiality of the proposed import and of the availability of similares nacionais.

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

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

Moreover, to facilitate the use of foreign credits by Brazilian enterprises, Central Bank Resolution No. 63, as amended, authorizes private commercial and investment banks and the National Bank for Economic Development to take up foreign credits for relending to the domestic private sector for the purpose of financing fixed or working capital. The certificate of registration of the loan for the purposes of the Foreign Investment Law is furnished by FIRCE upon application. The safeguards against excessive use of such credits include limitations on the foreign obligations that each bank may assume (related to the terms of the credit and the size of the bank) and the provision that the ultimate borrower must agree to assume the exchange risk involved in these transactions. At the end of November 1971, under a new program for the management of external debt, the National Monetary Council imposed quantitative limits on the amount of financial loans under Central Bank Resolution No. 63 and Law No. 4131 for which authorization may be given by the Central Bank. Loans with a maturity of less than one year are not permitted to rise beyond the level outstanding on December 1, 1971; to achieve this objective, new loans in any one month are registered in amounts no greater than those maturing in that month. Loans with maturities of one year or more are permitted to rise but 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.

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

Gold

Residents may freely purchase, hold, and sell gold coins in Brazil. Gold mining is ruled by Law No. 4425 of November 2, 1964. Residents other than the monetary authorities and licensed industrial users are not permitted to purchase, hold, or sell gold (other than alloys for dental use) abroad unless special permission is obtained from the Central Bank. SUMOC Instruction No. 27 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., 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 and is free of customs duty. Exports of gold coins and gold bars are prohibited and the export of gold in any other form (except jewelry constituting the personal effects of a traveler) requires an export certificate.

Table of Exchange Rates (as at December 31, 1971)1(Cruzeiros per U. S. dollar)
BuyingSelling
2.911-3.224 (Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price) 2

Coffee exports effected at a price equal to the minimum registration price, for payment at sight.

4.760 (Official Market Rate less 15% Contribution Quota)

Exports of cocoa beans and cocoa paste.

5.320 (Official Market Rate less 5% Contribution Quota)

Exports of cocoa derivatives.
5.600 (“Manual Market” Rate)

Foreign banknotes and travelers checks.

5.600 (Official Market Rate)

All other export proceeds. Other receipts.
5.635 (“Manual Market” Rate)

Foreign banknotes and travelers checks.

5.635 (Official Market Rate)

Imports. Invisibles.3 Capital.

Changes during 1971

During 1971 the exchange rate was again adjusted periodically. By virtue of regulations introduced on February 24, whereby the amount of the contribution quota on coffee exports was to be expressed in foreign currency, that quota was changed each time the exchange rate changed. From February 24 to December 1971 the contribution quota was changed on eight occasions. Minimum registration prices for coffee exports were changed twice—on February 24, when there was a substantial reduction in minimum registration prices to a level consistent with the establishment of the contribution quota denominated in foreign currency, and again on December 8. The price guarantee system for coffee exports was suspended temporarily during February and the basis of calculation of compensation under the system was amended twice, in February and April.

On various dates during the year additions were made to the list of imports with minimum values and to the list of imports for which reference prices had been established.

January 1. Imports of machinery, industrial equipment, tools, and spare parts for approved industrial projects were exempted from customs duty when there was no similar national product available.

January 1. Exports of beef became subject to an annual quota of 70,000 tons. The quota was increased on May 20 and June 8.

January 13. Decree No. 68053 regulated the scheme of entreposto aduaneiro whereby private and public warehouses could be authorized to serve as depositories for imported and domestically produced goods, free of duties and other taxes, for a period not exceeding three years. The scheme also provided for duty-free shops at sea and air ports.

January 13. Decree No. 68054 regulated the scheme under which a firm with an approved production plan could have its production site designated as an entreposto industrial and could import, free of duties and other taxes, raw materials and intermediate goods.

January 29. The reciprocal credit agreements with Mexico and Peru were put into effect.

February 8. The Central Bank commenced foreign exchange operations in São Paulo.

February 9. The buying and selling rates of the monetary authorities were changed from Cr$4.920 and Cr$4.950 per US$1 to Cr$5.000 and Cr$5.030 per US$1, respectively.

February 13. IBC Resolution No. 513 suspended the price guarantee for direct exports of coffee from Brazil.

February 24. Central Bank Resolution No. 173 specified that exporters were required to surrender without compensation a specified amount of foreign exchange per bag of coffee exported (the “contribution quota”); the remaining foreign exchange was to be purchased from the exporter at the current exchange rate. The amount of the contribution quota was, in future, to be announced by the Brazilian Coffee Institute. The requirement that commercial banks pass on to the Central Bank 40 per cent of foreign exchange purchased from coffee exporters was abolished. Under the previous system, the exporter had received a specified quantity of cruzeiros per bag of coffee exported, which did not vary with changes in the exchange rate.

February 24. IBC Resolution No. 517 revoked the provisions of Resolution No. 513 (see above) and reinstituted the system of price guarantees on exports of coffee. The guarantee was to be calculated on the basis of any change in the minimum registration price established for coffee type 6 or better, free of Rio Zone taste. Compensation was to correspond to the difference between the minimum registration price on the date of registration of the operation with the IBC and that on the thirtieth day after shipment.

March 1. Decree-Law No. 1154 established the Brazilian Nomenclature of Goods, based on the Brussels nomenclature, and provided that Brazil’s customs tariff would be adapted to the new nomenclature as from April 30, 1971.

March 12. Under GECAM Circular No. 100, exchange operations were permitted between banks in Rio de Janeiro and banks in São Paulo. Such operations had to be carried out on a spot basis and executed within two working days.

March 12. GECAM Announcement No. 174 stipulated that insurance on imports was required to be channeled through Brazilian insurance companies, either in cruzeiros or foreign currency. Where an importer had difficulty in obtaining insurance cover with domestic firms, approval would be given for insurance to be taken out with foreign firms.

March 16. Decree-Law No. 1158 extended, from 1971 to 1974, the concessions to exporters of manufactured products whereby profits earned on export sales of manufactures could be deducted from taxable income for income tax purposes.

March 22. The buying and selling rates of the monetary authorities were changed from Cr$5.000 and Cr$5.030 per US$1 to Cr$5.080 and Cr$5.110 per US$1, respectively.

March 22. IBC Resolution No. 518 provided for an increase in the contribution quota on coffee exports consequent to the change in the exchange rate on March 22. This action established the norm that the contribution quota would be adjusted each time there was a change in the exchange rate, in order to ensure that the cruzeiro proceeds accruing to exporters remained unchanged.

April 2. An agreement with the United States was signed by which Brazil undertook to make available annually for purchase by U. S. soluble coffee producers a specific quantity of green coffee free of the contribution quota. The quantity of green coffee for the initial 12-month period, from April 15, 1971, was fixed at 560,000 bags. At the same time Brazil agreed to remove, as from April 15, the export tax (expressed in cruzeiros and equivalent to US$0.13 per pound) on sales of soluble coffee to the United States. Shipments under this arrangement were suspended in July but registration was resumed on December 28, 1971.

April 22. Central Bank Resolution No. 182 increased, from 40 per cent to 50 per cent of the ordinary rediscount facilities, the ceiling on commercial banks’ rediscounts for the financing of the production of manufactures for export. The additional rediscount was to be used exclusively for the financing of firms holding certificates of entitlement provided by CACEX with a value not exceeding US$200,000.

April 26. IBC Resolution No. 524 altered the price guarantee system on exports of coffee and reverted to the basis of operation of the system in force prior to February 13, 1971 (see above). Compensation was to be calculated on the basis of the ICO’s indicator price for unwashed arabica and was to represent the largest difference between (1) the nine-day average of prices, in which the fifth day was the date of registration with the IBC; and (2) the moving average price over a period of ten consecutive marketing days beginning on the day of shipment and ending on the thirtieth day after shipment.

April 28. Decree No. 68555 exempted from import duties goods purchased from abroad for use in the publishing industry, provided that the equipment was imported direct from the country of origin and that there was no similar national product.

April 29. Decree-Law No. 1169 extended, to December 31, 1971, the customs surcharge of 100 per cent applied to certain goods under Decree-Law No. 398 of December 12, 1968.

April 30. GECAM Announcement No. 180 provided that commercial banks could refinance the export of capital goods and durable consumer goods contracted for payment at more than 180 days either by means of local currency sources or through lines of credit obtained abroad.

April 30. GECAM Circular No. 111 established that finance for exports could be provided by commercial banks up to the total cruzeiro equivalent of the exchange contract. Previously, such advances were limited to 80 per cent.

May 3. The buying and selling rates of the monetary authorities were changed from Cr$5.080 and Cr$5.110 per US$1 to Cr$5.160 and Cr$5.195 per US$1, respectively.

May 14. CONCEX Resolution No. 68 provided that CACEX could finance the export of manufactured goods on a medium-term and long-term basis through the Export Financing Fund (FINEX). Such financing was to include direct financing of the foreign importer for payment on demand in Brazil, refinancing of sales at terms in excess of 180 days, and supplementary financing for production, market research, and promotion and marketing abroad. Financing of production through FINEX was limited to the manufacture for export of capital goods with a high unit cost and a production cycle in excess of 180 days.

May 19. CACEX Communication No. 343 consolidated existing regulations governing imports and import procedures. It also provided that licenses were no longer required for the import of equipment, tools, spare parts for machinery, and instruments for ships and airplanes, provided the goods were for the sole use of the importer and the f.o.b. value did not exceed US$3,000 (previously US$2,000).

June 2. Decree-Law No. 1171 further extended the tax concessions to exporters of manufactures, to include sales in the domestic market of domestically produced machinery and equipment obtained in competition among national and foreign products. In order to qualify for the tax incentive, such sales had to be made against payment with funds originating in foreign currencies that had been received from a loan of more than five years’ maturity extended by a foreign financial institution or foreign governmental agency.

June 2. New rates of the mining tax, including the tax on gold, were approved, effective January 1, 1972. (Decree-Law No. 1172.)

June 3. GECAM Announcement No. 185 extended the period within which the contribution quota on coffee exports must be paid to the Central Bank from two working days to ten calendar days, as from the date of settlement of the exchange contract.

June 11. The buying and selling rates of the monetary authorities were changed from Cr$5.160 and Cr$5.190 per US$1 to Cr$5.250 and Cr$5.285 per US$1, respectively.

August 5. The buying and selling rates of the monetary authorities were changed from Cr$5.250 and Cr$5.285 per US$1 to Cr$5.370 and Cr$5.405 per US$1, respectively.

August 16. Dealings in foreign exchange were suspended. They were resumed the next day, exclusively in U. S. dollars, and at the August 5 exchange rates. Dealings in most other currencies were resumed on August 23.

September 1. The reciprocal credit agreement with Ecuador was put into effect.

September 13. The buying and selling rates of the monetary authorities were changed from Cr$5.370 and Cr$5.405 per US$1 to Cr$5.470 and Cr$5.505 per US$1, respectively.

September 16. The Minister of Finance announced that rebates would be paid to exporters of manufactures for expenditures on commissions paid abroad, subject to the authorization of the Central Bank; for freight charges on goods carried in Brazilian-owned vessels or vehicles; and for insurance premiums paid on policies with Brazilian-owned insurance companies.

September 16. The Minister of Finance announced that exporters of manufactures could deduct from income tax liabilities their expenses incurred abroad in advertising or promotion of their products, participation in foreign trade fairs, and the maintenance of offices or depots abroad.

September 24. Under Decree-Law No. 1189 exporters of manufactured goods were exempted from import duties and the tax on industrial products (IPI) with respect to imports of goods valued at no more than 10 per cent of the increase in their exports over the previous year. The exemptions applied to machinery and industrial equipment and parts and accessories, raw materials, and intermediate products, effective from January 1, 1972 for a period of three years.

October 1. The reciprocal credit agreements with Argentina and Colombia were put into effect.

November 5. GECAM Announcement No. 196 provided that exports to Latin American member countries of the Inter-American Development Bank, other than Argentina, Mexico, and Venezuela, could be settled in the currency of the country concerned.

November 10. The buying and selling rates of the monetary authorities were changed from Cr$5.470 and Cr$5.505 per US$1 to Cr$5.600 and Cr$5.635 per US$1, respectively.

November 19. Exchange proceeds from exports of cocoa derivatives were again made subject to a contribution quota of 5 per cent. (Central Bank Resolution No. 159 of September 10, 1970 had suspended the contribution quota on exports equivalent to 300,000 bags of cocoa beans.)

November 30. The National Monetary Council imposed quantitative limits on the amounts of financial credits taken up abroad for which authorization could be given by the Central Bank. Financial loans with a maturity of less than one year would not be permitted to rise beyond the level outstanding on December 1, 1971; new loans would be registered in amounts no greater than those maturing in that month. Outstanding loans with a maturity of one year or more would be permitted to rise, but only to the extent that the servicing commitments on Brazil’s total external indebtedness did not depart from the path approved by the National Monetary Council.

December 7. IBC Resolution No. 545 established quotas for exports of coffee in any form registered with the IBC, effective December 8, and covering shipments up to March 31, 1972. The Resolution also increased the contribution quota from US$20.55 to US$21.87 per bag of 60.5 kilograms.

December 15. An agreement among the Brazilian states provided for exemption from the value-added tax (ICM) for goods produced domestically and destined for the installation, enlargement, and re-equipment of industrial enterprises considered of national interest, when such production resulted from competition between national and foreign products and was made against payments of funds originating from convertible currencies that had been derived from long-term loans extended by foreign financial institutions or foreign governmental agencies.

The agreement also provided for the granting of a credit equivalent to the amount of the ICM exemption for those operations benefiting from exemptions from and credits for the IPI.

December 20. The Central Bank suspended quotations on all foreign currencies other than the U. S. dollar; the exchange rates for the U. S. dollar remained unchanged at Cr$5.600-5.635. Authorized banks continued to deal in foreign exchange, basing their quotations on those in the major foreign exchange markets abroad. Quotations were resumed on December 24, except for Argentine pesos, French francs, Japanese yen, Portuguese escudos, Spanish pesetas, and Uruguayan pesos. The quotation of Portuguese escudos and Spanish pesetas was resumed on December 28, and that of the Japanese yen on December 29.

December 27. Decree-Law No. 1199 amended Decree-Law No. 1154 of March 1, 1971 and empowered the Administration to reduce or increase the IPI tax and to modify the basis for its calculation.

December 27. CPA Resolution No. 1204 reduced from 100 per cent to 50 per cent the duty established on some 250 less essential imports by Decree-Law No. 398 of December 1968.

Burma

Exchange Rate System

The par value is 0.186621 gram of fine gold per Burmese Kyat. The central rate is K 5.3487 per US$1, and Burma avails itself of wider margins. On December 31, 1971 the buying and selling rates for sterling of the People’s Bank of the Union of Burma, the sole authorized dealer in foreign exchange, were 7.3402 pence and 7.0171 pence, respectively, per K 1.1 The Bank’s buying and selling rates for currencies other than sterling are based on the kyat-sterling rates and the London market rates for the currency concerned.

Administration of Control

Exchange control is administered by the Exchange Control Board, in accordance with instructions from the Ministry of Finance and Revenue, through the Exchange Control Department of the People’s Bank of Burma. Exports are handled by the Myanma Export-Import Corporation (MEIC or Trade Corporation No. 22). The MEIC also imports goods for the use of the private sector, whose requirements are determined by the Central Trade Council. Government agencies and departments make imports of goods for their own use, including imports under loan and aid agreements, in the name of the MEIC. Most payments for imports are made in accordance with an annual foreign exchange budget drawn up by the Ministry of Finance and Revenue.

Prescription of Currency

Payments to other countries may be made in any foreign currency or by crediting kyats to an External Account in Burma. Receipts must be collected in convertible currencies or to the debit of an External Account in Burma.

Imports and Import Payments

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

Payments for Invisibles

All payments for invisibles are subject to licensing. In general, payments for items connected with foreign trade are allowed automatically, and payments for most other purposes are considered on a case-to-case basis. Payments for membership fees to educational or technical institutions abroad and payments for subscriptions to certain foreign periodicals are as a rule allowed freely. Family remittances are permitted only by foreign municipal workers or foreign technicians employed under contract by the Government, 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 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: 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 People’s Bank of Burma within six months from the date of shipment. When exports are made on an f.o.b. basis, buyers are free to choose the carrier, but exports on a c.i.f. basis are usually shipped by 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. However, no private investments have been made under the Act; since February 15, 1963, when the Government announced a new policy of nationalization, permission has not been granted for any foreign private investment in Burma.

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

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

Gold

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

Changes during 1971

August 23. The effective parity relationship between kyats and pounds sterling was maintained unchanged at K 11.43 = £ stg. 1. As a result, the kyat began to appreciate in terms of the U. S. dollar, the pre-August 15 parity rate for which had been K 4.76190 = US$1.

December 27. A central rate of K 5.3487 per US$1 was established. Burma availed itself of wider margins.

Burundi

Exchange Rate System

The par value is 0.0101562 gram of fine gold per Burundi Franc and the central rate is FBu 87.50 = US$1. The exchange rates quoted by the Bank of the Republic of Burundi for the U. S. dollar, the intervention currency, are fixed at FBu 87.06 buying, and FBu 87.94 selling, per US$1. The Bank quotes buying and selling rates for the Belgian franc based on the fixed rates for the U. S. dollar and the official market rate for U. S. dollars in Brussels; the Bank also quotes buying and selling rates for other specified currencies 1 which are based either on its quoted rates for the Belgian franc and the official market rates for the currencies concerned in Brussels, or, in the cases of the Rwanda franc and the Tanzania shilling, on central rates. Authorized banks must carry out permitted exchange transactions at the buying and selling rates established by the Bank of the Republic of Burundi for currencies quoted by that Bank; they may agree rates freely with their customers for certain other currencies.2

Administration of Control

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

Prescription of Currency

Outgoing payments may be made in any currency; receipts must be obtained in one of the currencies quoted by the Bank of the Republic of Burundi.

Nonresident Accounts

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

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

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are prohibited. All imports except trade samples and merchandise not intended for sale and valued up to FBu 20,000 require licenses; these are issued freely, except for certain used clothing. Applications for licenses must be submitted to the Bank of the Republic of Burundi on a form entitled Import License and Payment Authorization. The approval of such an application constitutes an authorization also to obtain foreign exchange. With certain exceptions, applications for amounts under FBu 100,000 are approved by the authorized banks. Import licenses must be presented to the customs officials when the goods are cleared through customs. The license is valid for a period of seven months starting at the end of the month following that of validation; in special cases, extensions may be granted by the central bank. The number and date of expiration must be entered on the customs clearance form, the Consumption Declaration, a copy of which is then sent to the central bank by the customs office.

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

Payments for Invisibles

All payments for invisibles require approval. Transfers of earnings of foreign nationals are freely permitted upon proof of payment of taxes, up to 20-65 per cent of net annual income, depending on the amount of such income; this regime applies to earnings under a labor contract, to income earned in a profession, and to profits earned by any enterprise operated by an individual or a partnership. Private joint-stock companies may freely transfer their full net profits after taxes to their foreign nonresident stockholders, or, if the stockholders are resident foreign nationals, two thirds of profits after taxes. Persons leaving Burundi permanently are authorized to transfer abroad their holdings of Burundi francs that consist of unremitted savings or of the proceeds of the sale of their personal effects. Transfer of income from rental properties to nonresident owners is permitted after payment of taxes and deduction of normal maintenance expenses; resident owners of foreign nationality may remit two thirds of such income. Residents of Burundi nationality may purchase needed amounts of exchange for foreign travel; they may take out this exchange and up to FBu 2,000 in Burundi banknotes. In addition, residents may freely purchase foreign travel tickets up to reasonable amounts against payment in Burundi francs.

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

Capital transfers by residents require individual authorization, which is rarely given, except in the case of foreign capital on which a repatriation guarantee has been granted. The guarantee is given to foreign exchange imported in 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 at the official rate of the original amount surrendered.

Gold

Dealings in gold coins must be carried out through the central bank. All other private dealing in gold is prohibited. The central bank purchases unrefined gold from domestic producers at FBu 100.00 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 1971

March 1. Specified commodities were exempted from the 100 per cent advance deposit requirement.

August 2. The Rwanda franc was included among the currencies quoted by the central bank.

August 23. The effective parity relationship for the U. S. dollar was maintained at FBu 87.50 = US$1.

December 30. A central rate of FBu 87.50 = US$1 was established. Subsequently, Burundi availed itself of wider margins. The central bank’s fixed buying and selling rates for the U. S. dollar were maintained, however, at FBu 87.06 and FBu 87.94 per US$1.

Cameroon

Exchange System

No par value for the currency of Cameroon has been established with the Fund. The unit of currency is the CFA Franc,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 Equatoriale et du Cameroun (BCEAEC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission charges.

Exchange transactions relating to foreign countries, i.e., countries other than France, Monaco, and the Operations Account countries of the French Franc Area, take place in a dual exchange market, at rates based on the fixed rate for the French franc and the Paris exchange rate for the foreign currency concerned in either the official exchange market or the financial franc market. Settlements eligible for the official exchange market are payments and receipts in respect of imports, exports, and incidental expenses on imports and exports (freight, insurance, etc.), as well as current payments by or in favor of domestic and foreign public authorities and public bodies. All other settlements with foreign countries, as well as transactions in banknotes of foreign countries and banknotes issued by the BCEAEC, take place through the financial franc market at freely fluctuating rates. Exchange rates in the official market are based on par values and central rates; the effective parity relationship for the U. S. dollar in this market is CFAF 255.785 = US$1.

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

Administration of Control

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

Prescription of Currency

Cameroon is an Operations Account country of the French Franc Area, since the BCEAEC maintains an Operations Account with the French Treasury; settlements with France, Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other Operations Account country. 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 or Financial 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. BCEAEC banknotes may be credited to Financial Accounts in Francs when mailed direct to the Yaoundé agency of the BCEAEC 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. The import of rice, flour, and sugar is subject to special procedures. 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 foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 25,000. Import licenses entitle importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France, Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to the approval of the Ministry of Finance. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. For tourist travel, residents traveling to countries other than France, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 200,000 a person a year; any foreign exchange remaining after return to Cameroon must be surrendered. For business travel to foreign countries, there is an allocation of the equivalent of CFAF 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 to 50 per cent of the income declared for taxation purposes. Remittances for current repair and management of real property abroad are normally limited to the equivalent of CFAF 200,000 every two or three years. The transfer of 20 per cent or 50 per cent of the salary of a foreigner working in Cameroon is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within one month of the pay period concerned. Except in the case of foreigners working in Cameroon temporarily, payments to foreign countries of insurance premiums are not permitted if the same type of insurance is available in Cameroon. Resident and nonresident travelers going to foreign countries may take out up to a maximum of CFAF 20,000 in BCEAEC banknotes. Travelers to other countries may take out any amount in BCEAEC banknotes.

Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry, or 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 foreign countries must be domiciled with an authorized bank. Exports to countries in the French Franc Area are free of license. Proceeds from exports to foreign countries must be collected within a month of the date of arrival at their destination and proceeds received in currencies other than those of France or an Operations Account country must be surrendered within a month after collection.

Proceeds from Invisibles

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

Capital

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

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in Cameroon; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over the sale or introduction of foreign securities in Cameroon, the control measures do not apply to relations with France and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account. The provisions of Decree No. 67/DF/365, which introduced these special controls, have been suspended insofar as they are contrary to Decree No. 68/DF/460, on which the present exchange controls are based. All foreign securities, foreign exchange, and titles embodying claims on nonresidents must be deposited with an authorized intermediary, whether they belong to residents or nonresidents.

Direct investments 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: (a) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (b) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Cameroon and countries abroad or between foreign countries, in which these persons or firms take part; (c) loans contracted by registered banks and credit institutions; and (d) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one borrower, their duration does not exceed two years, and the rate of interest does not exceed 6 per cent a year.

Lending abroad by physical and juridical persons, whether public or private persons, whose normal residence or registered office is in Cameroon, or by branches or subsidiaries in Cameroon of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance and must subsequently be reported to him. The following are, however, exempt from prior authorization and are subject only to a report ex post: (a) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (b) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Cameroon and countries abroad or between foreign countries, in which these persons or firms take part; and (c) loans contracted by registered banks and credit institutions.

An Investment Code promulgated in 1960 and revised in April 1964 establishes four categories of fiscal and other benefits which may be granted to both foreign and domestic firms undertaking approved new industrial or agricultural projects in Cameroon. The scope and duration of the benefits vary depending on the size of the investment, the degree to which it helps implement the economic and social development plan, and its importance to national economic growth. Category A permits mainly duty-free entry of capital goods and raw materials required for manufacturing and processing. Under Category B, firms may be entitled to the benefits of Category A and also to exemption for 5 years from the tax on industrial and commercial profits and from various other taxes and fees. Under Category C, large companies may conclude an “establishment agreement” with the Government, under which special conditions for the operations of the company are agreed and the nature and extent of tax concessions are determined. Normally, an “establishment agreement” is valid for 25 years and defines also the legal, economic, and financial guarantees granted to the company, including the assurance of stable conditions for financial transfers and marketing of goods. Category D grants to firms making investments of particular significance to the national economy the benefits of Category C, as well as a guarantee of stability of taxation for up to 25 years.

Gold

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

Changes during 1971

February 22. The general import program for 1971 was announced. All remaining import quotas were abolished. A number of commodities from all sources required a special authorization (autorisation spéciale d’importation); when these goods were imported from countries other than France and the Operations Account countries of the French Franc Area, they required in addition an import license. The import of rice, flour, and sugar remained subject to special procedures. All other imports from countries outside of France and the Operations Account countries continued to require an import license, which was to be issued freely.

August 28. Following the introduction of a dual exchange market in France, similar dual market arrangements were introduced in Cameroon. The exchange rate for the French franc remained fixed at CFAF 1 = F 0.02, and the effective parity relationship for the U. S. dollar in the official exchange market remained at CFAF 277.710 = US$1. The system of nonresident accounts was reorganized. Foreign Accounts in Francs henceforth were related to the official exchange market only, and Financial Accounts in Francs were introduced, which were related to the financial franc market. BCEAEC banknotes mailed to the BCEAEC by foreign correspondents of authorized banks henceforth could be credited only to Financial Accounts in Francs.

August 28. Limits were imposed on authorized banks’ net overall positions in foreign currencies and in francs vis-à-vis foreign countries.

August 28. The exchange allocation for tourist travel was increased from the equivalent of CFAF 100,000 a person a year to CFAF 200,000 a person a year. The allocation for business travel was increased from the equivalent of CFAF 10,000 a day to CFAF 15,000 a day, and from a maximum of CFAF 300,000 to CFAF 450,000 for each trip. The amount of BCEAEC banknotes that travelers could take out was increased from CFAF 10,000 to CFAF 20,000, and the amount taken out was no longer deducted from the foreign exchange allocations for travel.

August 28. Payments for imports from foreign countries could not take place later than three months after customs clearance. (This measure was subsequently revoked.)

December 24. The exchange rate for the French franc was maintained at CFAF 1 = F 0.02. The effective parity relationship for the U. S. dollar in the official exchange market became CFAF 255.785 = US$1. The dual exchange market arrangements were maintained.

Canada

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, 1971 was Can$ 1.0021875 per US$1. Canada has no exchange restrictions on foreign payments. On March 25, 1952, Canada notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Prescription of Currency

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

Imports and Import Payments

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

Exports and Export Proceeds

The surrender of the proceeds 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. For security reasons, the export of certain specified commodities to all destinations except the United States is under export control. All exports to CMEA countries and mainland China are subject to control, although certain nonstrategic goods of Canadian origin may be exported to these destinations under general permit. The export of all goods to Rhodesia is prohibited, except medical supplies, news material, educational equipment and materials for use in educational institutions, and books, magazines, and periodicals.

Payments for and Proceeds from Invisibles

No requirements are imposed on exchange payments for, or exchange receipts from, invisibles. Individual travelers leaving Canada may not take out more than Can$5 in silver coins.

Capital

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

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. Under the Emergency Gold Mining Assistance Act of 1948, all mines receiving subsidies are required to sell their newly mined gold to the Royal Canadian Mint. After refining, this gold is disposed of in the free market to established wholesale dealers by the Bank of Canada, acting as agent for the Government. Exports of gold are subject to the following conditions: (1) exports to CMEA countries and mainland China are included among those exports subject to control and require a license from the Department of Industry, Trade and Commerce; (2) gold not of Canadian origin may only be re-exported to a country other than the United States when covered by a permit issued by the Minister of Industry, Trade and Commerce under the authority of the Export and Import Permits Act; 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 1971

March 10. The Bank of Canada requested banks and financial institutions to regard transfers of Canadian dollar deposits to countries other than the United States as subject to the guidelines covering operations in foreign currencies.

March 23. The Anti-Dumping Act Regulations were amended.

April 24. The Government asked provincial governments and investment dealers to restrict borrowing abroad.

May 25. The Export and Import Permits Act was amended. Quantitative import controls henceforth could be applied in certain circumstances where imports were determined to be causing or threatening serious injury to Canadian producers.

June 22. Measures were announced to restrain imports of certain cotton yarns. After a 60-day period for consultation with supplying countries, these yarns were placed on the import control list.

October 4. The Government established a special fund of Can$80 million upon which Canadian companies meeting certain conditions could draw to offset adverse effects of foreign import surtaxes on employment.

November 30. Certain shirts were placed on the import control list; imports became subject to a global quota.

December 16. In a further step to protect Canadian industry from the effects of foreign import surtaxes, the Government approved an increase in the funding of the general adjustment assistance program. The program’s ceilings on insured bank loans and direct loans to qualifying companies were raised by Can$l50 million and Can$16 million, respectively.

December 20. Canada announced that it intended temporarily to maintain a floating exchange rate and intended to permit fundamental market forces to establish the exchange rate without intervention except as required to maintain orderly conditions.

Central African Republic

Exchange System

No par value for the currency of the Central African Republic has been established with the Fund. The unit of currency is the CFA Franc,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 Equatoriale et du Cameroun (BCEAEC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission charges.

Exchange transactions relating to foreign countries, i.e., countries other than France, Monaco, and the Operations Account countries of the French Franc Area, take place in a dual exchange market, at rates based on the fixed rate for the French franc and the Paris exchange rate for the foreign currency concerned in either the official exchange market or the financial franc market. Settlements eligible for the official exchange market are payments and receipts in respect of imports, exports, and incidental expenses on imports and exports (freight, insurance, etc.), as well as current payments by or in favor of domestic and foreign public authorities and public bodies. All other settlements with foreign countries, as well as transactions in banknotes of foreign countries and banknotes issued by the BCEAEC, take place through the financial franc market at freely fluctuating rates. Exchange rates in the official market are based on par values and central rates; the effective parity relationship for the U. S. dollar in this market is CFAF 255.785 = US$1.

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

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

Administration of Control

The Office of Foreign Financial Relations in the Ministry of Finance supervises borrowing and lending abroad, the issuing, advertising, or sale of foreign securities in the Central African Republic, and inward and outward direct investment. Exchange control is administered by the Minister of Finance, who has delegated some of his approval authority to the BCEAEC,2 to the authorized banks, and to the Postal Administration. All exchange transactions relating to foreign countries must be effected through authorized banks. Import and export licenses are issued by the Directorate of Foreign Trade in the Ministry of Commerce and Industry, except those for gold, which are granted by the Ministry of Mines and Geology.

Prescription of Currency

The Central African Republic is an Operations Account country of the French Franc Area, since the BCEAEC maintains an Operations Account with the French Treasury; settlements with France, Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made in any of the currencies of those countries or in French francs through Foreign Accounts in Francs or Financial 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, related to the official exchange market, and Financial Accounts in Francs, related to the financial franc market.

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are suspended. The import from all countries of enameled household utensils and of textiles of qualities also produced domestically is prohibited, as is the import from Chad of beer and certain soft drinks. The import of many foodstuffs from all sources is not authorized unless local production of these commodities is inadequate. Imports of butter and cheese from all sources, and imports of certain types of footwear and paints not originating in a member country of the UDEAC, may be made only in given ratios to purchases of the local product, and imports of alcoholic beverages from all sources require an import authorization from the Ministry of the Interior, for health reasons. The import of firearms is prohibited irrespective of origin. All other imports from countries in the French Franc Area may be made freely and without an import license. All other imports from EEC countries also are free from quantitative restrictions. Imports from all countries outside the French Franc Area are subject to licensing within the framework of an annual import program of an indicative character, but are not normally restricted or subject to quota, import licenses being required for statistical purposes only.

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

Payments for Invisibles

Payments for invisibles to France, Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. Resident tourists traveling to countries other than France, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 50,000 a year for each person; of this allocation, an amount equivalent to CFAF 25,000 may be taken out in foreign banknotes. Any foreign exchange in excess of the equivalent of CFAF 5,000 remaining after return to the Central African Republic must be surrendered. For business travel to foreign countries, there is a special allocation of the equivalent of CFAF 10,000 a person a day, subject to a maximum of CFAF 100,000 a trip, for travel to certain listed countries; the allocation is CFAF 15,000 a day, up to CFAF 150,000 a trip, for business travel to any other foreign country; of this allocation, an amount equivalent to CFAF 5,000 may be taken out in foreign banknotes. The transfer of the entire net salary of a foreigner working in the Central African Republic is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Travelers going to foreign countries may take out up to a maximum of CFAF 10,000 in BCEAEC banknotes, French banknotes, and banknotes issued by any other institute of issue maintaining an Operations Account with the French Treasury. Travelers to other countries may take out any amount in BCEAEC banknotes.

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

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are suspended. All exports of cotton, coffee, corn, tobacco, peanuts, palm oil, meat, and diamonds require a license. All other exports to countries in the French Franc Area may be made freely. All exports to countries outside the French Franc Area require licenses, which are issued freely. The National Marketing Office for Agricultural Products has a monopoly over the export of agricultural products.

Proceeds from exports to foreign countries must be collected and repatriated within one month from the due date; the latter generally must fall within 180 days of shipment. Export proceeds received in currencies other than those of France or another Operations Account country must be surrendered. All export transactions relating to foreign countries must be domiciled with an authorized bank.

Proceeds from Invisibles

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

Capital

Capital movements between the Central African Republic and France, Monaco, and the other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in the Central African Republic; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over the sale or introduction of foreign securities in the Central African Republic, the control measures do not apply to relations with France and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad 4 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires the prior approval of the Ministry of Finance unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investments in the Central African Republic 5 must be declared to the Minister of Finance unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of direct investments in the Central African Republic must also be declared to the Minister, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in the Central African Republic. Both the making and the liquidation of direct investments, whether Central African Republic investments abroad or foreign investments in the Central African Republic, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent in the capital of a company whose shares are quoted on a stock exchange.

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

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in the Central African Republic, or by branches or subsidiaries in the Central African Republic of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between the Central African Republic and countries abroad or between foreign countries, in which these persons or firms take part; (3) loans contracted by registered banks; and (4) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one borrower. The contracting of loans referred to under (4) that are free of authorization, and each repayment thereon, must be reported to the Office of Foreign Financial Relations within 20 days of the operation, unless the total outstanding amount of all loans contracted abroad by the borrower is CFAF 500,000 or less.

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

Under Law No. 62/355 of February 19, 1963 (as amended by Ordinance No. 69/47 of September 2, 1969) and UDEAC Decision No. 18/65 of December 14, 1965, industrial, tourist, agricultural, and mining enterprises (both foreign and domestic) established in the Central African Republic are granted, under certain conditions, reduced duties and taxes on the import of specified equipment; in addition, certain enterprises receive exemption from direct taxes on specified income.

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

Requests for approval for preferential treatment must be submitted to the Minister of Industry, who is the Chairman of the Investment Commission which considers the application. If a positive decision has been given by the Commission, the proposed authorization is submitted to the Council of Ministers. Preferential treatments A and C are granted by decree issued by the Council of Ministers. Preferential treatment B is granted by an Act of the Board of Directors of the former Equatorial Customs Union upon the recommendation of the Council of Ministers.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in the Central African Republic. Imports and exports of gold from or to any other country require a license, which is seldom granted; in practice, imports and exports are made by an authorized purchasing office. Exempt from prior authorization are (1) imports and exports by or on behalf of the Treasury and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1971

January 1. BCEAEC banknotes, which for some time had not been accepted for credit to nonresident accounts, could again be credited to convertible Foreign Accounts in Francs, provided that they were mailed direct to the BCEAEC agency in Bangui by foreign correspondents of authorized banks. After the introduction of the dual market arrangements (see September entry, below), such banknotes could be credited only to Financial Accounts in Francs.

September. Following the introduction of a dual exchange market in France, similar dual market arrangements were also applied in the Central African Republic, which, however, did not formally issue any new exchange control regulations for this purpose. The exchange rate for the French franc remained fixed at CFAF 1 = F 0.02, and the effective parity relationship for the U. S. dollar in the official exchange market remained at CFAF 277.710 = US$1. The system of nonresident accounts was reorganized. Foreign Accounts in Francs henceforth were related to the official exchange market only, and Financial Accounts in Francs were introduced, which were related to the financial franc market.

December 21. The exchange rate for the French franc was maintained at CFAF 1 = F 0.02. The effective parity relationship for the U. S. dollar in the official exchange market was changed from CFAF 277.710 = US$1 to CFAF 255.785 = US$1. The dual exchange market arrangements were maintained.

Ceylon

Exchange Rate System

The par value of 0.149297 gram of fine gold per Ceylon Rupee, or Cey Rs 5.95237 = US$1, was established in November 1967 and the exchange rate system is based on this rate for the U. S. dollar. Another effective rate of Cey Rs 9.23 per US$1 arises from transactions in Foreign Exchange Entitlement Certificates (henceforth called certificates), which exporters of non-traditional exports (i.e., exports other than tea, rubber, and major coconut products but including instant tea) and most other earners or recipients of foreign exchange are entitled to receive upon surrender of foreign exchange earned. Nonresident travelers when converting foreign exchange into Ceylon rupees at the official rate may also receive either corresponding certificates or their cash value in rupees. The certificates are denominated in Ceylon rupees and are issued with a face value equivalent at the official rate to the foreign exchange surrendered; they are transferable within 30 days of the date of issue and may also be surrendered to the monetary authorities for encashment at a price of Cey Rs 55 per Cey Rs 100 in certificates. Additional certificates are sold by the Central Bank of Ceylon upon demand and at the same price; such certificates are not transferable. Certificates with a face value corresponding at the official rate to the amount of foreign exchange required must be surrendered when purchasing foreign exchange for payments in respect of most imports and most invisibles. The Central Bank deals in certificates for up to four months forward, at Cey Rs 56 selling and Cey Rs 54 buying per Cey Rs 100 certificate; transactions are permitted only when relating to anticipated genuine payments and receipts in foreign exchange to which the certificate requirements or privileges are applicable.

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

Exchange rates for sterling and Indian rupees are fixed by the Central Bank from time to time on the basis of the rates quoted for the U. S. dollar in the London market, and rates for other currencies are determined by commercial banks on the basis of quotations for those currencies in the London market.

Administration of Control

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

Prescription of Currency

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

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

Nonresident Accounts

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

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

Special Accounts may be maintained in Ceylon by Ceylonese workers abroad. Credits to the accounts are limited to the proceeds of remittances from abroad but the accounts may be freely debited for payments within Ceylon and income from the accounts or approved investments purchased from the accounts is exempt from income tax.

Imports and Import Payments

All imports of goods originating in or shipped from Rhodesia are prohibited. Except for imports by the Food Commissioner’s Department and certain minor imports (such as trade samples, gifts, and books up to the value of Cey Rs 50 for each consignment), all imports require individual licenses.

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

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

An authorized dealer may approve an application to remit foreign exchange or to credit a nonresident account when the applicant furnishes, or undertakes to furnish, evidence of importation and the cost of the goods together with a valid importer’s copy and an exchange control copy of the import license. Payment for imports in the B category requires, in addition to the rupee equivalent of the foreign exchange involved, surrender of certificates with a face value equal to the rupee payment; imports in the A category do not require the surrender of certificates. Import licenses for certain imports are subject to a minimum deferred payment term. Letters of credit against such licenses may be opened provided that drafts are drawn payable not earlier than six or twelve months after the shipment in accordance with the terms of the import license.

Payments for Invisibles

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

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

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

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

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

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

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

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

Exports and Export Proceeds

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

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

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

Proceeds from Invisibles

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

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

Capital

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

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

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

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

Repatriates leaving Ceylon for residence in the country of their permanent domicile are permitted, at the time of their departure, to transfer assets representing their retirement funds and a reasonable amount of savings as determined by the Government from time to time. For persons who have been in business in Ceylon, the capital they originally brought into the country plus a reasonable amount of savings are allowed to be transferred, subject to certain limits. Transfer of personal assets and of income thereon requires surrender of certificates; exempt are (1) balances on provident and pension funds held abroad and representing contributions in respect of contractual obligations entered into before May 6, 1968, (2) provident and pension funds held in rupees in Ceylon, and (3) the value of insurance policies held abroad and taken out before May 6, 1968. Special provisions, governed by an agreement between Ceylon and India, apply to Indian families returning to India.

Gold

Imports and exports of gold in any form require licenses issued by the Controller of Imports and Exports with the approval of the Central Bank. Such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities. The People’s Bank is the sole importer of gold. It sells gold in small quantities to licensed craftsmen and jewelers at the equivalent of US$84 an ounce. Small quantities are also sold to hospitals. Commercial imports of jewelry and of other articles containing gold are severely restricted.

Changes during 1971

January 18. Import duty rebates ranging from 3 per cent to 50 per cent of the f.o.b. value were permitted for specified industrial exports.

January 21. The Foreign Exchange Amnesty Act was passed (Act No. 1 of 1971). Under the terms of the Act, the repatriation of funds held abroad without exchange control permission by residents was free of both income tax and exchange control inquiries. The certificate rate was applicable to the funds so remitted to Ceylon.

February 3. Authorized dealers were required to refer for prior approval applications for letters of credit against import licenses providing for deferred payment terms where the rate of interest payable exceeded the bank rate in the country of supply by more than 2 per cent per annum.

February 6. A scheme of “special accounts” was introduced in order to mobilize small savings from Ceylonese workers abroad whereby commercial banks were permitted to open such accounts when foreign exchange remittances were received. These remittances continued to be eligible for Foreign Exchange Entitlement Certificates. Accounts could be maintained in local currencies as fixed deposits or savings deposits, and they were eligible for interest at the rate applicable to such deposits. Funds in the accounts could also be invested or disbursed locally without limitation. Income accruing from these accounts and investments made through these accounts with the approval of the Central Bank were exempt from income tax.

February 25. All applications for foreign exchange for the import of nylon and other synthetic yarn required the prior approval of the Controller of Foreign Exchange.

March 9. The right to export gems was vested exclusively in the newly established State Gem Corporation.

March 9. An act providing for the establishment of a state-owned shipping firm, the Ceylon Shipping Corporation, was passed.

March 17. All exports to Egypt through the Ceylon-Egypt clearing account required letters of credit established by banks in Egypt and confirmed by the Central Bank of Ceylon.

March 24. The Exchange Control Act was amended (Act No. 17 of 1971). Possession of foreign currency by any person without the permission of the Central Bank was prohibited. A new part was introduced in the Act containing provisions of control of foreign assets held by persons or residents in Ceylon. In particular, the opening, maintaining, and closing of accounts without the permission of the Central Bank was prohibited. Also, all persons or residents in Ceylon who held or acquired foreign assets were required to give full particulars relating to such assets and not to dispose of such assets without the permission of the Central Bank.

April 30. Authorized dealers were permitted to approve applications for the export of crepe rubber, provided the export was licensed by the Commissioner of Commodity Purchase.

April 30. The requirement of minimum deferred payments terms for private sector imports of industrial raw materials, machinery spare parts, and packing materials was raised from 6 months to 12 months for certain import payments. Also, the limit of Cey Rs 50,000 on spot payments for such imports was revised. Spot payments were permitted up to Cey Rs 200,000 for raw materials, Cey Rs 5,000 for machinery spare parts, and Cey Rs 10,000 for packing materials. Payments in excess of these limits were subject to 6-month or 12-month terms. Payments for machinery spare parts rials, payments from Cey Rs 200,000 to Cey Rs 900,000 were subject to 6-month terms and thereafter to 12-month terms. Payments for machinery spare parts and packing materials in excess of Cey Rs 5,000 and Cey Rs 10,000 were subject to 12-month terms. Import licenses were issued in accordance with these payments requirements. Letters of credit for up to 12 or 18 months were permitted against import licenses subject to 6-month or 12-month payments terms, respectively, provided that drafts were made payable not earlier than the prescribed periods.

July 1. Allocations of foreign exchange for imports of books and subscriptions to magazines and periodicals for personal use were permitted up to Cey Rs 50 and Cey Rs 100, respectively, for each applicant.

July 18. Exporters were required to obtain the approval of the Director of Commerce before entering into a contract of sale with the bilateral payments countries, and to ensure that the goods would not be resold or transshipped either in whole or in part to any country other than authorized.

August 23. The Ceylon rupee remained pegged to sterling at the pre-August 15 rate. The exchange rates for the U. S. dollar and the Indian rupee also were maintained at pre-August 15 levels, as was the price of foreign exchange entitlement certificates.

September 30. Remittances by shipping companies and airline agents in Ceylon were permitted only in U. S. dollars.

November 8. The Ceylon rupee was pegged to the U. S. dollar at the par value rate of Cey Rs 5.95237. The buying and selling spot rates for pounds sterling and Indian rupees were to be quoted by the Central Bank on the basis of London market quotations for the U. S. dollar. Exchange rates for other currencies were to be determined by commercial banks on the basis of the Central Bank’s rates for sterling and London market quotations for these currencies.

November 10. Remittances of foreign companies in respect of head office expenditures were disallowed. However, profits of foreign companies, including any amounts that otherwise might have been earmarked for head office expenditures, might be transferred in full, subject to payment of company taxes.

November 19. The requirement was withdrawn that remittances of collections of foreign-owned vessels and aircraft to the owners by their agents in Ceylon be effected in U. S. dollars.

December 20. The exchange rate system established on November 8 and exchange regulations and practices were maintained unchanged.

Chad

Exchange System

No par value for the currency of Chad has been established with the Fund. The unit of currency is the CFA Franc,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 Equatoriale et du Cameroun (BCEAEC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission charges.

Exchange transactions relating to foreign countries, i.e., countries other than France, Monaco, and the Operations Account countries of the French Franc Area, take place in a dual exchange market, at rates based on the fixed rate for the French franc and the Paris exchange rate for the foreign currency concerned in either the official exchange market or the financial franc market. Settlements eligible for the official exchange market are payments and receipts in respect of imports, exports, and incidental expenses on imports and exports (freight, insurance, etc.), as well as current payments by or in favor of domestic and foreign public authorities and public bodies. All other settlements with foreign countries, as well as transactions in banknotes of foreign countries and banknotes issued by the BCEAEC, take place through the financial franc market at freely fluctuating rates. Exchange rates in the official market are based on par values and central rates; the effective parity relationship for the U. S. dollar in this market is CFAF 255.785 = US$1.

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

Administration of Control

The Directorate-General of the Budget and the Public Accounts in the Ministry of 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 Finance, except those for gold. (Early in 1972, the Directorate-General mentioned above was abolished and the Office of the Minister of Finance became responsible for the exchange controls.)

Prescription of Currency

Chad is an Operations Account country of the French Franc Area, since the BCEAEC maintains an Operations Account with the French Treasury; settlements with France, Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with the U. S. S. R. are made through special accounts established in accordance with a payments agreement. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through Foreign or Financial Accounts in Francs.

Nonresident Accounts

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

Imports and Import Payments

Imports from all sources of wheat, wheat flour, and sugar require licenses. All other imports from countries in the French Franc Area and from EEC countries other than France may be made freely. All imports from non-EEC countries outside the French Franc Area are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by a joint French-Chadian Committee.

The import program contains global quotas for imports from non-EEC countries outside the French Franc Area and a special quota for imports of cotton textiles from countries with abnormal competitive advantages. Imports from Rhodesia and South Africa are prohibited.

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

All import transactions 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 Directorate-General of the Budget and the Public Accounts.

Payments for Invisibles

Payments for invisibles to France, Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when bona fide. For tourist travel, residents traveling to countries other than France, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip; 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 Directorate-General of the Budget and the Public Accounts 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 BCEAEC banknotes. Travelers to other countries may take out any amount in BCEAEC banknotes. A resident going abroad for less than 24 hours may not take out more than CFAF 5,000 in CFA banknotes.

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

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited. All exports to non-EEC countries outside the French Franc Area require licenses. Specified exports to the Libyan Arab Republic, Nigeria, and the Sudan may be made through compensation transactions.

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

Proceeds from Invisibles

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

Capital

Capital movements between Chad and France, Monaco, and other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in Chad by residents or nonresidents must be deposited with authorized banks in Chad.

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

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

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

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

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

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

Gold

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

Changes during 1971

March 17. Chad informed the GATT that it had ceased to invoke Article XXXV of the GATT in respect of Japan.

August 18. Limits were imposed on authorized banks’ net overall positions in foreign currencies and in francs vis-à-vis foreign countries.

September 3. Following the introduction of a dual exchange market in France, similar dual market arrangements were introduced in Chad. The exchange rate for the French franc remained fixed at CFAF 1 = F 0.02, and the effective parity relationship for the U. S. dollar in the official exchange market remained at CFAF 277.710 = US$1. The system of nonresident accounts was reorganized. Foreign Accounts in Francs henceforth were related to the official exchange market only, and Financial Accounts in Francs were introduced, which were related to the financial franc market. BCEAEC banknotes mailed to the BCEAEC by foreign correspondents of authorized banks henceforth could be credited only to Financial Accounts in Francs.

September 3. The exchange allocation for tourist travel was increased from the equivalent of CFAF 150,000 a person a trip, for two trips a year, to CFAF 175,000 a person a trip. The maximum amount of the special allocation for business travel was increased from CFAF 300,000 to CFAF 400,000.

September 3. The exchange allocations for transfers by emigrants and transfers of dowries were increased.

September 3. Residents acquiring the status of nonresidents after residing abroad for more than two years could transfer all their assets abroad.

September 3. The forward cover facilities for imports were improved.

October 19. Imports from foreign countries required domiciliation when their value was CFAF 100,000 or more.

December 24. The exchange rate for the French franc was maintained at CFAF 1 = F 0.02. The effective parity relationship for the U. S. dollar in the official exchange market became CFAF 255.785 = US$1. The dual exchange market arrangements were maintained.

Chile

Exchange Rate System

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

There are two exchange markets: the official market (known as the banking market) and the brokers’ market. Only the Central Bank, the Banco del Estado, authorized commercial banks, and other persons or entities authorized by the Central Bank may operate in these markets; brokers are not at present permitted to operate in either market and only the Central Bank, the Banco del Estado, and certain government-owned commercial banks operate in the brokers’ market. There are multiple exchange rates in both markets. Outward transfers through both markets are controlled. Through the banking market pass government transactions, proceeds from exports, receipts from a few invisibles, and payments for imports and for some commercial invisibles. Most invisibles and some capital transactions pass through the brokers’ market. In general, capital transactions are entitled to the same exchange market treatment on exit as on entry. However, the servicing and withdrawal of some capital received through the brokers’ market may be effected through the banking market. Transactions in the banking market are for both spot and forward delivery at the same exchange rate; for imports of most commodities, forward exchange purchases are mandatory and export proceeds may be sold forward. For both types of transaction, settlement in escudos is effected at the time the exchange contract is negotiated. Transactions in the brokers’ market are for spot delivery only. There is some restriction on the availability of exchange in that the Central Bank sells exchange to the commercial banks only for forward delivery (70 days on December 31, 1971).

On December 31, 1971 the buying rates in the banking market were E° 15.80 per US$1 for export proceeds, exchange accruals to the Government and public entities, and receipts from specified invisibles, and E° 19.00 per US$1 for certain capital receipts and receipts from specified other invisibles. The selling rates in the banking market (including banking commissions) were E° 12.23 per US$1 for payments for imports of foodstuffs and hydrocarbons and related current invisibles; E° 15.80 per US$1 for government transactions; E° 15.83 per US$1 for payments for imports of indispensable raw materials and intermediate goods and related invisibles, as well as for payments for specified other invisibles; E° 19.04 per US$1 for payments for imports of machinery and spare parts, other raw materials, and manufactured products, and invisibles related to these imports, as well as for profit and dividend remittances, and for interest, amortization, and capital repatriation on nonofficial loans and investments which have entered through the banking market and for payments for specified other invisibles; and E° 25.05 per US$1 for payments for imports of luxury goods and related invisibles.

The rate in the brokers’ market (including banking commissions) was E° 28.00 buying, and E° 28.06 selling, per US$1; the selling rate, however, is subject to certain exchange taxes. Purchases of exchange in the brokers’ market by nonbanks for payments and remittances that may be effected without specific authorization (in the form of a solicitud de giro) from the Central Bank are subject to a 53.15 per cent exchange tax. The retransfer through the brokers’ market of foreign capital and interest and profit remittances thereon are subject to a basic exchange tax of 18.15 per cent plus a variable exchange tax equal to the percentage increase in the consumer price index from August 1970 to the day before payment is effected. Purchases of exchange in the brokers’ market for remittances subject to prior authorization (solicitud de giro) are subject to an exchange tax of 0.15 per cent.

A mixing rate is applied to Chilean shipping companies’ receipts of foreign exchange, 85 per cent having to be sold in the banking market and 15 per cent in the brokers’ market.

Administration of Control

The Foreign Trade Department and the Department of International Transactions of the Central Bank of Chile are in charge of the operation of the exchange control system. Some functions of the Foreign Trade Department have been delegated to local commissions in important cities, and the supervision of copper exports and all imports of the copper industry has been delegated to the Copper Corporation, which is supervised by the Central Bank and the Superintendency of Banks. Imports for the public sector are supervised by the interministerial Import Committee for the Public Sector, on which the Central Bank is also represented.

Prescription of Currency

Settlements with Argentina, Bolivia, Colombia, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made through accounts maintained with each other by the Central Bank of Chile and the central bank of the country concerned, within the framework of the LAFTA multilateral clearing system. For imports, payment in U. S. dollars is permitted for goods of any origin and is mandatory for imports from the United States and imports from Latin American countries with which reciprocal credit agreements are in force; payment in sterling is permitted for imports from the United Kingdom, Commonwealth countries, and socialist countries (including Cuba); Canadian dollars, Belgian francs, Swiss francs, deutsche mark, Netherlands guilders, and Japanese yen may be used to pay for imports from the country issuing the currency concerned. Export proceeds may be received in U. S. dollars only when stemming from sales to the United States or to Latin American countries with which reciprocal credit agreements are maintained. Proceeds from exports to other countries must be received in Canadian dollars, Netherlands guilders, Belgian francs, Swiss francs, pounds sterling, deutsche mark, or Japanese yen. Certain payments and transfers to South Africa are prohibited. Certain settlements with Poland are made through special accounts established under a bilateral payments agreement.

Imports and Import Payments

Imports from Rhodesia are prohibited.

All imports, except those of the large mining companies and imports of defense materials, must be registered with the Central Bank. Imports are divided into four categories (Lists A to D) according to which of the four selling rates in the banking market applies. There is a List of Permitted Imports; commodities not appearing on it are prohibited unless imported (for some of these goods) through a “free port” zone (see below) or unless they are on Chile’s National List negotiated within LAFTA, or are imported from Andean Pact countries. A wide range of commodities may be considered as effectively prohibited for private importation since, although on the List of Permitted Imports, they are subject to an advance deposit requirement of 10,000 per cent unless they are imported by public sector agencies, originate in Andean Pact countries, are imported under a special regime, or are on the National List and originate in a LAFTA country; the Executive Committee of the Central Bank, however, may grant specific exemptions. Goods may normally be imported in any amount. The Central Bank, however, is empowered to reject import applications (registrations), except those for goods covered by special laws, for any item on the Permitted List if the total value of applications for imports in the previous month exceeds by more than 5 per cent the average monthly registrations for imports during the past 12 months; when applications are so rejected, the Central Bank must reject registration for all commodities listed under the same customs tariff heading. This power has not been invoked since January 1966.1 Imports of goods not on the permitted list that are imported into “free port” zones, such as Arica, Magallanes, Aysén, and Chiloé, may not be shipped to other parts of the country unless they are first processed or assembled in the “free port” zone. Certain commodities (including automobiles and most trucks) may only be imported into a “free port” zone for use in that zone.

Importers may not purchase exchange until 50 days after the goods have been shipped. For specified commodities, importers must, between 50 and 60 days after shipment, purchase forward exchange corresponding to the full registered value of the import against immediate cash payment in local currency once the goods have been cleared through customs; these goods may not be paid for before customs clearance. For supplementary lists of imports there are extended mandatory exchange cover periods of 120, 210, 240, and 360 days.

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

Payments for Invisibles

All payments for invisibles are subject to exchange control. Payment through the banking market is permitted for a few commercial invisibles; all other invisibles are settled through the brokers’ market. Payments through the brokers’ market may be effected up to established limits for the following purposes: for tourist travel (in addition to fares; all limits 2 are per person per journey, with a 30-day waiting period between trips, and subject to an annual limit of US$540 for all travel exchange taken up by any one person; the allocations for children under seven are half the amounts listed below, and all allocations are subject to tax at a rate of 53.15 per cent) the equivalent of US$60 for travel to destinations within 500 kilometers of the Chilean border (defined to include all of Argentina except the cities of Buenos Aires, Bahía Blanca, and Comodoro Rivadavia) subject to a maximum of US$15 a day; the equivalent of US$180 for travel to other parts of Latin America (defined as including the Bahama Islands, Curaçao, Jamaica, and Puerto Rico), with a maximum of US$20 a day; the equivalent of US$360 for travel to Canada and the United States, with a maximum of US$30 a day; the equivalent of US$540 for travel to countries outside the Western Hemisphere, with a maximum of US$30 a day; for family remittances US$100 a month for each beneficiary, with an annual maximum of US$600 for each beneficiary; for purchases of books US$50 a person a month; for subscriptions to periodicals US$200 a person a year; and for student registration fees US$50 a person a year. Banks may sell up to US$1,200 a person a year for payment of insurance premiums contracted prior to November 20, 1970 in foreign currency with national insurance companies or foreign companies authorized to operate in Chile. Transfers of other insurance premiums require the approval of the Central Bank, which acts on the advice of the Superintendent of Insurance. Payments for medicine and pharmaceutical products may only be made provided that the product in question is not available in Chile. Transfers in excess of these limits, and those in respect of other transactions, require the prior authorization of the Central Bank and are not normally approved. All purchases of exchange in the brokers’ market, except those for which the Central Bank has approved a transfer application (solicitud de giro), are subject to a tax of 53.15 per cent; the only documentation required for invisibles that are neither covered by the approval authority delegated to authorized banks nor by a solicitud de giro is an application form (carta petición) addressed to the Central Bank through an authorized bank. Residents of Chilean nationality and residents of foreign nationality who have spent more than a year in Chile, when traveling to countries outside Latin America, are required to pay a travel tax of E° 360 a trip. Resident travelers may take out 20 per cent of their travel allocation in Chilean banknotes, subject to registration of their exportation with the Central Bank. The export of Chilean banknotes by nonresident travelers is prohibited.

Exports and Export Proceeds

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

All exports must be registered with the Foreign Trade Department of the Central Bank and the sale proceeds of exports are subject to surrender requirements. Exporters, when submitting an export registration to the Central Bank, are required to furnish at the same time a power of attorney entrusting the Central Bank or any authorized commercial bank with the collection of export proceeds.

Most export proceeds subject to surrender requirements must be repatriated within 90 days from the date of shipment, and surrendered within 10 days thereafter, but for specified goods this period is extended to between 120 days and 480 days. Export proceeds sold on a spot basis must be transferred to the Central Bank; other proceeds may be sold forward between 60 days before shipment and 10 days before expiration of the obligatory surrender period.

By virtue of Law No. 16528 of 1966, many minor exports receive refunds of taxes and other charges included in their cost of production.

Proceeds from Invisibles

Receipts of exchange from news and communications agencies’ fees, from specified transactions by national insurance companies, from commissions, from reimbursements of insurance claims, and from credit granted in foreign currency by the commercial banks must be sold in the banking market. Exchange received in payment for personal services rendered by residents must be surrendered at the brokers’ market rate; however, foreign nationals who have been resident in Chile less than two years may retain 50 per cent of such remittances in foreign currency accounts with the Banco del Estado. Exchange derived from other invisibles, including tourism, may be sold in the brokers’ market or retained. The delivery by banks to residents of foreign exchange transferred from abroad is subject to prior Central Bank authorization. Travelers must declare all foreign currency held on entry. Tourists must change into local currency a minimum of US$10 for each day of stay (US$5 for minors); tourists from neighboring countries must change into local currency at least US$8 a day (US$4 for minors) if their stay exceeds seven days. Upon exit only escudos in excess of the minimum daily quotas may be reconverted into foreign currency. The import of Chilean banknotes is subject to a 10,000 per cent prior import deposit requirement.

Capital

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

Foreign capital may enter Chile under one of three different arrangements, depending on the purpose and the type of the investment. All new foreign borrowing or refinancing of existing credits by commercial banks requires prior approval by the Central Bank.

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

Such capital may only be repatriated through the brokers’ market with the prior approval of the Central Bank. The same is true for the transfer of interest and profits on such capital. All capital repatriation under Article 14 of the above Decree is subject to an exchange tax consisting of a basic tax of 18.15 per cent plus a variable tax equal to the per cent increase in the consumer price index since August 1970 to the day before the retransfer is effected. Repatriation is only allowed in accordance with the amortization schedule established upon registration.

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

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

Decision No. 24 of the Cartagena Agreement is considered to override any contrary provisions of Decree-Law No. 258 and of Articles 14 and 16 of Decree No. 1272.

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 industrial users in the form of Chilean gold coins at E° 50 a gram. 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 1971

During 1971 the scope of the 10,000 per cent prior import deposit was gradually increased, to cover an estimated minimum of 60 per cent of total 1971 import value. Ad hoc exemptions from the requirement were granted, however, for certain private sector import transactions. The Central Bank’s forward delivery period for sales of exchange to commercial banks in respect of import payments remained at 56 days until mid-1971, when the period was progressively extended to 65 days and finally to 70 days.

January 1. Law No. 17382 of October 30, 1970 came into force. It established a tax of 8 per cent on the customs value of goods imported through Chiloé. The law also created new import privileges for the provinces of Chiloé, Aysén, and Magallanes.

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

January 18. Commercial banks henceforth required prior authorization by the Central Bank to contract credit or refinancing abroad, to pay in foreign currency or in documents expressed in foreign currency any kind of draft or remittance received from abroad, and to pay or deliver foreign currency or documents expressed in foreign currency in connection with total or partial withdrawals of deposits in foreign currency.

March 9. The tax on purchases of exchange in the brokers’ market was raised from 15.15 per cent to 33.15 per cent. Exempt from this tax were the acquisition of foreign exchange by the Central Bank and commercial banks for their own account, purchases of exchange for student maintenance abroad, and purchases of exchange for the retransfer abroad of foreign capital and loans registered with the Central Bank (aporte de capital).

March 12. Retransfers abroad of capital which entered the country in the form of foreign exchange (aporte de capital) became subject to a basic tax of 18.15 per cent plus a variable exchange tax equal to the percentage increase in the consumer price index between August 1, 1970 and the date before the day on which the retransfer of funds was effected.

April 6. Exchange allocations for travel abroad within 500 kilometers of the Chilean border were reduced from US$100 (a maximum of US$25 a day) to US$60 (US$15 a day) a person a trip, and from US$300 (US$30 a day) to US$200 (US$20 a day) a person a trip for travel to other parts of Latin America.

April 12. Regulations were issued allowing imports of automobile parts only to the extent that they were offset within a specified period by equivalent exports made by the importing firm.

April 19. Persons receiving an exchange allocation for medical expenses abroad were required to open a bank guarantee in favor of the Central Bank in the value of 200 per cent of the medical expenditure authorized. Unless the expenditure was satisfactorily documented after return to Chile, the bank guarantee was forfeited.

April 28. A large number of commodities were made subject to the 10,000 per cent prior import deposit, except when they were of LAFTA origin.

April 29. Henceforth only the Central Bank, the Banco del Estado, and certain commercial banks owned by the State were permitted to effect exchange transactions in the brokers’ market.

May 12. The proceeds from exports to the Federal Republic of Germany henceforth had to be received in deutsche mark.

May 20. For purposes of travel exchange allocations, the area within 500 kilometers of the Chilean border was defined to include all of Argentina, except the cities of Buenos Aires, Bahça Blanca, and Comodoro Rivadavia. Excess exchange allocations resulting from travel to destinations other than previously indicated or from trips shorter than anticipated had to be sold to the commercial banks.

June 30. Decree No. 482 of the Ministry of External Affairs was published in the Official Gazette; it approved Decisions Nos. 24 and 37 of the Andean Group’s Cartagena Agreement.

July 11. By virtue of a constitutional amendment, the large copper mines were nationalized.

July 14. The total amount of travel exchange allocations that could be taken up by any resident not receiving a salary in foreign currency was limited to US$540 a year. The travel exchange allocation for travel to Latin American destinations not within 500 kilometers of the Chilean border was reduced from US$200 (US$20 a day) to US$180 (US$20 a day) a person a trip; the travel exchange allocations for travel to Canada and the United States were reduced from US$480 (US$30 a day) to US$360 (US$30 a day); the travel exchange allocation for travel to non-Western Hemisphere destinations was reduced from US$720 (US$30 a day) to US$540 (US$30 a day).

July 26. The exchange rate in the brokers’ market was depreciated from E° 14.33 per US$1 to E° 28.00 per US$1 (buying).

July 26. The Central Bank increased the domestic price of gold from E° 23 to E° 50 a gram.

July 26. Henceforth, 85 per cent of the foreign exchange earnings of Chilean shipping companies had to be sold in the banking market and 15 per cent in the brokers’ market. Previously, these earnings were sold entirely in the banking market.

July 28. To obtain exchange allocations for medical payments abroad a bank guarantee note was required equivalent to between 100 per cent and 200 per cent of the escudo value of the foreign currency authorized.

July 28. The Central Bank approved the terms of a new bilateral payments agreement with Poland. (Settlements through the special accounts established under the agreement became mandatory with the issuance of Circular No. 1656 on February 17, 1972.)

August 5. The Central Bank set standard periods within which importers must enter into contracts with commercial banks for the deferred delivery of foreign exchange for import payments. These maximum periods ranged from 60 days for most commodities to 360 days for certain essential goods. Importers could not enter into such contracts before 50 days had elapsed after the date of shipment, and presentation of the customs clearance certificate was required.

August 23. The rates for the U.S. dollar in both exchange markets were maintained unchanged.

August 25. A large number of commodities became subject to the 10,000 per cent prior import deposit.

August 26. Export proceeds henceforth could be received in U.S. dollars only when stemming from sales to the United States or to Latin American countries with which Chile maintained reciprocal credit agreements. Proceeds from other exports had to be received in Canadian dollars, Netherlands guilders, Belgian francs, Swiss francs, pounds sterling, deutsche mark, or Japanese yen.

August 30. Except under special circumstances, banks’ sales of exchange in the brokers’ market were limited to U. S. dollars. For travel to Latin America, however, the currency portion of the travel exchange allocation could be sold in the currency of the country of destination.

September 6. Escudo credit granted by Chilean banks to foreign-owned companies had to be repaid within 12 months. Such lending became subject to prior approval by the Central Bank of the borrowing company’s financial planning.

September 9. All imports for the automobile industry became subject to the 10,000 per cent prior import deposit.

September 13. Tourists entering Chile were required to declare all foreign currency held on entry and to change into local currency a minimum of US$10 for each day of stay for persons 18 years of age or older (US$5 a day for persons under 18 years). Upon exit, only escudos in excess of the prescribed minimum conversion amounts could be reconverted into foreign currency.

September 23. Tourists from neighboring countries were required to change into local currency at least US$8 a day (US$4 a day for minors), if their stay exceeded seven days. For shorter stays these amounts remained US$10 and US$5, respectively.

September 29. The Central Bank issued new regulations concerning the surrender requirements for export proceeds. When submitting an export registration to the Central Bank, exporters were required to furnish a power of attorney entrusting the collection of the export proceeds to the Central Bank or any authorized commercial bank.

September 30. The prescription of currency for imports was revised. Payment in U. S. dollars was permitted for imports of any origin and was mandatory for imports from the United States and imports from Latin American countries under reciprocal credit agreements; pounds sterling could be used for imports from the United Kingdom, Commonwealth countries, and socialist countries (including Cuba); Canadian dollars, Belgian francs, Swiss francs, deutsche mark, Netherlands guilders, and Japanese yen could be used for imports from the country issuing the currency concerned.

October 22. A large number of commodities were added to the list of permitted imports; most were made subject to the 10,000 per cent prior import deposit. A large number of other commodities were eliminated from the List of Permitted Imports and certain other items on the List of Permitted Imports were redefined; most of the latter also became subject to the 10,000 per cent prior import deposit.

October 28. Foreign exchange for payments abroad in respect of international communications charges had to be purchased in the brokers’ market.

October 28. A large number of commodities became subject to the 10,000 per cent prior import deposit.

October 30. Decree No. 1742 of October 5, 1971 (published on October 29) made imports of domestic banknotes subject to a customs duty of 1,000 gold pesos per gram net.

October 30. Imports of Chilean banknotes became subject to the 10,000 per cent prior import deposit; both imports and exports of Chilean banknotes became subject to registration at the Central Bank.

December 6. The foreign exchange markets in Chile were closed. They reopened on December 10.

December 10. The exchange rates in the banking market (previously E° 12.21 buying, and E° 12.23 selling, per US$1) were depreciated, while those in the brokers’ market remained unchanged at E° 28.00 buying, and E° 28.06 selling, per US$1. Exchange operations in the banking market were conducted at the following exchange rates. On the buying side, all export proceeds, all exchange accruals to the Government and public entities, and specified receipts from invisibles were settled at E° 15.80 per US$1; capital receipts under Articles 15 and 16 of Decree No. 1272 and under Decree-Law No. 258 (when channeled through the banking market) and specified receipts from invisibles were settled at E° 19.00 per US$1. On the selling side, payments for imports of foodstuffs and hydrocarbons and for invisibles related to such imports were settled at E° 12.23 per US$1; government transactions were settled at E° 15.80 per US$1; payments for imports of indispensable raw materials and intermediate goods and for invisibles related to such imports, as well as payments for specified other invisibles, were settled at E° 15.83 per US$1; payments for imports of machinery and spare parts, raw materials not considered indispensable, and certain manufactured products, and payments for invisibles related to all these imports, as well as profit and dividend remittances, interest, amortization and repatriation of nonofficial loans and investments which had entered through the banking market, and payments for certain other specified invisibles, were settled at E° 19.04 per US$1; payments for imports of luxury goods and for invisibles related to such imports were settled at E° 25.05 per US$1.

December 10. The commercial banks henceforth could buy and sell foreign currency as agents of the Central Bank only and could no longer take positions for their own account. Transactions had to be covered with the Central Bank daily.

December 10. Foreign shipping companies were required to use foreign exchange in payment of all obligations incurred in Chile.

December 10. The system whereby commercial banks bought exchange forward from exporters was terminated. All exports became eligible for financing through preshipment and/or postshipment export credits.

December 13. The Central Bank’s forward delivery period for sales of import exchange to commercial banks was extended from 65 days to 70 days.

December 17. The system of export finance revoked on December 10 was reinstituted. Commercial banks were temporarily authorized to buy exchange forward from exporters at E° 15.80 per US$1, with a maximum delivery period of 30 days.

December 20. The rates for the U. S. dollar in both exchange markets were maintained unchanged.

December 23. The forward delivery period for exchange purchased forward from exporters was extended to a maximum of 60 days.

Republic of China *

Exchange Rate System

The par value is 0.0222168 gram of fine gold per New Taiwan Dollar. The official buying and selling rates for the U. S. dollar are NT$ 40.00 and NT$ 40.10, respectively. Buying and selling rates for certain other currencies are also officially 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 appointed banks, and the rates are calculated in accordance with the foreign market quotations.2 With certain exceptions, earners of foreign exchange must sell it 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.

Administration of Control

The Executive Yuan is responsible for policies concerning foreign exchange and trade controls. Foreign exchange and trade matters are entrusted to the Ministries of Finance and Economic Affairs and the Central Bank of China. The Ministry of Finance has general jurisdiction over foreign exchange laws and regulations, and is in charge of government remittances. The Foreign Exchange Department of the Central Bank of China is responsible for the overall management of foreign exchange, for the determination of the official buying and selling rates of exchange, and for the supervision of the authorized banks, of which the Bank of Taiwan is the most important. The Central Bank also licenses private remittances and capital movements. The Board of Foreign Trade of the Ministry of Economic Affairs coordinates industrial and trade policies, including those relating to the import regime and export promotion, and is in charge of the issuance of import licenses. By delegation, the Application Receipt and Dispatch Center at the Board of Foreign Trade screens applications for import licenses and issues the licenses; for some goods, however, import applications and licenses are screened and issued by 11 appointed banks and their branches. Export applications are screened, and export permits issued, by 22 appointed banks. Most foreign exchange transactions are conducted through appointed banks, i.e., authorized banks.

Prescription of Currency

Export receipts must be obtained in Australian dollars, deutsche mark, Hong Kong dollars, Malaysian dollars, pounds sterling, Swiss francs, or U. S. dollars.3 Currencies not officially posted may be accepted by authorized 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

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. For virtually all commodities subject to license, license applications are screened, and import licenses are issued, by the Application Receipt and Dispatch Center at the Board of Foreign Trade. Designated appointed banks have authority to screen import applications for certain daily necessities, to issue import licenses on behalf of the Central Bank, and to make the necessary foreign exchange available; these goods do not require an import license. Imports normally must be settled on a sight letter of credit basis. End-users and traders with an export record of over US$500,000 a year, however, may contract imports of machinery and equipment or raw materials on documents against payment, documents against acceptance, or usance letter of credit terms, provided that interest charges are not included in the price. Exchange settlement corresponding to 20 per cent of the f.o.b., c. & f., or c.i.f. value of imports (raw cotton financed under the U. S. P.L. 480 program is exempt) must be made within 28 days of approval of the license for all imports not taking place on a deferred payment or consignment basis, i.e., for all imports under letter of credit or on documents against payment terms; the requirement is 10 per cent for usance imports, and 15 per cent for imports of machinery and equipment payable in installments that do not require a bank guarantee. Provided that the foregoing requirement of a so-called performance deposit has been met, the holder of an import license is entitled to obtain the necessary foreign exchange from an appointed bank. Imports from communist countries are prohibited. The Chinese authorities license and check imports from Hong Kong in order to induce importers to obtain certain imports direct from the country of production and to control effectively imports from mainland China; for similar reasons, certain commodities are not permitted to be imported from Hong Kong and Macao. Certain commodities which still can be financed with U. S. aid funds (including P. L. 480 funds) can be imported only from the United States.

Imports are divided into three groups: (1) prohibited, (2) controlled, and (3) permissible. The prohibited imports comprise not only narcotics and some other goods excluded by most countries from importation but also a wide range of pharmaceuticals and a number of luxury goods and less essential items, such as certain Chinese luxury foods, cigarettes, cigars, liquor, jewelry, certain medicines, tea, sugar (and its substitutes), and molasses. Liquor and cigarettes are imported by a government monopoly organization, which is also responsible for domestic distribution of these commodities. The controlled list contains three types of goods: some consumer luxury items,5 certain goods that are also produced locally of good quality and in sufficient quantity to meet domestic demand and whose ex-factory prices are not more than 5 per cent higher than the landed, duty-paid prices of comparable imported goods; and goods subject to regulation and allocation. The first two types are licensed restrictively;6 goods of the third type are often imported by government agencies, which offer them for sale either by allocation or by auction. Imports on the permissible list are licensed liberally and can be made by both end-users and traders. The importation of items on the controlled list is permitted only to factories and end-users. On December 31, 1971, of 11,584 classified import items, 14 were prohibited, 2,122 were controlled, and 9,448 were permissible.

A general (covering) licensing procedure has been introduced in respect of certain 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 authorized bank. On December 31, 1971, the procedure applied to some 30 items. An automatic approval system is applied to certain items on the permissible list. Under this system, importers may obtain foreign exchange at any authorized bank by submitting import licenses which are automatically approved. Application of the automatic approved system was limited to a few items initially but was later expanded. On December 31, 1971, the system applied to 2,444 items.

Special regulations apply to some 7 commodities normally imported in bulk shipments and imports of which exceed 40,000 metric tons a year.7 They are subject to annual quotas and priority must be given to Chinese flag vessels for their importation.

According to the intended utilization, goods may be imported by one of the three main groups of importers: government trading agencies, qualified private traders, and end-users and manufacturers. Commercial imports handled by government trading agencies include chemical fertilizers, tinplate, crude oil, and automobiles. The Central Trust of China is the main government trading agency. It handles imports for government and military organizations, public enterprises, and other customers. Another government trading agency is the Taiwan Supply Bureau, which is in charge of imports for the Taiwan Provincial Government, some local industries, and certain other customers.

Firms that wish to operate as authorized (“registered”) importers must obtain approval (“registration”) from the Board of Foreign Trade and be registered by the Taiwan Provincial Department of Reconstruction or the Reconstruction Department of Taipei City; the firms must be operating in accordance with certain laws and have a minimum capital of NT$200,000 and an “export record” equivalent to more than US$50,000 for the last two years. Traders licensed to operate on a commission basis may act only as agents for foreign suppliers. They also must be approved by the Board of Foreign Trade.

End-users and manufacturers are permitted to import raw materials, machinery, and replacement equipment needed for their factories. In granting licenses to this category of importer, the licensing authorities take into account such criteria as production capacity and equipment. In processing applications for licenses to import capital equipment for the construction of new plants, the licensing authorities consider the feasibility of the project and its priority from the point of view of the economic needs of the country. When the capital goods concerned are available from domestic sources, import licenses usually are not issued. Imports to be used for processing or producing goods for export are licensed up to requirements (e.g., raw cotton, wool, and wood for the production of plywood). In certain manufacturing industries, a stipulated minimum ratio of the value of the manufactured product must be met by use of domestic resources.

According to the methods of financing, imports may be divided into two broad categories: (1) imports for which exchange is allocated directly out of official exchange reserves, and (2) imports which are made without recourse to official exchange reserves and which comprise (a) those made under the U. S. P.L. 480 program and (b) those paid for with self-provided exchange or exchange supplied by foreign investors, foreign lenders, or overseas Chinese. Imports obtained with self-provided exchange are those financed by importers out of their own foreign exchange obtained by them prior to their coming to the Republic of China or originating from exchange receipts exempt from the surrender requirement.

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$100 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 70 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 rental and of foreign entertainers’ earnings may be transferred abroad; the remainder is to be used for local expenses. The full amount of tuition and living expenses during the first academic year of students studying abroad may be remitted, and up to US$2,400 a year in subsequent academic years. Residents are granted an exchange allowance equivalent to US$600 a trip (US$300 for each accompanying dependent under the age of 12) for any approved type of travel; visas for tourist travel, however, are not normally granted to Chinese nationals. For business travel, an allowance equivalent to US$ 1,000 a month for up to three months is granted for living expenses. All travel allocations are net of fares and tickets. Applications for exchange to pay for certain other types of invisibles are approved on their merits.

Residents leaving the Republic of China may take with them no more than NT$ 1,000 in domestic banknotes and coins and the equivalent of US$400 in foreign currencies. Nonresident travelers who have stayed in the Republic less than six months may take with them any unspent portion of the foreign currency which they registered upon entry, and may in addition convert local currency into foreign currency upon submission of the foreign exchange memorandum evidencing their acquisition of local currency by sale of exchange.

Exports and Export Proceeds 8

All exports require licenses, mainly in order to ensure the surrender of foreign exchange. Licenses may be issued only for exports to noncommunist countries. The re-exportation of imported goods is permitted after they have been processed. Exports of sugar, rice, and salt are handled by government trading agencies.

Quota limitations are maintained on the export of canned mushrooms. The export of a few foodstuffs also is restricted. There are ceilings on the export of cotton textiles to Canada, Italy, the United Kingdom, the United States, and the Federal Republic of Germany.

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

Proceeds from Invisibles

Exchange surrender requirements applicable to proceeds from invisibles are generally similar to those applicable to export proceeds. Interest, earnings, and profits on investments made by Chinese investors outside the country, and originally approved by the Central Bank of China, must be surrendered to the banks, but earnings from private investments abroad that have not been financed by outward remittances may be retained. Private inward remittances may be retained by the recipients for deposit on a foreign exchange account, from which they may be transferred freely.

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

Capital

Investments by nonresidents (including overseas Chinese) may be made in capital equipment or raw materials, or through the transfer of foreign currency to the Republic of China. In accordance with the Foreign Investment Law of July 14, 1954, as amended in 1959, and the 1971 Statute for Encouragement of Investment, new foreign investments approved by the authorities are guaranteed (1) unrestricted transfer of net annual profits or earned interest; (2) repatriation of capital, including reinvested earnings, 2 years after completion of the investment plan, at an annual rate not exceeding 15 per cent, calculated in relation to the originally invested funds; (3) the right to re-export invested capital in its original form; (4) favorable treatment in respect of rezoning and requisition of agricultural land for industrial use; (5) certain benefits with respect to business income tax and import duties; and (6) compensation for expropriation where the foreign investment constitutes less than 51 per cent, and immunity from expropriation for 20 years where the foreign investment constitutes at least 51 per cent, of the total investment. In addition, foreign investments are granted treatment at least as favorable as that accorded to new domestic investments. Laws for the encouragement of foreign investments provide for additional benefits in specific cases.

To obtain the benefits of the investment laws, investments by nonresidents must be made in enterprises conducive to the economic and social development of the country, such as mining, communications, and manufacturing for domestic needs. Preference is given to foreign investors who intend to produce goods for export or for replacing imports.

Nonresidents (including overseas Chinese) who intend to make investments in Taiwan stocks and wish to take advantage of privileges provided under the foreign investment laws, as described above, must obtain approval from the Ministry of Economic Affairs. Purchases and sales of stocks and bonds by nonresidents must be made through the intermediary of registered brokers, such as the Trust Department of the Bank of Taiwan and the Trust Department of the Central Trust of China.

Subject to approval, direct investments may be made outside the Republic of China in the form of technical know-how, semifinished products, locally manufactured equipment, and remittances of foreign exchange. Portfolio investment abroad by residents who are private persons is not normally permitted.

Chinese nationals who wish to emigrate, and foreign persons who 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. Persons outside the Republic of China who acquired in the Republic assets or balances in new Taiwan dollars on account of dowries, inheritances, gifts, and so forth, are not normally granted the right of transferring them from the Republic.

Gold

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; other imports of gold, including imports for investment purposes, require Central Bank approval and are not normally 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.

Changes during 1971

In addition to the changes listed below, imports were further liberalized during 1971 by the shifting of items from the prohibited to the controlled list, or from the controlled to the permissible list.

January 1. The registered foreign exchange scheme was abolished.

January 1. A revised Statute for Encouragement of Investment entered into effect.

January 15. A general (covering) licensing procedure was established for the import requirements of large manufacturers and other direct users. The procedure was applicable to certain items on the controlled list.

January 21. Residents were permitted to make outward remittances of up to US$100 for any purpose other than import payments; a maximum of four applications could be made in each year. Previously, the facility was limited to remittances up to US$50 each, but any number of applications could be made in a year.

February 1. Purchases and sales of domestically produced gold by the Central Trust of China were suspended.

February 6. Floor prices for exports of canned pineapple and citronella oil were abolished.

March 13. Some 129 items were shifted from the controlled import list to the permissible import list. Some items had been so shifted earlier in the year and further shifts took place subsequently.

April 1. A large number of items on the permissible list were placed under the automatic approval system introduced in October 1970, increasing its coverage to about 800 items.

July 9. The exchange allowance for any approved type of travel was raised from US$300 to US$600 a person a trip (from US$150 to US$300 for each accompanying child). The allowance for living expenses abroad for business travel was raised from US$700 to US$1,000 a month. The allowance for study abroad after the first academic year was increased from US$1,800 to US$2,400 a year.

July 20. The minimum presettlement in foreign exchange that was required for opening import letters of credit was increased from 25 per cent to 30 per cent, that for usance imports from 10 per cent to 15 per cent, and that for downpayments on machinery and equipment imported on an installment payment basis from 15 per cent to 20 per cent. On December 31, these percentages were reduced to 20, 10, and 15, respectively.

August 24. The basic exchange rate for the U. S. dollar was maintained unchanged at NT$40 — US$1. Henceforth, the Central Bank established daily buying and selling rates for posted foreign currencies.

August 26. Import surcharges were suspended.

October 12. Barley and sorghum were brought under the special regulations for bulk importation.

November 25. New regulations were promulgated governing the administration of the supply of, and trading in, ornamental gold. They came into effect immediately.

December 20. The basic exchange rate for the U. S. dollar was maintained unchanged at NT$40 = US$1.

Colombia

Exchange Rate System

On December 17, 1948, a par value for the Colombian Peso was established by Colombia with the Fund. However, exchange transactions no longer take place at rates based on that par value. All exchange transactions are effected through the Bank of the Republic (the central bank) or the authorized banks in the official market—the exchange certificate market, in which the rate fluctuates. On December 31, 1971 the average selling rate in the certificate market was Col$20.94 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$20.15 per US$1; the Government purchases exchange for all public debt payments and other expenditures included in the national budget at the same exchange rate. There are also certain other effective exchange rates. The different exchange rates and the types of transaction to which they apply are set out in the Table of Exchange Rates, below. On December 31, 1971, the fluctuating buying rate for proceeds from coffee exports (after taking into account a 20 per cent exchange tax) was Col$ 16.72 per US$1, and that for most other exports about Col$23.54 per US$1. All imports are paid for at the certificate market rate. In principle, all payments and receipts in respect of current invisibles and capital also take place at that rate but different effective rates arise from the application of advance deposit requirements on exchange purchased for foreign travel and of advance payments deposits for purchases of exchange for many other purposes. A fixed rate of Col$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 de divisas); the Bank’s 1 per mill commission on outward remittances is charged. 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. Warrants bear interest at 5 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 95 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, subject to the normal requirement of a local currency guarantee deposit.

Administration of Control

All imports and exports require prior registration at the Institute of Foreign Trade (INCOMEX). Exchange for payments must be purchased through the Bank of the Republic or the commercial banks, with an approved exchange license issued by the Exchange Office of the Bank of the Republic; however, payments for 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. The Institute of Foreign Trade, through its Import Board, controls imports that are subject to prior licensing. The National Council for Economic and Social Policy issues directives concerning direct investment in Colombia to the Exchange Office and the National Planning Department, which evaluates new projects. The Exchange Office of the Bank of the Republic keeps an accounting record both of foreign investment in Colombia and of debts abroad, and controls the movement of foreign capital as well as the transfer of profits, dividends, commissions, and royalties for trademarks, patents, etc. The Superintendency of Exchange Control, which is an autonomous agency reporting direct to the Presidency of the Republic, enforces control and supervision over exchange transactions and is responsible for applying penalties for violation of the exchange regulations currently in force.

Prescription of Currency

Payments and receipts related to international transactions are normally effected in U. S. dollars. Settlements with Bulgaria, Eastern Germany, Hungary, Poland, Spain, Rumania, 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, Ecuador, Mexico, Peru, Uruguay, and Venezuela are made through accounts maintained within the framework of the LAFTA multilateral clearing system, and settlements with the Dominican Republic are also made through special accounts.

Nonresident Accounts

Credit establishments are authorized to receive short-term deposits in foreign currency from physical or juridical persons not resident in Colombia, and these deposits are freely available to the holders, but any foreign currency deposits that they may wish to convert into Colombian currency must be sold to the Bank of the Republic. Before releasing the accounts of nonresidents, banks must obtain authorization from the Exchange Office.

Imports and Import Payments

Imports are classified as follows: goods whose import is prohibited; goods whose import is subject to prior licensing by the Institute of Foreign Trade; and goods that may be imported freely without license. In this last category, there is a global free list applicable to all countries and a National Free List applicable to LAFTA countries only; the latter contains all commodities that are on the global free list as well as some additional ones. These liberalized imports corresponded to about 29 per cent of 1971 reimbursable imports; 1 they comprise mainly certain raw materials and some types of machinery. All import registrations by public sector agencies are screened by the Institute of Foreign Trade to determine whether local substitutes are available. The prohibited list comprises mainly such items as arms and habit-forming drugs, certain foodstuffs, such as corn and milk, certain textiles and garments, jewelry, and a number of other consumer goods; imports of certain goods on this list may be licensed from time to time.

Prior registration of the import transaction at the Institute of Foreign Trade is required for all imports other than those with an f.o.b. value of less than US$20 (or US$40 for books and pharmaceuticals). The charge for import registration is Col$ 100.00 (in some cases Col$5.00) plus a consular invoice tax of 1 per cent. Advance import deposits in Colombian currency must be made with the Bank of the Republic before import registration is permitted; the deposit is returned 85 days after the goods have cleared customs. The advance import deposit is payable at one of many rates, depending on the type of goods; those important in practice are the rates of 1, 5, 10, 30, 50, 70, and 100 per cent.

The following imports are exempt from prior deposits: nonreimbursable imports; 1 imports brought into Colombia under special import-export arrangements (Vallejo Plan); nearly all goods included in the Colombian National List and the special lists granting concessions to LAFTA countries; all imports made under preferential arrangements from Andean Group countries; goods financed with credits having a maturity of at least 40 years; 2 noncommercial capital goods and components imported by the Government, departments, municipalities, official undertakings, semiofficial bodies, and public service agencies, and noncommercial goods when intended for mineral exploration or exploitation; goods imported by the National Federation of Coffee Growers for its own use; goods exempt by virtue of an international agreement; capital goods, components, and raw materials imported by firms sponsored and supported by the Government, and firms holding foreign commitments backed by the Government; machinery and equipment coming under the tariff headings for the basic industries; goods of prime necessity imported by the Institute of Agricultural Marketing (IDEMA); most imports by universities and other nonprofit-making educational institutions; scientific and literary books, newspapers, and reviews that contribute to the culture of the Colombian people, together with capital goods for the production of such items; and sacramental wine. The advance deposit is calculated on the f.o.b. value of the goods, at the average selling rate for exchange certificates for the previous month.

A prior exchange license is required for all payments for imports, except when they are made through credit institutions or are financed by letters of credit opened by banking institutions in countries with which bilateral payments arrangements or reciprocal credit agreements are in force (including the Dominican Republic). Licenses are granted by the Exchange Office, provided that it is satisfied that the goods have been cleared through customs and that payment is due. At least 20 days prior to filing an application for an exchange license, the importer must provide a peso advance deposit equivalent to 95 per cent of the exchange requested, calculated at a rate announced monthly by the Ministry of Finance on the basis of the average exchange certificate price for the preceding month. Exempt are import payments by the Government, departments, municipalities, and official agencies, and payments for imports financed with foreign credits extended to the Bank of the Republic, goods for general consumption imported by the Institute of Agricultural Marketing, payment for the crude oil acquired by the national petroleum company (Empresa Colombiana de Petróleos—ECOPETROL) for refining in Colombia, imports financed by U. S. AID credits, imports for which payment is made within 30 days of shipment, and payments, whether made by letters of credit or not, for imports from countries with which bilateral payments arrangements or reciprocal credit arrangements are in force (including the Dominican Republic).

Import duties are calculated at the effective exchange rate applicable to the advance deposit of 95 per cent. In addition to customs duties, there is an ad valorem tax on imports equal to 3 per cent of the c.i.f. value. Of the amounts collected, 50 per cent goes to the Export Promotion Fund, while the remaining 50 per cent goes to the National Coffee Fund. Exempt from this tax are imports by public entities, goods of LAFTA origin, and imports under the Vallejo Plan.

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

Payments for Invisibles

Payments for invisibles are made at the exchange certificate rate. In principle, all payments for invisibles are subject to exchange licenses, which are granted according to officially established priorities determined by the Monetary Board; however, the Bank of the Republic may make payments abroad on behalf of credit institutions without prior exchange license, and commercial banks in cities where Exchange Offices are located may sell exchange directly for the purpose of foreign travel and may also transfer without prior approval the monthly allowances of students studying abroad with government support. No advance payment deposit is required for invisibles, except for travel allowances, for which a 50 per cent prior deposit in local currency is required,3 and for payments of interest on certain loans, for which the prescribed deposit is 95 per cent. Payments for travel abroad are limited to US$30 a person a day, not to exceed US$1,050 a person a year; this limit may be raised to US$70 a day and US$6,300 a year when the travel may be especially beneficial to the country; transfers to professionals and technicians undertaking courses abroad are generally restricted to US$450 a month for up to 12 months, while for other students the ceilings vary from US$120 to US$200 a month, depending on the cost of living in the country concerned. Foreign tourists who have stayed in Colombia for a period not exceeding three months may, on leaving the country, purchase foreign currency not exceeding US$60 on presentation of their boarding pass.

Colombian nationals and resident foreigners are required to pay a travel tax of Col$500 whenever they leave the country.

Exports and Export Proceeds

Exports of Colombian products may be made freely, except when the law provides otherwise. There is a list of exports that are either prohibited or are subject to special requirements. Prior application for registration is required for all exports except crude oil, samples, and Colombian products in noncommercial quantities. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. When registering an export transaction, the exporter must provide either a personal guarantee in pesos (but without depositing any funds) corresponding to the full export value or a bank guarantee (usually for 30 per cent of the same value), to ensure that the proceeds will be surrendered to the Bank of the Republic. The periods for surrendering export proceeds are as follows: (1) for coffee exports, within 20 days from the date of registration of the 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 exports, generally within 90 days from the same date.

The Bank of the Republic is empowered in certain cases to retain a portion of the exchange proceeds surrendered by the exporter of any product to repay old foreign debts incurred by the exporter concerned. All exchange proceeds from exports, except those from the export of crude oil not produced by ECOPETROL, must be surrendered to the Bank of the Republic.

On surrendering their export proceeds to the Bank of the Republic, exporters of commodities other than coffee, petroleum and petroleum products, and cattle hides receive tax credit certificates (CATs) in an amount of 15 per cent of the total earnings surrendered, converted at the exchange rate used for import deposits. These certificates, which are freely negotiable and are quoted on the stock exchange, are accepted at par by tax offices six months after issuance for the payment of income tax, additional taxes, customs duties, and sales taxes.4 At the end of 1971, certificates just issued were quoted at a discount of about 7 per cent; hence the effective exchange rate was about Col$21.34 per US$1.

The surrender of foreign currency earned by exports is carried out by exchanging the foreign currency for exchange certificates that are negotiable in the bankers’ market. The certificates have a validity of 5 to 10 days, after which they must be surrendered to the central bank at 90 per cent of the lowest certificate rate quoted by the Bank in the preceding week.

The surrender price for exports other than coffee varies with fluctuations in prices in the world market. Coffee exports are subject to the following additional regulations: (1) A minimum surrender price (reintegro) is fixed, after deduction for freight and insurance, at US$72.00 5 per 70-kilogram bag. (2) Exporters pay a tax in foreign exchange at the rate of 20 per cent ad valorem. Of this tax, 4 percentage points are paid to the National Coffee Fund while the remainder provides revenue for the Treasury’s Special Exchange Account, of which the net product forms a contribution to the national budget. The Special Exchange Account is credited at the Bank of the Republic’s accounting rate of Col$20.15 per US$1. (3) Exporters must either surrender in kind to the National Federation of Coffee Growers and without payment the equivalent of 25½ per cent of the volume of excelso coffee that they wish to export (retención) or pay the Federation the peso equivalent. (4) Exports of coffee are subject to an additional tax of 6 per cent ad valorem (pasilla tax); the tax must be paid, either in kind or in pesos, to the Federation. (5) A committee composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation establishes domestic buying prices for the various grades, expressed in pesos per arroba of 12.5 kilograms. (6) In principle, 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. These provisions have never been applied.

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 a provisional exchange rate of Col$ 19.00 per US$1.6 Advance surrender of anticipated export proceeds from products other than coffee may be made at the average rate of exchange certificates for the previous month, as determined by the Ministry of Finance, provided that the actual surrender takes place within 12 months of the provisional surrender, or within 24 months if the export value exceeds US$500,000. The payment to the exporter is subsequently adjusted for the effective exchange rate applicable on the day of actual surrender.

Proceeds from Invisibles

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

Capital

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

All foreign investment in Colombia, all new foreign loans, direct lines of foreign credit obtained by nonbank residents,7 and the movement of capital previously imported (except loans previously registered under Decree No. 2322 of September 2, 1965) must be registered with the Exchange Office of the Bank of the Republic.8 Capital imports in amounts of US$100,000 or more and capital imported for petroleum exploration or exploitation, or for other mineral exploration, also require prior approval by the National Planning Department in accordance with directives issued by the National Council for Economic and Social Policy; capital for the petroleum industry or for other mineral exploration in addition requires approval by the Ministry of Mines and Petroleum. Capital registration entitles the investor to export profits and to repatriate capital at the certificate market rate on certain conditions specified in Monetary Board Resolution No. 9 of 1968.9 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 one year and to maximum interest rates of 9 per cent for loans of up to two years’ maturity and 9 ½ per cent for loans of longer maturity,10 but exceptions may be made when contracts provide for the periodic revision of the rate of interest.

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.

A peso advance deposit corresponding to 95 per cent of the exchange requested is required for repayments of principal and payment of interest on certain private loans and on private suppliers’ credits. In addition, all loans of working capital obtained from abroad in the form of foreign exchange are subject to the requirement of a 95 per cent peso deposit to be held by the Bank of the Republic for one month from the date of registering the loan.

Gold

Physical and juridical persons may trade in Colombia in gold coins for collection purposes only. With this exception, only the Bank of the Republic is entitled to purchase, sell, hold, import, or export gold. The Bank of the Republic purchases the gold produced in the country at US$35 an ounce and is empowered to pay up to 50 per cent in foreign currency on presentation by foreign capital mining companies of exchange licenses entitling them to make payments abroad for services, dividends, capital repayments, taxes, etc. The remaining 50 per cent and all payments to the small producers are paid in pesos at the certificate market exchange rate. On selling their gold to the Bank of the Republic, the producers receive tax credit certificates equivalent to 15 per cent of the value of the gold sold. The certificates held by the small producers are bought by the Bank of the Republic in Colombian pesos at their nominal value. When the Bank sells newly mined gold abroad at market prices in excess of US$35 an ounce, it reimburses the producer for the difference.

The Bank of the Republic makes domestic sales of gold for industrial use either direct or through the Colombian Mining Association, on presentation of licenses issued by the Superintendency of Exchange Control, at a price equivalent to the average quotation in the free external gold markets during the previous month plus a sales tax of 15 per cent; this price is translated into pesos at the prevailing selling rate of exchange certificates on the date of sale. The Bank’s exports of gold are made at world market prices and the excess over its purchase price of US$35 is paid out to the producers who have supplied the gold. Imports of gold also are a monopoly of the Bank of the Republic; imports of nonmonetary gold are not normally undertaken.

The assay and refining houses and the mining companies producing gold are under the supervision of the Superintendency of Exchange Control. In addition, the mining companies must obtain a license from the Superintendency in order to carry on their operations.

The Bank of the Republic from time to time strikes commemorative gold coins which are legal tender. Residents and nonresidents may freely buy such coins, but export licenses are not normally granted.

Table of Exchange Rates (as at December 31, 1971)(pesos per U. S. dollar)
BuyingSelling
16.72 (Certificate Market Rate less 20% Exchange Tax, Fluctuating Rate)

Coffee exports.11

20.15 (Accounting Rate of Bank of the Republic) Conversion of Government’s receipts from exchange tax on coffee exports.

20.90 (Certificate Market Rate, Fluctuating Rate)

Net proceeds from exports of crude oil and petroleum derivatives (Article 158 of Decree-Law No. 444).12

23.75 (Average Certificate Market Rate of Previous Month plus 15% Tax Credit Certificates, Fluctuating Rate)

All other exports.11, 13, 14
20.00 (Fixed Rate)

Purchases of crude oil from foreign-owned companies in Colombia for domestic refining.15



20.15 (Accounting Rate of Bank of the Republic)

Government’s purchases of exchange for servicing of public debt, diplomatic expenses, official travel, etc.

20.94 (Certificate Market Rate, Fluctuating Rate)

All other transactions.16

Changes during 1971

During the year, the advance import deposit requirements were reduced for the majority of tariff positions, principally by across-the-board reductions authorized by Monetary Board Resolution No. 40 (see below). There were relatively few changes of classification from the prohibited import list to the licensing list, but free list imports made up 29 per cent of reimbursable imports, compared with 20 per cent in 1970, chiefly due to shifts that had occurred during 1970 and a higher rejection rate of import applications for goods on the licensing list. The selling rate in the certificate exchange market was gradually depreciated from Col$19.13 per U. S. dollar to Col$20.94 per U. S. dollar.

January 1. The maximum interest rates on new loans contracted abroad were raised to 9 per cent for loans of up to one year’s maturity and 9½ per cent for loans with maturities in excess of one year. (Resolution No. 88.) Such loans became subject to a minimum maturity of 180 days. (Resolution No. 79.)

January 20. The provisional exchange rate for advance surrender of coffee export proceeds was raised from Col$15.50 to Col$19.00 per U.S. dollar. (Monetary Board Resolution No. 1.)

January 22. Exchange warrants became interest-bearing; the rate of interest was set at 5 per cent per annum. (Monetary Board Resolution No. 2.)

January 27. Advance import deposits were reduced for 43 items, including automobile parts. (Monetary Board Resolutions Nos. 4 and 5.)

January 28. Tariffs were lowered for unassembled automotive vehicles imported by assembly companies. (Ministry of Finance Decree No. 119.)

February 3. The ceiling on the rate of interest on private loans obtained abroad was fixed at 9 per cent for terms of less than two years and at per cent for terms longer than two years. (Monetary Board Resolution No. 8.)

February 5. Import payments and repayments of import credits were henceforth not permitted to be made before their due dates. (Exchange Office Circular No. 6.)

February 9. Imports of certain woolen fabrics, automobiles, and automobile parts were moved from the prohibited list to the licensing list. (Resolutions Nos. 2 and 3 of the Council of Foreign Trade.)

February 9. New tariff subpositions relating to automotive vehicles and their parts were put on the licensing list. (Resolution No. 2 of the Institute of Foreign Trade.)

February 10. It was required that advance exchange surrender for coffee exports be followed by actual surrender within 60 days (previously 120 days); the deadline could be extended, however, by up to 60 days. (Monetary Board Resolution No. 10.)

February 12. The minimum surrender price for coffee was reduced from US$76 to US$73 per 70-kilogram bag. (Monetary Board Resolution No. 12.)

February 23. Eight import items were moved from the prohibited to the licensing list, and eight others from the licensing to the free list. (Resolution No. 6 of the Institute of Foreign Trade.)

February 24. The amount of foreign exchange credits the Bank of the Republic was authorized to make available to the Export Promotion Fund was increased from US$7 million to US$15 million and the terms of the export credits were fixed at ten years maximum maturity and 8 per cent minimum interest rate. (Monetary Board Resolution No. 14.)

March 3. A 5 per cent reserve requirement was imposed against the major types of foreign exchange liabilities of the banks, and a 1 per cent a month limit was imposed on the growth of guarantees in foreign currency extended by credit institutions. (Monetary Board Resolution No. 15.)

March 24. Exchange warrants became negotiable. (Monetary Board Resolution No. 17.)

March 24. Monetary Board Resolution No. 18 set at 180 days the maximum term for lines of credit obtained directly abroad by individuals or firms (except for credits related to imports of capital goods). The resolution also set an interest ceiling of 9½ per cent on such lines of credit, and specified that these must be registered with the Exchange Office.

March 24. Monetary Board Resolution No. 19 exempted from the 1 per cent limit on the growth of banks’ foreign currency guarantees all guarantees related to completion of contracts other than loans or related to import payments.

April 6. The Exchange Office clarified that the exemptions from the 95 per cent advance payments deposit were applicable to countries with which Colombia had a bilateral payments agreement, LAFTA countries, and the Dominican Republic. Previously, these exemptions were already applicable in practice. (Circular No. 20.)

April 14. Monetary Board Resolution No. 31 exempted the following from the 1 per cent limit on the monthly growth of guarantees specified in Resolution No. 15: export financing utilizing the Export Promotion Fund, transactions involving international or official foreign credit organizations, and transactions involving institutions of higher education.

April 21. Monetary Board Resolution No. 34 further defined the deposit requirements with respect to Resolution No. 15.

April 26. Exchange Office Circular No. 25 specified that all payments for imports into the free trade zones of San Andres and Leticia must be made through banking establishments in those places.

April 28. Exempted from the 1 per cent limit on the growth of foreign currency guarantees were obligations related to multinational projects with Colombian public sector participation and credit operations for basic industries considered to be of an official nature. (Monetary Board Resolution No. 36.)

May 4. The Council of State suspended Monetary Board Resolution No. 52 of 1970. As a result, the tax credit certificates for the surrender of exchange proceeds from minor exports had to be calculated on the total value of the exchange surrendered instead of, as previously, the f.o.b. value.

May 10. Additional commemorative gold coins were issued by the Bank of the Republic.

May 13. Advance import deposit rates for all tariff positions for which these rates had previously been at 130 per cent and 70 per cent, were reduced to 100 per cent and 50 per cent, respectively. The deposit rates for many other positions were also reduced. This measure affected the bulk of imports for which advance import deposits were required. (Monetary Board Resolution No. 40.)

June 1. Monetary Board Resolution No. 59 extended from nine months to four years the term within which the required documentation must be submitted to receive reimbursement of the payments deposit for travelers’ foreign exchange.

June 2. Monetary Board Resolution No. 45 reduced from US$1,350 to US$1,050 the annual travel allowance for persons over 16, and from US$900 to US$700 the allowance for persons aged 12 to 16.

June 7. Decree No. 1082 set forth new export and import regulations pertaining to the free trade zones of Barranquilla, Buenaventura, and Palmaseca.

June 9. Decree No. 1146 eliminated customs duties on a large number of chemical and industrial imports originating in countries of the Andean Group.

June 15. The Colombian and Bulgarian Governments signed a bilateral payments agreement to replace the existing payments agreement concluded between the National Federation of Coffee Growers and the Bulgarian Foreign Trade Corporation.

June 23. The Exchange Office announced that it had taken over from the Bank of the Republic the administration of the monthly budget for travel exchange.

June 24. The exchange rate for acquiring foreign exchange for the purpose of purchasing crude oil for domestic refining was increased from Col$9 to Col$20 per U. S. dollar. (Monetary Board Resolution No. 53.)

June 24. The minimum surrender price for coffee exports was reduced to US$69 per bag.

June 30. Decree No. 1299 put into effect the Andean Investment Code. (Decision No. 24 of the Commission of the Andean Group.)

July 6. The validity for registrations of exports other than coffee was set at 60 days, and that for import licenses generally at five months. In the case of import licenses, certain exceptions and possibilities for renewal were specified. (Institute of Foreign Trade, Resolution No. 10.)

July 7. Travelers were permitted four years—instead of nine months as previously—to present to the Exchange Office the documentation required to receive reimbursement of their travelers’ exchange deposits. (Monetary Board Resolution No. 59.)

July 28. Banana export receipts were to be surrendered by the following deadlines: 50 per cent within 30 days of export registration and the remaining 50 per cent within 60 days of registration. (Monetary Board Resolution No. 65.)

August 9. Exchange Office Circular No. 42 increased to 240 days the term for completing payment for expenditures abroad that were financed by letters of credit with banking institutions established in countries with which the Bank of the Republic had initiated reciprocal credit arrangements.

August 10. The Bank of the Republic authorized the use of deutsche mark for exchange surrender. Foreign exchange purchased at the Bank of the Republic could also be taken up in the form of deutsche mark. (Circular No. 2977.)

August 11. Institute of Foreign Trade Resolution No. 505 published regulations pertaining to the re-exportation of foreign merchandise.

August 16. The U. S. dollar rate in the certificate market was maintained unchanged.

August 30. The Bank of the Republic authorized the use of the following currencies, in addition to the U. S. dollar and the deutsche mark, when surrendering foreign exchange: pounds sterling, French francs, Swiss francs, Italian lire, Swedish kronor, Netherlands guilders, and Japanese yen.

September 8. The Bank of the Republic henceforth sold foreign exchange for official travel at the accounting rate of the Bank of the Republic instead of at the certificate market rate. (Monetary Board Resolution No. 73.)

September 16. Congress passed Law No. 6 of 1971, which authorized the Government to undertake various reforms of the tariff system, including variation of tariff rates for the purpose of stimulating economic development.

September 22. Monetary Board Resolution No. 74 exempted from the 95 per cent advance payments deposit applications for foreign exchange in connection with crude oil purchases for domestic refining.

September 22. Monetary Board Resolution No. 75 reduced advance import deposit rates for 22 tariff positions.

September 24. The Exchange Office announced that it would no longer register loans for the prefinancing of exports when advance payment of interest was stipulated or when the loan was discounted directly by the creditors. (Circular No. 48.)

October 1. The reciprocal credit agreement with Brazil came into operation.

October 13. Monetary Board Resolution No. 80 specified the conditions under which the Exchange Office could grant a foreign exchange license in the absence of documentation describing the nature of the payment. These conditions included a guarantee payment by the applicant.

October 19. Resolution No. 5 of the Institute of Foreign Trade created an Advisory Committee for Global Licenses which was to study and review projects eligible for global import licenses.

October 20. Monetary Board Resolution No. 82 reduced the waiting period between the customs clearance of imports and the reimbursement of advance import deposits from 90 days to 85 days.

October 20. Monetary Board Resolution No. 84 determined that the Exchange Office would henceforth authorize exchange licenses for interest payments only when the effective rate of interest (including all service charges) did not exceed 9½ per cent per annum.

October 25. Monetary Board Resolution No. 85 set a deposit requirement of 18 per cent against the main types of short-term foreign liabilities of banking establishments. Exempted were liabilities related to export prefinancing.

October 25. Monetary Board Resolution No. 86 set a deposit requirement of 30 per cent for all additional short-term foreign liabilities incurred after October 31 by financial corporations.

October 25. Monetary Board Resolution No. 87 required that the nonbank recipient of a loan from abroad which resulted in a receipt of foreign exchange place a deposit corresponding to 95 per cent of the amount of the loan with the Exchange Office for a period of one month after registration of the loan.

November 5. Decree No. 2153 set forth the administrative regulations with respect to Decree No. 1399 which had brought the Andean Investment Code into effect. These regulations diverged from the original code in several respects, notably in the greater latitude given to continued foreign investment in the banking sector.

November 17. Monetary Board Resolution No. 94 laid down the conditions under which the Exchange Office should authorize freight and insurance payments by Colombian exporters. Among these conditions was that the relevant export registration must be in c.i.f. or c. & f. terms.

November 22. The Exchange Office announced that with effect from December 1 it would not be necessary to solicit approval for import payments (and costs associated with these payments) that were financed by letters of credit opened by banks established in countries with which the Bank of the Republic maintained reciprocal credit agreements.

November 26. Monetary Board Resolution No. 96 increased the minimum exchange surrender price for coffee exports to US$72 a bag.

December 6. Decree No. 2382 provided that the exchange tax certificate henceforth was redeemable at its face value as follows: for manufactured or processed exports, from the third month of the certificate’s issue, and for other commodities, from the sixth month after issue. The Executive Council of Foreign Trade would determine which products were to be considered manufactured or processed. (This determination had not been made by the end of the year and the six-month term was being applied to all minor exports.)

December 13. The Supreme Court of Justice declared Decree No. 1299, which had put the Andean Investment Code into effect, legally invalid, owing to the absence of approval by the Congress.

December 17. The accounting rate of the Bank of the Republic was depreciated from Col$ 18.50 to Col$20.15 per U.S. dollar. (Monetary Board Resolution No. 102.)

December 20. The U. S. dollar rate in the certificate market was maintained unchanged.

December 21. Exchange Office Circular No. 65 provided that unused airline tickets could be reimbursed by the airline concerned, provided that the passage money for the entire trip (when originating in or ending in Colombia) was transferred by the airline initiating or terminating the transport in Colombia.

People’s Republic of the Congo

Exchange System

No par value for the currency of the People’s Republic of the Congo has been established with the Fund. The unit of currency is the CFA Franc,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 Equatoriale et du Cameroun (BCEAEC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission charges.

Exchange transactions relating to foreign countries, i. e., countries other than France, Monaco, and the Operations Account countries of the French Franc Area, take place in a dual exchange market, at rates based on the fixed rate for the French franc and the Paris exchange rate for the foreign currency concerned in either the official exchange market or the financial franc market. Settlements eligible for the official exchange market are payments and receipts in respect of imports, exports, and incidental expenses on imports and exports (freight, insurance, etc.), as well as current payments by or in favor of domestic and foreign public authorities and public bodies. All other settlements with foreign countries, as well as transactions in banknotes of foreign countries and banknotes issued by the BCEAEC, take place through the financial franc market at freely fluctuating rates. Exchange rates in the official market are based on par values and central rates; the effective parity relationship for the U. S. dollar in this market is CFAF 255.785 = US$1.

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

Administration of Control

The Office of Foreign Financial Relations in the Ministry of Finance and the Budget supervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Congo, and inward and outward direct investment. Exchange control is administered by the Minister of Finance and the Budget, who has delegated his approval authority to the Office of Foreign Financial Relations and the authorized banks. All exchange transactions relating to foreign countries must be effected through authorized banks. Import and export licenses are issued by the Foreign Trade Office in the Ministry of Economic Affairs, except those for gold, which are granted by the Office of Foreign Financial Relations.

Prescription of Currency

The People’s Republic of the Congo is an Operations Account country of the French Franc Area, since the BCEAEC maintains an Operations Account with the French Treasury; settlements with France, Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with mainland China are made through special accounts established under a bilateral payments agreement.2 Settlements with all other countries are usually made in any of the currencies of those countries or in French francs through Foreign or Financial Accounts in Francs. All payments to Portugal require the prior approval of the Ministry of Finance and the Budget. All settlements between Congo and Rhodesia are prohibited.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting of BCEAEC banknotes to Financial Accounts in Francs is permitted when they have been mailed direct to the BCEAEC in Brazzaville by foreign correspondents of authorized banks.

Imports and Import Payments

Imports of virtually all commodities from countries in the French Franc Area and from EEC countries other than France may be made freely. All imports of Portuguese or Rhodesian origin are prohibited. Imports from all non-EEC countries outside the French Franc Area are subject to licensing in accordance with an annual import program; the program also includes indicative quotas for a few commodities from EEC countries other than France. This program is determined by a joint French-Congolese Committee. The import program does not include petroleum imports, for which a joint quota is set for the countries of the Central African Customs and Economic Union (UDEAC). Also outside the program are imports for the Government under foreign aid and bilateral payments agreements and imports made by OFNACOM (Office National du Commerce) or BCCO (Bureau pour la Création, le Contrôle et l’Orientation des Entreprises et Exploitations d’Etat). The quotas for non-EEC countries may be used to import goods originating in any country outside the French Franc Area. Licenses for liberalized commodities originating in EEC countries other than France are issued automatically.

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

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

All import transactions relating to foreign countries must be domiciled with an authorized bank. Licenses for imports from foreign countries require the visa of the Foreign Trade Bureau and that of the Office of Foreign Financial Relations. The approved import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France, Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. Resident tourists traveling to countries other than France, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 150,000 a person a trip (CFAF 75,000 for children under ten); any foreign exchange remaining after return to Congo in excess of CFAF 5,000 must be surrendered. For business travel to foreign countries, there is a special allocation of the equivalent of CFAF 20,000 a person a day, subject to a maximum of CFAF 400,000 a trip. Additional amounts of foreign exchange for business travel may be authorized in appropriate cases. The use of credit cards abroad by residents is prohibited. There are special facilities for travelers to Kinshasa who request no foreign means of payment other than zaïre banknotes. The transfer of the entire net salary of a foreigner working in Congo is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Resident and nonresident travelers going to foreign countries may take out up to a maximum of CFAF 25,000 in BCEAEC banknotes, French banknotes, and banknotes issued by any other institute of issue maintaining an Operations Account with the French Treasury. Travelers to other countries may take out any amount in BCEAEC banknotes.

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

Exports and Export Proceeds

Exports to Rhodesia are prohibited. 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. All other exports require individual licenses.

Proceeds from exports to foreign countries must be collected and repatriated, generally within 180 days of arrival of the commodities at their destination. Export proceeds received in currencies other than those of France or another Operations Account country must be surrendered within a month of the due date. All export transactions relating to foreign countries must be domiciled with an authorized bank.

Proceeds from Invisibles

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

Capital

All capital movements between Congo and Rhodesia are prohibited. Capital movements between Congo and France, Monaco, and other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in Congo by residents or nonresidents must be deposited with authorized banks in Congo.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, and offering for sale of foreign securities in Congo; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over the sale or introduction of foreign securities in Congo, the control measures do not apply to France and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad3 require the prior approval of the Minister of Finance and the Budget, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires the prior approval of the Minister, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investments in Congo 4 require prior declaration to the Minister of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of direct investments in Congo must also be declared to the Minister, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in Congo. Both the making and the liquidation of direct investments, whether these are Congolese investments abroad or foreign investments in Congo, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent in the capital of a company whose shares are quoted on a stock exchange.

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

Borrowing by residents from nonresidents requires prior authorization by the Minister of Finance and the Budget. The following are, however, exempt from this authorization: (1) loans constituting a direct investment abroad for which prior approval has been obtained as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Congo and countries abroad or between foreign countries, in which these persons or firms take part; (3) loans contracted by registered banks; and (4) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one borrower. The contracting of loans referred to under (4) that are free of authorization, and each repayment thereon, must be reported to the Office of Foreign Financial Relations within 20 days of the operation.

Lending by residents to nonresidents is subject to exchange control. However, certain lending in foreign currency and certain lending in CFA francs is unrestricted. Other lending to nonresidents requires prior authorization by the Minister of Finance and the Budget. The following are, however, exempt from this authorization: (1) loans granted by registered banks and (2) other loans when the total amount outstanding of these loans does not exceed CFAF 50 million for any one lender. The making of loans that are free of authorization, and each repayment thereon, must be reported to the Office of Foreign Financial Relations within 20 days of the operation.

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

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

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

Gold

By virtue of Decree No. 66/236 of July 29, 1966, as amended by Decree No. 66/265, of August 29, 1966, residents are free to hold in Congo gold in the form of coins, art objects, or jewelry, but they require the prior authorization of the Minister of Finance and the Budget to hold gold in any other form or to import or export gold in any form from or to any other country. Exempt from the latter requirement are (1) imports and exports by or on behalf of the Treasury or the BCEAEC and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration. The agency SOGAREM has a monopoly over the export of newly mined gold.

Changes during 1971

August 25. Limits were imposed on authorized banks’ net overall positions in foreign currencies and in francs vis-à-vis foreign countries.

August 28. Following the introduction of a dual exchange market in France, similar dual market arrangements were introduced in the People’s Republic of the Congo. The exchange rate for the French franc remained fixed at CFAF 1 = F 0.02, and the effective parity relationship for the U. S. dollar in the official exchange market remained at CFAF 277.710 = US$1. The system of nonresident accounts was reorganized. Foreign Accounts in Francs henceforth were related to the official exchange market only, and Financial Accounts in Francs were introduced, which were related to the financial franc market. BCEAEC banknotes mailed to the BCEAEC by foreign correspondents of authorized banks henceforth could be credited only to Financial Accounts in Francs.

August 31. Payment for imports from foreign countries had to be effected at the latest three months after customs clearance (two years for capital goods). (This measure was subsequently revoked.)

September 9. The exchange allocation for tourist travel was increased from the equivalent of CFAF 150,000 a person a trip, for two trips a year, to CFAF 150,000 a person a trip for any number of trips a year.

October 14. The import and export controls were reorganized. All imports from the French Franc Area of goods under import controls or import monopoly required a special authorization issued by the Minister of Commerce. All exports to foreign countries required a license, but the requirement of a surrender commitment (engagement de change) was terminated.

December 3. The commissions payable to the Treasury for transfers to foreign countries were announced and would come into force on January 1, 1972. They ranged from 0.10 per cent to 0.60 per cent, subject to a minimum of CFAF 100.

December 17. With certain exceptions, Foreign Accounts in Francs and Financial Accounts in Francs could only be debited for payments in francs to residents, and no longer for purchases of foreign exchange. (This measure was subsequently revoked.)

December 17. The lending of francs to nonresidents for periods of up to two years was freely permitted.

December 24. The exchange rate for the French franc was maintained at CFAF 1 = F 0.02. The effective parity relationship for the U. S. dollar in the official exchange market became CFAF 255.785 = US$1. The dual exchange market arrangements were maintained.

Costa Rica

Exchange Rate System

The par value is 0.134139 gram of fine gold per Costa Rican Colón. There is a dual exchange market. The Central Bank buys exchange derived from exports and other exchange tendered to it at a fixed buying rate of Ȼ 6.62 per US$1. Exchange at the official selling rate of Ȼ 6.65 is granted for listed essential imports from all sources, imports from Central America and Panama when covered by free trade agreements, specified current invisibles, and a few types of capital transfers. Receipts from certain invisibles must be surrendered at the official rate. All other sales and purchases may be made freely in a free market in which the exchange rates are fixed; the buying and selling rates for the U. S. dollar were Ȼ 8.57 and Ȼ 8.60, respectively, on December 31, 1971.

Two additional effective selling rates arise in the official market from exchange surcharges of 15 per cent and 30 per cent applied to payments for two groups of semiessential imports; these surcharges are applied to the official buying rate of Ȼ 6.62 per US$1 and give rise to effective selling rates of Ȼ 7.60 and Ȼ 8.60, respectively.1

Mixing rates may arise from the fact that transfers at the official rate of interest and dividends on registered capital may be limited to a certain percentage of the registered amount, while amounts in excess of that percentage can be transferred through the free market.

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 of Costa Rica. Purchases and sales of official market exchange are made through the Central Bank or through commercial banks acting as its agents. The free exchange market is conducted by commercial banks and licensed exchange houses. Commercial banks deal in this market with the authorization of the Central Bank, for its account and at its risk. Other residents do not require a license from the Central Bank to effect transactions in the free market.

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

Exchange at the official rate of Ȼ 6.65 per US$1 is granted for the c. i. f. value of specified essential imports 2 from outside Central America; for all imports from Central American countries and Panama that are covered by the provisions of regional integration agreements and are not manufactured in Costa Rica; for goods imported prior to June 19, 1971; for commitments undertaken prior to June 19, 1971 with bona fide financial institutions abroad; and for payments of letters of credit issued prior to June 19, 1971 for goods not shipped by that date. All other imports are subject to surcharges of 15 per cent or 30 per cent of their c. i. f. value when eligible for the official rate or pass through the free market when they are not.

To be eligible for foreign exchange from the official market, 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; delays may occur, however.

In addition to any applicable customs duty, there are levied on imports (1) a stamp tax of 3 per cent of the customs duty on commodities not covered by the common external tariff of the Central American Common Market; and (2) a sales tax with a range of 5-25 per cent ad valorem, from which certain essential items are exempt. Furthermore, most imports originating outside the Central American Common Market are subject to an import surcharge of 30 per cent of the applicable import duty.

Payments for Invisibles

Payments for invisibles may be made freely through the free market. Exchange at the official rate is only granted for freight and insurance on imports effected at the official rate; for dividends and interest on registered foreign capital; indispensable payments of the Central Government; normal expenses in foreign currency on export transactions settled through the official market; student remittances; royalties; and insurance and reinsurance premiums, provided a commitment is given that any receipts from indemnities will be sold in the official market. Allocations of exchange at the official rate for interest and dividends are in principle made on the basis of 10 per cent of the registered capital, while the balance may be settled through the free market; in practice, allocations are granted on the merits of the case.

Residents traveling abroad by air must pay a travel tax of 5 per cent of the value of the tickets plus Ȼ 5 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 in the official exchange market. 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 Industry and Commerce); sugar (from the Ministry of 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, animals and plants of forest origin (from the Ministry of Agriculture and Livestock); and coffee, which requires a sales contract approved by the Coffee Office, in order to control exports under the coffee quotas; 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.

The exchange proceeds of all exports must be surrendered within 60 days of exportation or, if the goods were sold on credit, upon expiry of the term of the credit. Foreign-owned banana companies that have contracts with the Government must surrender their net export proceeds, 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 bananas, sugar, and coffee.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered at the official rate within 60 days of accrual, with the exception of the following, which may be retained or sold in the free market: diplomatic and similar salaries and expenses; tourist expenditures; family remittances and other personal remittances; settlements on insurance claims, provided that the premium was paid through the free market; and commissions received by agents of foreign firms.

Capital

Inward and outward transfers of capital may be made freely through the free market 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 capital outflows may be effected through the official market only if so registered. Incoming capital may be sold freely in the free market 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. The only outward transfers of capital permitted to be made at the official rate are repayments on certain private and public debts and certain amortization on registered foreign capital.

Gold

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

Changes during 1971

January 6. Imports from Honduras became subject to a “customs guarantee” (fianza) equivalent to the duty in the external customs tariff of the Central American Common Market; some raw materials could be exempted by the Ministry of Industry and Commerce.

June 18. Imports of many commodities of Central American origin required a “customs guarantee” in the amount of the customs duties in the CACM’s external tariff.

June 19. The Central Bank invoked Article 97 of its Charter and reintroduced a dual exchange market. (The exchange rate system had been unified since December 23, 1969.) In the official market the existing buying and selling rates for the U. S. dollar were maintained at Ȼ 6.62 and Ȼ 6.65. The payments and receipts eligible for the official market were mainly the following: payments for imports of initially certain commodities on a list of essentials and subsequently some 400 commodities specified in three lists A, B, and C; payments in respect of commitments that had been entered into before June 19; government payments; student remittances; family remittances; profits, dividends, and amortization on private foreign capital whose entry had been registered at the Central Bank; royalties approved by the Central Bank; insurance premiums; export proceeds; normal incidental expenses on exports; and registered inflows of private foreign capital. Foreign exchange for imports of goods not on Lists A, B, or C and for payments not eligible for the official market could be purchased freely in the free market and inward transfers (with the exception of export proceeds) could be made freely through that market.

Imports from CACM countries and Panama were to receive official exchange only if included in the lists of essential imports. Official exchange was not granted for essential goods of non-CACM origin if comparable commodities (in terms of price, volume, and quality) were produced in Costa Rica or elsewhere in Central America.

June 22. The Central Bank established fixed exchange rates in the free market of Ȼ 7.50 buying, and Ȼ 7.53 selling, per US$1. At the same time, commercial banks were prohibited from selling foreign exchange in the free market. As a result, an active “curb” market with more depreciated exchange rates began to be operated by the exchange houses.

July 1. A trade agreement was signed with Bulgaria. To the extent possible, trade was to be balanced.

July 5. The Central Bank set new fixed rates in the free market, at Ȼ 8.57 buying, and Ȼ 8.60 selling, per US$1. Commercial banks were authorized to deal in the free market at these rates.

July 12. The Central Bank Board introduced exchange surcharges of 15 per cent and 30 per cent on payments for imports from all sources of goods on Lists B and C, respectively, and suspended commercial bank purchases of foreign exchange in the free market. The exchange surcharges were payable to the Central Bank at the time the foreign exchange was purchased by the customer. The surcharges were calculated on the official buying rate (Ȼ 6.62 = US$1) and gave rise to effective selling rates of Ȼ 7.60 and Ȼ 8.60. Imports of List B and List C goods were exempt from the surcharges when paid for through the free market.

July 27. The Central Bank announced that imports from CACM countries and Panama, to the extent that these commodities were covered by free trade agreements and were not manufactured also in Costa Rica, were eligible for foreign exchange at the official rate of exchange and exempt from exchange surcharges. List A goods produced in sufficient quantity and quality in Costa Rica, Central America, or Panama would be treated as List B goods when originating in third countries. Official exchange was granted for raw materials for the production of goods equal or similar to those imported from Central America or Panama, and, on the recommendation of the Minister of Agriculture and Livestock, for seed and agricultural implements.

August 12. Law No. 4812 came into force. Foreign pensioners and nonemployed persons were required to have a monthly income from foreign sources of at least US$300 to qualify for residence in Costa Rica.

August 18. Banks were directed to suspend purchases of U. S. dollars in the free market.

August 23. Exchange transactions continued to take place at the pre-August 15 buying and selling rates for the U. S. dollar of Ȼ 6.62–Ȼ 6.65 in the official market and the pre-August 15 selling rate of Ȼ 8.60 in the free market. Bank purchases of U. S. dollars in the free market remained suspended; they were resumed on September 13 (see below).

September 13. New free market rates were set at Ȼ 7.87 per U. S. dollar (buying) and Ȼ 7.90 per U. S. dollar (selling). The official market rates remained unchanged at Ȼ 6.62–Ȼ 6.65 per US$1. Banks were authorized to resume purchases of U. S. dollars in the free market.

September 20. Approval practices for the transfer abroad of interest and dividends were modified; the new rules applied also to credit taken up abroad, whereas the old ones applied to foreign direct investments only. Henceforth, decisions would be made on a case-by-case basis as to the percentage of interest or dividends that could be transferred through the official market. For interest transfers, the External Commerce Department of the Central Bank would take these decisions, and for dividends the Board of Directors (Comisión de Gerencia). Previously, annual transfers of dividends and interest through the official market were permitted up to 10 per cent (for both combined) of the amount shown to have been invested.

October 11. The free market rates were depreciated to Ȼ 8.22 per U.S. dollar (buying) and Ȼ 8.25 per U.S. dollar (selling).

October 20. The free market rates were deprecated to Ȼ 8.57 per U.S. dollar (buying) and Ȼ 8.60 per U.S. dollar (selling).

December 20. The buying and selling rates for the U. S. dollar were maintained unchanged at Ȼ 6.62 – Ȼ 6.65 in the official market and at Ȼ 8.57–Ȼ 8.60 in the free market.

Cyprus

Exchange Rate System

The par value is 2.13281 grams of fine gold per Cyprus Pound. The intervention currency is sterling, with exchange transactions being effected within 2¼ per cent of the effective parity against sterling (£C 1 = £ stg. 1). Exchange rates are based on the fixed rate for sterling and London market rates for sterling against other currencies. The rate for the U. S. dollar on December 31, 1971 was US$2.55¾ buying, and US$2.55¼ selling, per £C 1.

Administration of Control

Exchange controls are administered by the Central Bank of Cyprus and trade controls by the Ministry of Commerce and Industry. Certain authority to approve applications for the allocation of foreign exchange within the scope of instructions issued by the Central Bank has been delegated to the authorized banks. Authority to introduce, adapt, and supervise controls on exports of potatoes has been delegated to the Cyprus Potato Marketing Board, while exports of cereals are licensed by the Cyprus Grain Commission.

Prescription of Currency

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

Nonresident Accounts

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

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

Blocked Accounts are maintained in the name of a nonresident for certain funds of a capital nature which, under the existing exchange control regulations, may not be transferred outside Cyprus. Blocked funds may either be held as deposits or invested in government securities or government-guaranteed securities. Income earned on blocked funds so invested may be remitted to the nonresident beneficiary or credited to an External Account without prior reference to the Central Bank, but cannot be credited to the Blocked Account. Funds can be released from Blocked Accounts in the following circumstances: On application by the authorized bank concerned acting on behalf of the nonresident account holder, the Central Bank may authorize the release of blocked funds for (1) reasonable educational expenses in Cyprus of the account holder’s children; (2) reasonable living expenses of the account holder while on a visit to Cyprus; and (3) donations to charitable institutions in Cyprus. In addition to any releases under (1), (2), and (3), amounts up to a level determined from time to time may become eligible for release. At present, the Central Bank is prepared to permit the release to each nonresident holder of blocked funds of up to £C 1,000, as well as a further amount of up to £C 5,000 in any calendar year, provided that the amount applied for in respect of the latter release represents the proceeds of redemption or sale of securities that were held for account of the nonresident beneficiary for a continuous period of at least four years.2

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. Imports of virtually all commodities may be made freely from any other country except Albania, Bulgaria, mainland China, Czechoslovakia, Eastern Germany, Hungary, North Korea, Poland, Rumania, Tibet, the U. S. S. R., and North Viet-Nam. Certain goods may not be imported freely (some agricultural and textile products, footwear, metal manufactures, and industrial machinery); for a few of these items, no licenses are granted, while for most of them licenses are granted liberally. Imports from Bulgaria, Czechoslovakia, Eastern Germany, Hungary, Poland, Rumania, and the U. S. S. R. are permitted in accordance with the terms of bilateral trade and payments agreements. With respect to Albania, mainland China, North Korea, Mongolia, Tibet, and North Viet-Nam, no formal trading arrangements exist but certain barter transactions take place from time to time.

Individual import licenses are not required for bona fide unsolicited gifts up to £C 10 in value (not to be sold), for returned goods, or for certain special import transactions.

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

Payments for Invisibles

Payments for invisibles to residents of other Sterling Area countries may be made freely. All remittances to countries outside the Sterling Area require the approval of the exchange control authorities. Profits, dividends, and interest from approved foreign investments may be transferred abroad, after payment of any charges and taxes due. Insurance premiums due to foreign insurance companies are remittable after deduction of all expenses and contingencies in respect of any claims. Maintenance remittances are allowed on application accompanied by documentary evidence of hardship. For certain categories of payments, limits are imposed, mainly for the purpose of preventing illicit capital outflow. For study abroad, the lower limit is £C 500 a year, and the upper limit is £C 1,700 a year; the amount allowed depends on the cost of living in the country concerned—e.g., for study in countries in the Middle East, £C 550; in the United States and Canada, £C 1,700; in other countries, £C 1,050. Higher amounts for student allowances may be granted on presentation of documentary evidence. For tourist travel, the limit is £C 250 a person annually; for business travel £C 10 to £C 40 a day is granted in addition to the tourist allowance. The basic tourist allowance is not available for travel to Rhodesia. Resident travelers may take out Cyprus notes up to £C 10 and foreign currency notes up to the equivalent of £ stg. 50. Nonresident travelers may take out £C 10 in Cyprus notes and any amount of foreign currency notes that they brought into Cyprus.

Exports and Export Proceeds

Exports of potatoes are subject to control by the Cyprus Potato Marketing Board, and those of wheat and barley to control by the Cyprus Grain Commission. Exports to Sterling Area countries, with minor exceptions, are free from licensing, irrespective of their amount; exports to other countries are free from licensing when the f.o.b. value does not exceed £C 75. Goods destined for countries outside the Sterling Area are subject to a further control to ensure repatriation of the sales proceeds in an appropriate manner (see section on Prescription of Currency, above). Export proceeds in non-Sterling Area currencies must be surrendered within one month of receipt.

Proceeds from Invisibles

Receipts from invisibles in non-Sterling Area currencies must be sold to an authorized bank within one month of receipt. Persons entering Cyprus may bring in any amount in foreign currency notes and Cyprus currency notes.

Capital

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

Foreign investments in Cyprus by residents of countries outside the Sterling Area require the prior approval of the exchange control authorities. In considering applications, due regard is given to the purpose of the investment, the extent of possible foreign exchange savings, the number of persons to be employed, the extent of the foreign exchange liability which might arise from the investment, and possible competition with existing industries. Foreign investment involving participation in domestic industries not exceeding 49 per cent of the share capital is normally approved; participation above this limit may be permitted in exceptional circumstances. Proceeds from the liquidation of approved foreign investments may be repatriated in full at any time, after payment of any charges and taxes due.

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

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

Gold

Residents may hold and acquire gold coins in Cyprus for numismatic purposes. With this exception, residents other than the monetary authorities, authorized dealers in gold, and industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Authorized dealers in gold are permitted to import gold only for the purpose of disposing of it to industrial users. The export of gold requires the permission of the exchange control authorities.

Changes during 1971

August 16. Foreign exchange transactions were suspended.

August 23. The Central Bank resumed transactions in sterling. The Cyprus pound remained at par with sterling and began to appreciate in terms of the U. S. dollar, the pre-August 15 rate for which had been £C 1 = US$2.40.

December 20. The par value in terms of gold was maintained. The Cyprus pound remained at par with sterling. The effective parity relationship for the U. S. dollar became £C 1 = US$2.60571. Cyprus would avail itself of wider margins.

Dahomey

Exchange System

No par value for the currency of Dahomey has been established with the Fund. The unit of currency is the CFA Franc,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, free of commission charges.

Exchange transactions relating to foreign countries, i. e., countries other than France, Monaco, and the Operations Account countries of the French Franc Area, take place in a dual exchange market at rates based on the fixed rate for the French franc and the Paris exchange rate for the foreign currency concerned in either the official exchange market or the financial franc market. Settlements eligible for the official exchange market are payments and receipts in respect of imports, exports, and incidental expenses on imports and exports (freight, insurance, etc.), as well as current payments by or in favor of domestic and foreign public authorities and public bodies. All other settlements with foreign countries, as well as transactions in banknotes of foreign countries and banknotes issued by the BCEAO, take place through the financial franc market at freely fluctuating rates. Exchange rates in the official market are based on par values and central rates; the effective parity relationship for the U. S. dollar in this market is CFAF 255.785 = US$1.

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, Dahomey, Gabon, Ivory Coast, the Malagasy Republic, Mali, Mauritania, Niger, Senegal, Togo, and Upper Volta). Hence, all payments to these countries may be made freely. All other countries, except 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 Economy and Planning, which also supervises borrowing abroad, the issuing, advertising, or offering for sale of foreign securities in Dahomey, inward direct investment, all investment in foreign countries, and the solicitation of funds in Dahomey for placement in foreign countries. The BCEAO is authorized to collect, either direct or through the intermediary of the banks and the Postal Administration, any information necessary to compile the balance of payments statistics. All exchange transactions relating to foreign countries must be effected through authorized intermediaries. Import licenses are issued by the Directorate-General of Economic Affairs in the Ministry of Economy and Planning, except those for gold, which are granted by the Minister of Economy and Planning personally. Exports of diamonds require the prior approval of the Directorate of Mines. There are three special offices for the import and export of precious metals and precious mineral materials. Import certificates for liberalized commodities 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 (including its Overseas Departments and Territories, except the French Territory of the Afars and the Issas), Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other Operations Account country. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through Foreign or Financial Accounts in Francs.2 All settlements with Portugal, Rhodesia, and South Africa are prohibited.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting to nonresident accounts of CFA banknotes, French banknotes, or banknotes issued by any other institute of issue that maintains an Operations Account with the French Treasury is not permitted, except for BCEAO banknotes mailed direct to the BCEAO agency in Cotonou by authorized banks’ foreign correspondents for credit to the accounts 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. 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-Dahomean Committee, in which both countries have equal status, as provided for by the Economic Cooperation Agreement with France. Under this program, a global quota is established for imports from all countries outside the French Franc Area except EEC countries. Certain French textiles processed in foreign countries are licensed separately.

All imports originating in foreign countries, when valued at more than CFAF 20,000, must be domiciled with an authorized bank. The import licenses or import certificates entitle importers to purchase the necessary exchange, but not earlier than eight days before shipment if a documentary credit is opened or eight days before the payment is due if the commodities have already been imported.

Payments for Invisibles

Payments to Portugal, Rhodesia, and South Africa are prohibited. Payments for invisibles to France, Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to the approval of the Directorate-General of Economic Affairs. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted. For tourist travel, residents traveling to countries other than France, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 75,000 a trip for each person (CFAF 37,500 for children under ten) for two trips a year; any foreign exchange 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 200,000 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. Travelers to other countries may take out any amount in BCEAO banknotes, but if going to a country that is not a member of the West African Monetary Union they must declare to the customs the amount taken out if it exceeds CFAF 150,000.

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

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

All investments abroad by residents of Dahomey require prior authorization by the Minister of Economy and Planning.3 Foreign direct investments in Dahomey 4 must be declared to the Minister of Economy and Planning before they are made. The Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of either type of investment also requires declaration. Both the making and the liquidation of investments, whether these are Dahomean investments abroad or foreign investments in Dahomey, must be reported to the Minister of Economy and Planning within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent in the capital of a company whose shares are quoted on a stock exchange.

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

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

Lending abroad is subject to prior authorization by the Minister of Economy and Planning. The lending of CFA francs to nonresidents for periods of up to two years, however, is freely permitted, subject to ex post reporting to the Directorate-General of Economic Affairs and to the BCEAO.

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

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Dahomey. Imports and exports of gold from or to any other country require prior authorization by the Minister of Economy and Planning, which is seldom granted. Exempt from this requirement are (1) imports and exports by or on behalf of the Treasury or the BCEAO; (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles); and (3) imports and exports by travelers of gold articles up to a maximum weight to be determined by an Order of the Minister. Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1971

May 19. The exchange allocation for tourist travel was increased from the equivalent of CFAF 50,000 a person a year to CFAF 75,000 a person a trip, for two trips a year. The allocation for business travel was increased to the equivalent of CFAF 20,000 a day, subject to a maximum of CFAF 200,000 a trip. The foreign exchange booklet (carnet de change) was abolished.

August 19. Limits were imposed on authorized banks’ net overall positions in foreign currencies and in francs vis-à-vis foreign countries. (This measure was revoked on January 18, 1972.)

September 9. Following the introduction of a dual exchange market in France, similar dual market arrangements were introduced in Dahomey. The exchange rate for the French franc remained fixed at CFAF 1 = F 0.02, and the effective parity relationship for the U. S. dollar in the official exchange market remained at CFAF 277.710 = US$1. The system of nonresident accounts was reorganized. Foreign Accounts in Francs henceforth were related to the official exchange market only, and Financial Accounts in Francs were introduced, which were related to the financial franc market. BCEAO banknotes mailed to the BCEAO by foreign correspondents of authorized banks henceforth could be credited only to Financial Accounts in Francs.

December 9. The forward cover facilities for imports were improved.

December 9. The lending of francs to nonresidents for periods of up to two years was freely permitted.

December 10. With certain exceptions, Foreign Accounts in Francs and Financial Accounts in Francs could only be debited for payments in francs to residents, and no longer for purchases of foreign exchange.

December 24. The exchange rate for the French franc was maintained at CFAF 1 = F 0.02. The effective parity relationship for the U. S. dollar in the official exchange market became CFAF 255.785 = US$1. The dual exchange market arrangements were maintained.

Denmark

Exchange Rate System

The par value is 0.118489 gram of fine gold per Danish Krone. The central rate is DKr 6.98 = US$1, and Denmark avails itself of wider margins. The official limits for the U. S. dollar are DKr 6.823 buying, and DKr 7.137 selling, per US$1, at which rates the exchange authorities stand ready to intervene; the rate for the U. S. dollar fluctuates in the exchange market between these limits. Market rates are quoted daily for the 16 currencies that are used most often.1 Authorized exchange dealers may engage in arbitrage both spot and forward for up to 12 months with one another and with their foreign correspondents in all currencies, including Danish kroner (other than Danish kroner on East German accounts). Forward premiums and discounts are left to the interplay of market forces. Forward transactions with residents must cover contractual payments for goods and services or payments on authorized loans and credits, the payments covered being due not more than two years from the date of the forward contract.

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

Denmark 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; the latter has its own currency, however.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

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

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

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

Imports and Import Payments

Most commodities are liberalized and free of licensing from all sources. The import licensing system is based on three negative commodity lists and three country lists. Commodities listed in Annex 1A to Executive Order No. 489 issued by the Minister of Commerce on December 15, 1970 (as amended) require a license irrespective of country of purchase or origin. All commodities require a license when purchased from or originating in countries or territories listed in Annex 2 III (Albania, mainland China, the Republic of China, Eastern Germany, North Korea, Mongolia, Rhodesia, and North Viet-Nam).

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

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

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

Many commodities are subject to a temporary import surcharge of 10 per cent; the principal exemptions are for raw materials and foodstuffs.

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 14 days before the day stipulated as the latest in the contract (or before the latest customary date in the trade); only in a few cases is approval from the Bank required. 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 2,000 for any permitted purpose may be made without delivery of forms. Foreign exchange for travel is allocated freely and may be obtained for travel to any country, but not earlier than two weeks before the trip if the amount applied for exceeds the equivalent of DKr 2,000. Foreign exchange in banknotes and coins may be purchased from agencies or individuals other than the authorized exchange dealers, provided that the amount does not exceed DKr 2,000 for each transaction.

Payments of any kind to Rhodesia, except payments for pensions, for strictly humanitarian, medical, or educational purposes, or for the purchase of news material, are prohibited.

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

Exports and Export Proceeds

Exports to Rhodesia are prohibited, with the exception of products intended for strictly medical purposes, educational material or other equipment for schools and the like, publications, and news material.

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

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

Proceeds from invisibles

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

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

Capital

Residents have an obligation to repatriate proceeds realized from the sale or liquidation of assets abroad. Transfers abroad may be made by residents to pay interest on, or to redeem upon maturity, or to repurchase the transferor’s own bonds (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. The National Bank has granted a general permission to authorized exchange dealers to make transfers abroad, within certain limits, for account of their resident customers in connection with direct investments or with the private acquisition of real estate abroad. The authority is limited to DKr 40,000 a year for each foreign enterprise for direct investments and to DKr 40,000 a person for private acquisition of real estate. Permission from the National Bank is required for most other transfers abroad of a capital nature by residents. Direct investments abroad by residents are normally approved, but portfolio investment abroad is generally not allowed. Loans and credits involving nonresidents and made in connection with commercial transactions are normally permitted, subject to certain limitations. The net “commercial” foreign position of authorized foreign exchange dealers is subject to limitation; for commercial banks this position cannot exceed 15 per cent of their equity capital.

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

Direct investment in Denmark by nonresidents may be made without any special license if the transaction concerns industry, commerce, handicrafts, the hotel business, or transportation, and if the investment does not increase total direct foreign investment in the enterprise concerned by more than DKr 40,000 in each calendar year. Other direct investment by nonresidents requires permission from the Ministry of Commerce, which is granted liberally in accordance with Denmark’s obligations as a member of the Organization for Economic Cooperation and Development. The purchase by a nonresident of real property in Denmark usually requires a special license from the Ministry of Justice. A nonresident who is or has been a Danish national may freely purchase or subscribe to securities expressed solely in Danish kroner which do not represent direct investment. Other nonresidents may purchase or subscribe to bonds that are quoted daily and are expressed solely in Danish kroner, when the funds have been obtained from the liquidation of investments in Denmark. Moreover, the sale to nonresidents of Danish bonds expressed solely in Danish kroner and listed on the Copenhagen Stock Exchange is freely permitted within an annually established quota; the quota for 1971 was DKr 100 million (cost price), provided that sales were effected for the account of the National Bank of Denmark.2 In addition, nonresidents may purchase or subscribe to shares that are quoted daily, are expressed solely in Danish kroner, and do not represent direct investment when the funds have been obtained from the liquidation of Danish shares, or when the acquisition is made on the basis of subscription rights to shares. Nonresidents may grant credits within certain limits to residents to finance purchases of commodities abroad and to finance the granting of credits for exports. They may, further, grant loans of up to DKr 5 million per borrower in a calendar year to finance the borrower’s own enterprise in most industries, provided that the activity in question does not exclusively or essentially consist in financing, trading in real estate, or certain building and construction activities, and provided that the maturity is at least five years. Finally, they may grant loans up to DKr 200,000 per borrower in a calendar year to subsidiary companies, branches, and the like, and to members of the nonresident’s family.

Municipalities and public utility companies may as a rule issue debenture loans abroad without special permission of the National Bank, but their foreign borrowing is subject to control by the competent executive department of the Government.

Transfers of proceeds from the sale or liquidation of all types of investments and transfers of all other liquid funds in Denmark owned by nonresidents other than newly emigrated Danish nationals are permitted freely, irrespective of when and how the original investment was acquired. Interest and repayment of principal on authorized loans, credits, and deposits received from persons and firms who are nonresidents at the time of receipt may be paid freely, with the proviso that loans and credits obtained from a nonresident must not be amortized or repaid in full more than 14 days before the amortization payment or repayment is due, or before the customary date in the trade; commercial credits for which the latest permissible date of payment under the contract lies within 90 days from inward clearance may be repaid at any time within that period if it results in any savings.

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

Imports and exports of securities are subject to regulations, the details of which are established by the National Bank, or, when exports of specified multiple currency Danish bonds are concerned, by the Ministry of the Interior. Bona fide imports of Danish securities payable only in Danish kroner are permitted. Exports of Danish and foreign securities owned by nonresidents are normally permitted also. Danish securities held in Denmark and belonging to nonresidents may, with certain exceptions, be sold freely to residents. Foreign securities held in Denmark and belonging to nonresidents may, with certain exceptions, be sold to residents only with the permission of the National Bank. Foreign securities held in Denmark may be negotiated freely between residents, provided that the exchange control regulations are not circumvented.

Gold

Residents may freely buy, hold, and sell gold coins in Denmark. Residents other than the monetary authorities and authorized industrial users are not allowed to acquire gold abroad. Imports and exports of gold normally require licenses issued by the Ministry of Commerce; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users. Imports of gold in bars or coins, unless made by or on behalf of the monetary authorities, are subject to value-added tax at a rate of 15 per cent but not to customs duty. Domestic transactions also are taxed at a rate of 15 per cent.

Changes during 1971

January 26. It was made clear that the general regulations applicable to residents’ payments to foreign countries were applicable also to the transfer by foreign nationals residing in Denmark of their wages and salaries, e.g., for family remittances, gifts, and family loans; moreover, premiums for existing life and annuity insurance could be transferred. Also, authorized banks were 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 had not resided in Denmark for more than three years and the transfer was made to the remittor’s own account abroad. In addition, it was made clear that the total balance on all krone accounts held by nonresidents in excess of DKr 75,000 must be transferred abroad at the end of each quarter.

February 26. Nonresidents were permitted to purchase Danish bonds, denominated in Danish kroner only and listed on the Copenhagen Stock Exchange List, up to an amount of DKr 100 million (sales price plus 1 per cent broker’s fee less interest) during 1971, provided that the sale was effected for the account of the National Bank of Denmark.

April 27. Danish issuers of bonds denominated not exclusively in Danish kroner could as a rule freely purchase such bonds abroad for repatriation or liquidation, provided that the securities were quoted on an authorized stock exchange abroad.

May 28. The annual ceiling of DKr 1 million on financial loans taken up abroad on terms of five years or more by certain categories of business enterprises was raised to DKr 5 million, and the rules for such loans were revised.

May 28. The regulations on payments for certain services, including educational fees, royalties, and insurance premiums, were liberalized; payments could now be made through an authorized dealer for up to one year at a time, but at the earliest 90 days before the period covered by the payment.

May 28. Documentary bills covering imports of goods and payable in Denmark could be discounted by authorized dealers, acting as agents of their foreign correspondents, provided that the bills would fall due in no more than 90 days.

August 16. The exchange market was closed. It reopened on August 23.

August 23. The official buying rate for the U. S. dollar was suspended, while the official selling rate for the U. S. dollar and the par value of the Danish krone were maintained. As a result, the krone began to appreciate in terms of the U. S. dollar, the effective parity relationship for which had been DKr 7.50 = US$1.

October 1. The voluntary agreement with the National Bank was suspended, under which authorized banks had deposited in a special account with the National Bank the counterpart of any increase in their total net foreign liabilities.

October 21. An import surcharge of 10 per cent was introduced, except for various essential items, primarily certain raw materials. The surcharge would be reduced to 7 per cent as of July 1, 1972 and to 4 per cent as of January 1, 1973; it was to expire at the end of March 1973.

November 29. Rules governing the net “commercial” foreign position of authorized foreign exchange dealers were introduced, to take effect from December 1, 1971. The net “commercial” foreign position was defined as the balance of (1) all assets in foreign currencies and Danish kroner with nonresidents, and (2) all liabilities in foreign currencies to nonresidents and the liabilities in Danish kroner to foreign correspondents, shipowners, and insurance companies. This position was required to be at all times at least zero and at most DKr 2 million, although commercial banks could at any given moment have a net “commercial” foreign position equal to 15 per cent of their equity capital.

December 21. A central rate of DKr 6.98 per US$1 was established. Denmark availed itself of wider margins and set the official margins for the U. S. dollar at DKr 6.823 buying and DKr 7.137 selling.

Dominican Republic

Exchange Rate System

The par value is 0.888671 gram of fine gold per Dominican Peso. The central rate is RD$1.00 = 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 central rate, subject to banking commissions of ¼ of 1 per cent buying and ½ of 1 per cent selling. With the exception of payments for imports made with the importer’s own foreign exchange, all payments abroad must be made through banks, and all exchange received must be sold to banks. The commercial banks are required to transfer to the Central Bank all exchange purchased. There is a tolerated parallel exchange market.

On August 1, 1953, the Dominican Republic notified the Fund that it 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. AID must be effected under special letters of credit. Certain import commissions must be paid in local currency only. Settlements with Colombia and Venezuela may be effected through special accounts established under reciprocal credit agreements;1 payments for oil imports, however, may not be made through these accounts. Otherwise no obligations are imposed on importers, exporters, or other residents in respect of the method to be followed or the currency to be used for payments to or from nonresidents.

Imports and Import Payments

Imports of some 80 categories of goods, including automobiles with an f.o.b. value in excess of RD$2,000, are prohibited. Imports of certain other commodities are restricted by quotas. All commodities are exempt from quota and prohibition when they are financed with the importer’s own foreign exchange; such imports are also exempt from prepayment of import taxes and surcharges. Licensing controls are maintained over a few commodities, however, for reasons of health or security. All payments for imports require the approval of the Central Bank, except those made with the importers’ 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 alcoholic beverages, Venetian blinds, some perfumes and cosmetics, electric ovens, freezers and refrigerators, record players, and certain construction materials. Some 20 other import items not subject to restrictions must be covered by regular letters of credit. The commercial banks transmit to the Central Bank each day a list of applications for all imports against letters of credit. After the Central Bank approves an application and the importer (where necessary in accordance with Decree No. 239) prepays import duties and surcharges to the customs, the letter of credit may be opened by the commercial bank. For prepaid letters of credit the Central Bank debits the account of the commercial bank for the peso equivalent at the time of approval of the letter of credit. The peso equivalent of other letters of credit is forwarded to the Central Bank after they have been negotiated and exchange is requested by the commercial bank. Importers of most commodities subject to the prepaid letter of credit obligation are also required to prepay to the customs 80 per cent of the estimated value of customs duties and surcharges on the goods prior to the opening of the letter of credit.

In principle, exchange for import payments is made available within not more than five working days from the receipt of the application, but since May 1966 there have been delays in the provision of exchange.

Most imports are subject to an internal consumption tax of 20 per cent ad valorem. Virtually all imports are also subject to customs surcharges (impuestos internos) ranging from 20 per cent to 200 per cent of the f.o.b. value; for most imports, however, they are 56.6 per cent. Imports of agricultural and industrial machinery and equipment and spare parts are subject to a single import tax (including customs duties) of 5 per cent. Certain foodstuffs are exempt from import taxes and others are relieved under special arrangements in times of seasonal shortage.

Payments for Invisibles

All payments for invisibles require the prior approval of the Central Bank, which is given only after careful examination of the application and if the transaction is considered genuine. The allocation of foreign exchange for travel and insurance other than insurance on merchandise imports is suspended. Allowances for family remittances and medical expenses are rarely granted. 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$200 for studies in Latin America, Puerto Rico, and Spain, and up to US$230 for studies in the United States (except Puerto Rico), Canada, and 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 the contract. Transfers of profits and dividends on foreign investments made on or before October 6, 1970 are in principle approved on presentation of a balance sheet which has been agreed with the tax authorities, provided that taxes due on these earnings have been paid, including an 18 per cent tax on dividends remitted or credited to nonresidents; in some cases the transfer may have to be effected in monthly or quarterly installments. Profits on foreign investments made after October 6, 1970 may be remitted, subject to the flat 18 per cent tax, provided that a certificate of the Central Bank is presented certifying the genuine nature of the foreign investment and provided that the investment has been registered at the Central Bank. Remittances of profits on foreign investments made after October 6, 1970 without such certification are taxed at the complementary income tax rate or at 18 per cent, whichever is higher. (The applicable complementary tax rate rises progressively and is 70 per cent for dividend or profit income in excess of RD$900,000.)

In principle, exchange for payments for invisibles is made available within five days from receipt of the application, but there have been delays.

Travelers may take out foreign currency notes up to the amount of any travel allocation they have obtained. Travelers are not permitted to take with them any domestic currency.

Exports and Export Proceeds

Export licenses are required for sugar, in connection with the operation of export quotas established under the International Sugar Agreement, and for coffee, cocoa, and tobacco. Within two working days of receiving payment, exporters of Dominican products must surrender through the commercial banks to the Central Bank foreign exchange equal to 100 per cent of the f.o.b. or c.i.f. value of their exports. For the purpose of exchange surrender, declared export prices must equal or exceed the minimum export prices published by the Central Bank. Exempt from the exchange surrender requirements are foreign mining companies, and firms operating in industrial free zones, which are only required to convert sufficient foreign exchange to cover local costs and taxes. Exporters may not extend credit for more than 90 days from the date of embarkation without authorization by the Central Bank.

Proceeds from Invisibles

The foreign exchange proceeds from invisibles are subject to surrender requirements and must be surrendered to the Central Bank through the commercial banks. The import of Dominican banknotes and coins is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. Inward capital remittances must be registered with the Central Bank and must be converted into pesos at that Bank. Registration may cover the value of machinery and equipment, as well as intangible assets such as licenses and patents. Applications for approval of outward capital remittances must be submitted through the commercial banks to the Central Bank. Withdrawals of capital by foreigners leaving the Dominican Republic are authorized in reasonable amounts, sometimes with provision for the transfer to be effected in annual installments. Applications by residents to transfer capital abroad to make portfolio investments, purchase real estate, etc., are not normally approved.

Gold

Residents may purchase, hold, and sell gold coins in the Dominican Republic for numismatic purposes. With this exception, residents other than the monetary authorities and authorized industrial users are not allowed to hold or acquire gold in any form other than jewelry, in the Dominican Republic or abroad. Imports and exports of gold in any form other than jewelry constituting the personal effects of a traveler require licenses issued by the Central Bank; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users.

Changes during 1971

January 1. The maintenance allowance for students was increased from US$150 to US$175 for Latin America, Puerto Rico, and Spain and from US$200 to US$225 for the United States (except Puerto Rico), Canada, and other European countries. On November 1, these allowances were further increased to US$200 and US$230, respectively.

January 15. Allowances for family remittances by Dominican nationals (up to RD$50 for each beneficiary a month) and medical expenses abroad were resumed.

May 21. The list of prohibited imports was enlarged to cover some chemical products.

June 9. Law No. 136 of May 11, 1971 increased from 3 per cent to 4 per cent the surcharge levied on customs duties and import taxes by virtue of Law No. 692 of April 2, 1965.

June 9. Law No. 137 was promulgated, creating the Dominican Center for Export Promotion.

June 16. A new Mining Law, Law No. 146, was promulgated.

July 1. Decree No. 1181 of June 22, 1971 extended the system of import controls until June 30, 1972.

August 17. Exchange operations in currencies other than the U. S. dollar were suspended. They were resumed on September 27.

August 17. Import letters of credit could only be opened in U. S. dollars. On September 27 they could again be established in other currencies as well.

August 21. A new insurance law entered into force. It stipulated that insurance on imported goods must be effected with companies authorized to operate in the Dominican Republic. Importers were therefore required to conclude contracts on the basis of f.a.s., f.o.b., or c & f prices.

August 23. The Dominican peso remained pegged to the U. S. dollar at RD$1 = US$1.

November 29. Law No. 235 extended for another year the internal consumption tax of 20 per cent levied on most imports.

December 21. A central rate of RD$1 = US$1 was established.

Ecuador

Exchange Rate System

The par value is 0.0355468 gram of fine gold per Ecuadoran Sucre. There are two exchange markets. The effective parity relationship for the U. S. dollar in the official market is S/ 25.00 = US$1. In the official market the Central Bank maintains rates of S/ 24.75 buying and S/ 25.25 selling per U. S. dollar which apply to export proceeds, import payments, certain capital transactions, and all transactions by the Government or public entities. All other transactions take place in a free market where the rate fluctuates and all purchases and sales of foreign exchange are subject to a tax of 1 per cent. The free market selling rate on December 31, 1971 was S/ 26.96 per US$1.

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 of Ecuador. The Central Bank also issues import and export licenses and registers foreign capital. Exports of coffee to “new markets,” however, require the prior authorization of the Institute of Foreign Trade and Integration. Imports which enter as part of a direct investment and imports by foreign enterprises which have contracts with the Government require authorization from the Finance Ministry as well as from the Central Bank in lieu of an import license.

Prescription of Currency

Most settlements with Bulgaria, Eastern Germany, Hungary, Poland, and Rumania must take place through bilateral accounts. Payments between Ecuador and 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.1 Prior import licenses are required for all permitted imports, with the exceptions specified below. Medicine and spare parts for machinery and automotive vehicles are free of license when valued at US$100 or less. A few goods may be imported only from LAFTA countries, and some only from Paraguay; with these exceptions, import licenses are issued freely irrespective of the origin of the goods, provided that the appropriate advance deposits and additional import taxes have been paid, that the required prepayments of import duties have been made, and, normally, 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 generally prohibited. Import licenses which do not entitle the importer to foreign exchange at the official rate (“no exchange licenses” or permisos de importación no reembolsables) may be issued for goods financed from the proceeds of certain international loans, provided that these have been registered at the Central Bank, but such licenses are not required to import the goods concerned. Imports which enter the country as gifts or as part of a direct investment and imports by foreign enterprises which have contracts with the Government (mainly petroleum and mining enterprises) require an authorization from the Ministry of Finance and the Central Bank instead of an import license; the importer is not entitled to purchase foreign exchange at the official rate. The Monetary Board is authorized to shift items between Lists I and II and to prohibit the import of goods or lift import prohibitions when the economic situation of the country and the balance of payments situation so require.

The advance deposit requirement applies to most public and private imports financed with official exchange. The main exceptions are imports under the agricultural surplus agreements with the United States, grants from foreign governments and organizations, imports of certain goods to be used for the construction and equipment of hotels, all imports from Paraguay, imports of capital goods financed by international organizations or by suppliers’ credit for at least one year after arrival, imports of medical supplies and equipment made by official health or social service institutions, imports by the universities and polytechnical schools, and imports of machinery, equipment, and materials needed for public works. The advance deposit must be made in sucres by the importer when applying for an import license; the importer must at the same time lodge with the Central Bank a prepayment in local currency of the import duty. The rates for the advance import deposits are determined in accordance with the type of good imported and the terms of payment. There are five categories of imports, one in List I and four in List II, and three ranges of payments terms, giving a possible total of 15 advance deposit rates.2 At the end of 1971, they ranged from 10 per cent to 280 per cent of the c.i.f. value, but for imports by the Government or by official agencies they cannot exceed 100 per cent of the c.i.f. value. The prescribed prepayment of import duty is 100 per cent for both List I and List II commodities. Advance deposits are released pari passu with the making of import payments. That part of the deposits which exceeds 100 per cent of the c.i.f. value is released at the time of customs clearance. Imports of crude petroleum receive a subsidy of S/ 7.07 per U. S. dollar invoiced on import documents. The subsidy is received in the form of a tax credit certificate issued by the Central Bank on the basis of documentation approved by the Ministry of Natural Resources and Tourism that the import was effected, without relation to the import payment.

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 and amortization 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 per cent a year and remittances of dividends and profits at the official rate may not exceed 14 per cent of the registered value of the investment. There are also limits on student allowances eligible for the official rate; these range from US$300 to US$450 a month, depending on the type of study and on the country involved. All other payments for current invisibles, including travel expenditure, must be settled in the free market and are unrestricted. There are no limitations on the amounts of domestic and foreign banknotes that travelers may take out. Residents traveling abroad by air must pay a tax of S/ 600 for each exit visa. Tickets for foreign travel are taxed at the rate of 8 per cent on tickets for departure from Ecuador and 4 per cent on tickets for the return trip to Ecuador.

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. Most exports are subject to export taxes, payable at the time the export license is received. During 1970 a system of ad valorem taxes on the f.o.b. export value was instituted which affects about 90 per cent of exports by value. The rates are 10 per cent for exports of bananas and shrimp and 15 per cent for all other exports, except those specifically exempted. These taxes will be reduced from the second half of 1972 in such proportions as to eliminate them over a five-year period. A small part of exports exempted from the ad valorem export taxes receive a subsidy based on the f.o.b. value at rates ranging from 4 per cent to 15 per cent. The subsidy is received in the form of a tax credit certificate on the basis of customs documentation. All exports of bananas are subject to an additional specific tax, except those carried out through ports in Esmeraldas Province. 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. Outward transfers through the official market are restricted.

All foreign investments in Eucador 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. In the case of investment for which exchange was sold to cover local costs, the investor must document that the exchange was sold to the Central Bank of Ecuador. For foreign capital entering in the form of machinery and equipment, the investor must document that the merchandise has been nationalized and that it took the form of a “nonreimbursable” import. Additionally the investor must present to the Central Bank the certification from the appropriate ministry (Finance, 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 of Ecuador; for private loans registration is optional. In the case of suppliers’ credits and similar credit for financing the importation of merchandise, no special registration procedure is required; all the pertinent information on terms of payment, etc., is contained in the import license, and that provides the basis for purchase of exchange for remittance of interest, charges, and scheduled amortization.

Foreign exchange at the official rate may be obtained for the withdrawal of foreign investment from Ecuador five years after the date of registration, on the basis of a schedule agreed by the Central Bank. Profits accumulated in previous years may be repatriated also on the basis of a schedule agreed by the Central Bank for investments which have completed the registration procedure. For investments registered on a provisional basis, 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 and are free of advance deposit. Imports of nonmonetary gold in bars may be made by the Central Bank or by any other resident and are treated as List II imports subject to advance deposit. Gold bars are exempt from import duty, while that on semiworked gold is 70 per cent ad valorem. All imports of gold are payable through the official market.3

Changes during 1971

January 1. New advance import deposit requirements for the first quarter went into effect. They ranged from 1.92 per cent to 291.60 per cent.

January 25. Decree No. 97 of January 21 revised the taxes on banana exports. Decree No. 106 of January 22 fixed minimum prices that exporters of bananas must pay to producers.

February 3. Decree No. 153-A temporarily exempted coffee exports to Annex B countries from the ad valorem taxes to which they had been made subject by Decree No. 496 of October 13, 1970. Instead, a contribution of US$1 on each 60-kilogram bag was levied on such exports.

February 4. Decree No. 144 exempted from the 20 per cent ad valorem duty all imports made by the Government, municipalities, and provincial councils.

April 1. New, reduced advance import deposit requirements went into effect for April, May, and June.

April 15. Decrees Nos. 539 and 540 implemented in part the import duty liberalization required by the Cartagena Agreement (Andean Pact).

April 21. Decree No. 555 was issued containing the operating instructions for the Foreign Trade Institute.

April 24. Decree No. 587 was promulgated containing a new import tariff based on the Brussels nomenclature. The Decree also authorized the Government to impose import quotas. The additional tax imposed on List II imports was abolished by incorporation into the new tariff.

June 3. A reciprocal credit agreement was signed with Bolivia. It came into force on July 1.

June 8. A reciprocal credit agreement was signed with Brazil. It came into force on September 1.

June 16. Monetary Board Resolution No. 580 abolished the advance import deposit requirements for goods on List I.

June 22. The Industrial Development Law was amended. Among the new provisions was one permitting certain firms to receive negotiable tax credit certificates ranging from 7 per cent to 15 per cent of the value of their exports, depending on the global f.o.b. value of such exports.

June 30. Decree No. 974 ratified the Foreign Investment Code of the Andean Pact.

July 1. New, reduced advance import deposit requirements went into effect for July, August, and September.

July 5. Decision No. 267 of the Ministry of Finance provided that applications for import licenses must be accompanied by a certificate showing that the insurance had been arranged in Ecuador. Prepaid customs duties were based on the c.i.f. value.

July 13. Decree No. 1029 exempted several branches of activity from certain provisions of the Andean Pact’s Foreign Investment Code.

August 2. Decree No. 1108 provided that, in accordance with Decree No. 420 of March 11, 1971, branches and agencies of foreign banks could not accept savings or fixed-term deposits from persons domiciled in Ecuador; existing deposits had to be liquidated by September 24, 1972 or lose the right to earn interest.

August 23. The official buying and selling rates for the U. S. dollar were maintained at S/ 24.75 and S/ 25.25 per US$1.

September 2. Decree No. 1303 exempted coffee exports to Annex B countries until December 31, 1971 from the 15 per cent ad valorem tax introduced by Decree No. 239 of August 16, 1970. Instead, a 5 per cent ad valorem contribution was imposed on these exports.

September 24. Decree No. 1447-B established new procedures for coffee exports.

September 27. A new Hydrocarbons Law came into force.

October 1. New payments procedures for imports went into effect guaranteeing to the importer the exchange rate prevailing on the day he made his sucre deposit at the Central Bank.

October 1. New, reduced advance import deposit requirements went into effect for October, November, and December. They ranged from 3.60 per cent to 182.25 per cent.

November 22. Supreme Decree No. 1740 reintroduced a secondary free exchange market with a fluctuating rate. (The dual exchange market had been unified in August 1970.) Imports and exports, government transactions, and other specified transactions continued to be settled in the official market, where the buying and selling rates of S/ 24.75 and S/ 25.25 per U. S. dollar were maintained. The principal settlements eligible for the official market were those relating on the supply side to exports, private registered capital, and capital for official investments by the Government and by public agencies, and on the demand side those relating to imports, interest and amortization on loans, dividends, profits, and amortization on registered foreign investments, student remittances, and essential remittances by the Government and by public agencies. All other settlements had to take place through the free market. The tax measures and export incentives introduced by Decree No. 239 of August 16, 1970 were maintained. The Decree also provided that the Monetary Board could authorize private banks, including branches of foreign banks, to accept deposits in foreign exchange (implemented on November 24 by Monetary Board Resolution No. 594) and it modified some export tax exemptions. Decrees Nos. 5 and 239 of June 22, 1970 and August 16, 1970 were revoked, so that the Monetary Board was empowered to shift transactions between the two exchange markets. The initial rate in the free market was about S/ 26.00 per US$1.

November 22. Monetary Board Resolution No. 592 re-established advance import deposits on List I commodities and increased those for List II imports. The rates for List I ranged from 50 per cent on imports payable within 180 days to 10 per cent on imports for which payment was not due for at least a year. The rates for List II ranged from 280 per cent on category ‘d’ imports payable within 180 days to 40 per cent on category ‘a’ imports for which payment was not due for at least a year.

November 22. Export taxes were modified and would be abolished in stages over a five-year period. The new rate of tax was 10 per cent for bananas and shrimp, and 15 per cent for all other commodities. The taxes were payable upon receipt of the export license. Provincial and municipal governments were prohibited from imposing new taxes or charges on exports.

December 2. Monetary Board Resolution No. 596 established allocations at the official exchange rate for study abroad.

December 20. The official buying and selling rates for the U. S. dollar were maintained at S/ 24.75 and S/ 25.25 per US$1.

December 22. Monetary Board Resolution No. 599 exempted imports of raw materials by business firms from the advance deposit requirements.

December 30. Decree No. 1896 increased the tax on exit visas from S/ 400 to S/ 600. Travel by sea or land was exempt.

December 30. Decree No. 1918 imposed a 1 per cent tax on all exchange transactions in the free market.

Egypt

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$2.30. The Central Bank of Egypt’s buying and selling rates for the U. S. dollar on December 31, 1971 were LE 43.4782 and LE 43.7390. An exchange tax of 5 per cent is applied to most invisible and capital remittances. A premium of 35 per cent of the f.o.b. price is applicable in principle to the convertible currency proceeds of certain agricultural exports and to convertible foreign exchange sold by foreign tourists to pay for hotel services and specified handicraft products.1 Holders of balances in specified accounts in foreign currencies may sell these funds to residents, through a commercial bank, at a premium. An exchange surcharge of 35 per cent is applicable to certain private sector payments for invisibles and to certain funds allocated to enterprises for imports needed to overcome production bottlenecks.

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 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 Economy and Foreign Trade. The exchange control laws, ministerial orders, decree-laws, instructions of the Minister of Economy and Foreign Trade, and decisions of the Supreme Committee are carried out by a Director of Exchange Operations appointed by the Minister of Economy and Foreign Trade. A foreign exchange budget is established annually. Exchange control is implemented under the supervision and instructions of the Under-Secretary for Economy and Foreign Trade in Charge of Exchange Operations and the Foreign Exchange Budget and the Director of Exchange Operations. The technical work of exchange control is performed by the Central Exchange Control Department attached to the Central Bank of Egypt. The General Control Authority for Exports and Imports controls imports and exports; it also issues import licenses for imports that do not require the transfer of foreign exchange. Many imports and most exports of traditional commodities are carried out by public sector companies.

Prescription of Currency

Payments to residents of countries with which Egypt does not have bilateral payments agreements may be made in the currency of the payee’s country when that currency is available; in a convertible currency;2 in Egyptian pounds to the credit of the appropriate nonresident account; or in any other manner permitted by the Central Exchange Control. Receipts 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 Central Exchange Control.

Settlements with countries with which Egypt has payments agreements are made according to the terms of those agreements.3 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 three main types of nonresident accounts in Egyptian pounds: Free Nonresident Accounts, Nonresident C Accounts, and Nonresident D Accounts.

Free Nonresident Accounts may 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 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 Central Exchange Control. They may be debited, subject to exchange control approval, for payments due to residents (except for exports, Suez Canal dues, and ships’ disbursements); for transfers to other Nonresident C Accounts; for transfers to Nonresident D Accounts; and for payments abroad in convertible currencies.

Nonresident D Accounts may be opened in the name of any resident of a payments agreement country (see footnote 3). 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 Central 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.

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.

In addition, there are certain types of foreign currency accounts that may be held by nonresidents or persons treated for certain exchange control purposes as nonresidents. These foreign currency accounts are of four types, as indicated below.

External Accounts of Nonresident Aliens may be opened in the name of nonresident foreigners. They may be credited with convertible currencies transferred from abroad; foreign currency transferred from other accounts of the same type; and bank interest on balances in these accounts. They may be debited for amounts of foreign exchange sold to the Central Bank of Egypt at the official exchange rate to cover local payments; transfers to other accounts of the same type; and transfers abroad in any convertible currency for the benefit of nonresidents (or, if the account is held by a juridical person, for the benefit of residents who are employed by the holder of the account).

External Accounts of Resident Aliens may be opened in the name of foreign residents who are for exchange control purposes treated as nonresidents in respect of income they receive from abroad. They may be credited only with convertible currencies transferred from abroad and with bank interest on balances in these accounts. They may be debited only for amounts sold at the official exchange rate to the Central Bank of Egypt to cover local payments and for transfers abroad in any convertible currency for the benefit of the account holder, his parents, wife, or children.

External Accounts of Egyptian Citizens may be opened in the name of citizens who for exchange control purposes are treated as nonresidents in respect of income they receive abroad, such as emigrants and Egyptians working abroad for over five years. They may be credited with convertible currencies transferred from abroad and with bank interest on balances in these accounts. They may be debited for transfers abroad in any convertible currency for the benefit of the account holder, his parents, wife, or children; for amounts of foreign currency sold to obtain an exchange premium; and for sales of foreign currency for Egyptian pounds to the bank at which the account is held.

Resident Accounts of Egyptian Citizens may be opened for Egyptians working abroad or performing services in Egypt for foreign persons or firms. They may be credited with convertible currencies transferred from abroad that represent their foreign currency income after deduction of the prescribed percentages that must be repatriated; bankers’ checks, travelers checks, and letters of credit denominated in convertible currency; and foreign banknotes.4 They may be debited for transfers abroad in the name of the account holder while he is abroad; travel and living expenses abroad of the account holder, his parents, wife, or children; transfers abroad for the benefit of the account holder to cover personal expenses; and sales of foreign currency for Egyptian pounds to the bank at which the account is held.

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.

Most imports are made, under the supervision of twenty Determination Committees, by publicly owned commercial companies affiliated with the Egyptian General Trade Organization. The Committees are responsible for determining the overall export and import policy in respect of the commodities for which they have been established. This includes the drawing up of the necessary implementation programs for the achievement of import targets in accordance with established priorities, and the examination of import offers, taking into consideration specifications, prices, delivery dates, and means of payment. Some imports may also be made by certain industrial and other public sector establishments and by private sector enterprises. Imports of specified goods up to LE 7,500 a year may be made (through the intermediary of a public sector company whenever the value exceeds LE 200) by industrial private sector establishments, provided that no transfer of foreign exchange is required. Individuals are permitted to import (through the intermediary of a public sector company whenever the value exceeds LE 200) for their own use specified goods up to a value of LE 3,000 a year, provided that no transfer of foreign exchange is required.

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. Imports may be authorized by this Committee, by the General Control Authority for Imports and Exports (when the authorization is based on a decision of the relevant Determination Committee), or by the Exchange Control Department. Advance payments for imports in excess of LE 100 require the prior approval of the Exchange Control Department.

Imports of new personal effects exceeding LE 400 in value and imports not requiring the transfer of foreign exchange are subject to import licenses, which are issued by the General Control Authority. All other imports are regulated by exchange allocations rather than by import licenses.

Certain exchange allocations for imports by enterprises are subject to an exchange surcharge of 35 per cent.

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; for others, the prior approval of the Central Exchange Control is required. Exchange is normally made available for expenses associated with approved trade transactions and other current payments. Expenses for permitted travel, family maintenance, film royalties, and subscriptions and fees of professional organizations usually are approved within specified quotas. Private travel abroad is usually permitted when no exchange is applied for. Egyptian nationals who have deposited earnings from their work abroad, or from services performed for nonresidents, in specified foreign currency accounts, may use this foreign exchange freely for any travel expenses for themselves, their families, or their parents. Other residents may purchase, through local banks acting as intermediaries and up to specified amounts, the foreign exchange required for travel expenses and certain other purposes from Egyptian nationals holding certain foreign currency accounts or direct from holders of certain other foreign currency accounts. An exchange surcharge of 35 per cent is levied on foreign exchange required for these purposes.

An exchange tax of 5 per cent is applied to all payments for invisibles except students’ remittances, government payments, transfers of funds for pilgrimages, and travel financed with funds from specified foreign currency accounts.

Travelers may not export Egyptian pound banknotes. Foreign tourists leaving Egypt and 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. Residents may not take out foreign exchange in excess of the equivalent of LE 15 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, but an export form must be submitted. Exports of many agricultural products are organized and supervised by Determination Committees. Cotton, rice, and petroleum are exported by the public sector only. A premium of 35 per cent of the f.o.b. price is applicable in principle to the convertible currency proceeds of exports of citrus fruits, fresh vegetables, potatoes, groundnuts, and certain handicraft articles (Khan el Khalili products). Certain nontraditional exports may be eligible for ad hoc subsidies.

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

A 35 per cent premium is applied to foreign exchange remitted by Egyptians abroad and sold to a bank, and to foreign currency sold by tourists to pay their hotel bills (but see footnote 1).

Physical persons who are considered nonresidents (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 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 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.

Capital

Egyptian nationals who have deposited foreign earnings in specified 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.

Transfers abroad by residents for the purpose of acquiring securities or other capital assets outside Egypt require individual licenses, which normally are not granted except for transfers to some Arab countries. The import and export of securities and similar items require licenses. 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. The Foreign Investment Law of September 23, 1971 defines the treatment of new foreign investments. Requests for transfers of profits not covered by this law are considered on an individual basis.

Gold

Residents may hold and acquire gold coins and gold jewelry in Egypt. The monetary authorities and authorized industrial users are allowed to hold or acquire gold in any other form. There is a free market for gold coins in Cairo. With the exception of monetary gold, most imports and exports of gold in any form other than jewelry require licenses.

Changes during 1971

January 1. New bilateral trade and payments arrangements with Spain came into force. The existing payments agreement was terminated.

May 23. Ministerial Order No. 553 amended certain exchange control regulations concerning the purchase of foreign currency by persons leaving the country for a vacation. The principal change was an increase from LE 5 to LE 15 in the amount of exchange they could purchase without special permission.

May 23. Ministerial Order No. 554 revised the regulations on resident and nonresident accounts in foreign currencies. Henceforth, four types of accounts were distinguished: External Accounts of Nonresident Aliens, External Accounts of Resident Aliens, External Accounts of Egyptian Citizens (emigrants and persons who had worked abroad for over five years), and Resident Accounts of Egyptian Citizens (persons working abroad, working in Egypt for foreign firms, or furnishing other services in Egypt to firms or persons abroad or to foreign nationals in Egypt).

June 1. Law No. 33 of May 9, 1971 amended Law No. 149 of 1964, which on April 10, 1964 had introduced an exchange tax of 5 per cent on all payments for invisibles and capital transfers except students’ remittances, funds for pilgrimages, and government payments. These exemptions were maintained. The modification aimed at defining precisely the concept of Public Treasury, in view of the exemption accorded to the Treasury’s transfers.

June 1. Ministerial Order No. 607 established an External Finance Committee, to replace the Finance Committee.

July 1. Presidential Decree No. 1770 established a General Control Authority for Exports and Imports. It would supervise the application of the export and import laws and, on the basis of decisions taken by “determination committees,” authorize the implementation of import transactions.

July 1. The organization of foreign trade was revised. The commodity and country monopolies of the 13 state trading companies were terminated, so that each could effect authorized imports of any commodity from any source. On the export side, the official, cooperative, and private sectors were given equal rights; only the export of staples (cotton, oil, and rice) remained a government monopoly. Import and export orders were to be considered by 20 Determination Committees, which replaced the 10 commodity boards. The decisions on imports of capital equipment were entrusted to the Egyptian General Industrialization Authority, with the exception of imports under aid agreements with foreign states.

July 1. The list of goods which may be imported without transfer of official exchange by industrial enterprises was expanded and the maximum amount that could be imported annually was raised from LE 5,000 to LE 7,500. For imports by individuals, including those of automobiles, the annual limit remained LE 3,000.

July 1. The amount up to which Egyptian nationals who have worked abroad for a period of not less than one year may without an import license import their personal effects was increased from LE 100 to LE 400.

July 25. A 35 per cent exchange premium was granted to tourists’ payments for hotel services. (On January 13, 1972 the premium was extended to all conversions of foreign currency by foreign travelers in Egypt other than students or holders of visas valid for three months or more.)

July 29. Implementing regulations for the new payments arrangements with Spain were issued.

August 23. The official rate for the U.S. dollar was maintained at LE 1 = US$2.30. Rates for other currencies were based on rates in international exchange markets.

September 23. Foreign Investment Law No. 65 defined the treatment of new foreign investment and provided norms for profit transfers and capital repatriation. Five-year exemptions from profit tax could be granted to these investments. The law also provided for the establishment of free trade zones.

September 24. A private bank, the Egyptian International Bank for Foreign Trade and Development, was created. A reform of the banking system was announced, to become effective on July 1, 1972; the National Bank of Egypt would then be the only bank authorized to conduct financial transactions related to foreign trade.

December 21. The official rate for the U. S. dollar was maintained at LE 1 = US$2.30. Egypt did not avail itself of wider margins. The buying and selling rates for the U. S. dollar were unchanged at piastres 43.4782 and 43.7390.

December 23. The Central Bank set new exchange rates for leading currencies other than the U. S. dollar to reflect the December realignment of exchange rates.

El Salvador

Exchange Rate System

The par value is 0.355468 gram of fine gold per Salvadoran Colón. The effective parity relationship for the U. S. dollar is Ȼ 2.50 = US$1. The rates of the Central Reserve Bank of El Salvador for transactions with the public are Ȼ 2.49 buying, and Ȼ 2.51 selling, per US$1. Exchange transactions by commercial banks with the public take place at or within these limits. A stamp tax of 110 of 1 per cent is applicable to all sales of exchange as well as drafts and other documents embodying a right to exchange; on amounts below Ȼ 100,000 the tax is levied at fixed amounts that may be slightly in excess of 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

Exchange control authority is exercised by the Central Reserve Bank through its Exchange Control Department. Authority to approve certain payments is delegated to the commercial banks. Exchange licenses for imports are issued by the Exchange Control Department. The Central Reserve Bank is also empowered to license exports, but this power has not been exercised. Exports of a number of commodities require licenses issued by the Ministry of Economy or of Agriculture. Exports of coffee are supervised by the Salvadoran Coffee Company and require licenses issued by the Ministry of Finance.

Prescription of Currency

Payments to Costa Rica, Guatemala, Honduras, and Nicaragua in respect of trade and specified invisibles 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 be authorized to hold nonresident accounts in U. S. dollars with authorized banks, provided that such accounts are credited with foreign exchange received from abroad. The accounts of nonresidents may be utilized freely, but the commercial banks must make periodic reports to the Central Reserve Bank of the movements on such accounts. The maximum balance which may be held on these accounts is fixed by the Exchange Control Department.

Imports and Import Payments

Imports from all countries except those of the Central American Common Market must be registered with the Central Reserve Bank before orders are placed. Import licenses are required for airplanes, firearms, ammunition, military equipment, dynamite, cotton for industrial use, jute sacks, skins, leather, some chemical and pharmaceutical products, coffee for seeding, sugar, and saccharin. Payments and transfers abroad require exchange licenses, which are granted freely, provided that the terms of payment do not exceed a certain maximum (counted from the date of entry of the merchandise into a customs warehouse): (1) Imports of raw materials for industry, iron and steel products for the construction industry, various spare parts, greases, and lubricants are authorized by the Exchange Control Department when the terms of payment do not exceed three years.1 (2) Imports of staple food products, medicinal products, and medical and surgical supplies must be paid for within one year.2 Imports of the following goods are not subject to maximum credit terms: machinery and equipment for agriculture and industry, semiprocessed goods for industrial production, surgical equipment, research and educational equipment, scientific and technical books, fertilizers, and insecticides. A prior import deposit in local currency, equivalent to 100 per cent of the c.i.f. value, is applied to specified nonessential food products, confectionery, alcoholic beverages, tobacco products, perfumes, cosmetics, watches, and jewelry. All goods not mentioned previously in this paragraph may be imported only against payment before customs clearance.

The commercial banks are authorized to provide exchange for import payments not exceeding US$10,000 for imports from Central American countries and US$2,000 for imports from all other countries; larger amounts have to be approved by the Central Reserve Bank. When suppliers abroad request payment in advance for commodities valued at over US$500, 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 for goods valued at over US$500 that are subject to the 100 per cent prior import deposit; the latter may be used to finance the deposit on the advance payment. These regulations are also applicable to goods imported from other countries of the Central American Common Market. Guarantee deposits are refunded when the goods arrive in the country, provided that payment in full has been made to the exporter. Imports from Panama that are covered by the Free Trade Agreement with that country and imports made by small traders and industrial producers (up to US$500 for each order and up to US$6,000 a year for each importer) are exempt from the ruling exchange control regulations.

Imports originating outside the Central American Common Market are subject to an import surcharge of 30 per cent of the applicable import duty; the surcharge is not applied to certain industrial equipment and raw materials that are duty free by virtue of the Industrial Incentives Law.

Payments for Invisibles

Payments for current invisibles require exchange licenses, which are granted freely for most items, although for certain payments only up to specified limits. Permission to purchase exchange for travel outside the Central American area (interpreted to mean the Central American Common Market) for tourism, business, or health reasons is granted by the Exchange Control Department free from deposit requirements up to the equivalent of US$600 a person a trip, on the basis of US$50 a person a day (US$300 for children under 15 on the basis of US$25 a day); for amounts in excess of US$600 a person a trip, up to US$1,500 (for amounts in excess of US$300, up to US$750 for children under 15), a 10 per cent guarantee deposit in local currency must be lodged with the Central Reserve Bank, which is released upon the traveler’s return.3 The Department also generally authorizes transfers of up to US$150 a month to each adult Salvadoran with permanent residence abroad; larger amounts may be authorized when the need therefor is shown. Students also are allowed US$150 a month, in addition to an installation allowance, tuition, and other expenses.

For nationals traveling to Central American countries, the commercial banks have been delegated authority to provide exchange as follows: for travel to Costa Rica, Honduras, and Nicaragua, the equivalent of Ȼ 500 a trip in Costa Rican colones, lempiras, or córdobas; for travel to Guatemala, Guatemalan currency notes up to Q 1,000 a trip, or a cashier’s check in Salvadoran colones up to the equivalent of Ȼ 2,500 a trip (for payment in Guatemala through the Cámara de Compensación Centroamericana). Requests for larger amounts must be submitted to the Central Reserve Bank. 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 for in foreign exchange, provided that the insurance contract was registered with the Exchange Control Department at the time it took effect. Alternatively, insurance companies may receive premiums in colones and periodically obtain from the Exchange Control Department authorization to purchase the foreign currencies they are obliged to transfer abroad. Foreign currencies derived from insurance or reinsurance contracts must be surrendered to the Central Reserve Bank or to an authorized commercial bank.

Travelers may take out Ȼ 200 in domestic notes and coins. This limit is subject to modification, however, to facilitate border trade with other Central American countries.

Exports and Export Proceeds

Export licenses are not required except for a number of foodstuffs and other items of which the authorities wish to ensure an adequate local supply, but the proceeds of all exports must be received through a bank in El Salvador and the foreign exchange must be surrendered to the Central Reserve Bank or an authorized commercial bank. Export transactions must be declared to the Exchange Control Department within 15 days of shipment. The collection terms normally must not exceed 90 days, but longer credit terms may be authorized by the Exchange Control Department. With the exception of sales to “new markets,” exports of coffee are subject to an export tax.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the Central Reserve Bank or an authorized commercial bank. Travelers may bring in 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. Payments abroad representing capital movements require exchange licenses; such licenses are not granted for resident-owned capital except for investments in Costa Rica, Guatemala, Honduras, and Nicaragua. The entry of capital in the form of foreign investment may be registered with the Ministry of Economy. Registration ensures (1) free remittance of net profits on foreign capital invested in industrial enterprises, enterprises engaged in the extraction of nonrenewable natural resources, and enterprises in the sphere of tourism; (2) the remittance of net profits of enterprises engaged in other activities up to a limit of 10 per cent a year of the registered capital (larger amounts may be authorized in special cases by the Ministry of Economy); (3) repatriation of the proceeds from the total or partial liquidation of the enterprise (after payment of taxes) in proportion to the participation of foreign capital in the total capital; (4) remittance of the sales proceeds of shares and other instruments representing investments or participations, including capital gains; and (5) with respect to loans, interest and amortization as determined at the time of registration. In the cases under (3) and (4) there is required, in addition to the approval of the Exchange Control Department, the prior approval of the Ministry of Economy. Foreign investments made in El Salvador prior to June 1, 1961 must also be registered by the Ministry of Economy or the Exchange Control Department in order to enjoy the same facilities. The Exchange Control Department authorizes, without restriction, the remittance abroad of foreign currency for the payment of interest and amortization on short-term loans from abroad that have been approved by and registered with the Exchange Control Department. The Central Reserve Bank controls the short-term foreign liabilities of the commercial banks through a system of individual quotas.

Decree No. 279 of March 27, 1969 sets certain minimum capital requirements for businesses that are owned by foreign nationals and for those in which foreign nationals have a share-holding interest. For purposes of this Decree, foreign nationals are defined as persons who are not citizens of one of the five countries of the Central American Common Market.

Gold

Residents may hold and acquire gold coins in El Salvador for numismatic purposes. With this exception, residents other than the monetary authorities and authorized industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Imports and exports of gold in any form other than jewelry require licenses issued by the Central Reserve Bank; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users. In practice, imports of nonmonetary unworked gold are made only by a jewelers’ cooperative acting on behalf of its members and other users.

Changes during 1971

March 1. The deposit requirement on sales of foreign exchange for advance payments in respect of imports was reduced from 25 per cent to 10 per cent on imports valued at over US$500 (previously US$200). For specified luxury goods, however, the required deposit on prepayments remained at 100 per cent.

March 1. The portion of the exchange allowance for tourists, business, or health travel outside the Central American area that is exempt from guarantee deposit was increased from US$400 to US$600 a person a trip (from US$200 to US$300 for children under 15). The guarantee deposit required on excess amounts was reduced from 20 per cent to 10 per cent.

March 31. The amount up to which commercial banks were authorized to provide exchange for imports from Central American countries was increased from US$6,000 to US$10,000.

May 18. Imports up to US$500 for each order and up to US$6,000 a year for each recipient were exempted from the exchange control regulations when made by small traders and industrialists.

August 16. The exchange rate for the U. S. dollar was maintained at Ȼ 2.50 = US$1. The Central Bank’s buying and selling rates remained Ȼ 2.49 and Ȼ 2.51. Transactions in other currencies were suspended. They were resumed on August 23.

November 30. Imports from Panama were exempted from the exchange control regulations when covered by the Free Trade Agreement with that country.

December 21. The exchange rate for the U. S. dollar was maintained at Ȼ 2.50 = US$1. The Central Bank’s buying and selling rates remained Ȼ 2.49 and Ȼ 2.51.

Equatorial Guinea

Exchange Rate System

The currency of Equatorial Guinea is the Equatorial Guinean Peseta, which is issued by the Central Bank of the Republic of Equatorial Guinea and is defined as equivalent to 0.0126953 gram of fine gold. 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.

Administration of Control

The Central Bank is in charge of exchange control. Exchange transactions must be carried out through the Central Bank or authorized banks. 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 Central Bank.

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 Central Bank, after which the exchange is automatically made available. Licenses for imports from Spain usually have a validity of three months, and those for other countries a validity of six months.

Payments for Invisibles

All payments for current invisibles require the prior approval of the Central Bank, which for specified purposes and up to specified amounts has delegated its approval authority to authorized commercial banks. Residents1 are granted foreign exchange up to the equivalent of Ptas EG 10,000 a person a calendar year for tourist travel abroad. The standard allocation for business travel is the equivalent of Ptas EG 2,000 a person a day, subject to a maximum of Ptas EG 50,000 a trip. For study abroad, foreign exchange is granted to cover tuition and living expenses; nonboarding students are allowed the equivalent of Ptas EG 5,000 a month for living expenses.

The transfer of wages and salaries by foreign workers 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. Exemptions allowing the transfer of a higher proportion of earnings may be requested, but nonresident aliens do not require such exemption; transfers in excess of the specified limits are subject to a transfer tax of 35 per cent on any amount in excess of 60 per cent of earnings that is transferred. The same ceilings and rate of transfer tax are applicable to the transfer of business earnings and professional earnings. There are special arrangements, however, for the transfer of earnings of Nigerian workers employed in Equatorial Guinea. In addition, nonresident aliens are permitted to withdraw up to Ptas EG 5,000 a month from their savings accounts for remittance abroad.

The transfer of net investment income and net rental receipts from real estate other than urban properties 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 and net rental receipts being reinvested in Equatorial Guinea, the tax is 17.5 per cent of the amount remitted. The transfer of net rental receipts from urban properties is permitted up to a maximum of 90 per cent of the amount involved, subject to a transfer tax of 35 per cent of the amount transferred. The balance must be kept in a blocked account and, subject to approval by the Central Bank, may be utilized for maintaining or improving the property. Transfers abroad in respect of patents, trademarks, etc., are permitted fully, subject to a tax of 25 per cent of the amount remitted.

Travelers may take out Ptas EG 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 Central Bank or an authorized commercial bank.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the Central Bank or an 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. Capital receipts in foreign currency must be surrendered to the Central Bank or an authorized commercial bank. The transfer abroad of funds from the sale of fixed assets and financial assets by nonresidents is subject to a tax of 35 per cent of the capital gain realized; 50 per cent of the total amount realized net of taxes may be remitted abroad immediately and the balance in 24 equal monthly installments. Residents, as well as nonresidents living in Equatorial Guinea, are prohibited from engaging in borrowing or lending with nonresidents. Foreign investments in Equatorial Guinea are governed by the General Law on Foreign Investments in Equatorial Guinea.

Gold

All purchases and sales of minted gold and gold bars are centralized in the Central Bank, which also has a monopoly over the import and export of minted gold and gold bars.

Changes during 1971

February 28. The Central Bank issued general regulations for the application of Decree-Law No. 1/1969. They included a definition of residents.

August 23. Equatorial Guinea maintained both the gold parity of its currency and the fixed exchange rate for the Spanish peseta, with which the currency remained at par. As a result, the Equatorial Guinean peseta, which previously had corresponded to Ptas EG 70 = US$1, began to appreciate in terms of the U. S. dollar.

December 20. Equatorial Guinea maintained the gold parity of its currency, which remained at par with the Spanish peseta. As a result, the effective parity relationship for the U. S. dollar became Ptas EG 64.4737 = US$1. Except in transactions against the Spanish peseta, Equatorial Guinea would avail itself of wider margins.

Ethiopia

Exchange Rate System

The par value is 0.355468 gram of fine gold per Ethiopian Dollar. The effective parity relationship for the U. S. dollar, the intervention currency, is Eth$2.30263 = US$1. The official rates on December 31, 1971 were Eth$2.28536 buying, and Eth$2.35444 selling, per US$1. Authorized banks may freely undertake forward exchange transactions.

Administration of Control

All transactions in foreign exchange must be carried out through authorized banks and authorized dealers under the control of the National Bank of Ethiopia. All payments abroad require licenses issued by the Exchange Controller, whose office is a department of the National Bank; all exports are licensed by the Exchange Controller to ensure the surrender of the foreign exchange proceeds.

Prescription of Currency

Outgoing payments are normally made in convertible foreign exchange appropriate to the country of the recipient or in U. S. dollars. The net proceeds of exports must be received in a foreign currency that is freely convertible, or in any other foreign currency acceptable to the Exchange Controller.

Nonresident Accounts

Nonresidents may hold nonresident accounts either in Ethiopian dollars or in foreign currencies at authorized banks. Balances in these accounts may be freely transferred abroad. Transfers between nonresident accounts require prior approval, except those between foreign currency accounts.

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are prohibited. No import licenses are required. However, payments abroad for imports require exchange licenses; these licenses are granted freely in the currency appropriate to the country of origin, or in any convertible currency that may be requested, but advance payment for imports is not permitted. Goods ordered through a third country must be supported by evidence of original cost. Payment is normally authorized by letter of credit, mail transfer, telegraphic transfer, or cash against documents at sight or on an acceptance basis; however, goods which were previously subject to advance deposit requirements (about 100 items, mostly consumer goods) may not be financed on an acceptance basis.

Payments for Invisibles

Payments for invisibles require exchange licenses. Invisibles connected with trade transactions are treated on the same basis as the goods to which they relate. Foreign nationals may remit up to 35 per cent of their salaries or annual income net of taxes, provided that they have resided in Ethiopia for less than six years; this time limit does not apply to foreign nationals who are in contractual service with the Ethiopian Government, with an autonomous government organization, or with certain private institutions, and who have an employment contract specifically entitling them to remit a stated percentage of their earnings. Ineligible persons may apply for exchange to meet expenses for maintenance of bona fide dependents, education of children, medical care, and premiums on insurance policies taken out before April 2, 1962. Subject to proper provision having been made for local taxation and for a reserve prescribed by the Commercial Code, foreign companies may remit dividends on their invested and reinvested capital in any currency.

Persons traveling abroad are allowed foreign exchange equivalent to Eth$75 a day for a maximum period of six weeks in any one calendar year if the journey is made for business purposes, and up to the equivalent of Eth$600 a year for persons 16 years of age or over and Eth$420 a year for those under 16 if the journey is made for pleasure. Travelers may take with them a maximum of Eth$100 in Ethiopian banknotes.

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are prohibited. All commodities require export licenses. When applying for a license, an exporter must specify the goods to be exported, the destination, and the value. The granting of the license by the Exchange Controller enables the goods to pass through customs. The licensing system is used to ensure that foreign exchange receipts are surrendered to the National Bank of Ethiopia within six months and that export proceeds are received in an appropriate currency (see section on Prescription of Currency, above).

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Persons may bring in a maximum of Eth$100 in Ethiopian banknotes. Foreign exchange need not be declared by travelers on entry, and its re-export is freely permitted.

Capital

All receipts of capital in the form of foreign exchange must be surrendered. There is no discrimination regarding the currencies in which foreign investments are accepted. Special concessions are made to approved new enterprises financed by domestic or foreign capital; these concessions include exemption from taxes for a period of five years, admission of all imports of machinery free of duty, and a guarantee of permission to foreign investors to remit abroad earned profits after taxation. Upon liquidation, transfer of the entire imported capital and reinvested profits is permitted in any currency. Transfers of emigrants’ allowances, legacies, and savings of foreign employees upon retirement are permitted up to the equivalent of Eth$70,000 in foreign currency. Sums in excess of this amount are authorized up to a total of Eth$70,000 in any subsequent 12-month period.

Borrowing abroad requires exchange control approval and is restricted. 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.

Gold

Residents may hold and acquire in Ethiopia gold coins of a special commemorative issue, as provided in Legal Notice No. 318 of 1966; such coins are offered for sale by the Commercial Bank of Ethiopia to residents and nonresidents and may be exported by travelers. The ownership of personal jewelry and articles of adornment of which gold or platinum forms a part also is permitted. Unless specifically authorized by the Minister of Finance, the possession or custody, in a quantity in excess of 10 ounces, of raw or refined gold or platinum or of gold or platinum in the form of nuggets, ores, or bullion constitutes an offense. Certain mined gold is sold by the Treasury to the National Bank at a price slightly below US$35 an ounce. Imports and exports of gold in any form other than jewelry require exchange licenses issued by or on behalf of the Ministry of Finance. Such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users; those for the import of gold for industrial purposes are issued to registered importers by the National Bank on behalf of the Ministry of Finance.

Changes during 1971

August 18. The Ethiopian dollar remained pegged to the U. S. dollar at Eth$2.50 = US$1.

August 21. The spread between the official buying and selling rates for the U. S. dollar was increased from Eth$2.475 buying and Eth$2.525 selling to Eth$2.4625 buying and Eth$2.5375 selling.

September 1. The official buying rate for the U.S. dollar was restored to Eth$2.475.

December 21. The par value in terms of gold was maintained. The effective parity relationship for the U.S. dollar became Eth$2.30263 = US$1. Ethiopia availed itself of wider margins. The official buying and selling rates for the U. S. dollar were set at Eth$2.25082 and Eth$2.35444 per US$1.

December 31. The official buying rate for the U.S. dollar was changed to Eth$2.28536.

Fiji 1

Exchange Rate System

Fiji has not yet established a par value for its currency, the Fiji Dollar, with the Fund. However, prior to independence a par value of F$1 = US$1.14832 was agreed. A fixed relationship between the Fiji dollar and the pound sterling, the intervention currency, is maintained at £ stg. 1 = F$2.0900. The effective parity relationship for the U. S. dollar was US$1 = F$0.802085 on December 31, 1971.

Administration of Control

Exchange control is administered by the Minister of Finance operating as the Exchange Control Authority, who 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 Ministry of Finance, residents of Fiji are required to offer for sale to an authorized dealer all foreign currencies they receive.2 The Ministry of Commerce, Industry, and Cooperatives is responsible for the issue of import licenses. Export licenses are issued by the Ministry of Finance.

Prescription of Currency

Fiji is a member of the Sterling Area, and settlements with residents of other parts of the Sterling Area may be made freely in any Sterling Area currency. Payments from Fiji to residents of countries outside the Sterling Area may be made in any foreign currency except Rhodesian currency. Payments by nonresidents of the Sterling Area to residents of Fiji may be made in any currency, but the prescribed manner of payment for exports to countries outside the Sterling Area is payment in Fiji currency from an External Account in the Sterling Area or in any foreign currency. All payments to Rhodesia are prohibited.

Nonresident Accounts

Fiji distinguishes between two classes of “residents” for exchange control purposes—a resident of Fiji and a resident of another country which is in the Sterling Area. A resident of Fiji is a person who either has lived or intends to live in the country for a period of at least three years; a resident of another country in the Sterling Area is a person who is known to have established his domicile in such a country. The bank accounts in Fiji of both classes of residents are designated resident accounts; payments from resident accounts held by residents of other Sterling Area countries to nonresidents of the Sterling Area are normally subject to the approval of the exchange control authorities in the Sterling Area country concerned.

A nonresident is a person whose country of established residence is a country outside the Sterling Area. A nonresident 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 Ministry of Finance. There are no restrictions on debits to External Accounts, all of which may be effected without specific approval. The accounts may be credited freely with interest payments, payments from other External Accounts, the proceeds of sales of foreign currency by the account holder, and the proceeds of sales of Fiji currency which the account holder brought into Fiji or acquired with 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. Foreign currency accounts are conducted on a basis similar to External Accounts.

Imports and Import Payments

All imports from Rhodesia are prohibited, and imports originating in mainland China and the CMEA countries 3 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 butter, matches, cement, and gold.

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 from sources outside the Sterling Area only if the goods have already left the port of shipment; in all other cases advance payment for goods of non-Sterling Area origin requires the permission of the Ministry of Finance.

Payments for Invisibles

Payments for invisibles originating in other Sterling Area countries may be made freely in any Sterling Area currency. Payments for invisibles originating in countries outside the Sterling Area (except Rhodesia) are permitted either under a delegated authority to banks or, where large amounts or nondelegated payments are involved, upon application to the Ministry of Finance. In principle, payments to residents of countries outside the Sterling Area may be made freely for all bona fide current transactions.

There are no restrictions on travel expenditure in, or remittances to, countries in the Sterling Area. Residents of Fiji traveling to countries outside the Sterling Area are entitled to a foreign currency travel allowance for private or business travel up to the equivalent of F$523 a journey. In addition, each traveler may take with him F$100 in Fiji currency, and the equivalent of F$100 in other Sterling Area currencies. Any additional foreign currency required for travel purposes is granted on application to the Ministry of Finance, provided the Ministry is satisfied that the additional amount is required to meet genuine travel expenditures. Subject to the prior approval of the Ministry of Finance, an education allowance of F$4,180 is available for study outside the Sterling Area by students who for exchange control purposes are regarded as residents. Travelers may not take out more than F$100 in domestic currency notes and F$1 in domestic coins.

Exports and Export Proceeds

There are no exchange control obligations in respect of exports to countries in the Sterling Area. Exporters are, however, obliged to collect the proceeds of exports to countries outside the Sterling Area 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 the export to countries outside the Sterling Area of lumber and a few other items, including 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

There are no controls on receipts from invisibles from Sterling Area countries, but receipts from non-Sterling Area countries must be surrendered to authorized dealers. 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 non-Sterling Area currencies to an authorized dealer within 30 days of return.

Capital

There are no restrictions on capital transfers to other parts of the Sterling Area, and residents of other Sterling Area countries may invest freely in Fiji. 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. Capital transfers by residents to finance direct investments outside the Sterling Area require the specific permission of the Ministry of Finance and are normally permitted only where benefits will accrue to Fiji within a reasonably short term. The transfer of inheritances and dowries which are due to nonresidents is permitted, as is the transfer of the sales proceeds of a house owned by a nonresident. Residents of Fiji are also allowed to make cash gifts equivalent to F$523 a year to nonresidents; additional funds are permitted in compassionate cases. Emigrants may take out all their assets, whether their destination is inside or outside the Sterling Area.

Residents are not permitted to purchase foreign currency at the official rate of exchange to acquire foreign currency securities but they may, subject to prior approval by the Ministry of Finance, acquire such securities through the investment currency market in the United Kingdom. Residents are not permitted to purchase personal real property outside the Sterling Area. Portfolio investment in Fiji by nonresidents is permitted, provided that payment is made from a nonresident source; the proceeds of the sale or realization of such investment qualifies for repatriation.

Gold

Residents may freely hold gold coins, but not gold bullion, in Fiji. The export of gold coins and bullion requires the specific permission of the Ministry of Finance. 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 and are subject to a 25 per cent duty when of Commonwealth origin or 50 per cent when of other origin. Gold jewelry may be imported free of duty from Commonwealth sources (the duty is 25 per cent for other sources) and 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.

Changes during 1971

August 23. The existing relationship between the Fiji dollar and the pound sterling was maintained at £ stg. 1 = F$2.0900. As a result, the Fiji dollar began to appreciate in terms of the U. S. dollar, the parity rate for which had been F$1 = US$1.14832.

December 21. The existing relationship between the Fiji dollar and the pound sterling was maintained at £ stg. 1 = 2.0900. The effective parity relationship for the U.S. dollar became US$1 = F$0.802085.

Finland

Exchange Rate System

The par value is 0.211590 gram of fine gold per Finnish Markka. The central rate is Fmk 4.10000 = US$1. The Bank of Finland’s official buying and selling rates for the U. S. dollar, the intervention currency, vary within a range of Fmk 4.008-4.192 per U. S. dollar; on December 31, 1971 they were Fmk 4.134 and Fmk 4.152 per US$1. The market rates for the U. S. dollar are applicable also to clearing dollars. Market rates for certain other currencies 1 vary between limits which result from combining the official limits for the U. S. dollar maintained by Finland and such limits in force in the country of the other currency concerned, or, in the case of the Canadian dollar, are based on market rates abroad. The Bank of Finland quotes daily forward rates for the U. S. dollar; otherwise, forward premiums and discounts are left to the interplay of market forces. Official fixed buying and selling rates are applied to the clearing ruble. 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; forward transactions with residents must have a commercial basis.

Administration of Control

The Bank of Finland operates the exchange control system, delegating authority to the authorized exchange dealers (mainly commercial banks). Import and export licensing is administered by an office subordinate to the Ministry of Trade, 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 countries 2 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 Rumania, Finnish markkaa for mainland China, and U. S. dollars in all other cases) or in Finnish markkaa through Restricted Accounts. Settlements with the convertible currency countries may be made in any convertible currency or through Convertible Accounts.

Nonresident Accounts

There are four categories of nonresident accounts: Foreign Exchange Accounts, Convertible Markka Accounts, Restricted Markka Accounts, and Capital Accounts.

1. Foreign Exchange Accounts are held by nonresidents in convertible or bilateral currencies.3 These accounts may be credited with amounts received in the currency in which the account is kept; with payments authorized to be made in the currency in which the account is kept; and with interest accrued on such accounts. They may be debited for transfers to Capital Accounts; for payments to residents of Finland; and for withdrawals in Finnish currency. If the account is held in a convertible currency, it may also be debited for transfers to other Foreign Exchange Accounts in any convertible currency and for transfers abroad or withdrawals in any convertible currency. If the account is held in a bilateral currency, it may be debited for transfers to other Foreign Exchange Accounts in the same currency and for transfers to the respective bilateral country.

2. Convertible Markka Accounts may be credited with the equivalent in Finnish markkaa of convertible currencies sold to an authorized bank; with authorized remittances from residents of Finland to residents of convertible currency countries; with transfers from other Convertible Markka Accounts; with the value of Finnish banknotes received by an authorized bank from a bank in a convertible currency country; and with interest accrued on the account. They may be debited for authorized payments in Finland, including the purchase of foreign exchange; for remittances abroad; and for transfers to other Convertible Markka, Restricted Markka, or Capital Accounts.

3. Restricted Markka Accounts are held by residents of countries with which Finland has bilateral payments agreements (see footnote 2). They may be credited with the proceeds from the sale of the currency of the country of the account holder or of any convertible currency; with transfers from another Restricted Markka Account of the same country; with authorized remittances payable to the country of the account holder; with the value of Finnish banknotes received by an authorized bank from a bank in the country of the account holder; and with interest accrued on the account. They may be debited for authorized payments in Finland in accordance with the relevant payments agreement; for transfers to other Restricted Markka Accounts related to the country of the account holder; for transfers to the country of the account holder; and for transfers to Capital Accounts.

4. Capital Accounts comprise all other nonresident accounts. They may be credited with funds available for credit to a Foreign Exchange Account, a Convertible Markka Account, or a Restricted Markka Account; with proceeds from the sale to a resident of any asset held in Finland by a nonresident; with interest on the account; with income from nonresident-held assets administered by the account-holding bank; and with sums obtained from the redemption of bonds and debentures. Capital Accounts may be debited for noncommercial current expenses in Finland of and for account of the account holder and for investment in shares and in those bonds and debentures that are denominated in Finnish markkaa, provided that the securities are quoted on the stock exchange and are purchased by a bank on behalf of the holder. The Bank of Finland 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),4 provided that the goods are purchased from and originate in that area. Certain other goods may be imported from the multilateral area under a global quota system, which provides for import licenses to be issued at least up to the amounts of certain value quotas for specified commodity groups; no industrial goods are restricted by global quotas. The total value of the global quotas for 1971 amounted to some 0.5 per cent of total 1971 imports. All remaining goods require an individual license when imported from the multilateral area and are set out in a negative list, the discretionary licensing list, which comprises only agricultural commodities and petroleum products. The only commodities still subject to quantitative restriction for the multilateral area are certain agricultural commodities, certain fuels, certain fertilizers, and gold and silver.

Import licenses are not required for most commodities originating in and shipped from the U. S. S. R., and for many commodities originating in and shipped from the other bilateral countries; all commodities liberalized for import from the bilateral area are among those already liberalized for import from the multilateral area. Other imports from the bilateral countries are admitted under licenses up to quotas provided for under the relevant trade agreement. All imports of commodities originating in countries classified neither in the multilateral area nor in the bilateral area require individual licenses. The State Granary is the sole agency for the import of wheat, rye, barley, oats, and products of these grains for human consumption. There is a state monopoly also for imports of alcoholic beverages.

Exchange is granted without delay for all permitted imports on presentation of an application form, the import license if required, and the original commercial invoice, provided that the goods are already in the country or there is sufficient evidence to guarantee their importation. About one fourth of total imports, mainly specified consumer goods and all types of motor vehicles, must be paid for in cash before customs clearance. The goods in question may be stored in a free port in Finland, provided that they do not cause any financial obligations of residents to nonresidents; if such an obligation is created, payment must be effected immediately, and otherwise payment must be made not later than on withdrawal of the goods from free port storage. Payment for other imports must be made within six months after the arrival of goods in the country. For imports on credit of over six months, the credit must be authorized by the Bank of Finland. Such credit is approved provided that it is considered normal in the traditions of the trade.

Payments for Invisibles

With 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.

A Finnish resident going abroad (except for border travel) may purchase from commercial banks foreign exchange equivalent to Fmk 3,000 a trip. A traveler going to Denmark, Norway, or Sweden may withdraw on a savings account passbook issued by a Finnish monetary institution up to Fmk 500 during one journey, provided that the utilized amount of his travel allocation does not exceed a total of Fmk 3,000. Nonresident travelers may take out Fmk 3,000 a trip in Finnish notes and coins and any amount in foreign notes and coins declared upon entry. Resident travelers may take out foreign or domestic currency, or any combination of these, up to Fmk 3,000; travelers making frequent trips to neighboring countries to destinations not located beyond any municipality adjoining Finland’s land boundary may take out foreign or domestic currency, or any combination of these, up to Fmk 200 a person a trip. For all types of travel, bona fide applications for additional amounts of foreign exchange are approved by the Bank of Finland.

Exports and Export Proceeds

All exports to Rhodesia are prohibited. Export licenses are required only for exports of 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 must be surrendered to the Bank of Finland or an authorized exchange dealer. However, exporters are permitted to keep a part of their export proceeds in foreign exchange accounts with Finnish banks or with banks abroad. The accounts may be used by the exporter to pay for expenses related to exports and for authorized imports of raw materials intended for his own production. The Bank of Finland may at any time claim the accounts against payment at the official rate.

Proceeds from Invisibles

With the exception of freight earnings, foreign exchange receipts derived from current invisibles do not have to be surrendered. The authorized exchange dealers and shipping firms are allowed to maintain working balances in foreign exchange, under the supervision of the Bank of Finland. The import of Finnish and foreign means of payment is unrestricted.

Capital

Most outward transfers of nonresident capital are subject to approval by the Bank of Finland. Inheritances are transferable without limitation and, subject to certain conditions, are generally transferred automatically up to Fmk 100,000 for each beneficiary. Persons who during the last calendar year have resided outside Finland and continue to do so may transfer abroad their assets in Finland in one lump sum, subject to the prior approval of the Bank of Finland. Generally, the Bank of Finland will grant foreign exchange for this purpose.

Nonresidents may purchase through an authorized bank, against convertible or externally convertible currencies or by debiting a Convertible Markka Account, bonds, debentures, or shares quoted on the Helsinki stock exchange. When the securities so acquired by a nonresident are deposited in the custody of the authorized bank, the nonresident purchaser is permitted to sell the securities on the stock exchange through the authorized bank and to repatriate the proceeds of the sale in a convertible or an externally convertible currency. No permission is needed for the acquisition with funds classified as Capital Accounts of shares, bonds, and debentures quoted on the stock exchange, but proceeds from the sale of such securities may not be 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 Markka Account, approval for their export can be obtained freely. The import of securities is unrestricted.

The regulations concerning foreign direct investment are as follows: All incoming capital transactions must be approved by the Bank of Finland, which considers the foreign exchange aspect. The Bank grants permission liberally, unless the investment is judged to be exceptionally detrimental to the national interest or to be of a purely financial character. Repatriation of authorized direct investments is free. Foreign investments that involve a participation of more than 20 per cent in the capital of an enterprise require, in certain cases, the approval of the State Council. This approval, when required, is usually granted liberally. The primary reason for the 20 per cent limit is concern for the protection of natural resources, mainly forests. Direct foreign investment in the forest and mining industries is not normally permitted.

On demand of the Bank of Finland, residents must declare their foreign assets, including property owned abroad. Proceeds from the sale of securities and real property must be surrendered. Outward transfers of capital by residents require individual approval; investment by residents in foreign securities or real estate is rarely permitted. For direct investment abroad, approval is granted on the merits of each case.

Finnish emigrants are granted an exchange allowance of up to Fmk 50,000 a person, in addition to the basic tourist travel allowance.

Gold

Residents may freely hold, buy, and sell gold in any form at home. Imports of gold in any form other than jewelry require licenses issued by the Licensing Office; such licenses are not normally granted except for imports by or on behalf of the monetary authorities and industrial users. Commercial imports of articles containing gold require licenses issued by the Licensing Office; for most such articles, these are granted freely. Exports of gold are subject to the same regulations as exports of other commodities, i.e., an export control declaration approved by the Licensing Office is usually sufficient.

Changes during 1971

January 1. The import regulations for 1971 entered into force. The amount of the global quota program for 1971 was unchanged from 1970 and there was no change in the composition of the global quotas.

May 10. The Bank of Finland suspended its buying and selling rates for the deutsche mark and the Netherlands guilder. The officially posted fluctuation limits for these currencies also were suspended.

May 10. Foreign exchange for travel to Czechoslovakia and Poland could be taken up in convertible currencies.

May 14. The regulations of November 13, 1970 requiring cash payment for certain imports before customs clearance or before the goods were placed in a public or private bonded warehouse or entered in a free port in Finland were further modified. Cash payment for these items was no longer required before the goods were placed in a public or private bonded warehouse or in a free port in Finland, but continued to be required before customs clearance.

May 19. The Government issued a decree introducing temporary import licensing for the goods covered by impending tax legislation. The decree was to remain in force until the said legislation entered into force but no longer than one month from the date of the decree. It was abrogated on June 7.

June 6. A 15 per cent supplementary sales tax was levied on certain consumer durables, whether imported or domestically produced. The tax expired on December 31, 1971.

June 6. An import equalization tax ranging between 1.2 and 5 per cent and covering about 75 per cent of all imported manufactured goods was introduced to compensate for the “cascade” effect of taxes levied on domestically produced goods.

August 16. The exchange market was closed. It reopened on August 23.

August 23. The Bank of Finland suspended its existing buying rate for the U.S. dollar (Fmk 4.158 per US$1) but maintained the official selling rate (Fmk 4.242 per US$1). As a result, the markka appreciated slightly in terms of the U. S. dollar. The Bank would until further notice give official quotations only for the U. S. dollar, the ruble, and the clearing dollar. The buying and selling rates for rubles and clearing dollars were the same as the rates that were applied on August 13, 1971 (Fmk 4.6533 buying and Fmk 4.6799 selling for rubles and Fmk 4.188 buying and Fmk 4.212 selling for clearing dollars). The rates of exchange for other currencies would be established by the Bank of Finland and authorized foreign exchange dealers on the basis of the Bank’s officially quoted U. S. dollar rates and available international quotations for the currencies concerned.

September 17. The Government submitted to Parliament a proposal for a generalized system of tariff preferences on imports from developing countries.

November 17. Certain sales and marketing expenses incurred by a sole agent in the interest of a foreign seller were included in the customs value of trademarked goods. This change in customs valuation practices, which did not affect duty-free goods of EFTA or U. S. S. R. origin, raised the value at customs clearance of the goods concerned by 1 to 5 per cent of the invoiced price.

December 8. The fixed buying and selling rates for the ruble were changed from Fmk 4.6533 and Fmk 4.6799 to Fmk 4.932 and Fmk 4.960 per ruble 1.

December 13. The Bank of Finland started quoting daily forward rates for the U. S. dollar for periods of one, two, three, six, nine, and twelve months. The Bank would also quote, in special cases, rates for periods in excess of twelve months but not exceeding twenty-four months. (As regards longer-term risks, the Bank of Finland was examining special covering arrangements with the Export Guarantee Institute.) Forward cover was available for all transactions permitted by the foreign exchange regulations, including those connected with the taking up and servicing of loans.

Authorized banks could cover at the Bank of Finland contracts with residents only; the banks had to conclude contracts directly with their customers and then could cover their total net position at the Bank of Finland. However, although the Bank of Finland did not cover contracts with nonresidents, such contracts could be used to cover forward contracts with residents, in which case the former had to be included in the calculation of the total net position of the banks.

December 20. A central rate of Fmk 4.10000 = US$1 was established. Finland would avail itself of wider margins.

December 20. The Central Bank ceased to quote fixed buying and selling rates for clearing dollars. Henceforth, the official buying and selling rates for the U. S. dollar were applied also to clearing dollars.

France *

Exchange Rate System

The par value is 0.160000 gram of fine gold per French Franc. There are two exchange markets, the official market, where exchange rates are based on par values and central rates, and the financial franc market, in which rates are determined by supply and demand, free from official intervention. In the official market the effective parity relationship for the U. S. dollar is F 5.11570 = US$1. In the financial franc market the rate for the U. S. dollar was about F 5.210 = US$1 on December 31, 1971. Market rates for spot exchange transactions in U. S. dollars in the official market are maintained between official limits of F 5.0005 buying, and F 5.2310 selling, per US$1. Market rates for Western European currencies and a few other currencies fluctuate between limits which result from combining the official limits for the U. S. dollar maintained by France and such limits in force in the country of the other currency concerned.1

The dual exchange market regulations are not applicable to the Operations Account countries.2 Fixed conversion rates in terms of French francs apply to the currencies of the following countries and territories: Algeria, Morocco, Tunisia, the Operations Account countries, the French Overseas Departments, 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. Except in the cases of Algeria, Morocco, and Tunisia (to all of which the dual market regulations are applicable) these conversion rates are applied irrespective of the nature of payments or receipts.

The transactions with foreign countries or nonresidents that are eligible for the official market are essentially limited to (a) import and export transactions; (b) current invisibles directly linked to import or export transactions and paid or received by the importer or exporter (mainly freight and insurance on imports and exports, customs and warehousing charges, and various harbor charges); (c) current payments made by the French State and French public bodies to nonresidents or made by any resident in favor of foreign states and foreign public bodies; and (d) current payments received by the French State or French public bodies from nonresidents or received by any resident from foreign states and foreign public bodies. All other transactions (including all merchanting transactions and all transactions between residents and nonresidents in domestic or foreign banknotes or between residents in foreign banknotes) must take place in the financial franc market.

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 official exchange market and the financial franc market in France. There is no official intervention in the forward markets. 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, but their forward sales of foreign currency are free, whether these represent export proceeds or other receipts. On the import side, forward cover is, in principle, available for some commodities for 6 or 12 months, and for all others for 3 months; at the end of 1971, however, such cover was normally limited to 3 months.3 On the export side, an underlying contract is required and cover is limited to the 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 (see footnote 2); payments between France and these countries are free of restriction and take place at fixed exchange rates. For imports and exports of gold, however, the Operations Account countries are also considered foreign countries.4 All other countries are considered foreign countries for exchange control purposes; all payments between France and foreign countries are subject to exchange control and take place at exchange rates resulting from the dual market regulations. The Condominium of the New Hebrides is considered a foreign country for exchange control purposes.

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, 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, depending on the nature of the transaction (see section on Nonresident Accounts, below), through nonresident Foreign Accounts in Francs or Financial Accounts in Francs. Importers and exporters are free to invoice in any currency; import payments in foreign currency must be made in the currency of the contract.

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 on nonresident-held franc accounts are subject to general or specific permission; the lending of francs to nonresidents for periods of up to two years is covered by a general permission. Nonresident accounts are mainly of two kinds: Foreign Accounts in Francs and Financial Accounts in Francs; these are related to the official exchange market and the financial franc market, respectively.

Foreign Accounts in Francs may be freely credited with (1) the franc proceeds of the spot or forward sale of foreign currencies (but not in banknote form) on the official exchange market by a nonresident; (2) the franc equivalent of an authorized bank’s arbitrage in foreign currencies on a foreign market, provided that the regulations of the country concerned allow the transactions; (3) transfers from other Foreign Accounts in Francs; and (4) any authorized payment by a resident to a nonresident that is eligible for the official market. These accounts may be freely debited for (1) the equivalent in francs of arbitrage abroad in foreign currencies by an authorized bank, provided that the regulations of the country concerned allow the transaction; (2) transfers to other Foreign Accounts in Francs; (3) any payment to a resident when the regulations permit the sale of the foreign currency in the official market; and (4) purchases of any foreign currency on the official exchange market by a nonresident.

Financial Accounts in Francs may be freely credited with (1) the franc proceeds of foreign currency sold spot or forward in the financial franc market by a nonresident; (2) the franc proceeds of the sale of foreign banknotes (not those of the Operations Account countries) to an authorized bank by a nonresident; (3) transfers from other Financial Accounts in Francs; (4) liquidation proceeds of nonresident-held direct investments 7 or real estate; (5) 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; (6) any payment made by a resident to a nonresident when the regulations permit access to the financial franc market; (7) the franc equivalent of an authorized bank’s arbitrage in foreign currency on a foreign market, provided that the regulations of the country concerned allow the transaction; and (8) the sales proceeds, income, and amortization from French and foreign securities held in a foreign dossier in France.

Financial Accounts in Francs may be freely debited for (1) francs purchased against foreign currency by an authorized bank in an arbitrage transaction with a foreign market; (2) approved direct investment;7 (3) purchases in France of French or foreign securities; (4) purchases of real estate from residents; (5) transfers to other Financial Accounts in Francs; (6) any payment in favor of a resident when the sale of foreign currency is eligible for the financial franc market; (7) purchases by nonresidents of any foreign currency, including foreign banknotes, on the financial franc market; (8) French banknotes (and those of Operations Account countries) mailed by authorized banks direct to their foreign correspondents.

Direct transfers between Foreign Accounts and Financial Accounts are prohibited. Transfers between the two types of accounts may, however, be effected by conversion through spot exchange transactions in the two exchange markets concerned (arbitrage sur les marches des changes).

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. The unremittable funds of emigrants of French nationality, however, must be retained in resident accounts; emigrants of foreign nationality 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, Rumania, and the U. S. S.R.) and mainland China; and (4) Eastern Germany. 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. Certain agricultural imports are subject to special levies (montants compensatoires).

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 official exchange market; imports valued at less than F 10,000 may also be paid for through postal channels. Import transactions relating to foreign countries and valued at F 10,000 or more must be domiciled (registered) with an authorized bank, to which the necessary import documents must be presented and through which all payments related to the import must be made.

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 (1) if a documentary credit has been opened, upon receipt of advice from the bank’s foreign correspondent bank that the shipping documents (showing direct shipment either to the French customs territory or to a nearby port, such as Antwerp or Rotterdam) have been submitted to it; (2) if a draft accompanied by shipping documents (effet documentaire, remise documentaire) is presented to the authorized bank, when the bank has verified that the documents cover the goods concerned and that they have been shipped (to the customs territory or a neighboring port); (3) for imports of raw materials by importers holding a special authorization from the Customs Administration, as soon as the importer presents the bill of lading to his bank of domiciliation; or (4) for all other imports, if the importer submits the customs declaration (unless he already did so when purchasing his foreign currency).

Import payments are made through the official market, but, if no precise breakdown of the value of the goods and the services can be provided for a combined import transaction in which services account for 25 per cent or more of the contract price, then the entire amount of the contract must be settled in the financial market; mixed transactions in which services are less than 25 per cent may be settled entirely in the official market.

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.

Payments for Invisibles

Payments for current invisibles to foreign countries are controlled but not restricted as to amount. Settlement must take place through the financial franc market, with in principle only the following exceptions: incidental expenses on direct imports and exports (including transport, insurance, customs, warehousing, and harbor charges) when shown on the invoice and paid or received by the importer or exporter himself; payments for processing of goods; current payments made by the French State and French public bodies (collectivités publiques); and current payments made by any resident in favor of foreign states and public bodies (collectivités publiques).

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 300 a person without indicating their purpose, provided that the transfers do not constitute installments of payments exceeding F 300, are not for purposes subject to special allocation, and do not serve to accumulate funds abroad.

Payments which may be authorized without limitation 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 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 3,500 a person a trip (F 1,750 for children under ten), which may be taken up for any number of trips a year. The basic allocation for business travel is the equivalent of F 400 a person a day, subject to a maximum of F 8,000 a trip. 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 100 must be surrendered upon return to France. Applications for travel exchange cannot be submitted earlier than one month before departure. The use of credit cards abroad is permitted up to one half of the amount of any travel allocation granted, but such use is set off against the allocation itself. All fares for trips starting in France may be paid in francs in France.

Resident travelers going to foreign countries may take out F 500 in French banknotes, or F 50 if they go abroad for less than 24 hours. These banknotes may be spent abroad. Nonresident travelers may take out F 500 in French banknotes and may reconvert in the financial franc market into foreign currency any French banknotes up to F 500 obtained by the conversion in the financial franc market of foreign means of payment that they declared upon entry or obtained by debit to a Financial 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 3,500 in foreign notes and coins when acquired in the financial franc market against a tourist travel allocation, or, if they are leaving on a business trip, the equivalent of F 3,500 in foreign banknotes or in checks. Nonresident travelers may not, in principle, take out more than the equivalent of F 500 in foreign banknotes unless they were declared upon entry and the annotated declaration form shows that the amount to be taken out does not exceed that imported minus any amounts exchanged for francs plus any 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 financial franc market, by debit to a Financial Account in Francs, or by debit to a foreign currency account.

Exports and Export Proceeds

Certain goods on a prohibited export list may only be exported if a special license is issued. Some other exports also require individual licenses; but if the total value does not exceed F 500, these exports may be permitted without any formality, subject to certain exceptions. Regardless of their value, exports through compensation transactions with certain countries 9 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; however, export proceeds received and sold before the due date set in the commercial contract must be sold in the financial franc market. The repatriation 10 and, where appropriate, the surrender in the official 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 extend foreign currency advances to exporters, but these are considered as advance repatriation and must therefore be sold in the financial franc market. The proceeds from the discounting of foreign currency drafts presented by exporters also are treated as advance export receipts and must be sold in the financial franc market. Combined export transactions in which services account for 25 per cent or more of the contract price must be settled entirely in the financial franc market unless a precise breakdown of the price of goods and services is provided. Combined transactions with less than 25 per cent services are settled entirely in the official exchange market. The due date of the commercial contract cannot, except with special authorization, be more than 180 days after arrival of the goods at their destination. Export proceeds must not be received in French or foreign banknotes or banknotes issued by an institute of issue maintaining an Operations Account with the French Treasury, or by debit to a postal checking account in France. All export transactions relating to foreign countries and valued at F 10,000 or more must be domiciled with an authorized bank; the Director-General of Customs and Indirect Taxes, however, may exempt certain approved firms from domiciliation.

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. Sales to foreign tourists normally are settled through the financial franc market, although the regulations provide for the possibility of using the official exchange market if certain special customs requirements are fulfilled.

Holders of exporters’ cards, which are issued to enterprises that export a specified percentage of their production, are entitled to obtain every year import licenses for any commodity still subject to quota and related to their export activity, up to a value corresponding to 10 per cent of their export proceeds in foreign currencies received in the previous year.

Proceeds from Invisibles

Proceeds from transactions in invisibles with Monaco and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be repatriated and, where appropriate, surrendered, within one month from the due date. Settlement must take place in the financial franc market, with the following exceptions: receipts from incidental expenses on imported and exported goods, when received by the exporter or importer himself and shown on the invoice; receipts from processing of goods; current payments received from nonresidents by the French State or French public bodies (collectivités publiques); and current payments to a resident made by foreign states and public bodies (collectivités publiques). With minor exceptions for certain types of transactions, services performed for nonresidents do not require licenses.

Resident and nonresident travelers may bring in any amount of banknotes and coins (except gold coins) in French francs, CFA francs, Malagasy francs, CFP francs, or any foreign currency; however, the exchange of banknotes issued by Algeria, Morocco, and Tunisia is prohibited at the request of those countries. Resident travelers must within a month of entry sell in the financial franc market any foreign banknotes in excess of F 100 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. Most inward and outward capital transfers between France and foreign countries (between residents and nonresidents) must be effected through the financial franc market. 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 appropriate 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 not normally permitted to purchase real estate abroad for personal use. The transfer abroad of nonresident-owned funds in France, including the sales proceeds of capital assets, is not restricted.

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 residents must be deposited with a qualified bank or broker. Foreign securities held in France by a nonresident must be deposited with an authorized bank; French securities held in France by nonresidents need not be deposited but cannot be dealt with or exported unless they have been deposited. 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 and provided that settlement takes place in the financial franc market. 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 financial franc 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 financial franc 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. 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 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 that might 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. 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.

Until recently, French direct investment abroad in many cases had to be partially financed abroad, and foreign direct investment in France generally was required to be financed in part with an inflow of foreign exchange. Both financing requirements were eased considerably in 1971, and for outward investment they were terminated in September 1971.

Foreign issues on the French capital market are subject to prior authorization by the Minister of Economy and Finance. The requirement is applicable also to the Operations Account countries. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the French Government, and (2) shares similar to securities that already are officially quoted on a stock exchange in France.

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in France, or by branches or subsidiaries in France of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Economy and Finance. The following types of borrowing are, in principle, exempt from this authorization: (1) loans constituting a direct investment, which are subject to prior declaration, as indicated above, and whose postponement may be requested by the Minister up to two months after receipt of the declaration; (2) borrowing by industrial firms for the execution of works abroad; (3) borrowing by any type of firm to finance imports or exports; (4) loans related to certain international merchanting transactions; (5) loans contracted by banks expressly permitted to borrow abroad (these include all authorized banks); and (6) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed F 2 million for any one borrower, provided that the interest rate is a “normal” market rate, that the borrowing is not for the purpose of direct investment, and that the foreign exchange proceeds are surrendered. However, since July 24, 1970 borrowing in francs has been subject to closer scrutiny to prevent excessive interest rates in the Euro-franc market, and the exemptions under (2), (3), (4), and (6) have been limited to borrowing in foreign currency. When the countervalue in francs is made available to the borrower, repayment must be scheduled to take place after at least one year. Since the date mentioned, borrowing in francs by nonbank residents from nonresidents has in effect been prohibited. During the last quarter of 1971, furthermore, banks and industrial companies were not normally allowed to borrow abroad to finance direct investment in France or abroad.

The application of the controls over direct investment and borrowing is delegated to the Bank of France insofar as they relate to French firms that are mainly engaged in real estate business.

Lending abroad is subject only to exchange control authorization by the Bank of France and is restricted. Authorized banks have since the imposition of exchange control in 1968 been virtually free to lend foreign currency to nonresidents, subject to certain reservations in respect of the granting of guarantees and varying limitations on their external position. Lending to nonresidents in francs, however, was until late in 1971 heavily restricted; at the end of 1971, franc loans to nonresidents for up to two years were freely permitted, for any purpose, and the Bank of France approved liberally applications for loans of over two years. At the end of 1971, authorized banks’ foreign currency assets and their overall liabilities in francs and foreign currency to nonresidents were free from limitation. Authorized banks may freely sell foreign exchange on the official exchange market, spot or forward, for the account of nonresidents.

Nonresidents may freely purchase French short-term securities, including treasury bills, bons de caisse, and private drafts, through the financial franc market.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in France. They may continue to hold abroad any gold they held there prior to November 25, 1968. There is a free gold market for bars and coins in Paris, to which residents have free and anonymous access and in which no official intervention takes place. Imports and exports of gold into or from the territory of continental France require prior authorization by the Bank of France, which is not normally granted for monetary gold but usually is given for industrial gold. Exempt from this requirement are (1) imports and exports of gold addressed to or shipped by the Bank of France; (2) imports and exports of manufactured articles containing only a minor quantity of gold, such as gold-filled and gold-plated articles; (3) imports and exports of gold objects (other than medals, coins, and bars, but including both personal and other jewelry) whose combined weight does not exceed 500 grams; and (4) collectors’ items of gold and gold antiques that are exported under “02 licenses” granted with the approval of the Directorate of Museums. Both licensed and exempt imports of gold are subject to customs declaration. The import and export of certain gold objects that are considered merchandise, such as gold watches, is subject to both the regular import and export licensing arrangements and to licensing by the Bank of France. Imports and exports of industrial gold are settled in the official exchange market.

In domestic trading, purchases of monetary gold (bars and coins) are not subject to value-added tax. Imports of monetary gold are exempt from customs duty and value-added tax.

Changes during 1971

January 1. The financing facilities for commercial and industrial direct investment abroad were improved. The amount up to which an industrial firm could without individual exchange control authorization make transfers for an approved project was raised from F 2.5 million to F 5 million a year. Alternatively, industrial firms that in 1970 had repatriated over F 5 million in profits and royalties from their foreign branches and subsidiaries could dispose of the full amount so repatriated for purposes of financing their foreign branches and subsidiaries.

January 13. Investment guarantees were made available for new private direct investments in French-speaking African countries and the Malagasy Republic, i.e., initially in the Operations Account countries. The facility was applicable also to certain expansion of existing investments but not to petroleum or agricultural investment nor to real estate operations or financial operations. The guarantees would be issued by the CCCE and covered by a counter-guarantee of the Treasury. They covered the political risk and that of nontransfer of liquidation proceeds (not that of nontransfer of profits), each for 75-90 per cent.

January 25. Foreign Accounts in Francs could again be credited with banknotes issued by the BCEAO, the BCEAEC, the Malagasy Institute of Issue, or the Central Bank of Mali, provided that they were mailed to the main office of the Bank of France by foreign correspondents of French authorized banks. Such credits had been prohibited since November 1968.

February 22. Member countries of the EEC were exempted from the special transaction controls over inward and outward direct investment, but such investments between France and other EEC countries henceforth required prior declaration or prior approval under the exchange control regulations; prior authorization was required for all operations that might involve a capital movement. Decrees Nos. 71-143 and 71-144 of February 22 modified accordingly Decree No. 67-78 of January 27, 1967 and Decree No. 68-1021 of November 24, 1968. Two implementing Orders were also issued.

March 18. The amount below which import transactions relating to foreign countries did not require domiciliation with an authorized bank was increased from F 2,500 to F 10,000. The corresponding amount for export transactions was increased from F 5,000 to F 10,000 on March 17.

March 23. The exchange allocation for tourist travel to foreign countries was increased from the equivalent of F 1,500 to F 2,000 a person a trip (from F 750 to F 1,000 for children under ten); as previously, this allocation was available for two separate trips in a calendar year.

April 1. A deposit requirement was imposed on the franc balances of authorized banks’ foreign correspondents, agencies, and branches; the rate of deposit was the same as that for residents’ deposits.

April 10. The facilities of March 13, 1969 allowing resident commodity brokers to deal forward in commodities on commodity markets in France were expanded. Brokers, who previously were only permitted to borrow the necessary foreign currency from authorized banks in France, were now permitted also to borrow foreign exchange abroad. Furthermore, brokers were permitted to engage in dealings on commodity markets abroad, provided that these were the counterpart of transactions in the same commodity on French markets and that their value did not exceed the brokers’ overall position in the same commodity on French markets.

April 27. The use abroad of credit cards ceased to be prohibited; it became permitted for up to 50 per cent of the allocations for tourist and business travel but was charged against the allocations.

May 18. The National Credit Council authorized the Bank of France to increase reserve requirements against nonresidents’ deposits with French banks beyond the previous 15 per cent upper limit, up to 100 per cent, and to forbid or restrict the remuneration of such deposits.

May 21. The franc accounts of foreign banks and other nonresidents, which for purposes of reserve requirements previously were classified in the time deposit category, were reclassified and treated as sight deposits. Thus, the reserve requirement against these deposits went up from 3¼ per cent to 9¼ per cent.

June 1. The zaïre was officially quoted in Paris.

July 1. General tariff preferences went into effect for many manufactured, semimanufactured, and processed goods originating in most developing countries.

July 1. A general reform of export credit facilities took place. Both terms and procedures were improved.

July 21. The reserve requirement against nonresidents’ franc accounts was raised from 9¼ per cent to 10¼ per cent.

August 3. The allocation for tourist travel was increased to the equivalent of F 3,500 a person a trip (F 1,750 for children under 10), for any number of trips a year; the presentation of an official identity card and the signing of an attestation were no longer required. The allocation for business travel remained at the equivalent of F 400 a person a day, but the maximum for each trip was increased from F 4,000 to F 8,000.

August 3. The standard allocation for transfers of French emigrants’ assets upon departure was increased from F 5,000 to F 10,000, that for family remittances from F 400 to F 1,000 a month for each remittor, that for dowries from F 5,000 to F 10,000, and that for maintenance of jointly owned buildings from F 2,000 to F 4,000 for each owner a year. The standard allocations for student expenses abroad and participation in meetings and conventions abroad were doubled.

August 3. The assets of residents of French nationality taking up residence abroad were declared transferable after two years’ residence abroad. Previously, only an exchange allocation upon departure was granted. (Residents of foreign nationality had since November 1968 been free to transfer their assets upon departure.)

August 3. Forward cover was made available for additional import commodities, and for longer periods. The standard period was increased from one month to three months, and selected commodities could receive six or nine months’ cover.

August 3. Importers were allowed to purchase spot foreign exchange one month instead of one week before the due date of the import payment (in case of a documentary credit, one month instead of one week before shipment). Advance payments for imports from foreign countries, which previously required individual approval, could now be made freely, but in accordance with the terms of the purchase contract, up to 30 per cent of the price for capital goods and up to 10 per cent for other commodities; previously, individual approvals had been granted on the same basis. The exchange for such advance payments also could be purchased one month before the due date.

August 3. It was announced that foreign exchange would be granted more liberally for the financing of French direct investment abroad and for advance repayment of loans previously taken up abroad, although the approval requirements would be maintained. Further details were announced on September 2.

August 3. To prevent any further increase in banks’ net external liabilities the Bank of France issued Circular No. 4 P. B. instructing authorized banks to prevent in future (on a day-to-day basis) any deterioration from the August 3 level in their “overall net position in foreign currencies and francs in respect of foreign countries.” Foreign countries for this purpose included the Operations Account countries. There was no obligation imposed, however, to refuse any specific credits to nonresident accounts. The circular only informed banks that these measures “could lead them to refuse sales of foreign currency from abroad that were motivated by speculative reasons.”

August 5. The reserve requirement against nonresidents’ franc accounts was increased from 10¼ per cent to 12¼ per cent.

August 6. The Minister of Economy and Finance requested his colleagues of the Operations Account countries to adopt measures similar to those provided for by Circular No. 4 P. B.

August 6. Under a “gentlemen’s agreement” with the Bank of France the commercial banks announced that they would no longer pay interest on term deposits in francs held by nonresidents where the deposits were for periods of less than 90 days (previously, only sight deposits did not bear interest). The provision was made mandatory on August 17 by a decision of the National Credit Council; exempt from the prohibition were deposits held by residents of Operations Account countries and, until their expiration, existing interest rate agreements between banks and their customers. With effect from August 20, the exemptions were extended to the deposits as of August 17 of foreign central banks and of certain international organizations.

August 6. Banks were freely permitted to lend francs to nonresident correspondent banks in swap transactions against foreign currencies (when the transactions served to finance forward sales of foreign currency by their customers or other foreign correspondents); such lending had been prohibited since December 6, 1968.

August 16. The official exchange market and the gold market were closed. The latter reopened on August 18 and the official exchange market on August 23.

August 21.11 A dual exchange market was created comprising an official market based on parity and accommodating only import and export transactions, trade-related current invisibles, and current official transactions and a financial franc market which would fluctuate in response to supply and demand and would accommodate all other transactions, with the exception of those that continued to be channeled through the security currency market. The existing exchange restrictions and surrender requirements were maintained. In the official market, the Bank of France maintained its official buying and selling limits for the U. S. dollar at F 5.5125 and F 5.5960.

August 21. The system of nonresident franc accounts was reorganized. The name of Foreign Accounts in Francs was retained, but henceforth these were related to the official market only, and Financial Accounts in Francs were introduced, which were related to the financial franc market. Transfers between these two types of account were prohibited;12 either type could freely be credited with the proceeds of foreign currency sold by a nonresident in the appropriate exchange market, and could freely be debited for the purchase of foreign currency by a nonresident in the appropriate exchange market. Foreign and Financial Accounts could freely be used for settlements between residents and nonresidents that were authorized under the exchange control regulations, provided that the payment was eligible for the exchange market to which the account was related. Existing nonresident franc accounts were redesignated Foreign Accounts in Francs, although subsequently (see August 30, September 2, November 8, and November 19, below) certain balances were treated as Financial Accounts.

August 21. French banknotes presented to the Bank of France by foreign banks henceforth were credited to Financial Accounts in Francs.

August 21. Henceforth any foreign exchange received as advance payments for exports had to be sold in the financial franc market if sold before the due date of the contract. Exporters receiving advance payment could, however, retain the foreign exchange until one month after the due date and then sell it in the official exchange market. The November 24, 1968 directive remained in force which required repatriation and sale of export proceeds within a month after the due date set in the contract.

August 21. Authorized banks’ positions on Financial Accounts in Francs were included in their overall net external position as defined in Bank of France Circular No. 4 P. B.

August 21. The amount below which imports from foreign countries were exempt from domiciliation was lowered from F 10,000 to F 5,000. Import payments for goods valued at F 5,000 or more henceforth had to be made not later than three months after customs clearance (two years for capital goods, but the Customs Administration could allow longer periods for heavy machinery). Goods imported two months or more previously and not paid for had to be settled in full before September 21.

August 24. Transfers of salaries and allowances to French officials posted abroad had to be effected through the financial franc market.

August 25. It was confirmed that only Financial Accounts in Francs could be debited for withdrawals by nonresidents of French or foreign banknotes. As an exception, however, foreign officials posted in France could debit their Foreign Accounts in Francs (up to the amount of their salaries and allowances) for withdrawals of French banknotes and for any payment to a resident.

August 30. Foreign workers in France who had been in the country for less than two years (and hence were nonresidents) were permitted to transfer direct to a Financial Account in Francs up to F 5,000 of their August 21 balance on a Foreign Account in Francs.

August 31. It was clarified that incidental expenses on imports and exports were to be settled in the official exchange market only when directly connected with a specified transaction and shown on the invoice for the merchandise.

August 31. It was clarified that processing of goods temporarily imported or exported and remaining the property of a nonresident or a resident, respectively, qualified for the official exchange market. The rental of temporarily imported or exported machinery also qualified for the official market.

August 31. A clarification was issued to the effect that all merchanting trade (whether the goods passed through French territory or not), and all transactions on commodity markets had to be settled in the financial franc market when a foreign country or a nonresident was involved.

August 31. For purposes of the regulations ruling import payments, a definition of capital goods was published. It was modified on September 15 and October 15.

August 31. Import payments in foreign currency had to be made in the currency of the commercial contract. Since the foreign currency had to be purchased in the official exchange market on the due date(s) set in the contract, banks were henceforth prohibited from granting advances in foreign currency to importers. Exporters receiving payment in a foreign currency other than the one invoiced in the commercial contract were free to decide whether to accept settlement in such form.

August 31. The foreign currency proceeds of sales to foreign tourists had to be sold in the financial franc market.

September 2. Nonresidents’ balances as of August 21 in savings accounts and similar accounts were treated as balances in Financial Accounts in Francs.

September 2. The authority delegated to branches of the Bank of France to allocate exchange for business travel was increased from F 10,000 to F 12,000 a person a trip. In addition, these branches were empowered to grant supplementary allocations for representation expenses.

September 2. Banks were informed that foreign currency loans to importers were prohibited and that when they extended foreign currency loans to resident exporters, the foreign currency had to be sold in the financial franc market. Banks were also informed that forward sales of foreign currency by their customers had to be effected in the exchange market for which the underlying transaction was eligible.

September 2. The financing requirements for inward and outward direct investment were eased. (1) French companies making such investments abroad could henceforth transfer abroad all funds necessary for approved projects, while previously they normally had to borrow from nonresidents any amounts in excess of F 5 million a year (F 2.5 million for each foreign branch for commercial investments). (2) The foreign financing requirement for nonresidents making direct investments in branches and subsidiaries in France would be relaxed for transactions deemed useful for the expansion of the economy; previously, the requirement was that foreign funds should constitute, on the average, in relation to the total financing of each branch or subsidiary, a percentage equal to at least one half of that of the foreign participation in the enterprise. (3) Applications for advance repayment of loans previously taken up abroad would be approved very liberally, but the normal requirements for borrowing abroad (maturity of at least one year, prohibition of advance repayment clauses, etc.) were maintained.

September 15. The proceeds from the discounting of foreign currency drafts presented by exporters were treated as advance export payments and had to be sold in the financial franc market.

September 15. Since the regulation prescribing payment by September 21 for imports that had cleared customs two months or more prior to August 21 threatened to cause hardship, it was announced that certain facilities could be granted to importers who had accepted drafts. If drafts were expressed in foreign currency, importers could purchase the amount of foreign currency required, either spot or forward, and deposit it with an authorized bank until the foreign payment fell due. If drafts were in francs, importers could deposit francs until the foreign payment fell due.

September 15. Authorized banks were informed that their overall net external position (Circular No. 4 P.B.) must be improved by the amount of foreign currency they might come to hold for the account of resident customers receiving a waiver from the obligation to settle “old” imports before September 21 (and thus having to purchase foreign currency either spot or forward) or might acquire to cover the forward purchases of such customers.

September 24. The calculation of the banks’ overall net external position (Circular No. 4 P.B.) was revised to exclude claims and liabilities in respect of Operations Account countries.

September 24. Authorized banks wishing to increase their position de change (i.e., any excess of their balances or claims in foreign currency over their foreign currency liabilities) could request the permission of the Bank of France to do so. Permission for such purchases was granted liberally. Purchases and any subsequent sales had to be effected in the financial franc market. Title I of Bank of France Circular No. 1 P.B. of December 3, 1968 was rescinded, which had prohibited banks from maintaining a positive net position de change in excess of that of September 3, 1968.

September 30. Until further notice, banks and industrial companies were not normally allowed to borrow abroad to finance investment in France or abroad.

October 11. The transferable assets of residents acquiring nonresident status had to be credited direct (i.e., without prior conversion in the exchange market) to Financial Accounts in Francs. Financial Account balances held by nonresidents acquiring resident status had to be credited direct to a resident account; Foreign Account balances held by such persons, however, could be credited to resident accounts only after conversion in the official exchange market (with the exception that unused balances as of August 21, 1971 could be credited to a resident account without such conversion).

October 15. It was clarified that incidental expenses on imports and exports were eligible for the official exchange market only if paid to or by the importer or exporter himself (or the person or firm authorized to act for him as mandataire).

October 15. Combined import or export transactions in which services accounted for less than 25 per cent of the contract amount were settled entirely in the official market. Unless an exact breakdown of the value of the commodities and the services could be provided, combined import or export transactions in which services accounted for 25 per cent or more of the contract amount had to be settled entirely in the financial franc market. These provisions were also applied to existing contracts.

October 19. The Minister of Economy and Finance announced that the introduction of exchange rate guarantees for exporters was under consideration. (They were introduced on January 31, 1972.)

October 20, The security currency market (devisetitre market) was merged into the financial franc market. Residents were freely permitted (subject, where appropriate, to compliance with the special regulations concerning inward and outward direct investment) to purchase French and foreign securities on stock exchanges abroad, through authorized banks, provided that settlement took place in the financial franc market. Such French and foreign securities could be held or sold abroad, but they could also be imported and then either be held or sold on a French stock exchange. Thus residents could sell on the French market any French or listed foreign securities they purchased abroad. The proceeds of the sale abroad of French or foreign securities had to be sold on the financial franc market within one month of receipt, unless used within that period for reinvestment in securities abroad.

October 25. It was announced that for the time being no Euro-franc bond issues would be allowed.

November 8. Nonresident physical persons living abroad and holding Foreign Accounts in Francs opened before August 21, 1971 were permitted to use the balance as of November 5, 1971 directly (i.e., without prior conversion in the exchange markets) for a number of current payments in France that otherwise had to be settled through the financial franc market (including school fees, family support up to F 1,000 a month for each account, medical expenses, pension premiums, house rent, and maintenance of buildings) and, subject to prior Bank of France approval, for the purchase of personal real estate (as their principal residence) in France.

November 8. It was clarified that all current payments by nonresidents in favor of the French State or French collectivités publiques, including, notably, tax payments, had to be effected either by the sale of foreign currency in the official exchange market or by debit to Foreign Accounts in Francs.

November 16. Nonresidents (including those living in France) were freely permitted to import into France any French or foreign securities they held abroad, to hold the imported securities in a foreign dossier in France or to sell them on a French stock exchange, and to have the sales proceeds of any such French or foreign securities credited to a Financial Account in Francs and transferred abroad through the financial franc market. Previously, the sales proceeds of nonresident-held foreign securities (unlike those of French securities) could not be transferred abroad, although the securities could be exported. As a result of the elimination of the formalities governing the sale in France of nonresident-held French securities, these measures caused the discounts abroad on French securities to disappear.

November 19. Nonresident physical persons receiving on a Foreign Account in Francs scholarships, pensions, and rentes (certain official pensions and official annuities) paid by the French State, foreign states, or French or foreign collectivités publiques could debit their Foreign Account, up to the amount of the receipts mentioned, for any payment in favor of a resident or to withdraw francs in the form of French banknotes.

December 3. The Ministry of Economy and Finance announced that a number of additional measures were being taken to ensure the proper functioning of the dual market by preventing nonresidents from running up speculative franc holdings. Until December 10 these measures would leave unchanged the permitted utilization by nonresidents of the francs they held. From December 10, however, the use of any excess francs would be subject to new rules; from that date, nonresidents holding francs on Foreign Accounts or Financial Accounts could only use the balances for payments in francs to residents in accordance with the exchange control regulations, and no longer for conversion into foreign currency. At any time after December 14, any excess over the balance as of November 30, 1971 in either type of account could be directed to a blocked account.

December 3. Lending of francs to nonresidents for periods up to two years was fully liberalized. The approval of the Bank of France remained required only for such loans with a maturity in excess of two years, and approvals were granted liberally.

December 3. Forward exchange cover for imports was made available for any commodity; the standard cover period was set at three months, but for commodities previously eligible the term was increased from three months to six months or from six or nine months to one year.

December 3. The Minister of Economy and Finance issued a circular specifying the treatment to be accorded to nonresident franc accounts from December 10, 1971. From that date, Foreign Accounts in Francs could be debited only for payments to residents that must be effected through the official market, and Financial Accounts only for payments in francs to residents that must be effected through the financial franc market. Consequently, from December 10 Foreign and Financial Accounts could no longer be debited for purchases of foreign currency in either exchange market nor to acquire francs in exchange for foreign currency by arbitrage with a market abroad. Furthermore, with effect from December 4, Financial Accounts could no longer be debited for purchases of French banknotes for mailing abroad, for purchases of any French short-term securities (including treasury bills, bons de caisse, and private drafts), or for payments on savings books.

If nonresident franc accounts showed a balance in excess of that on November 30, 1971, the Minister of Economy and Finance could at any time, beginning December 14, direct the transfer of the excess to Blocked Foreign or Financial Accounts; the manner in which these accounts could be used, either in francs or by conversion into foreign currency, would be determined in due course. These provisions about Blocked Accounts and conversion into foreign exchange would not be applicable to: (1) Foreign Accounts held by foreign states and collectivités publiques; (2) Foreign Accounts held by nonresident physical persons, but only for the balance as of August 21, 1971; and (3) Financial Accounts held by nonresident physical persons, but only up to the amount of wages, salaries, and fees, social security payments, and pensions and rentes credited to the accounts.

The circular also amended the circular of August 20, 1971 concerning nonresident franc accounts and foreign security dossiers to reflect the new provisions on lending of francs to nonresidents and to permit the corresponding interest and amortization payments, while specifying that such loans could not be granted to enable a nonresident to invest in short-term French securities.

December 7. The Ministry of Economy and Finance announced that the December 3 measures did not affect foreign portfolio investment in France or payments for imports of goods or services that were invoiced in francs. Francs accruing to nonresidents from the following would remain transferable abroad: investment income, the proceeds of investments sold to residents, personal earnings, and payments for goods or services imported into France.

December 8. Bank of France Circular No. 182 A.F. informed authorized banks that they were no longer allowed to borrow francs from nonresidents in swaps against foreign currencies.

December 8. Bank of France Circular No. 183 A.F. allowed the continued convertibility into foreign currency after December 10 of francs held in Foreign Accounts by certain physical persons: (a) foreign officials serving in France, for the amounts of the salaries and allowances received from their governments; and (b) any nonresident physical person, for the amounts received from the French State, foreign states, and French or foreign collectivités publiques as scholarship funds, pensions, or rentes.

December 8. Bank of France Circular No. 184 A.F. created a new type of nonresident franc account, the Patrimonial Assets Account. Balances in Patrimonial Assets Accounts would not be subject to any blocking measures that might be decided upon by virtue of the Ministerial Circular of December 3. The accounts could not be credited with the counterpart of foreign currency sold in either exchange market, nor with francs from Foreign or Financial Accounts. Transfers between Patrimonial Assets Accounts were freely permitted and they could be debited freely for the purchase of any foreign currency in the financial franc market. As a result, the dual exchange market temporarily became a triple market.

Credits to the new accounts were freely permitted for (a) the proceeds of the sale on a French stock exchange of listed French securities or of mutual fund shares, i.e., shares in a Société d’Investissement à Capital Variable, or SICAV, provided in all cases that on November 30, 1971 they were held in a foreign dossier or that they were after that date acquired by debit to a Patrimonial Assets Account; (b) the proceeds of the sale of real estate acquired in accordance with ruling regulations by nonresidents prior to November 30 or purchased subsequently by debit to a Patrimonial Assets Account; (c) housing and agricultural rents from real estate and interest and dividends on French securities and SICAV shares belonging to nonresidents; and (d) transfers from other Patrimonial Assets Accounts.

Debits were freely permitted for (a) the purchase by a nonresident of any foreign currency in the financial franc market; (b) the purchase of foreign banknotes from an authorized bank; (c) the amount of francs exchanged for foreign currency by an authorized bank in an arbitrage transaction with a foreign market; (d) the acquisition of real estate from residents; (e) the acquisition in France of listed French securities and of SICAV shares; (f) transfers to other Patrimonial Assets Accounts; and (g) any payment in favor of a resident when the regulations permitted the latter to sell foreign currency in the financial franc market.

December 8. Bank of France Circular No. 185 A.F. clarified that, as an exception to the December 10 prohibition on the conversion into foreign currency of nonresident-held francs, balances in Foreign Accounts could continue to be converted into balances in Financial Accounts, and vice versa, through spot transactions in the two exchange markets concerned, provided that the purchase and sale of foreign currency had the same value date.

December 8. Bank of France Circular No. 186 A.F. provided that after December 10 authorized banks would remain free to transfer abroad, by purchasing foreign currency in the appropriate exchange market, amounts credited by order of residents to nonresident accounts, provided that: (a) the credit entries corresponded to commercial or financial debts that were invoiced in francs, had fallen due, and were transferable under the exchange control regulations; (b) the foreign currency was purchased in the official or financial market, depending on the nature of the claim; and (c) the purchase of foreign currency took place on the same day the nonresident account was credited.

However, banks had to obtain from the nonresident beneficiaries a standing or specific order to convert the francs credited to their accounts into foreign currency. In the absence of such orders, the francs credited would be subject to the December 3 provisions (possibility of blocking and prohibition of conversion); nevertheless, amounts credited to Foreign or Financial Accounts that resulted from spot sales of foreign currency effected in order to pay residents on the same day for goods and services that were invoiced in francs and whose payment had fallen due would be exempt from any blocking measures.

December 9. Bank of France Circular No. 187 A.F. concerning transactions in securities summarized the regulations applicable after the abolition of the devisetitre market and the liberalization measure of November 16. For the first time a definition of securities was provided. The period within which the proceeds of securities sold abroad had to be either reinvested or sold in the financial franc market was set at two months (previously one month). The circular also confirmed that the sales proceeds of nonresident-owned foreign securities could be transferred abroad.

December 10. Patrimonial Assets; Accounts were renamed Special Sections of Financial Franc Accounts.

December 13. Title II of Bank of France Circular No. 1 P.B. of December 3, 1968 was canceled and the circular was withdrawn. Title II had provided that the overall amount of banks’ claims in francs on nonresidents could not exceed the level of November 24, 1968 and by the end of January 1969 had to be reduced to at most the level of September 3, 1968.

December 20. The patrimonial franc was abolished. On December 21, balances in Special Sections of Financial Franc Accounts were redesignated as financial franc balances.

December 20. The Ministerial Circular of December 3, 1971 was revoked which had restricted the conversion into foreign currency of franc balances in Foreign and Financial Accounts, provided for a possible blocking of nonresidents’ franc balances, and prohibited the use of Financial Franc Accounts for purchases of French banknotes and French short-term securities. The blocking authority had never been invoked. The circular’s general permission for the lending of francs to nonresidents for periods of up to two years, and the prohibition on such lending for investment in short-term French securities were maintained. (With effect from January 3, 1972, lending of francs by residents to nonresidents to finance purchases of short-term French securities was again permitted.)

December 20. The amount below which imports were free from the domiciliation requirement was restored from F 5,000 to F 10,000. The August 20 limitations on the use of suppliers’ credit by importers were rescinded.

December 20. It was announced that the National Credit Council would be requested to permit nonresident franc accounts to bear interest again, and that the Bank of France would reduce the reserve requirements on nonresident accounts to the levels applicable to residents’ deposits.

December 21. The par value in terms of gold was maintained unchanged. The effective parity relationship for the U. S. dollar in the official exchange market, previously F 5.55419, became F 5.11570. France availed itself of wider margins and the official limits for the U.S. dollar were set at F 5.0005 and F 5.2310. The dual exchange market was maintained.

December 21. Bank of France Circular No. 4 P.B. of August 3, 1971, as amended, was revoked; the banks’ net overall external position in francs and foreign currencies ceased to be subject to limitation.

December 21. The Bank of France revoked the December 8 suspension of authorized banks’ freedom to borrow francs from nonresidents in swaps against foreign currencies.

December 21. The Bank of France brought the reserve requirements on franc deposits of nonresidents back into line with those for residents. The requirement thus was reduced for foreign banks and correspondents from 12¼ per cent to 10 per cent for demand deposits and from 6½ per cent to 4 per cent for time deposits with an initial maturity of less than three years.

December 24. A compensatory tax of 6 per cent ad valorem was levied on agricultural imports from non-EEC countries and on imports of the same commodities from Italy when their Italian origin could not be documented.

December 27. The National Credit Council revoked, with retroactive effect from December 21, the August prohibition of interest payments on nonresident-held franc deposits with a maturity of less than 90 days in Foreign Accounts in Francs.

Gabon

Exchange System

No par value for the currency of Gabon has been established with the Fund. The unit of currency is the CFA Franc,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 Equatoriale et du Cameroun (BCEAEC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission charges.

Exchange transactions relating to foreign countries, i. e., countries other than France, Monaco, and the Operations Account countries of the French Franc Area, take place in a dual exchange market, at rates based on the fixed rate for the French franc and the Paris exchange rate for the foreign currency concerned in either the official exchange market or the financial franc market. Settlements eligible for the official exchange market are payments and receipts in respect of imports, exports, and incidental expenses on imports and exports (freight, insurance, etc.), as well as current payments by or in favor of domestic and foreign public authorities and public bodies. All other settlements with foreign countries, as well as transactions in banknotes of foreign countries and banknotes issued by the BCEAEC, take place through the financial franc market at freely fluctuating rates. Exchange rates in the official market are based on par values and central rates; the effective parity relationship for the U. S. dollar in this market is CFAF 255.785 = US$1.

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

Administration of Control

The Office of Foreign Financial Relations in the Ministry of Finance and the Budget supervises borrowing and lending abroad, the issuing, advertising, or sale of foreign securities in Gabon, and inward and outward direct investment. Exchange control is administered by the Minister of Finance and the Budget, who has delegated his approval authority for current payments to the authorized banks and that with respect to the external position of the banks to the BCEAEC. All exchange transactions relating to foreign countries must be effected through authorized intermediaries, i. e., the Postal Administration and authorized banks. Import and export licenses are issued by the Foreign Trade Office in the Ministry of National Economy, Trade, Industry, and Development.

Prescription of Currency

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

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BCEAEC banknotes may be credited to Financial Accounts in Francs when they have been mailed direct to the BCEAEC agency in Libreville by authorized banks’ foreign correspondents. Otherwise, the crediting to nonresident accounts of BCEAEC banknotes, French banknotes, or banknotes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited.

Imports and Import Payments

Some imports are prohibited for security or health reasons. Imports of cement from all sources require special authorization. All other imports from countries in the French Franc Area and from member countries of the EEC other than France may be made freely. All imports from non-EEC countries outside the French Franc Area are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by a joint French-Gabonese Committee. A special licensing procedure is applicable to the import of petroleum products.

Global quotas are established for imports from all non-EEC countries outside the French Franc Area. The global quotas may be used to import goods originating in any of these countries. A few commodities in the program are subject to ceilings for all non-EEC countries outside the French Franc Area.

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

Payments for Invisibles

Payments for invisibles to France, Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. For tourist travel, residents traveling to countries other than France, Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip (CFAF 87,500 for children under ten); any foreign exchange remaining after return to Gabon must be surrendered. For business travel to foreign countries, there is a special allocation of the equivalent of CFAF 20,000 a day, subject to a maximum of CFAF 400,000 a trip. Tourist and business travel allocations may not be combined. Travelers going to foreign countries may take out up to a maximum of CFAF 25,000 in BCEAEC banknotes; the amount taken out is not deducted from the travel allocation. Travelers to other countries may take out any amount in BCEAEC banknotes.

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

Exports and Export Proceeds

Exports to countries in the French Franc Area are free of license. Exports to other countries of rice, corn, tobacco, cotton, diamonds, and mining products (except sodium carbonate, manganese, and crude petroleum) require licenses. Gold and uranium may be exported only to France. Exporters may obtain import licenses for additional quantities of commodities included in the import program and essential to their export activities, up to an amount corresponding to 10 per cent of the total value of their exports during the preceding year.

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

Proceeds from Invisibles

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

Capital

Capital movements between Gabon and France, Monaco, and other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in Gabon by residents or nonresidents must be deposited with authorized banks in Gabon.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in Gabon; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over the sale or introduction of foreign securities in Gabon, the control measures do not apply to France and its Overseas Departments and Territories (except the French Territory of the Afars and the Issas), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad 2 must be declared to the Ministry of Finance and the Budget, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires declaration to the Ministry unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investments in Gabon3 must be declared to the Minister, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of direct investments in Gabon must also be declared to the Ministry unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in Gabon. Both the making and the liquidation of direct investments, whether these are Gabonese investments abroad or foreign investments in Gabon, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent in the capital of a company whose shares are quoted on a stock exchange.

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

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

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

Under the Investment Code of December 4, 1961, as amended on March 23, 1967 and July 9, 1971, any enterprise to be established in Gabon, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specified income.

The Code provides for five categories of treatment. Three of these apply to enterprises established in Gabon and whose activity is limited to the national territory of Gabon (categories IA, IB, and II, according to the economic importance of the enterprise). The other types of treatment apply to enterprises established in Gabon whose market includes the territory of two or more states of the Central African Customs and Economic Union—UDEAC—(categories III and IV, depending on the importance of the enterprise). Preferential treatments IA and IB are granted for a period of up to 10 years. Preferential treatment II is reserved for enterprises of prime importance to the country’s economic development and involving exceptionally high investments; it provides for stabilization of their fiscal charges for up to 25 years. Preferential treatment III includes special import privileges and treatment IV includes, in addition to the privileges mentioned above, the advantage of a founding agreement (convention d’établissement).

Requests for approval for preferential treatment must be submitted to the Minister of National Economy, Trade, Industry, and Development, who, after examining the documents, transmits them to the Investment Commission. After an opinion has been given by that Commission, the project is submitted to the Council of Ministers. Preferential treatments IA, IB, and II are granted by decree issued by the Council of Ministers. Preferential treatments III and IV are granted by a certification of the UDEAC upon the recommendation of the Council of Ministers.

In addition to fiscal privileges, eligible companies may receive protection against foreign competition and may be given priority in the allocation of imports, or public credit, and of government contracts. Non-Gabonese firms or individuals are not permitted to own land in Gabon.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Gabon. Imports and exports of gold require prior authorization by the Minister of Finance and the Budget, which is seldom granted. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Unworked gold may be exported only to France. Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1971

May. A commemorative gold coin was issued.

July 9. Ordinance No. 38/71 amended the Annex to the Investment Code.

August 31. Following the introduction of a dual exchange market in France, similar dual market arrangements were introduced in Gabon. The exchange rate for the French franc remained fixed at CFAF 1 = F 0.02, and the effective parity relationship for the U. S. dollar in the official exchange market remained at CFAF 277.710 = US$1. The system of nonresident accounts was reorganized. Foreign Accounts in Francs henceforth were related to the official exchange market only, and Financial Accounts in Francs were introduced, which were related to the financial franc market. BCEAEC banknotes, which since October 16, 1970 had been accepted for credit to convertible Foreign Accounts in Francs, provided that they were mailed direct to the BCEAEC agency in Libreville by foreign correspondents of authorized banks, henceforth could be credited only to Financial Accounts in Francs.

September 7. The foreign exchange allocations for tourist and business travel were increased.

December 21. The exchange rate for the French franc was maintained at CFAF 1 = F 0.02. The effective parity relationship for the U. S. dollar in the official exchange market was changed from CFAF 277.710 = US$1 to CFAF 255.785 = US$1. The dual exchange market arrangements were maintained.

The Gambia

Exchange Rate System

The par value is 0.426562 gram of fine gold per Gambian Dalasi. The currency issuing authority is the Central Bank of The Gambia. In practice, the Bank deals only in sterling, the intervention currency, and charges a commission of 116 of 1 per cent for buying, or ½ of 1 per cent for selling, based on the fixed rate of £ stg. 1 = DG 5. The commercial banks deal with customers for spot transactions in sterling at rates within 1 per cent of the Bank’s fixed rate and in other currencies at rates determined by the prevailing market rate in London for the currency concerned against sterling.

Administration of Control

Exchange control policy is made by the Ministry of Finance. The day-to-day administration of exchange control is carried out by the Central Bank. The commercial banks, which have been appointed as authorized dealers, may authorize sales of currencies of countries outside the Sterling Area for imports from outside the Area that are covered by specific licenses and, up to specified amounts, for travel expenses and sundry payments outside the Sterling Area. All other sales of non-Sterling Area currencies are subject to the authorization of the Central Bank. The Ministry of Finance is responsible for the issue of import and export licenses.

Prescription of Currency

The Gambia is a member of the Sterling Area, and settlements with other Sterling Area countries may be made and received freely in sterling or in any other Sterling Area currency. Settlements with countries outside the Sterling Area may be made and received in any non-Sterling Area currency other than Rhodesian currency, or in dalasis or sterling from nonresident sources.

Nonresident Accounts

Banking accounts held by authorized dealers in The Gambia on behalf of residents of countries outside the Sterling Area other than Rhodesia may be designated External Accounts. These may be credited with authorized payments from residents of the Sterling Area, with transfers from other External Accounts, and with the proceeds of sales of non-Sterling Area currencies. They may be debited for any payments to residents of the Sterling Area, for transfers to other External Accounts, and for purchases of non-Sterling Area currencies. In addition, there is legal provision for authorized dealers to maintain Blocked Accounts under the direction of the Central Bank.

Imports and Import Payments

The import of certain specified goods is prohibited from all sources, predominantly on social, health, and moral grounds. The import from any country of rice and wheat flour is subject to specific licensing in order to ensure the adequacy of such imports and their fair domestic pricing. The Gambia Produce Marketing Board is responsible for rice imports. All other imports are freely permitted under an Open General License if imported from the following countries, but are subject to specific licensing if imported from other countries: (1) all countries within the Sterling Area; (2) Austria, Belgium, Canada, Denmark, France, the Federal Republic of Germany, Greece, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, and the United States, together with the overseas territories of these countries; and (3) Argentina, Brazil, Chile, Egypt, Iran, Iraq, Lebanon, Mali, Morocco, Paraguay, Peru, Senegal, the Syrian Arab Republic, Thailand, Uruguay, Venezuela, and Yugoslavia.

Imports from Sterling Area countries may be paid for freely in dalasis or in any other currency of the Sterling Area. Settlement for imports from outside the Sterling Area may be approved by an authorized dealer on production of evidence of importation for any commodity that is covered by a valid specific import license. For imports from outside the Sterling Area which do not require specific licensing, payment authorization is given by the Central Bank on production of evidence of importation or shipment. Advance payments for imports, whether covered by specific licenses or not, are approved by the Central Bank in all cases where the payment is considered genuine and in accordance with the normal practice of the trade. Payments for imports from outside the Sterling Area may be made in dalasis or sterling to an External Account or in any non-Sterling Area currency other than Rhodesian currency.

Payments for Invisibles

Payments for invisibles to Sterling Area countries may be made freely. Payments in currencies of countries outside the Sterling Area require permission from the Central Bank except where authorized dealers have been delegated powers to authorize travel expenses and sundry payments. Such permission by the Central Bank is liberally given in all genuine cases. Irrespective of the purpose of the journey, authorized dealers may authorize a basic exchange allowance up to DG 750 for each journey but not exceeding DG 1,500 in any one calendar year for travel outside the Sterling Area. For business, professional, or official purposes, authorized dealers may provide residents with exchange facilities up to DG 1,750 for any one journey at a rate not exceeding DG 125 a day subject to a maximum of DG 3,500 in any one calendar year. Any excess over these allowances requires permission from the Central Bank. Of the above amounts, up to DG 250 may be taken in currency notes and coins of countries outside the Sterling Area. Irrespective of destination, each traveler leaving The Gambia may take out DG 75 in Gambian and/or sterling currency notes. Visitors to The Gambia may also take out with them on departure any other currency notes declared by them when entering the country.

Exports and Export Proceeds

Because of needs for local consumption, the export to any destination of charcoal, firewood, and crustaceans is subject to specific licensing, as is the export of all goods to Bulgaria, mainland China, Czechoslovakia, Eastern Germany, Hungary, Poland, Rumania, the U. S. S. R., and Yugoslavia. The export of all other goods to any other destination is freely permitted under Open General License. Payment for exports to countries outside the Sterling Area must be received within six months from the date of export in a non-Sterling Area currency other than Rhodesian currency or in dalasis or sterling from an External Account.

Proceeds from Invisibles

Receipts from invisibles in currencies of countries outside the Sterling Area must be offered for sale to authorized dealers. There is no restriction on the import of Gambian or other currency notes.

Capital

Inward transfers of capital are not controlled. Outward transfers may be effected freely to countries within the Sterling Area but are subject to control to countries outside the Area. At the time of making investments in The Gambia, nonresident investors may apply for an undertaking as to the authorization of applications for the subsequent repatriation of capital; the remittance of profits is freely allowed after provision has been made for local taxation. All other applications to transfer capital outside the Sterling Area are dealt with by the Central Bank. Loans and advances by the commercial banks to nonresidents are subject to the authorization of the Central Bank; such authorization is normally given freely for the purpose of providing working capital to companies registered outside The Gambia for their operations in The Gambia.

Gold

The import of gold coins minted in the United Kingdom requires licensing by the Ministry of Finance; otherwise, gold coins and bullion may be imported freely. All internal dealings in gold and the export of gold require the permission of the Central Bank. Neither the Central Bank nor the commercial banks deal in gold.

Changes during 1971

March 1. The Central Bank of The Gambia commenced operations and assumed responsibility for currency issue from the Gambian Currency Board.

May 10. The Central Bank increased its selling margin for sterling from ⅜ of 1 per cent to ½ of 1 per cent.

May 21. The powers to administer the Exchange Control Act were delegated to the Central Bank.

July 1. The Gambia Produce Marketing Board assumed sole responsibility for the import of rice, which previously was undertaken by the Rice Consortium.

July 1. The Gambian pound was replaced by a new decimal currency unit called the dalasi, 5 dalasis equaling £G 1. The par value of the new unit was established at 0.426562 gram of fine gold or DG 1 = US$0.48. Its introduction involved no appreciation or depreciation of the Gambian currency.

July 29. Authorized dealers were given delegated powers to approve all payments for imports from outside the Sterling Area that were covered by specific licenses.

August 16. The effective parity relationship for the pound sterling was maintained. As a result, the dalasi began to appreciate in terms of the U. S. dollar.

November 5. The basic allowance for travel outside the Sterling Area was reduced from the equivalent of DG 1,500 a person a trip to DG 750 a person a trip, subject to a limit of DG 1,500 a person a year; the basic allowance could no longer be accumulated for up to three years. Authorized dealers were empowered to approve sundry payments to nonresidents of the Sterling Area within prescribed limits.

November 23. The Gambia ceased to invoke Article XXXV of the GATT in respect of Japan.

December 20. The par value in terms of gold and the effective parity relationship for sterling were maintained. The effective parity relationship for the U. S. dollar became DG 1 = US$0.521143. The Gambia did not avail itself of wider margins.

Federal Republic of Germany *

Exchange System

The par value is 0.242806 gram of fine gold per Deutsche Mark. A central rate of DM 3.2225 = US$1 has been established, and Germany has availed itself of wider margins of 2¼ per cent. The official limits established by the Federal Government for the Bundesbank’s dealings with banks in U. S. dollars, the intervention currency, are DM 3.1500 buying, and DM 3.2950 selling, per US$1. For banks’ transactions with their customers, these rates are considered as middle rates which can be exceeded by buying or selling margins. The rate for the U. S. dollar fluctuates in the exchange market between these margins. Market rates for certain other currencies vary between limits which result from combining the official limits for the U. S. dollar maintained by Germany 1 and such limits in force in the country of the other currency concerned. Fourteen other currencies are also regularly quoted in Germany. Premiums and discounts on forward exchange transactions are normally left to the interplay of market forces.

In accordance with international understandings, there is an almost total prohibition of payments and transfers to Rhodesia and of trade and capital transactions involving Rhodesia. Otherwise, there are no restrictions on payments, no restrictions on foreign exchange dealings by residents or nonresidents, and no prescription of currency requirements. Residents are not required to repatriate or surrender their foreign exchange earnings or holdings, which may be held in Germany or abroad at the choice of the holder. Accounts in deutsche mark or in any foreign currency may be held in Germany by any nonresident. Balances on nonresident accounts may be transferred freely to any type of resident or nonresident account and used for any payment in Germany or abroad, including the purchase of any foreign currency or gold, minted or in bars; these accounts may be credited freely with any payment, with the exception that payment of interest on nonresident accounts at present requires prior approval, which is not normally granted. Payment of interest on savings deposits of natural persons, however, is permitted for balances up to DM 50,000.

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

Administration of Control

The administration of control in Germany in respect of imports and exports of goods and services is operated by the Federal Ministry of Economics and Finance, the Federal Ministry of Transportation, the Federal Office for Trade and Industry (Bundesamt für gewerbliche Wirtschaft), the Federal Office for Food and Forestry (Bundesamt für Ernährung und Forstwirtschaft), Import and Storage Agencies (Einfuhr- und Vorratsstellen), and the Ministries of Economics of the Laender. The Deutsche Bundesbank is primarily the authority that would be in charge of any exchange controls that might concern capital transactions; the Bank’s prior approval is required for transactions involving the sale by residents to nonresidents of money market paper and, under certain circumstances, fixed-interest domestic securities, as well as for the payment of interest on nonresident-held deposits in Germany. All banks in Germany are permitted to carry out foreign exchange transactions. A voluntary coordinating body within the banking system, the Central Capital Market Committee, formulates recommendations with regard to the timing and the terms of bond issues.

Imports and Import Payments

The Import List, which is part of the Foreign Trade and Payments Law, comprises a total of some 8,300 statistical positions. Of these, some 5,100 may be imported free of license from any country. Commodities corresponding to 2,800 other positions may be imported free of license from countries in Country Lists A and B, and commodities covered by another 275 positions may be imported free of license from countries in Country List A.2 Certain petroleum products (6 positions) require a license irrespective of origin. Imports of coal from countries that are not members of the European Coal and Steel Community are permitted within the framework of a global quota. Some 1,135 of the 8,300 statistical items are covered by the Common Agricultural Policy of the EEC; most of these are subject to variable import levies which have replaced all previous barriers to imports.

De facto liberalization is extended to certain commodities (about 1,500 statistical items) when originating in and purchased in Bulgaria, Czechoslovakia, Hungary, Poland, or Rumania. Under these arrangements, import licenses are issued automatically upon application, provided that domestic production and prices are not affected adversely (AMLA3 procedure).

Imports not subject to licensing require only an import declaration stamped by the Deutsche Bundesbank, which serves as documentation. For imports still subject to quantitative restriction (with certain exceptions, such as foods imported by tourists, samples, gifts, and small parcels), an individual import license is required. Applications are normally invited by tender (Ausschreibung) published in the Federal Official Gazette. Import licenses may be allocated to importers either on a first-come, first-served basis, or on the basis of the total value of applications in relation to the quotas established for specified commodities. Some tenders are permanently open (AMLA procedure).

For manufactured goods, the period of validity of the license is usually six months, but it may be extended in certain cases (e.g., heavy machinery) to a period necessary for the production of the goods. For agricultural products the usual period is also six months; however, for seasonal imports, it may be shorter.

Payments for imports are free, even if the underlying import transaction is still restricted. Commodity futures may be dealt in freely. Transit trade transactions may, in principle, be carried out freely.

Payments for Invisibles

All payments for invisibles may be made freely without individual license, except to Rhodesia. German and foreign notes and coins and other means of payment may be exported freely.

The following transactions—but not the related payments—between residents and nonresidents are subject to restriction: the chartering of foreign ships from residents of specified countries; the use of foreign boats in certain inland waterways traffic; transactions with specified countries (which do not grant reciprocal treatment) for hull and marine liability insurance and aviation insurance, except passenger accident insurance; the production of motion pictures in association with nonresidents; and certain contracts with nonresidents pertaining to motion-picture films.4

Exports and Export Proceeds

With few exceptions, export transactions may be carried out freely. For all goods, an export notification, for statistical purposes, is required. Certain exports—mostly strategic goods and agricultural commodities subject to EEC regulations—are subject to individual licensing. The customs authorities exercise control over export declarations and also check to see whether a license is required.

Foreign exchange proceeds from exports do not have to be declared or surrendered, and they may be used for all payments. Claims in excess of DM 20,000 that have been overdue for more than three months and prepayments in excess of DM 10,000 must be reported.

Proceeds from Invisibles

With few exceptions, services performed for non-residents do not require licenses. However, licenses are required for transactions related to specific sea services, and for technical assistance through the delivery to residents of list С countries (see footnote 2) of constructional drawings, materials, and instructions for manufacture, insofar as such assistance is for the production of goods whose export requires a license.

There are no restrictions on the receipt of payments for services rendered to nonresidents. However, receipts exceeding DM 500 on account of such services have to be reported.

German and foreign notes and coins and other means of payment may be imported freely.

Capital

Residents and nonresidents may import or export capital freely without a license, except to Rhodesia.5 Foreign and international bond issues on the German capital market do not require official approval. However, a system of voluntary coordination of banks is operated by the Central Capital Market Committee. (In May 1971, the Committee recommended a temporary suspension of new bond issues denominated in deutsche mark, by residents and nonresidents alike, but such issues were resumed shortly thereafter.) Securities of all types may be imported or exported freely, although transactions with nonresidents in money market paper and, under repurchase agreements, transactions in certain fixed-interest securities require the prior approval of the Bundesbank. There are no limitations on the disposal of legacies located in Germany and inherited by nonresidents, or on legacies located abroad and inherited by residents. Banks are not normally permitted to pay interest on domestic or foreign currency balances held by nonresidents.

Gold

Residents may freely hold gold in any form at home and abroad and may negotiate gold in any form with residents or nonresidents at home and abroad. There is a free gold market in Frankfurt. Imports require a license from the Federal Office for Trade and Industry when the gold is purchased in or originates in Rhodesia or, in certain circumstances, in a country on country list C. With these exceptions, imports and exports by residents and nonresidents of gold in any form are unrestricted and free of license; a customs declaration, however, is required. Imports of unworked gold and gold alloys are free of customs duty but are subject to value-added tax at a rate of 11 per cent. Imports of monetary gold by the Bundesbank and imports of gold coins that are legal tender, including sovereigns, are exempt from this tax and from customs duty; imports of other gold coins are subject to value-added tax at a rate of 11 per cent or, where the assessment basis exceeds 250 per cent of the fine gold value, at a rate of 5.5 per cent. Domestic purchases of gold (alloys and coins that are not legal tender) are subject to value-added tax at a rate of 11 per cent. Commercial imports and exports of articles containing gold are subject to the general foreign trade regulations and in most cases are liberalized.

Changes during 1971

February 25. The Bundesbank requested the Federal Reserve Bank of New York to offer three-month forward marks in the New York market for the account of the Bundesbank. These sales were discontinued in mid-March.

March 24. The self-restraint program for imports of heavy heating oil was formally terminated.

March 31. The Bundesbank announced, with effect from April 1, the lowering of its rediscount rate from 6 per cent to 5 per cent and of the Lombard rate from 7.5 per cent to 6.5 per cent. At the same time, the rediscount quotas of commercial banks were cut by 10 per cent.

April 2. The Bundesbank resumed its intervention in the forward exchange market; this intervention took the form of outright sales of three-month forward deutsche mark at the spot ceiling rate. This action was supported by the Federal Reserve Bank of New York which, dealing for Reserve System account, offered forward marks at the same rate in New York. The joint operations continued through most of April.

April 7. The Foreign Trade and Payments Ordinance was amended. With effect from June 1, 1971, the reporting requirements for nonbank residents in respect of balances held abroad and claims and liabilities vis-à-vis nonresidents were tightened; that in respect of overdue export claims was eased. Among the changes was a new reporting requirement for liabilities on intercompany accounts.

April 28. The Bundesbank announced that it had ceased buying U. S. dollars forward.

May 5. The Bundesbank at the request of the Federal Government suspended its exchange market intervention in the form of spot purchases of U. S. dollars. The foreign exchange market was closed (although banks were legally free to continue to deal if they wished). It reopened on May 10.

May 9. The Bundesbank announced that, with effect from May 10, it would at the request of the Federal Government no longer maintain the exchange rates for the deutsche mark within the established margins (DM 3.63 buying and DM 3.69 selling, per US$1). On May 10, the deutsche mark began to float and to appreciate in terms of the U. S. dollar.

May 9. The Foreign Trade and Payments Ordinance was amended by the insertion of Articles 52, 53, and 54. Their effect was that from May 10 essentially the same limitations and prohibitions on financial transactions with nonresidents were introduced that had been in force from 1961 through 1969 and abolished on December 20, 1969. Banks required permission to pay interest on domestic or foreign currency deposits placed with them by nonresidents; such permission would not normally be granted. Savings deposits in the name of nonresident individuals, however, were exempt up to an amount of DM 50,000, and existing time deposits until the maturity date or until the bank could give notice of termination to the customer. Nonresidents needed special authorization for all purchases from residents of domestic money market paper (including treasury bills and bills of exchange) and for purchases of domestic fixed-interest securities in which the resident seller undertook an obligation to reacquire the securities later under a fixed-price repurchase agreement (en pension transactions). Certain nonresident physical persons of German nationality were exempt from these regulations.

May 12. An EEC ordinance allowed Germany to introduce levies on imports and subsidies on exports of agricultural commodities if the deutsche mark appreciated by more than 2.5 per cent above its official parity of DM 3.66 = US$1. Such levies and subsidies were introduced on May 14 and May 18, respectively, both retroactive to May 12.

June 2. The Bundesbank announced, with effect from June 1, the raising of minimum reserve requirements on commercial banks’ domestic liabilities by 15 per cent across the board and on banks’ foreign liabilities to a level twice as high as the new minimum reserve requirements on domestic liabilities. The 30 per cent additional reserve requirement on increases in liabilities to nonresidents, which had been reintroduced on December 1, 1970, remained unchanged. The supplementary rediscount quotas for “third-country bills” were canceled with effect from October 1.

June 2. The Bundesbank announced that it was resuming intervention in the exchange market for the first time since the floating of the deutsche mark by offering spot U. S. dollars at DM 3.5675 per U. S. dollar. The operation was continued over the next few weeks, at varying rates acceptable to the Bundesbank. On August 5, however, the Bundesbank for the first time purchased spot U. S. dollars again.

July 1. Generalized tariff preferences went into effect for specified commodities originating in most developing countries.

July 21. The Cabinet announced its decision to introduce draft legislation empowering the authorities to impose cash deposit requirements, retroactive to July 21, against the foreign borrowings of nonbanking enterprises.

August 16. The foreign exchange market was closed. It reopened on August 23, when the deutsche mark continued to float.

September 7. The official quotation for the Japanese yen was suspended. Official quotation was resumed on January 6, 1972.

September 21. The Bundesbank announced it was prepared to buy U. S. dollars forward (at one to three months), provided it found the rates quoted by banks acceptable.

September 23. Imports of commodities falling under 10 statistical positions were formally liberalized, i.e., permitted without an import license, for all countries. Furthermore, imports of commodities falling under 27 statistical positions were formally liberalized when originating in or purchased in any of the countries of list С (Albania, Bulgaria, mainland China, Cuba, Czechoslovakia, Hungary, North Korea, Mongolia, Poland, Rumania, the U. S. S. R., and North Viet-Nam).

October 13. The Bundesbank announced, with effect from October 14, a reduction in its rediscount rate to 4.5 per cent and in its Lombard rate to 5.5 per cent. It also announced, with effect from November 1, a 10 per cent across-the-board reduction in minimum reserve requirements on domestic liabilities. The two reserve requirements against foreign liabilities remained unchanged.

October 21. The Federal Government announced its intention to introduce an exchange risk insurance system designed to protect exporters who might be adversely affected by the fluctuations of the deutsche mark rate. The scheme would provide cover against exchange rate fluctuations of more than 3 per cent on long-term contracts denominated in foreign currency. (The exchange rate insurance facilities came into force on February 24, 1972 and could be applied to export transactions concluded on or after January 1, 1972. Eligible for cover were export transactions invoiced in U. S. dollars, sterling, or Swiss francs and having a maturity in excess of two years. No cover was granted for the first two years of any contract. The exchange rate insured was the middle rate officially quoted on the Frankfurt exchange for the currency concerned on the last day of the uncovered two-year period of the contract. The exporter would bear any exchange loss up to 3 per cent, and the Federal Government any excess; the exporter could retain any exchange profit up to 3 per cent but would have to transfer to the Government any excess. The premium was set at 0.6, 0.65, or 0.7 per cent per annum, depending on the other types of export risk insured jointly with the exchange rate risk. Cover would be provided by the Hermes Kreditversicherungs A. G.)

December 23. The cash deposit law (Bardepotgesetz) was enacted. It amended the Foreign Trade and Payments Law and empowered the administration to require residents, including banks, to lodge noninterest-bearing cash deposits in deutsche mark with the Bundesbank corresponding to at most 50 per cent of their loans and other credits taken up directly or indirectly from nonresisents, other than liabilities resulting from normal international transactions in goods and services. Branches and subsidiaries in Germany of nonresident firms would for purposes of the deposit requirement be considered as juridically independent. Exempt from the requirement were any liabilities against which minimum reserves had to be held with the Bundesbank. The law came into force on January 1, 1972. On March 1, 1972, the Federal Government passed the 21st Ordinance Amending the Foreign Trade and Payments Ordinance, according to which the cash deposit requirement for most foreign liabilities of residents came into force on the same day. At the same time, the Bundesbank, acting with the approval of the Minister of Economics and Finance, established the rate of deposit at 40 per cent.

December 20. The foreign exchange market was closed. It reopened on December 21.

December 21. A central rate of DM 3.2225 = US$1 was established and Germany availed itself of wider margins of 2¼ per cent. The Bundesbank henceforth stood ready to buy and sell U. S. dollars at DM 3.1500 and DM 3.2950, respectively. All existing restraints against inflows of foreign funds were maintained.

December 22. The Bundesbank announced, with effect from December 23, a reduction in its rediscount rate to 4 per cent and in its Lombard rate to 5 per cent. At the same time it announced, with effect from January 1, 1972, a 10 per cent reduction in the minimum reserve requirements against domestic liabilities of banks. The two reserve requirements on banks’ foreign liabilities remained unchanged.

Ghana

Exchange Rate System

The par value is 0.450182 gram of fine gold per Ghanaian New Cedi. The effective parity relationship for the U.S. dollar is NȻ 1 = US$0.55.1 The Bank of Ghana quotes rates for the U. S. dollar and sterling; on December 31, 1971 the Bank’s rates were NȻ 4.73 per £ stg. 1 and NȻ 1.82 per US$1. For other currencies, the commercial banks in Accra base their rates on the current London market rates plus or minus the exchange charge of ½ of 1 per cent levied on sterling transactions and a brokerage fee of ⅛ of 1 per cent. The authorized banks may arrange exchanges of Ghanaian currency for any foreign currency and engage in arbitrage in all currencies, spot or forward, but they do not maintain foreign exchange balances, receiving their requirements from the Bank of Ghana on a day-to-day basis.

Administration of Control

The Controller of Imports and Exports at the Ministry of Trade is empowered, on behalf of the Ministry of Trade, to prohibit, regulate, or license the import and export of all goods. Applications by the industrial sector and certain state agencies for individual import licenses must be channeled through the appropriate ministry or government agency for endorsement. Applications that have been endorsed by the competent ministry or agency are then forwarded to the Controller of Imports and Exports at the Ministry of Trade. Applications by the commercial houses for the import of consumer and investment goods are submitted direct to the Ministry of Trade. The Controller of Imports and Exports issues import licenses for items on the Restricted List on the basis of periodic foreign exchange allocations provided by the Bank of Ghana.

The Exchange Control Department of the Bank of Ghana administers the allocation of exchange for payments for invisibles and capital. Permitted foreign exchange transactions must be made through authorized banks.

Prescription of Currency

Ghana is a member of the Sterling Area and has prescription of currency requirements similar to those of the United Kingdom. Settlements between residents of Ghana and residents of other Sterling Area countries may be made in new cedis through Sterling Area Accounts, in sterling, or in other Sterling Area currencies. Authorized payments, including payments for imports, by residents of Ghana to residents of countries outside the Sterling Area other than Rhodesia may be made in new cedis to the credit of a Foreign Account, in sterling to the credit of an External Account, or in any non-Sterling Area currency. Receipts from residents of countries outside the Sterling Area other than Rhodesia may be obtained in new cedis from a Foreign Account, in sterling from an External Account, or in any non-Sterling Area currency. However, settlements related to transactions covered by bilateral trade and payments agreements are made through clearing accounts maintained by the Bank of Ghana and/or the central or state banks of the countries concerned.2

Nonresident Accounts

Accounts in new cedis held by residents of countries within the Sterling Area other than Ghana are designated Sterling Area Accounts. These accounts may be credited with authorized payments by residents of Ghana, with transfers from Foreign Accounts and from other Sterling Area Accounts, and with the proceeds from sales of Sterling Area and non-Sterling Area currencies. They may be debited for payments to residents of Sterling Area countries, for transfers to other Sterling Area Accounts, and for purchases of Sterling Area currencies.

Accounts in new cedis held by residents of countries outside the Sterling Area other than Rhodesia with authorized banks in Ghana are designated Foreign Accounts. The opening of these accounts is subject to approval by the Bank of Ghana. The accounts may be credited with authorized outward payments by residents of Sterling Area countries, with transfers from other Foreign Accounts, and with the proceeds from sales of non-Sterling Area currencies other than Rhodesian currency. They may be debited for inward payments to residents of the Sterling Area, for transfers to other Foreign Accounts, and for purchases of Sterling Area and non-Sterling Area currencies other than Rhodesian currency.

Nonresident accounts maintained under the provisions of bilateral payments agreements are called “Official Accounts” or “Territorial Accounts.” These accounts may be credited with authorized outward payments by residents of Sterling Area countries, with transfers from Foreign Accounts, with payments received through the Bank of Ghana for settlements with bilateral payments agreement countries, and with proceeds from sales of non-Sterling Area currencies other than Rhodesian currency. They may be debited for authorized inward payments to residents of Ghana, for transfers to other Official Accounts related to the same country, and for transfers to the related clearing account at the Bank of Ghana. Blocked Accounts are nonresident accounts of another category, the purpose of which is to receive funds that are not placed at the free disposal of nonresidents, e.g., certain types of capital proceeds. These may be debited for authorized payments, including the purchase of approved securities.

Imports and Import Payments

Imports from Rhodesia, South Africa, South-West Africa, and the Portuguese Monetary Area are not permitted. A large part of the import trade is carried out by private importers who must be registered and have to pay a flat registration fee of 50 a year. Unregistered importers pay a fee of 25 a year which entitles them to import goods on an open general license only. Other imports are made by state agencies. Imports of certain goods also produced in Ghana, as well as certain other commodities of a luxury character, are severely restricted; these are specified in a List of Restricted Imports or a List of Banned Imports comprising some 80 items.3 There are ten open general licenses which permit any registered importer to import freely (and normally from any country) the commodities specified in the relevant license. These commodities include most chemicals, spare parts, fertilizers, certain electric machinery, mineral manufactures, paper and paperboard, certain foodstuffs, and pharmaceutical products. All other imports require individual licenses; for some, the license must be obtained before orders are placed. Individual licenses are of two kinds: specific licenses and special unnumbered licenses. All goods not covered by an open general license must be covered by a specific license, but where satisfactory evidence can be produced to the effect that payment for such goods has been made and therefore no transfer of foreign exchange is involved, they can be imported under “special unnumbered licenses”; these are not issued for imports in commercial quantities.

Except for aid imports or imports under bilateral payments agreements, import licenses do not specify the country from which the commodity has to be imported; they merely specify whether payment is to be made in convertible or inconvertible currency. Licenses are issued on a c. & f. basis and are endorsed to the effect that insurance must be covered in Ghana.

In principle, exchange for payment of approved imports is granted freely by the Bank of Ghana, but certain arrears have arisen. With the exception of aid imports, imports under bilateral payments agreements, and certain other imports for which exemption has been granted by the Ministry of Trade in consultation with the Bank of Ghana, all goods must be imported on credit terms of 180 days after shipment.4 Commercial banks usually require importers to make downpayments on the opening of letters of credit for all categories of imports.

Some imports are subject to a sales tax of one new pesewa a pound (which is equivalent to about 10 per cent ad valorem on rice and about 18 per cent on sugar). Many imports are subject to a levy of 11½ per cent on the combined amount of c.i.f. value, import duty, and other import charges.

Payments for Invisibles

All payments for invisibles require specific approval of the Exchange Control Department of the Bank of Ghana, and documentary evidence must support all applications. Certain payments and transfers are in arrears.

The following categories of payments are normally authorized in connection with the importation of goods: (1) the buying commission—this must be duly endorsed on the import license and the amount of the authorized commission is deducted from the value of the import license; (2) the transfer of normal bank charges payable to overseas bankers for import payments, provided that the amount of the bank charges and the buying commission combined do not exceed 4 per cent of the c.i.f. value of the goods; and (3) the transfer of funds to cover interest on bills up to 6 per cent per annum. Freight charges must be paid to the local shipping agents; the transfer of funds to cover such charges is normally permitted, provided that the applications are properly documented. With few exceptions, insurance on all imports shipped to Ghana on f.o.b. or c. & f. terms must be arranged in Ghanaian currency with local insurance companies.

Remittances of income by non-Ghanaian employees are limited to 40 per cent of their net annual earnings, up to a maximum of N0 3,000 a year, and are permitted only to persons having an annual disposable income of at least N0 1,000; this personal remittance quota is intended to cover all personal and family requirements and commitments outside Ghana, including leave expenses, travel for health purposes, education, gifts, insurance premiums, subscriptions, and donations. Remittances of income by non-Ghanaian self-employed persons are also limited to 40 per cent of their net annual earnings, up to a maximum of N0 3,000.

Nonresident companies are, with the exception of companies financed with locally raised capital, permitted to transfer abroad freely their net profits, i.e., profits after payment of the prevailing 55 per cent tax for commercial companies and the 50 per cent tax for other companies; at present, however, profit transfers are being authorized only on a limited basis. The transfer of profits by companies that are either foreign-owned or owned or controlled by nonresidents and that have been financed with locally raised capital is not permitted.

The basic annual travel allowance for Ghanaians is N0 104.06 for each person 18 years of age or over and N0 47.30 for each person under that age. Foreigners resident in Ghana are allowed up to N0 946 a calendar year out of their personal remittance quota (if any). Exchange for business travel is granted as follows: a basic travel allowance of N0 496.65 a journey plus an additional allocation determined on the merits of the application; not more than two journeys a year are allowed. All residents may buy round-trip tickets in Ghana to the country of destination, subject to approval by the Bank of Ghana. Residents of any nationality (except children under two years of age, diplomats, and UN personnel) who, for any purpose, are leaving Ghana by air or sea, whether temporarily or not, must pay a travel tax of 10 per cent of the price of the round-trip ticket.

Resident travelers may be permitted to take with them additional foreign currency equivalent to N0 236.50, provided that not more than the equivalent of N0 47.30 is taken in banknotes in any one currency. Ghanaian banknotes may be taken out by any traveler up to N0 47.30, but may be spent only on Ghanaian aircraft and ships. Nonresident travelers may take out any unutilized foreign currency imported and declared upon entry.

Exports and Export Proceeds

Exports to Rhodesia, South Africa, South-West Africa (Namibia), and the Portuguese Monetary Area are prohibited. Cocoa and certain other agricultural products are exported through the Cocoa Marketing Board. Normally, specific export licenses are required.

Exporters are required to collect and repatriate the proceeds from their exports within 60 days of shipment; export proceeds in foreign exchange must be surrendered to a commercial bank in Ghana upon receipt.

Proceeds from Invisibles

All receipts from invisibles must be sold to an authorized bank. Foreign currency notes may be imported freely, provided that their exportation is not prohibited by the issuing country. The import of Ghanaian currency notes is prohibited, with the exception of the reimportation of notes taken out previously by the same traveler and recorded in his passport.

Capital

Foreign investment in Ghana requires prior approval. The Capital Investments Act, which was promulgated in April 1963, provides for the granting of special benefits to specified existing investments as well as to new investments. Under the act, approval may be granted to investments that contribute to the development and utilization of productive capacity, the reduction of imports, the attainment of a high level of employment, or the acquisition of technical skills by citizens of Ghana. However, certain retail, wholesale, and transportation operations are not open to foreigners. Investments approved under this act obtain a guarantee of the right to transfer profits and, in the event of sale or liquidation, capital proceeds; tax holidays, initial capital allowances, etc., are also available for such investments. The act also stipulates that the assets of foreign investors may not be expropriated and that, when approved enterprises are nationalized in the public interest, fair compensation is to be determined either by voluntary agreement of the parties or through arbitration by the International Bank for Reconstruction and Development. A Capital Investments Board decides which foreign investments qualify for benefits under the act.

All outgoing capital movements must be approved; applications for such transfers must be supported by documentary evidence and are considered on their merits. Transfers to beneficiaries under wills and intestacies are approved, provided that all local indebtedness has been paid. Requests for the transfer of funds representing personal assets of foreign residents in Ghana who emigrate are considered individually on their merits. Applications must be supported by appropriate documentation showing that the savings are genuine and that no illegal transfer of capital is involved. Proceeds from the liquidation of real assets of foreign nationals leaving Ghana may be directed to be reinvested in government bonds or treasury bills; the interest accruing on such investments is transferable.

Loan and overdraft facilities to resident companies controlled by nonresidents require the individual approval of the central bank. Such companies, when financed with locally raised capital, are not permitted to transfer profits or dividends abroad.

Transactions in securities are controlled to ensure that capital is not transferred abroad without express permission. In respect of portfolio investments, residents have to obtain approval for any switch in their holdings of securities issued by nonresidents.

Gold

Residents may hold and negotiate in Ghana gold obtained domestically by washing or mining according to indigenous methods, gold coins that are collectors’ pieces, and gold jewelry. Other domestic transactions in gold, as well as imports and exports, may be authorized by the Ministry of Trade in collaboration with the Bank of Ghana, and certain domestic sales may be carried out by permit under the Gold Mining Products Protection Ordinance. With these exceptions, no Ghanaian resident other than an authorized dealer may buy or borrow any gold from, or sell or lend any gold to, any person other than an authorized dealer. Imports of gold other than imports by or on behalf of the monetary authorities are not normally licensed; imports for industrial use are very small, a specified commercial bank being the sole importer. The import duty on bullion and partly worked gold is 10 per cent, and that on other gold is 50 per cent. The gold mines export their entire output in semirefined form. Exports are free of duties or taxes; the mining corporations are subject to a minerals tax based mainly on profits.

Changes during 1971

March 20. Notice to Importers No. 363 removed rice from the import items on open general license.

April 20. Act 357, providing for the payment of an export bonus to exporters of specified items, went into effect. For export receipts surrendered to the Bank of Ghana in the fiscal year 1969/70, the scheme provided for the payment of a bonus in new cedis at the rate of 10 per cent of the increment of export receipts over the 1968/69 financial year. For export receipts surrendered in the fiscal year 1970/71 and thereafter, exporters would be eligible to receive a bonus calculated on the basis of the annual value of exports, at rates determined by the Minister of Finance.

May 3. The banking arrangement between Ghana and Upper Volta signed in November 1970 entered into force.

May 28. The Bank of Ghana announced that registered importers wishing to import machinery and equipment under open general license valued at more than N0 50,000 were asked to refer their applications to the Exchange Control Department of the Bank of Ghana for approval of the terms of payment.

June 11. The Bank of Ghana announced that imports of specified items would be required to be inspected before shipment from the port of export. Clearance through customs of these goods at the point of entry would not be permitted if they arrived in Ghana on or after September 1, 1971 unless proof of inspection was presented.

June 25. Notice to Importers No. 365 announced the addition of certain types of power cables to the items on the Restricted List.

July 2. A Government Gazette notice established the regulations implementing the provisions of Act 357 of April 20. The Export Bonus Scheme was applicable to all exports to African countries except cocoa beans, minerals, and primary metals. Of exports to non-African countries, all exports, except the following, were eligible for the bonus: timber and its derivatives (excluding plywood and furniture); cocoa beans and products; and all minerals and primary metals. For export receipts surrendered in 1970/71 or thereafter, the bonus was fixed at 25 per cent of the value of exports expressed in new cedis. The Bank of Ghana was to keep a record of the export performance of individual exporters, and the bonus was to be paid upon presentation by the exporter of proof of surrender of foreign exchange proceeds to the Bank of Ghana.

July 27. The customs tariff regulations were amended by increasing by 50 per cent all rates of duty specified therein in the case of goods originating in a country which the Minister of Finance determined had imposed, in respect of Ghanaian exports, import duties or other import taxes higher than those levied on similar goods originating from any other country. The temporary import surcharges introduced in August 1970 were similarly amended. Furthermore, all government departments and statutory corporations were henceforth required to pay import duties, excise duties, sales taxes, purchase taxes, and import surcharges at the established rates. In addition, import duties on a number of items were converted from specific to ad valorem basis.

July 27. The sales tax payable at the time of importation on imports of liquid petroleum gas, motor spirits, and gas oil were increased. The sales tax on imports of sugar, salt, rice, and flour was lowered from 11.5 per cent of the duty-inclusive value to 5 per cent.

July 27. Subject to certain conditions, Ghanaians who had been resident outside Ghana for at least one year continuously were exempted from import duties and other import levies in respect of their movable personal belongings imported on their return to Ghana.

July 27. The temporary import surcharges established on August 25, 1970 were amended by Act 376. Goods were classified into six categories: items listed in the first five categories were subject to rates of surcharge of 5, 10, 25, 40, or 75 per cent ad valorem when imported under open general license; items listed in the sixth schedule were subject to ad valorem rates of 5, 25, or 40 per cent and consisted primarily of raw materials requiring specific licenses. Imports of certain food items (e.g., milk and cream, and tinned fish and meat) previously free of surcharges were made subject to a surcharge at the rate of 5 per cent.

July 27. Notice to Importers No. 368 banned the importation of passenger cars.

July 27. Act 378 established a tax on remittances of specified current invisibles to be paid prior to the allocation of foreign exchange at the following rates: (1) dividends, profits, and royalties (excluding profits and dividends relating to any period prior to July 1, 1971), 25 per cent; (2) airline and shipping remittances other than remittances in connection with merchandise imports, 10 per cent; (3) insurance premiums, 10 per cent; (4) personal remittances, 10 per cent; (5) students’ remittances, 10 per cent; (6) transfers to Ghana’s missions abroad, 10 per cent; (7) business travel and private travel, 25 per cent; (8) commissions, 25 per cent; (9) interest payments, 25 per cent; (10) head-office expenses, 25 per cent; and (11) all other current payments and transfers, except those in connection with merchandise imports, 25 per cent. The Minister of Finance was given the authority to grant partial or total exemptions from the tax.

July 27. The ceiling of 6 per cent on remittable interest on 180-day import credits was abolished.

August 15. The fixed rate for sterling of N0 1 = £ stg. 0.41 was maintained. As a result, the new cedi began to appreciate in terms of the U. S. dollar from the previous level of N0 1 = US$0.98.

August 27. Notice to Importers No. 369 further extended the scope of the ten open general licenses with effect from July 27, 1971. At the same time, about 60 items were removed from the list of restricted imports and placed on a banned import list. The scope of the restricted list was somewhat reduced.

September 10. Under the provisions of Act 343, the Minister of Finance revoked the previous schedules of import surcharges, replacing them with new schedules encompassing a larger number of items. Goods were classified into eleven categories. Items listed on the first four schedules were subject to surcharges of 5, 10, 25, and 40 per cent; in practice, the lists corresponded to open general licenses Nos. 5, 6, 7, and 8, respectively. The fifth schedule consisted of items subject to specific or ad valorem rates from 5 per cent to 150 per cent when imported under open general license; most items on open general license No. 9 were included in this category. Schedules VI—X consisted of items subject to surcharges of 5, 10, 25, 40, and 75 per cent, respectively, when imported under specific license; and the eleventh schedule listed items on the restricted list with a surcharge of 40 per cent.

September 15. Tourists visiting Ghana became entitled to a bonus of 25 per cent when cashing foreign currency or travelers checks for new cedis.

November 4. The new cedi ceased to be pegged to sterling, the fixed rate for which had been N0 1 = £ stg. 0.41. The par value in terms of gold was maintained. The relationship of N0 1 = US$0.98 that existed prior to August 15 was restored.

December 27. The par value was changed from 0.870897 gram of fine gold to 0.450182 gram of fine gold per new cedi. The effective parity relationship for the U. S. dollar became N0 1 = US$0.55. Ghana informed the Fund that it was availing itself of wider margins of up to 2¼ per cent.

December 27. The temporary import surcharges, the 10 to 25 per cent tax on remittances for invisibles, the 25 per cent bonus on foreign currencies and travelers checks cashed by tourists, and the 25 per cent export bonus scheme were abolished.

Greece

Exchange Rate System

The par value is 0.0296224 gram of fine gold. A central rate of Dr 30 = US$1 has been established, and Greece avails itself of wider margins of up to 2¼ per cent. The intervention currency is the U. S. dollar. The official rates maintained by the Bank of Greece (the central bank) are Dr 29.90 buying, and Dr 30.10 selling, per US$1.1 Rates for other currencies are determined daily on the basis of the official limits for the U. S. dollar maintained by Greece and the rates for the currencies concerned in international markets.

Administration of Control

Controls are administered on the policy level by the Ministry of National Economy and the Currency Committee. Exchange control policy is made by the Currency Committee, the Credit Committee, and the Foreign Exchange Sub-Committee, and import policy is made by the Ministry of National Economy. Exchange control is implemented, and import approvals are granted, by the Bank of Greece and authorized commercial banks. Import and export licenses are issued by the Bank of Greece, authorized banks, and the Ministry of National Economy and, in some cases, require the prior approval of the competent ministry. The authorized banks may make exchange settlements relating to permitted trade transactions and may grant residents a standard travel allowance. All other exchange payments require the approval of the Bank of Greece.

Prescription of Currency

Settlements with countries with which Greece has bilateral payments agreements2 are made through controlled accounts, with the U. S. dollar as the currency of account. Settlements with all other countries are made in any convertible currency or through Foreign Sight Deposit Accounts in drachmas.

Nonresident Accounts

Nonresidents are permitted to open with Greek banks convertible Foreign Sight Deposit Accounts in drachmas or convertible currencies. These accounts may be credited with convertible foreign exchange or the proceeds from sales of convertible currencies, with authorized payments by residents of Greece for imports or services payable in convertible currencies, and with transfers from other Foreign Sight Deposit Accounts. They may be debited for payments to residents for current transactions, for transfers to other Foreign Sight Deposit Accounts, and for the purchase and transfer abroad of any convertible currency. Any withdrawal from drachma accounts for use in Greece and any conversion of foreign exchange withdrawals into drachmas entail the loss of the reconversion right of the sums withdrawn. The maximum rate of interest on such accounts is 1.50 per cent per annum.

Nonresidents may also make time deposits in convertible foreign exchange for a minimum period of 90 days with authorized foreign exchange banks; interest rates on the deposits range between 6¾ and 8 per cent per annum according to their term. Particular regulations apply to nonresident investors (including Greek nationals permanently residing abroad) enjoying the privileges of Legislative Decree No. 2687/53 (see section on Capital, below). They may establish time deposits, for a minimum period of six months and with a minimum deposit in convertible currencies equivalent to US$10,000; balances on these accounts earn interest of 7–8 per cent, and principal and interest are freely transferable at maturity in the currency of the deposit.

All drachma assets of nonresidents other than those in Foreign Sight Deposit Accounts must be declared and are held in blocked accounts. Domestic banknotes in excess of Dr 750 brought in by nonresident travelers must also be credited to a blocked account, as must certain income accruing in Greece to nonresidents. Subject to the approval of the exchange control authorities, balances on blocked accounts may be used for such purposes as personal expenses in Greece up to Dr 30,000 a visit, purchases of securities officially listed on the stock exchange in Greece, and purchases of real estate in Greece. Amounts of up to Dr 60,000 may be released for remittance by each account holder, provided that the funds were held before December 31, 1963; amounts of up to Dr 30,000 may be released semiannually for remittance by each account holder, from accounts opened after January 1, 1964, provided that the money deposited was derived exclusively from rents. Other amounts of balances on blocked accounts may be transferred abroad if the prior approval of the Bank of Greece is obtained. All transfers between blocked accounts require prior approval. Blocked balances may be deposited with a commercial bank, where they earn interest at current rates for sight deposits.

Greek citizens (including seamen) who are employed abroad and certain Greek societies and associations operating abroad may establish, with funds originating abroad, convertible foreign currency accounts with authorized banks in Greece. Merchant seamen may deposit their wages and salaries in these accounts, provided that the funds originate abroad and, if they are received in drachmas, that they are obtained through the intermediary of a shipping firm established in Greece. Balances on these accounts earn interest at 3 per cent per annum for sight deposits, 6¾-8 per cent per annum for time deposits, and 6¼ per cent per annum for savings bank deposits. Balances on these accounts, including accrued interest, are freely convertible into foreign exchange as long as the holder continues to work abroad, or to serve at sea, and for five years thereafter.

Imports and Import Payments

Imports of all commodities originating in or shipped from Rhodesia are prohibited. All other imports, except those of goods on Lists P and P-12 with an invoice value c.i.f. of the equivalent of US$100 or less for which payment will be made through an authorized bank, require approval. For most imports, prior approval is required; however, for certain commodities, mainly machinery and raw materials, imports may be effected without prior approval, provided that approval is obtained subsequently. The granting of an import approval implies that appropriate foreign exchange will be made available. Apart from imports for which special licenses are required, two general import procedures (E and D) are applicable to imports, mainly for statistical purposes. Under procedure E, the approval of an authorized bank is required (1) for imports from countries participating in the European Monetary Agreement (EMA) when payment is to be made in a convertible or externally convertible European currency; (2) for imports from Canada or the United States when payment is to be made in free dollars, i.e., not on the basis of procurement authorizations under U. S. aid; and (3) for imports from countries with which Greece has concluded bilateral payments agreements when payment is to be made through the re