Chapter

Introduction

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
January 1992
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The Report provides a detailed description of the exchange and trade systems of individual member countries, including a nonmetropolitan territory (Hong Kong), for which the United Kingdom has accepted the IMF’s Articles of Agreement, and Aruba and the Netherlands Antilles, for which the Kingdom of the Netherlands has accepted the IMF’s Articles of Agreement.

In general, the description relates to the exchange and trade systems as of the end of 1991, but in appropriate cases reference is made to significant developments that took place in early 1992.

A standardized approach has been followed, under which the description of each system is broken down into similar headings, and the coverage for each country includes a final section that lists chronologically the more significant changes during 1991.

The description of the exchange and trade system is not necessarily confined to those aspects involving exchange restrictions or exchange controls. As in previous Reports, questions of definition and jurisdiction have not been raised, and an attempt has been made to describe exchange and trade systems in their entirety, except for the tariff structure and, in most cases, direct taxes on exports and imports. Thus, the coverage extends to such features as import licensing, advance deposit requirements, import surcharges, travel taxes, export licensing, and export incentive schemes. Similarly, the section Changes During 1991 includes references to certain developments that may have a direct impact on international transactions but are not necessarily reflected in the body of the country descriptions, such as major revisions of import tariffs or developments in regional cooperation.

The description given in the section Exchange Arrangement is in line with the notification of exchange arrangements that member countries have furnished to the IMF under Article IV, Section 2(a). The structure of exchange markets is described, and the official exchange rate is given. The rates quoted are those effective on December 31, 1991, unless stated otherwise.

Under Administration of Control, some indication is given of the authorities responsible for policy and administration of the controls and of the extent to which their powers are delegated for working purposes.

The section on Prescription of Currency describes the requirements affecting the selection of the currency and method of settlement for transactions with other countries. Where a country has concluded payments agreements with other countries, the terms of these agreements often lead to prescription of the currency for specified categories of payments to and from the countries concerned. The countries with which bilateral payments agreements are in force are listed either in the text or in a footnote.

Under Resident/Nonresident Accounts, and, in some instances, External Accounts, a description is given of the manner in which the country treats accounts, if any, maintained in its currency by account holders who are not regarded as residents of that country, and the facilities and limitations attached to such accounts. Where there is more than one type of nonresident account, the nature and operation of the various types are also described.

In the section on Imports and Import Payments, import-licensing requirements are described briefly, and details are given of other requirements imposed on payments for imports and of any advance deposit requirements. The term “open general license” indicates arrangements whereby certain imports or other international transactions are exempt from the restrictive application of licensing requirements, in contrast to an “individual license,” which may be given either freely or restrictively according to administrative decisions.

Under Payments for Invisibles, the procedures for permitting payments abroad for current transactions in invisibles are described briefly, together with any limitations on the exportation of foreign and domestic bank notes. For some countries that do not impose limitations on payments for invisibles, this section is combined with the section on Proceeds from Invisibles (see below).

Export-licensing requirements and procedures are described under Exports and Export Proceeds, with an outline of the requirements that may be imposed on the handling of proceeds from exports. The expression “exchange receipts must be surrendered” indicates that the recipient is required by the regulations to sell any foreign exchange proceeds in return for local currency, usually at the official rate, to the central bank or to a commercial bank or exchange dealer authorized for this purpose. In some countries, there is a requirement that such exchange or part thereof be sold in a free market.

Under Proceeds from Invisibles, any regulations governing exchange derived from transactions in invisibles are given, and any limitations on the importation of foreign and domestic bank notes are described.

In the section on Capital, the special arrangements or limitations attached to international capital movements are described. Where regulations on foreign capital also cover the income thereon, they are usually dealt with in this section rather than in the sections on Payments for Invisibles and Proceeds from Invisibles.

The section on Gold gives a summary of the principal regulations that govern the holding, negotiation, importation, and exportation of gold coins and gold in other forms.

Afghanistan

(Position on December 31, 1991)

Exchange Arrangement

The currency of Afghanistan is the Afghani. Da Afghanistan Bank (the central bank) maintains an official rate, which is defined in terms of the U.S. dollar. The official rate is applied to (1) a few transactions of the Central Government (mainly debt-service payments); and (2) certain foreign currency income earned in Afghanistan (see section on Proceeds from Invisibles, below). On December 31, 1991, the official exchange rate was Af 50.00 per US$1 buying and Af 51.20 per US$1 selling, respectively.

Almost all other official transactions are conducted at a commercial rate set by the Government (introduced in July 1988). There also exists a free market in the form of a money bazaar. On December 31, 1991, the commercial rate was Af 1,455.00 per US$1 buying and Af 1,450.00 per US$1 selling, respectively.

Between May and December 1989, there was a significant simplification of the previously complex multiple exchange rate system. Different mixed rates that had applied to proceeds in convertible currencies for nine principal exports were abolished, and proceeds from exports in convertible currencies were shifted to the commercial exchange rate. In December 1989, most public sector transactions, with the exception of debt servicing, were also moved to the commercial exchange rate. The commercial exchange rate was, however, not closely linked to the free market rate. Between December 1989 and February 1991, it was closely linked to the free market rate. However, in February 1991, it was kept at Af 734 per US$1, and subsequently a significant premium developed between the commercial and free market exchange rates. The central bank limited sales of foreign exchange to five essential commodities (tea, vegetable oil, medicines, powdered milk, and soap) in March 1991. The official exchange rate now applies to no more than 10 percent of convertible currency transactions. Exchange rates for trade under bilateral payments agreements are determined under each agreement (see section on Prescription of Currency, below). The exchange rate applied to transactions of international organizations is set at 80 percent of the level of the commercial exchange rate.

Da Afghanistan Bank posts rates for deutsche mark, French francs, Indian rupees, Pakistan rupees, pounds sterling, and Swiss francs. It charges commissions ranging from 0.10 percent to 0.375 percent on exchange transactions. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Foreign exchange transactions are controlled by the Government through Da Afghanistan Bank. No official restrictions are applied to transactions in the free exchange market.

Prescription of Currency

Settlements with countries with which Afghanistan maintains bilateral payments agreements1 are made in bilateral accounting dollars in accordance with the procedures set forth in these agreements. Some of these have been inactive for several years and others are being phased out. The proceeds from exports of karakul to all countries must be obtained in convertible currencies. There are no other prescription of currency requirements.

Imports and Import Payments

Imports are not subject to license, but import transactions must be registered before orders are placed abroad. The importation of a few items (for example, certain drugs, liquor, arms, and ammunition) are prohibited on grounds of public policy or for security reasons; in some instances, however, special permission to import these goods may be granted. The importation of certain other goods (for example, a few textiles and selected nonessential consumer goods) is also prohibited. There are no quantitative restrictions on other imports. Most bilateral agreements, however, specify quantities (and sometimes prices) for commodities to be traded. An annual import program is drawn up by the Ministry of Commerce, covering imports of both the public and private sectors. Adjustments in the public sector import plan are made in the light of changing circumstances. The import plan for the private sector, drawn up on the basis of proposals submitted by the Chamber of Commerce, is indicative. The importation of petroleum products is a state monopoly.

The present customs tariff structure, promulgated in June 1974, changed little until May 1989. At that time, tariff rates on most consumer items were adjusted upward to 30–50 percent from their former range of about 20–35 percent.

Payments for imports through the banking system to payments agreement countries may usually be made only under letters of credit. Payments to other countries may be made under letters of credit, against bills for collection, or against an undertaking by the importer to import goods at least equivalent to the payment made through the banking system. Except for public sector imports under the government budget, all importers are required to lodge minimum import deposits with banks when they open letters of credit; in January 1990, the deposit ratios, based on the c.i.f. value of imports, were adjusted downward to 20 percent from 25 percent for essential products and upward to a range of 30–60 percent from a range of 20–50 percent for other products.

Payments for Invisibles

The maximum amount that can be taken out of the country for tourist travel abroad is the equivalent of $1,000 a trip except for travel to India, for which the limit is the equivalent of $700. On application, foreign exchange is allocated for business travel and for medical treatment abroad, and the amounts are determined by Da Afghanistan Bank; normally the limits are $15,000 and $2,500, respectively. Foreign exchange for other private purposes may be acquired in the bazaar market. The central bank levies a charge of Af 0.75 per US$1 and 1 percent of hard currency for permits that approve the exportation of convertible currency by authorized travelers. For medical treatment and business travel, the central bank levies Af 0.75 per US$1. Travelers may take out not more than Af 2,000 in domestic bank notes and Af 50 in coins.

Exports and Export Proceeds

Exports (other than gold) are not subject to license, but export transactions must be registered. The exportation of a few products (for example, opium and museum pieces) is prohibited. Otherwise, control is exercised only over exports to bilateral agreement countries (see section on Imports and Import Payments, above). Export proceeds from bilateral accounts may be retained in bilateral clearing dollar accounts with Da Afghanistan Bank. These retained proceeds may either be used directly by the original exporter or sold to other importers. In either case, the retained proceeds are converted at the clearing rate applicable to that particular bilateral arrangement.

In the case of exports to countries trading in convertible currencies, export proceeds may be retained abroad for 3, 6, or 12 months, depending on the country of destination. During the relevant period, the exporter may use these funds to import any good other than those included on the list of prohibited goods. Alternatively, at the end of the relevant holding period limit, the foreign exchange holdings abroad must be repatriated and held in a foreign currency account with a bank in Afghanistan or sold at the commercial exchange rate. However, proceeds from seven items (raisins, fresh fruits, animal casings, skins, licorice roots, medicinal herbs, and wool) have to be surrendered immediately at the commercial exchange rate.

Proceeds from Invisibles

Sixty percent of the foreign currency salaries of foreign employees working in the Afghan public and private sectors must be converted into Afghanis at the official rate. Travelers entering Afghanistan are required to spend a minimum of the equivalent of $26 a day in foreign exchange. They may bring in any amount of foreign currency but must declare it when entering the country if they intend to take out any unspent amount on departure, subject to the above minimum conversion requirement. Travelers may bring in no more than Af 2,000 in domestic bank notes and Af 50 in coins.

Capital

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

Payments of principal and interest on loans from abroad may be remitted freely to the extent of the legal obligation involved. Profits may be repatriated freely, and capital may be repatriated after five years at an annual rate not exceeding 20 percent of the total registered capital.

Gold

Residents may freely purchase, hold, and sell domestically gold in any form. Imports and re-exports of gold are permitted, subject to regulations. Exports of gold bullion and silver, as well as of jewelry, require permission from Da Afghanistan Bank and the Ministry of Finance. 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.

Changes During 1991

Exchange Arrangement

February 1. The exchange rate applying to transactions of international organizations was depreciated from Af 55 per US$1 to a level that is 80 percent of the commercial exchange rate.

February 1. The commercial exchange rate was fixed at Af 734 per US$1.

March 1. The central bank limited sales of foreign exchange at the commercial exchange rate to five essential commodities.

Albania1

(Position on December 31, 1991)

Exchange Arrangement

The currency of Albania is the Lek (100 qindarka = 1 lek). There are two exchange markets: the official and the free market. The official exchange rate of the lek was fixed against the ECU at lek 30 per ECU1 on September 10, 1991, and at lek 62 per ECU1 on January 20, 1992. Exchange rates for other currencies are determined on the basis of the cross rates between the ECU and the currencies concerned in international markets.2 No margins are set between buying and selling rates for the official exchange rate that is applied to official and commercial transactions; nor are commissions assessed on these transactions. However, the commercial banks charge a commission of 0.5 percent on purchases or sales of foreign bank notes and traveler’s checks. On December 31, 1991, the official buying and selling rate for the U.S. dollar was lek 25 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward exchange cover against exchange risk operating in the official or the commercial banking sector.

The sources of foreign exchange for the official exchange market are surrendered foreign exchange, official reserves, and external loans and grants. State enterprises may retain a portion of their foreign exchange earnings as determined periodically on a case-by-case basis by the Ministries of Finance and Economy in collaboration with the ministry responsible for the enterprise. Foreign exchange at the official exchange rate is allocated to the public sector on a weekly basis by a commission consisting of representatives of the Ministries of Finance, Economy, and Foreign Economic Relations, and the State Bank of Albania.3

All other transactions are channeled through the free market, in which the exchange rate is determined by supply and demand. Foreign exchange earnings retained by private enterprises and individuals after paying domestic taxes and expenses, private remittances, and the retained foreign exchange earnings of the state enterprises constitute the source of foreign exchange for the free market. Foreign exchange brought in by visitors may also be sold in this market. On December 31, 1991, the buying and selling rates in the free market were lek 50 per US$1 and lek 53 per US$1, respectively.

Since January 1, 1991, the exchange rate of the lek against the U.S.S.R. ruble and for transactions under clearing accounts has been fixed at lek 8 per rub 1, although these agreements have been conducted in convertible currencies effective from that date.

Administration of Control

The authority to amend the exchange control regulations is vested in the Parliament, which approves specific proposals made by the Council of Ministers. Exchange controls are administered by the Ministry of Finance, and the authority to change the external value of the currency is vested in the Council of Ministers. All commercial banks as well as the State Bank of Albania are authorized to conduct foreign exchange transactions and hold accounts abroad.

Prescription of Currency

Since January 1, 1991, all merchandise trade has been conducted in convertible currencies or, in the case of bilateral payments agreements, through clearing accounts denominated in U.S. dollars, except for trade related to U.S.S.R. ruble balances or contracted in the U.S.S.R. ruble and outstanding at the end of 1990. At the end of 1991, Albania maintained bilateral clearing arrangements with 7 countries;4 bilateral trade agreements with 12 countries;5 and agreements on economic, industrial, trade, and financial cooperation with 10 countries.6 Since January 1, 1991, prices of all products imported and exported under bilateral trade and economic agreements have been based on international prices.

Resident and Nonresident Accounts

All enterprises are permitted to hold foreign currency accounts with the domestic banking system and abroad, but individuals are allowed to hold foreign currency accounts only with the banking system. There are no specific restrictions on withdrawals of foreign exchange from foreign exchange accounts by residents for transfer abroad; in practice, however, the approval from the Ministry of Finance is required for withdrawals in excess of $500.7 Nonresidents may hold accounts in Albania in domestic or foreign currencies. There are no specific restrictions on withdrawals from these accounts or on transferring abroad the balances held in these accounts. Interest at international rates is paid on foreign currency accounts.

Imports and Exports

All state and private enterprises, individuals, and juridical persons are free to engage in foreign trade activities. The lists of products subject to export and import licenses are issued by the Ministry of Foreign Economic Relations. At the end of 1991, private and public sector importers were required to obtain licenses to import 17 broad categories of items. For these items, if importation was not banned, private importers could obtain an import license upon presentation of a contract with a foreign entity or firm. The importation of consumer goods by the private sector did not require a license. Public sector importers could obtain a license for goods subject to licensing requirement after presentation of a contract with foreign partners, justification of the need to import, and demonstration of ability to pay in foreign currency; in practice, however, these requirements were not enforced. Nearly all major categories of exports (42 categories) were subject to licensing requirements. Applicants for import and export licenses must pay a service charge of $5 for each license; in practice, this charge was not collected.

Since December 2, 1991, customs duties or tariffs have applied equally to public and private sector imports, ranging from 5 percent for imports of raw materials, intermediate goods, and foodstuffs to 30 percent for imports of industrial and capital goods.

Payment for and Proceeds from Invisibles

Invisible transactions by individual persons through the free market are not restricted. Payments for invisibles by state enterprises and with balances outstanding in clearing accounts must be approved by the Council of Ministers. Proceeds from invisibles earned by state enterprises are subject to surrender requirements. Persons traveling abroad are required to fill out forms indicating the type of currency and the amount they are taking out and attach a permit from the State Bank that authorizes its exportation. Individuals holding foreign currency are obliged to declare it to the Ministry of Finance and to obtain permission from the Ministry before exporting it. The amounts permitted to be exported are determined on a case-by-case basis. The exportation and importation of domestic currency are prohibited. The amount of foreign exchange that can be purchased for travel or by emigrants is subject to approval on a case-by-case basis.

Capital

The “Principal Constitutional Provisions” approved by Parliament in April 1991 (pending the completion of a new draft constitution) removed the 1976 constitutional ban on foreign borrowing. At present, there are no laws regulating portfolio or foreign direct investment by residents. While inward transfers generally do not require approval, outward transfers generally do.

A decree approved by Parliament in July 1990 set out the conditions for establishing joint ventures involving foreign capital. All requests must be approved by the Council of Ministers through the ministry covering the relevant sector, except for those by financial institutions, which are reviewed by the State Bank of Albania. There are no specific restrictions on foreign direct investment by joint ventures in Albania. Joint ventures are required to open a foreign currency account in Albania and are permitted to borrow abroad. Remittances of profits after meeting expenses and taxes in Albania are permitted through the free market. Profits of joint ventures could be subject to tax rates of up to 50 percent, depending on the activity of the enterprise; profits are exempted from all taxes during the first two years of operation for long-term (at least ten years) investment projects. Enterprises that reinvest profits in Albania will be eligible for reduced tax rates.

Nonresidents are prohibited from purchasing land or houses but are allowed to rent or lease them in Albania. Transfers abroad of proceeds from sales of inherited property are permitted only under special consular treaties and arrangements.

Gold

All transactions in gold have to be effected through the State Bank. There are no restrictions on gold holdings. Gold may be exported only by the State Bank of Albania.

Changes During 1991

No significant changes occurred in the exchange and trade system.

Algeria

(Position on December 31, 1991)

Exchange Arrangement

The currency of Algeria is the Algerian Dinar. Daily buying and selling rates for the U.S. dollar, the intervention currency, and other specified currencies1 are established by the Bank of Algeria partly on the basis of a relationship between the dinar and a composite of currencies. The currencies included in the composite and their weights take into account the relative importance of payments, including capital transactions, that are made in these currencies. The Bank of Algeria frequently adjusts this rate to reflect its domestic economic objectives. A margin of DA 0.015 has been established between the buying and selling rates of the dinar in terms of the U.S. dollar. On December 31, 1991, the buying and selling rates for the U.S. dollar were DA 21.3844 per US$1 and DA 21.3994 per US$1, respectively.

Foreign exchange reserves are centralized in the Bank of Algeria; authorized banks must clear their foreign currency position with their foreign correspondents at the end of each day but, under certain conditions, they are permitted to hold cover for documentary credits outside Algeria.

Under Regulation 91/07, residents may obtain from their commercial banks forward cover against exchange rate risk in the form of forward contracts to buy or sell foreign exchange. Payment for future delivery of foreign exchange may be effected either at the date the contract is made, in which case the spot exchange rate applies, or at the time the foreign exchange is delivered, in which case a forward rate quoted by the Bank of Algeria applies. The Bank of Algeria quotes three-month and three-year forward exchange rates for the U.S. dollar and the French franc.

Administration of Control

The Bank of Algeria has general jurisdiction over exchange control. It formulates exchange legislation and regulations and is responsible for their application by the authorized banks. Authority over many exchange control procedures has been delegated to five commercial banks and the Postal Administration.

Prescription of Currency

Settlements with countries with which no payments agreements are in force are made in convertible currencies.2 Payments under foreign supply contracts (contrats de fourniture) can be made in either the currency in use at the headquarters of the supplier or that of the country of origin of the merchandise, except that transactions with Morocco can be effected in U.S. dollars through special clearing accounts maintained at the central banks of the respective countries. Foreign holders of servicing contracts are required to open local nonresident accounts to which payments are made by the Algerian contracting party; such accounts must be closed within six months of the end of the contract, beyond which date outward transfers of the funds or their use for purposes unrelated to the contracts are not permitted.

Nonresident Accounts

Most nonresident accounts are foreign accounts in convertible dinars or internal nonresident accounts. There are at present four types of accounts, as follows:

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

Foreign Accounts in Foreign Currency. Under Regulation 91/02, juridical and natural persons of foreign nationality may open accounts denominated in the convertible currency of their choice. Such accounts may be credited with (1) bank notes and other means of payment denominated in foreign currency and (2) other dinar-denominated funds that meet all requirements for transfers abroad. They may be debited without restriction (1) to make transfers abroad; (2) through withdrawals of foreign bank notes to export; and (3) to make dinar payments in Algeria. These accounts pay interest and may not show a net debit position.

Final Departure Accounts may be opened, without prior authorization, in the name of any natural person residing in Algeria, not of Algerian nationality, who intends to leave Algeria to return to his country of origin. These accounts may be credited freely with an amount equivalent to the holdings on October 20, 1963 in the account of the person concerned; with the proceeds from sales of real estate of the account holder, provided that the funds are paid directly by a ministerial officer; with the proceeds of the sale of securities through a bank; and with any other payments, up to DA 2,000. These accounts may be debited without prior approval for certain payments in Algeria on behalf of the account holder. Outward transfers require individual approval.

Foreign Currency Accounts (comptes devises) may be opened by natural and juridical Algerian nationals resident in Algeria or by nonresident Algerian nationals who have resided for more than six months in a foreign country. Such accounts may be freely credited with (1) book transfers of convertible currencies from abroad using either postal or banking facilities, (2) imported convertible foreign currencies that have been declared at the time of the account holder’s entry into the country, and (3) domestic bank-to-bank book transfers. The accounts may be freely debited for book transfers abroad but only through the banking system; they may also be debited for purchases of dinars, for book transfers in dinars, and for purchases of convertible foreign currencies to be physically exported by the account holder. The interest rate payable on deposits in these accounts is fixed quarterly by the Bank of Algeria. Since 1990, economic entities have also been able to open foreign currency accounts for receiving and making foreign currency transfers, including the retained proportion of their export proceeds. They may transfer funds in these accounts to other foreign currency accounts or use them to make payments in Algeria or to make foreign payments for goods and services pertaining to their business.

Imports and Import Payments

Imports from Israel and South Africa are prohibited. Certain imports are prohibited regardless of origin.

All regulations requiring prior authorization to import and those controlling foreign exchange payments for imports have been abolished. Any juridical and natural persons licensed under the Commercial Register (including concessionaries and wholesalers) may import goods that are not prohibited or restricted without any prior authorization, provided that the importer is in possession of foreign exchange resources. All these imports are subject to obligatory domiciliation at an authorized intermediary bank, which an importer must establish by submitting a commercial contract or pro forma invoice. Import payments may be made only through the domiciled bank, which effects payments in foreign exchange and debits the importer’s account with corresponding amounts in dinars valued at the official exchange rate. Before import payments are effected, domiciled banks may require from the importer a deposit in dinars up to the full value of the imports. Importers maintaining foreign currency accounts at authorized intermediary banks may use them to pay for imports. Payments for imports of gold, other precious metals, and precious stones must be made from foreign currency accounts.

External borrowing by importers for import financing purposes must be arranged through the authorized intermediary banks. External borrowing may not exceed the import value. For imports of less than $2 million value, the intermediary bank can combine import orders to seek a combined financing. Imports of food products and other consumer goods (biens courants), raw materials, semifinished goods, and capital goods used by essential industries are encouraged to be financed with official lines of credit. For imports not eligible for official financing, and for those imports that are eligible for official lines of credit but for which the available lines have been totally drawn, banks are instructed to obtain credits with a maturity of at least 3 years for capital goods and equipment and at least 18 months for other inputs. Short-term commercial credits may be obtained for wage goods. Imports with other financing arrangements must be referred to the External Loans Subcommittee of the Bank of Algeria for review. Imports financed from foreign currency accounts are exempted from the above financing requirements, and payments from these accounts do not require prior review or approval by the External Loans Subcommittee of the Bank of Algeria.

Except as otherwise indicated by the Bank of Algeria, down payments may not exceed 15 percent of the total value of an import operation. In accordance with Law No. 80–07 of August 3, 1980, imports must be insured by Algerian insurers. When a public agency, public enterprise, or ministry is effecting expenditures for imports deemed to be urgent or exceptional, the bank may effect payments before exchange and trade control formalities have been completed.

Special regulations apply to imports that do not require the use of official foreign exchange (importations sans paiements). Capital goods and spare parts, and personal effects with values of less than DA 30,000 may be imported without any reporting requirements regarding the source of the foreign exchange used, but applicable taxes must be paid. The list of items that may be imported is prepared periodically by ministerial decree; it excludes finished consumer goods, except for personal effects.

During 1990, a system of concessionaries and wholesalers was introduced to increase the availability and standardization of imported goods for resale. These entities are permitted, by the Council for Money and Credit, to import and resell items in Algeria relating to their approved activity without restriction. Profits earned from foreign investment may be freely repatriated. When more than two concessionaries or wholesalers are operating in an activity, all imports must be channeled through these concessionaries or wholesalers, whether or not they use official foreign exchange. The initial list of goods eligible for importation by these entities includes motor vehicles and motorcycles, materials used in agriculture, fishing, electric and electronic household appliances, heating and air conditioning equipment, pharmaceutical and child care products, and most spare parts.

Payments for Invisibles

The Bank of Algeria must approve all payments for invisibles to all countries. When supporting documents are presented, however, approval may be granted by authorized banks, or sometimes by the Postal Administration, either freely or up to specified limits for certain payments, such as (1) those relating to approved trade transactions and maritime contracts, (2) business or official travel expenses, (3) transfers of salaries and wages, (4) educational expenses, and (5) advertising expenses. For payments for which the approval authority has not been delegated, the Bank of Algeria or the Ministry of Economy must authorize the granting of exchange. Public and private sector national exporters may open EDAC accounts (that is, exporters’ convertible dinar accounts) denominated in convertible dinars, which can be credited with up to 100 percent of repatriated proceeds and be used for any purpose.

Residents of other countries working in Algeria, under technical cooperation programs, for public enterprises and agencies or for certain mixed companies may transfer abroad a percentage of their net salaries.

Foreign exchange allocations for tourism abroad by Algerian residents were suspended in October 1986. Residents requiring medical treatment abroad are entitled to a foreign exchange allowance based on need. Emigrant Algerian workers who take their vacations in Algeria may, when returning abroad, re-export foreign exchange that they brought in and duly declared on their arrival in Algeria.

Pilgrims traveling to Saudi Arabia receive an allowance in Saudi Arabian riyals; the amount is fixed for each pilgrimage and may be furnished in the form of checks that may be cashed on arrival for those traveling by air or by sea. Resident travelers may take out Algerian dinar bank notes up to DA 200 a person. Foreign nonresident travelers may also re-export any foreign currency they declared upon entry. Travel tickets that are bought by nonresidents for travel abroad must be paid for with foreign exchange from abroad.

Exports and Export Proceeds

All exports to Israel and South Africa are prohibited. Certain exports are prohibited regardless of destination. All proceeds from exports of crude and refined hydrocarbons, by-products from gas, and mineral products must be surrendered. Exporters of other products may retain a specified proportion of their export earnings in a foreign currency account, as follows: Algerian tourist operators, 20 percent; exporters of other agricultural and fisheries products, 50 percent; and exporters of major services and exporters of other products, 100 percent. Entities may use these funds for imports or other payments pertaining to their business or they may transfer the funds to another foreign currency account. Nonhydrocarbon exports benefit from certain incentive measures granted by the Government, including, for example, (1) exemption from the tax on industrial and commercial profits and the flat-rate levy on the wage bill, and (2) export promotion assistance (Ampex).

Sales on consignment must be authorized by the Ministry of Economy and must always be registered before customs clearance. Export proceeds must be repatriated within 120 days of collection. Those petroleum companies that hold mineral rights must repatriate to Algeria the proceeds from their exports of hydrocarbons, calculated on the basis of a contractual price for each barrel, which is fixed by agreement with the companies concerned. For the petroleum company that holds mineral rights, however, there are different repatriation requirements.

Proceeds from Invisibles

Proceeds from invisibles must be repatriated and surrendered. There are no restrictions on the importation of foreign bank notes, coins (except gold coins), checks, and letters of credit, but nonresidents, including those of Algerian nationality, must declare such holdings when they enter Algeria. Resident travelers may reimport Algerian dinar bank notes up to DA 200 a person. Nonresident travelers are not permitted to bring in Algerian bank notes.

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 abroad are subject to individual license. The Committee for External Borrowing administered by the Bank of Algeria must approve in advance all borrowing abroad or from nonresidents.

The Law of Money and Credit of April 14, 1990 provides for state guarantees in respect of borrowing for investments in accordance with the international codes and agreements ratified by Algeria in all areas except those expressly reserved for the state. Repatriation in respect of the sale or liquidation proceeds from invested foreign capital is guaranteed. The law also stipulates that profit remittances on such investments may be permitted, provided that documentation requirements on tax payments are met. Tax facilities may 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 the code. The law on joint ventures with foreign companies, which came into effect in April 1982, provides foreign partners with a guarantee of fair return on investment, tax exemptions of up to five years on industrial and commercial profits, reduced taxes on reinvested profits, and the repatriation of earnings and royalties in respect of transfers of technology.

Algerian banks offer three-year interest-free bonds in dinars, which entitle the subscriber to exchange 20 percent of the placement value annually into a convertible currency at the official exchange rate.

Gold

Residents may purchase, hold, and sell gold coins in Algeria for numismatic purposes. Under 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. Gold for use by dentists and goldsmiths is imported by Agenor under import licenses issued by the Ministry of Economy and the Bank of Algeria. Gold and other precious metals are included in the list of items importable by concessionaries.

Changes During 1991

Exchange Arrangement

August 14. Regulation 91/07 was promulgated, permitting residents to obtain from their banks forward cover against exchange rate risk in the form of forward contracts to buy or sell foreign exchange. Payment for future delivery of foreign exchange may be effected either at the contract date, in which case the spot exchange rate would apply, or at the date of delivery of the foreign exchange, in which case a forward rate quoted by the Bank of Algeria would apply.

December 1. The August 14, 1991 regulation was supplemented with the introduction of three-month and three-year forward exchange rates for the U.S. dollar and the French franc.

Nonresident Accounts

February 20. Juridical and natural persons of foreign nationality were authorized to open foreign exchange accounts in a convertible currency of their choice. These accounts might be credited with (1) transfers from accounts in convertible dinars (CEDAC accounts); (2) bank notes and other means of payment denominated in foreign currency; and (3) other dinar-denominated funds that meet all requirements for transfers abroad. They might be debited without restriction (1) to make transfers abroad; (2) to credit foreign exchange or CEDAC accounts; (3) through withdrawals of foreign bank notes to export; and (4) to make dinar payments in Algeria. These accounts pay interest and may not show a net debit position.

Imports and Import Payments

April 1. All regulations requiring prior authorization to import and those controlling foreign exchange payments for imports were abolished. All registered juridical and natural persons were permitted to import goods that are not prohibited or restricted, without any prior authorization, provided that the importer possesses foreign exchange resources. All these liberalized imports were subjected to obligatory domiciliation at an authorized intermediary bank, which the importer must establish by submitting a commercial contract or pro forma invoice. Import payments must be made only through the domiciled bank, which is to effect payments in foreign exchange and to debit the importer’s account with corresponding amounts in dinars, valued at the official exchange rate. Before import payments are effected, domiciled banks may require from the importer a deposit in dinars up to the full value of the imports. Importers maintaining foreign currency accounts at authorized foreign intermediary banks may use them to pay for imports. Payments for imports of gold, other precious metals, and precious stones must be made from foreign currency accounts.

External borrowing by importers for import financing purposes was required to be arranged through the authorized intermediary banks. External borrowing may not exceed the import value. For imports of less than $2 million in value, the intermediary bank can combine import orders to seek a combined financing. Imports of food products and other consumer goods (biens courants), raw materials, semifinished goods, and capital goods used by essential industries were encouraged to be financed with official lines of credit. For imports not eligible for official financing, and for those imports that are eligible for official lines of credit but for which the available lines have been totally drawn, banks were instructed to obtain credits with a maturity of at least 3 years for capital goods and equipment and at least 18 months for other inputs. Short-term commercial credits may be obtained for wage goods. Imports with other financing arrangements must be referred to the External Loans Subcommittee of the Bank of Algeria for review. Imports financed from foreign currency accounts were exempted from the above financing requirements, and payments from these accounts would not require prior review or approval by the External Loans Subcommittee of the Bank of Algeria.

Proceeds from Invisibles

April 1. The requirements that nonresident Algerian nationals and foreigners must convert foreign exchange equivalent to at least DA 3,500 or DA 1,000, respectively, on arrival in Algeria were revoked.

Capital

February 24. Algerian banks began to offer three-year interest-free bonds in dinars, which entitle the subscriber to exchange 20 percent of the placement value annually into a convertible currency at the official exchange rate (the first offering was made on March 30).

Angola

(Position on December 31, 1991)

Exchange Arrangement

The currency of Angola is the New Kwanza (plural New Kwanzas), which replaced the Kwanza at par on September 25, 1990. Since May 1976, the external value of the new kwanza has been pegged to the U.S. dollar, and on December 28, 1991, the official exchange rate was set at NKz 180 per US$1. This rate applies to official transactions, transactions of the traditional export sector (oil and diamond sectors), and raw material imports. In addition, the following three multiple exchange rates are in effect resulting from the imposition of surcharges and the operation of the free exchange market: (1) the rate of NKz 550 per US$1 (the official rate plus a surcharge of NKz 370 per US$1) applying to other imports; (2) the rate of NKz 550 per US$1 (the official rate plus a premium of NKz 370 per US$1 paid by the National Bank of Angola (NBA)), which applies to nontraditional exports; and (3) the floating exchange rate in the free exchange market, which applies to purchases and sales of foreign exchange, checks, traveler’s checks, payment orders, and other instruments used in international transactions by single individuals, organizations, firms, and tourist operators, and to sales of foreign exchange for travel and special expenses or transfers abroad. On December 31, 1991, the rates in the free market were NKz 970 per US$1 (buying) and NKz 1,000 per US$1 (selling). Exchange rates for 17 other currencies1 are established using the weekly average cross rates of the currencies concerned on the New York, Frankfurt, Paris, London, Brussels, and Zurich markets on the basis of a formula that projects exchange rate changes in the following week. This formula takes into account the changes in rates during the preceding week.

Two tables of exchange rates are published weekly, one for transactions between the NBA and the commercial banks and another for transactions between the commercial banks and economic agents. The NBA applies a margin of 0.25 percent to both its buying and selling transactions with economic agents. Buying and selling margins for cash transactions are set at 3–4 percent, depending on the currency. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

The Law of the National Bank of Angola and the Financial Institutions Law promulgated on April 20, 1991 established the central bank, the NBA, and the commercial banks as the financial institutions that are legally authorized to conduct foreign exchange transactions. The NBA has delegated authority to banks to license and execute permitted foreign exchange invisible transactions.

Commercial banks and foreign exchange dealers licensed by the NBA are authorized to deal in foreign exchange at the floating exchange rate. The NBA operates in the floating rate foreign exchange market only in its dealings with financial institutions.

All imports and exports are subject to licensing. Foreign exchange transactions are effected through the NBA’s foreign exchange department, the Banco de Poupança e Crédito (BPC), and the Banco do Comércio e Indústria (BCI), of which the latter two are commercial banks authorized to deal in foreign exchange under the Law of the NBA and the Financial Institutions Law. The NBA’s commercial branch is a transitional arrangement established to make possible the transition from the former centralized banking system to the present two-tier banking system. Accordingly, the NBA serves both as a central bank and as an authorized bank for external transactions. Arrears are maintained with respect to external payments.

Prescription of Currency

The NBA prescribes the currencies to be used for imports, depending upon the country with which transactions are to be carried out. The currencies are usually those of the exporting countries or the U.S. dollar. Bilateral settlement arrangements, which do not contain bilateral payments features, are maintained with Brazil, Portugal, and Spain. These arrangements utilize single accounts through which monthly balances can be used without restriction for transactions with third parties.

Resident and Nonresident Accounts

With the prior authorization of the NBA, resident enterprises in Angola may maintain foreign exchange accounts. Transactions through these accounts are subject to the prior authorization of the NBA. Nonresidents may maintain accounts in new kwanzas, provided that the funds are transferred from abroad. Former residents may also hold accounts in new kwanzas, but they may withdraw funds on these accounts only to cover expenses during their stay in Angola. Nonresidents with established businesses in Angola may hold foreign exchange accounts subject to the prior authorization of the NBA.

Imports and Import Payments

All imports are subject to licensing, with limits established under the import plan and subject to the availability of foreign exchange, except imports of spare parts, accessories or similar goods, medicines, equipment, and raw materials, up to a quarterly maximum of $50,000 (or its equivalent) an importer; licenses are expeditiously issued by the NBA. Licenses are granted only to registered enterprises of proven technical, commercial, and financial capacity and are issued on the basis of a foreign exchange allocation and restricted to imports of goods for which the enterprise is registered. To obtain a license, enterprises must present to the sectoral ministries and the Ministry of Commerce offers of three foreign suppliers. The approved offer may be considered for an import license application, which, in turn, must be approved by the same ministries. Import licenses specify the importer; name(s) of the supplier; the intermediary; the product by its Brussels Tariff Nomenclature classification, volume, and unit price; the transport and insurance companies; costs; method of payment; and currency of payment. Once the importation of merchandise is approved, the NBA issues the credit document, with a copy for the applicant of the import license, stating that the goods are to be examined by international agencies before shipment to Angola for purposes of checking their compliance with international standards for merchandise transactions. Licenses for imports of goods are valid for 180 days after issuance and may be extended once for an additional 180 days. If an import transaction is not fully effected during this period, the transaction that was originally considered to be a merchandise transaction is then deemed to have become a capital transaction. A license fee of 0.1 percent of the import value is levied. Import licenses are also required for statistical purposes even if foreign exchange is not requested. Imports of capital goods must be financed partly by medium-term foreign financing.

Payments for Invisibles

Service contracts with nonresidents are subject to licensing. Preferential treatment is given to domestic air and sea transportation, and imports not insured domestically are approved only in exceptional cases. Exchange allowances for private travel are granted only in certain cases. A maximum monthly allowance of $2,500 is granted to residents who are abroad for up to 90 days for educational, scientific, or cultural purposes. Up to the equivalent of $5,000 may be granted for purposes of medical treatment abroad at the free market exchange rate. Up to the equivalent of $1,500 a month may be granted to Angolans or foreigners residing abroad who are direct ascendants or descendants and financially dependent on residents in Angola, provided (1) they are minor descendants under 18 years old or, if legal age, demonstrate they are students or incapable of working; or (2) they are ascendants over 60 years old or, if younger, demonstrate they are incapable of working. Education travel expenses are normally expected to be covered by scholarships, but an additional foreign exchange equivalent to NKz 16,000 a year at the free market exchange rate may be granted. Resident nationals who wish to travel abroad may purchase foreign exchange at the banks under the following rules: (1) a child up to the age of 16, up to $500 for neighboring countries or up to $1,000 for other countries with the presentation of air ticket and passport containing indication of the amount and date of the sale; and (2) a person older then 16, up to $1,500 for neighboring countries and up to $3,000 for other countries. Firms may purchase foreign exchange to cover expenses of their employees abroad for trips not exceeding 30 days, with the following daily limits: (1) chairman or equivalent, $350; (2) vice chairman or equivalent, $300; and (3) director of departments or equivalent, $200. If a person returns from his trip before 30 days, the remaining foreign exchange must be resold to a financial institution. All these transactions take place at the free market exchange rate.

When departing from Angola, nonresidents visiting the country for tourism or on business are permitted to purchase up to 50 percent of foreign exchange they sold to an institution accredited to deal in foreign exchange on presentation of the corresponding sales voucher. The exportation of domestic currency is prohibited.

Exports and Export Proceeds

Exports of certain goods are prohibited.2 Reexports of goods other than equipment and personal belongings are also prohibited. Restrictions also apply to the exportation of products that are in short domestic supply. All other exports are subject to licensing. Licenses may be obtained by registered enterprises, and proceeds must be collected within 30 days of shipment and surrendered to the NBA. Certain foreign enterprises (currently oil companies) are required to surrender only a proportion of export receipts and may retain the remainder to cover production costs.

Proceeds from Invisibles

Service contracts with nonresidents are subject to the approval of the NBA. The sectoral ministries supervise the execution of contracts. All proceeds must be surrendered to the NBA within 30 days of receipt.

There are no limits on the amount of foreign bank notes or traveler’s checks in foreign exchange a person may bring into the country, but the amount exceeding the equivalent of $10,000 must be declared upon arrival. Residents are permitted to leave the country with foreign exchange in excess of $5,000 only if they present the documents on purchase of foreign exchange; nonresidents must present such documents when the amount exceeds $10,000. The importation of domestic currency is prohibited.

Capital

All capital transfers are subject to licensing and control. The Foreign Investment Law of July 1988 prohibits foreign investment in strategic sectors.3 Direct investments in the oil sector are encouraged. Dividends and capital may be repatriated upon liquidation, with the prior approval of the Ministry of Finance. Transfers of personal capital, such as inheritances, dowries, savings from wages and salaries, and proceeds from sales of personal property, are permitted only on a case-by-case basis.

Gold

Imports and exports of gold are the monopoly of the NBA. Residents are permitted to hold gold only in the form of jewelry.

Changes During 1991

Exchange Arrangement

March 15. The official exchange rate was devalued from NKz 29.92 per US$1 to NKz 59.24 per US$1.

July 20. Commercial banks and licensed foreign exchange dealers were authorized to deal in foreign exchange.

November 18. The official exchange rate was devalued from NKz 59.24 per US$1 to NKz 90 per US$1 and was applied to official transactions and transactions in the traditional export sector (oil and diamonds). In addition, multiple exchange rates were introduced, as follows: (1) the rate of NKz 180 per US$1 (the official rate plus a surcharge of NKz 90 per US$1), which is applied to raw material imports; (2) the rate of NKz 550 per US$1 (the official rate plus a surcharge of NKz 460 per US$1), which is applied to nonpriority imports, nontraditional exports, and some invisibles; and (3) a freely determined market exchange rate, which applies to all other transactions (NKz 780 per US$1 at the close of business on this date).

December 28. The official exchange rate was devalued to NKz 180 per US$1, and the surcharge of NKz 90 per US$1 was eliminated. The surcharge of NKz 460 per US$1 was reduced to NKz 370 per US$1.

Antigua and Barbuda

(Position on December 31, 1991)

Exchange Arrangement

The currency of Antigua and Barbuda is the Eastern Caribbean Dollar,1 which is issued by the Eastern Caribbean Central Bank (ECCB). The Eastern Caribbean dollar is pegged to the U.S. dollar, the intervention currency, at EC$2.70 per US$1. On December 31, 1991, the buying and selling rates for the U.S. dollar quoted by the ECCB in its transactions with commercial banks were EC$2.6949 and EC$2.7084, respectively, per US$1. The ECCB also quotes daily rates for the Canadian dollar and the pound sterling. There are no arrangements for forward cover against exchange risk operating in the official or the commercial banking sector.

Antigua and Barbuda formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from November 22, 1983.

Administration of Control

Exchange control applies to all currencies and is administered by the Ministry of Finance. Export licenses are required for a range of products, particularly those subject to export duties. Import licenses are issued by the Collector of Customs in the Ministry of Finance and by the Ministry of Trade, Industry and Commerce, depending on the type of commodity. Arrears are maintained with respect to external payments.

Prescription of Currency

Settlements with residents of member countries of the Caribbean Common Market (Caricom)2 must be made either in the currency of the Caricom country concerned or in Eastern Caribbean dollars. Settlements with residents of other countries may be made in any foreign currency or in Eastern Caribbean dollars. Settlements involving South African currency are not permitted.

Nonresident Accounts

External accounts may be opened for nonresidents with the approval of the Ministry of Finance and may be maintained in any currency. With the approval of the Ministry of Finance, such accounts may also be opened by resident individuals or firms, especially in tourist-oriented industries or in export trades where most receipts are in foreign currency and a large portion of inputs is imported or is financed in foreign currency. External accounts can be credited with receipts from sales of merchandise (whether from export-oriented or local production) or from remittances. Commercial banks are required to report external accounts operations to the Ministry of Finance on a monthly basis.

Imports and Import Payments

All imports from South Africa are prohibited. Most goods may be freely imported under open general licenses granted by the Ministry of Trade. Certain other commodities require individual licenses, unless imported from Caricom countries. Antigua and Barbuda follows the Caricom rules of origin adopted in June 1981. Payments for authorized imports are permitted upon application and submission of documentary evidence.

Imports that are exempt from import duties include basic foods and agricultural imports. All other exemptions for machinery, equipment, and raw materials are granted on a case-by-case basis and generally under the Fiscal Incentives Act, 1975 and the Hotel Incentives Act.

Payments for Invisibles

Payments for invisibles related to authorized imports are not restricted. Upon presentation of supporting documents, and with the authorization of the Ministry of Finance, residents may purchase foreign exchange up to the equivalent of US$750 a trip outside the ECCB area; however, this limit may be exceeded with permission from the Ministry of Finance. In terms of Caricom traveler’s checks (which are denominated in Trinidad and Tobago currency), the basic allowance is TT$500 a trip for holiday travel, TT$2,500 a trip for business, and TT$3,000 a trip for medical reasons. Official authorization is required for amounts exceeding these limits. Foreign exchange allowances for education, family maintenance, medical treatment, and remittances of earnings by foreign workers are approved on a case-by-case basis. Profits on foreign direct investment may be remitted in full, subject to confirmation by the Commission of Inland Revenue of registration for corporate income tax purposes. There are no limits on the amount of local currency that may be taken out of the country.

Exports and Export Proceeds

No export licenses are required for certain commodities to any destination. Surrender of export proceeds is not required, and re-exports are not subject to any tax if they take place within the bonded area.

Proceeds from Invisibles

Travelers to Antigua and Barbuda may freely bring in notes and coins denominated in Eastern Caribbean dollars or in any foreign currency. Foreign currency coins are not normally exchanged. Checks and drafts in U.S. and Canadian currency can be tendered up to US$1,000 without restriction; for amounts over US$1,000, Ministry of Finance approval must be obtained. Levy exemptions for transfers, especially for charity purposes, are usually granted.

Capital

There are no legislated restrictions on capital movements. Foreign investment is granted the same incentives as domestic investment under the Fiscal Incentives Law and the Hotel Incentives Act. Large transfers abroad for investment purposes can be phased over time by the Financial Secretary.

Gold

There are no restrictions on the importation of gold.

Changes During 1991

No significant changes occurred in the exchange and trade system.

Argentina

(Position on December 31, 1991)

Exchange Arrangement

The currency of Argentina is the Austral (plural Australes), the external value of which is pegged to the U.S. dollar. On December 31, 1991, the middle rate of the austral in terms of the U.S. dollar was ₳ 9,985 per US$1 (selling).

Transactions are allowed in certain other currencies,1 with daily quotations based on the buying and selling rates for the U.S. dollar on markets abroad. Swap transactions and forward exchange operations are permitted under a regime introduced on December 20, 1989. The currency of transactions and rates may be freely negotiated.

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

Administration of Control

All exchange transactions must be carried out through entities authorized expressly for this purpose. These authorized entities include banks, exchange agencies, exchange houses, exchange offices, and financial companies; each of these types of institution is subject to separate regulations. Credit institutions and mortgage savings and loan companies may effect certain foreign exchange transactions on the same terms as financial companies. Arrears are maintained with respect to external payments.

Prescription of Currency

All payments between Argentina and Bolivia, Brazil, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained by the Central Bank of Argentina and the central banks concerned, under reciprocal credit agreements within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). Pursuant to the Presidential Declaration and Energy Integration Protocol signed with the Government of Bolivia on December 13, 1989 for the purpose of making joint use of the energy resources of both countries, a fixed proportion of Argentina’s payments for Bolivia’s natural gas exports is made into a non-interest-bearing account at the Central Bank of Argentina; it is used solely for purchases of goods and services of Argentine origin for the construction of the Río Grande-Campo Santa Cruz gas pipeline, the gas treatment plant at Naranjillos, and the Palmar Grande-Camiri highway. Argentina maintains reciprocal credit arrangements with Bulgaria, Cuba, Hungary, Poland, and the former U.S.S.R. by means of special accounts in each central bank through which transactions are settled. Transactions with other countries must be settled in freely usable currencies. The Central Bank of Argentina maintains a special account with Romania under which payments for imports of equipment and capital goods from Romania (settled before September 23, 1989 when the agreement expired) are offset by receipts from exports of certain products from Argentina.

Nonresident Accounts

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

Imports and Import Payments

Import payments may be effected in convertible currencies. Payments for imports may be freely settled by authorized financial entities and, since December 20, 1989, have been settled at the rate in the free exchange market with no minimum financing requirement period. Imports and related payments by the public sector require the prior approval of the Central Bank. Consumer goods imports are regulated by Decree No. 2657/91, under which customs duties are levied as follows: (1) capital goods not domestically produced, works of art, and bank notes and coins, 0 percent (736 items); (2) goods not domestically manufactured, foodstuffs (depending on comparative advantage) and mineral-based raw materials (locally produced), 5 percent (2,777 items); (3) domestically produced inputs and intermediate goods, 13 percent (2,622 items); (4) final products manufactured locally (including capital goods and spare parts), 22 percent (2,275 items); and (5) electrical domestic household appliances (audiovisual equipment), 35 percent (36 items). Imports of automobiles are subject to a quota.

Payments for Invisibles

Since December 20, 1989, the sale of foreign exchange at the market exchange rate has been permitted for most invisible payments. Authorized entities may carry out most types of transactions without prior authorization from the Central Bank.

Exports and Export Proceeds

Minimum export prices (reference prices) are established for many agricultural and livestock exports as a basis for the payment of duties. Certain nontraditional exports are eligible for rebates of estimated indirect taxes paid in the process of production. Exports shipped through certain ports are eligible for additional rebates ranging from 7 percent to 12 percent.

General export taxes are levied on sunflower seeds and soybean exports. Export proceeds are not subject to the surrender requirement.

Many exports, particularly nontraditional exports, are eligible for various other export incentives, although a number of schemes have been suspended since July 1989. The Central Bank has established prefinancing and financing regimes when credits are obtained using external funds. These regimes are applied to exporters by the participating banks to promote exports of certain goods and services. The prefinancing regime using U.S. dollar-denominated obligations of the Central Bank (BCRA notes) has been suspended since January 1, 1990, except for operations already begun by that date, with funds from all the regimes being lent as they are collected from their own portfolios.

The financing system for promoted exports requires insurance coverage of all operations against extraordinary risks or credit risk; it is provided by the Argentine Export Credit Insurance Company, Inc. (CASCE) for the account of the National Government. These credit documents must also be endorsed by a highly rated foreign bank, or the operation must be covered by export credit insurance against commercial risk provided by the CASCE or another company. Certain products, mostly non-traditional exports, may be shipped on consignment for 360 days; if not sold within that period, the goods must be returned to Argentina.

Various export incentives are provided for promoted exports in accordance with the Export Promotion Laws of December 16, 1984. These include (1) a deduction from taxable profits, up to 10 percent of the value of certain exports; (2) the creation of export consortia and cooperatives and the granting of an incentive equal to 4 percent of the f.o.b. value of exports over a period of five years; (3) the establishment of international trading companies; (4) permission for firms to engage in countertrade when marketing promoted exports; (5) a tax drawback scheme under which rebates (equivalent to an average rate of 7 percent of the f.o.b. value of exports in cash) would be allowed for taxes of imported inputs and other taxes; (6) the elimination of the 0.5 percent stamp tax for exports from the Federal Capital Area; and (7) the funding of an export promotion fund to finance participation in trade fairs and exhibitions. All these incentives have, however, been formally suspended since September 15, 1989 under the Economic Emergency Law (see section on Capital, below).

Proceeds from Invisibles

Foreign currency receipts obtained from private sector invisible transactions need not be surrendered to the Central Bank but may be sold in the exchange market. Domestic and foreign bank notes entering and leaving the country are not subject to any exchange requirement, nor are gold coins, or “good-delivery” gold bars.

Capital

Since December 20, 1989, proceeds from all loans have been transacted in the free exchange market. There are no conditions, on maturity dates or interest rates, for financial loans transacted through the free market. Principal and interest payments for loans may only be effected directly through authorized entities on the maturity date without prior central bank authorization.

Since June 1981, borrowers for loans in foreign currency wishing to obtain an exchange rate guarantee or a swap agreement from the Central Bank were required to obtain an extension of the original maturities for the terms as necessary. All loans outstanding and covered by a swap agreement with the Central Bank as of December 4, 1982, and all loans for which the domestic borrower had obtained an exchange rate guarantee from the Central Bank and which fell due through the end of 1985, have been extended under minimum terms established by the Central Bank. Loans covered by swap agreements that fell due in 1985 were rescheduled either by means of insurance on BCRA notes with a ten-year maturity, or by a direct refinancing between debtor and creditor for up to five years, followed by the issuance of a BCRA note for the remainder of the period. Financial loans that benefited from any of the above-mentioned coverages were rescheduled as of October 1987 by means of the issuance of BCRA notes with a 19-year maturity and a 7-year grace period.

The inflow of financial loans undertaken by local foreign-owned enterprises and originating from foreign enterprises that either directly or indirectly control the borrowing enterprises or are their subsidiaries requires authorization from the Central Bank. Loans endorsed or guaranteed by the state also require prior authorization from the Central Bank. Banks may accept foreign currency sight or term deposits. Foreign borrowing by the public sector is regulated by Decree-Law No. 19328 of October 29, 1971 and Decree No. 3532 of November 24, 1975. Banks may accept sight and term deposits in foreign currency.

The foreign investment regime is established by Law No. 23697—the Economic Emergency Law—passed on September 1, 1989 and promulgated by the National Executive Power on September 15, 1989. Chapter VI of the Law modifies the Foreign Investment Law, mainly by repealing (exclusively) the provisions of the law requiring prior approval from the National Executive Power or from the implementing authority for foreign capital investments. Decree No. 1225 of November 9, 1989 regulates the foreign investment regime. The investments may be made in freely convertible foreign currencies, in capital goods and their spare parts and accessories, in profits or capital in local currency belonging to foreign investors, in capitalization of external credits in freely convertible foreign currencies, in intangible goods (in accordance with the specific, applicable legislation), and in any other form of contribution acceptable to the implementing authority or within the scope of commercial or promotional regimes.

Foreign investors may invest in Argentina without prior approval, on the same terms as investors who reside in Argentina, subject to the laws governing the field in which they intend to invest. Law No. 23697 of 1989 has established the Register of Foreign Capital Investments, and Decree No. 1225/89 provides that investments registered before its entry into force shall automatically be recorded in the new register. Investments carried out using external public debt instruments cannot be registered unless they are redeemable.

In accordance with Articles 12 and 13 of Law No. 21382 (as amended by Law No. 23697 and Decree No. 1225), foreign investors are entitled to repatriate their capital unless the National Executive Branch imposes general restrictions. When such restrictions are imposed, foreign investments may be registered, and registered investments may be repatriated after three years. When the Central Bank limits access to exchange markets through exchange controls, foreign investors may acquire foreign exchange for transfer abroad as profits and repatriation of capital. Without prejudice to the foregoing, enterprises that receive foreign investments may distribute the liquid profits they earn to foreign investors who have registered their investments with foreign exchange from their exports. If the National Executive Power declares an external payments crisis, the Central Bank will deliver external public debt instruments denominated in foreign currency for the amounts that registered foreign investors wish to remit as profits.

Law No. 23760 (on tax reform), passed on December 7, 1989 and promulgated on December 14, 1989, abolished the special tax on additional profits from foreign capital investments that had been imposed by Article 16 of Law No. 21382.

Local enterprises based on foreign capital may borrow domestically with the same rights and on the same terms as local enterprises based on domestic capital.

The Government, through its Ministry of Foreign Affairs and Culture, has entered into investment promotion and protection agreements with the Belgium-Luxembourg Economic Union, and the governments of Germany, Italy, Switzerland, and the United Kingdom. The agreements will come into effect when the governments notify each other that their constitutional requirements for entry into force of international agreements have been met. These agreements are intended to promote, and especially to protect, investments in the signatory countries.

In October 1987, a debt-conversion scheme was announced that would allow investments to be financed through conversion of external loan claims into domestic currency at the free foreign exchange market rate. The value of the loan claims would be determined through an auction system. The scheme came into effect on January 1, 1988, and the first auction was held in January 1988. Profits on investments under this scheme may not be remitted for at least four years, and capital may not be repatriated for ten years. No auctions under this scheme were held during 1991.

Gold

Residents may hold gold coins and gold in any other form in Argentina or abroad. Financial institutions, exchange houses, and exchange agencies may buy or sell gold in the form of coins or good-delivery bars among themselves and may buy such gold from their clients. Gold exports must be paid for in convertible currencies. Imports of gold by industrial users are subject to a statistical duty of 0.6 percent, and those by other users are subject in addition to a sales tax. Institutions may carry out arbitrage operations with their clients in gold coins or good-delivery gold against foreign bank notes.

Changes During 1991

Exchange Arrangement

January 29. A target zone for exchange rate intervention was announced, and it was initially set at ₳ 8,000–₳ 10,000; it was subsequently narrowed to ₳ 9,700–₳ 10,000 by the end of March.

March 19. The unified floating exchange rate system was replaced by a peg to the U.S. dollar, and the lower end of the intervention band was raised to narrow the band to ₳ 9,700–₳ 10,000 per US$1.

Imports and Import Payments

April 1. The tariff regime was modified, as follows: (1) 0 percent for capital goods not domestically produced, works of art, and bank notes and coins; (2) 5 percent for goods not domestically manufactured, foodstuffs (depending on comparative advantage), and mineral-based raw materials (locally produced); (3) 13 percent for domestically produced inputs and for intermediate goods; (4) 22 percent for final products manufactured locally (including capital goods and spare parts); and (5) 35 percent for electrical domestic household appliances (including audiovisual equipment).

April 1. The prohibition on the importation of automobiles was lifted and replaced with a quota.

Exports and Export Proceeds

March 8. The regulations governing prefinancing and financing of “promoted exports” were tightened by Communication “A” 1807.

March 22. All export taxes were eliminated, except those on sunflower seeds and soybeans.

April 8. The surrender requirements on export proceeds were abolished.

May 1. The duty rebate scheme was modified, whereby payments equivalent to an average rate of 7 percent of the f.o.b. value of exports would be made in cash instead of partly in austral-denominated bonds.

September 3. An export financing regime was introduced on a temporary basis by Communication “A” 1872. The regime provided for guidelines similar to those of Communication “A” 1205 (item 2.3) and established restrictions with regard to the amounts to be used, products to be financed, and acceptable terms.

November 1. The 3 percent statistical levy on the f.o.b. value of exports was abolished.

Aruba1

(Position on December 31, 1991)

Exchange Arrangement

The currency of Aruba is the Aruban Florin, which is pegged to the U.S. dollar at Af. 1.7900 per US$1. The Centrale Bank van Aruba (the Bank) deals with local commercial banks within margins of 0.00279 percent on either side of parity. On December 31, 1991, the official buying and selling rates for the U.S. dollar were Af. 1.77 and Af. 1.80, respectively, per US$1. (The official selling rate for drafts was Af. 1.78 per US$1.) Official buying and selling rates for other currencies2 are set daily on the basis of rates for the U.S. dollar on the international exchange markets. A foreign exchange commission of 1.3 percent is levied on all payments made by residents to nonresidents. Purchases of foreign exchange by resident companies with a nonresident status for foreign exchange control purposes are exempted from the commission.

There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Foreign exchange controls are administered by the Bank. Import licenses, where required, are issued by the Department of Economic Affairs, Commerce, and Industry.

Prescription of Currency

Payments to and receipts from nonresidents may be made in any convertible currency, except in the legal tender of Aruba. For purposes of the compilation of the balance of payments, all payments made by residents to nonresidents and receipts through local banks and through banks abroad must be reported to the Bank.

Nonresident Accounts

Nonresidents may freely open accounts in any foreign currency, but they are not permitted, in principle, to hold accounts in Aruban florins.

Resident Foreign Bank Accounts

Residents require a license from the Bank to open and maintain foreign bank accounts.

Imports and Import Payments

Payments for imports may be made freely. With the exception of eggs, all products are permitted without restriction. The restriction on the importation of eggs, however, is administered liberally in accordance with the domestic supply situation.

Payments for Invisibles

Most payments for invisibles exceeding Af. 50,000 a quarter require a license from the Bank. Tourist travel allowances, education allowances, remittances for family maintenance, and allowances for medical treatment are granted liberally. Transfers of profits and dividends are permitted by the Bank upon application. Nonresidents may take with them on departure any foreign currency that they brought in. The exportation of Aruban bank notes is prohibited.

Exports and Export Proceeds

Exports do not require a license. Export proceeds must be converted into local currency within eight working days, credited to a foreign currency account with a local bank, or credited with a foreign bank with the approval of the Bank.

Proceeds from Invisibles

The regulations governing export proceeds also apply to proceeds from invisibles. Nonresidents may bring in any amount of checks, traveler’s checks, or bank notes denominated in foreign currency.

Capital

The following transactions require a bank license: (1) purchases from and sales to nonresidents of domestic securities; (2) purchases of officially listed foreign securities with values exceeding Af. 50,000 a year; and (3) purchases from and sales to nonresidents of foreign real estate. Proceeds from the liquidation of direct foreign investments may be repatriated without restriction.

Changes During 1991

Imports and Import Payments

January 1. With the exception of eggs, all products may be imported without restriction. The restriction on the importation of eggs, however, is administered liberally, depending on the domestic supply situation.

Australia

(Position on December 31, 1991)

Exchange Arrangement

The currency of Australia is the Australian Dollar.1 The Australian authorities do not maintain margins in respect of exchange transactions; spot and forward exchange rates are determined on the basis of demand and supply conditions in the exchange market, but the Reserve Bank of Australia retains discretionary power to intervene in the foreign exchange market. There is no official exchange rate for the Australian dollar. The Reserve Bank of Australia publishes an indicative rate for the Australian dollar based on market observation at 4 p.m. daily. On December 31, 1991, the indicative rate in terms of the U.S. dollar was $A 1.3161 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Authorized foreign exchange dealers may deal among themselves and with their customers at mutually negotiated rates for both spot and forward transactions in any currency, in respect of trade and non-trade-related transactions. The Reserve Bank sets a limit for each dealer’s net open overnight foreign exchange exposure.

The procedural requirements applying to certain transactions with residents of designated countries and to emigrants, which had been for taxation-screening purposes, were abolished as of July 1, 1990.

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

The Reserve Bank is responsible for administering the few requirements imposed under Australia’s current foreign exchange arrangements. (Most exchange controls were abolished on December 12, 1983.)

On April 5, 1991, restrictions on payments and transfers to persons within the territory of Kuwait, which were introduced on August 9, 1990, were lifted.

Prescription of Currency

Both outward and inward payments may be settled in Australian currency or in any foreign currency,2 but purchases and sales of foreign currency by persons in Australia must be undertaken with an authorized foreign exchange dealer.

Nonresident Accounts

Nonresidents may establish and operate accounts without formality; funds may also be repatriated without restriction. Accounts may be denominated in foreign currency, but purchases and sales of foreign currency in Australia must be handled through authorized dealers. Special requirements apply in the case of interest-bearing investments by foreign government monetary authorities (see section on Capital, below).

Imports and Import Payments

There are no import-licensing requirements or quotas on imports other than tariff quotas, which apply to textiles, clothing, footwear, and cheese and curd. Australia is not a signatory of the Multifiber Arrangement. For many products, imports are allowed only if written authorization is obtained from the relevant authorities or if certain regulations are complied with. Among the goods subject to control are narcotic, psychotropic, and therapeutic substances, firearms and certain weapons, particular chemicals, certain primary commodities, some glazed ceramic ware, and various dangerous goods. These controls are maintained mainly to meet health and safety requirements; to meet certain requirements for labeling, packaging, or technical specifications; and to satisfy certain obligations arising from Australia’s membership in international commodity agreements.

Almost all tariff rates are subject to some tariff-reduction program. In 1990–91, the import-weighted average tariff rate (that is, total duty paid divided by the f.o.b. value of all imports) was 7.1 percent. The tariff-reduction program announced in May 1988 envisaged that tariff rates above 15 percent would be gradually reduced to 15 percent by July 1992. Tariff rates higher than 10 percent but lower than 15 percent would be phased down to 10 percent over the same period. Proportional reductions were to have been made to those tariffs not expressed in ad valorem terms. The March 1991 economic statement calls for most tariffs to be reduced further to a maximum level of 5 percent by July 1996. The exceptions in these two tariff-reduction programs are for passenger motor vehicles and the textile, clothing, and footwear sectors, where tariffs have been relatively high, especially in effective terms. Under the 1988 program, tariffs on passenger motor vehicles were to be reduced to 35 percent by July 1992 and tariff quotas in the textile, clothing, and footwear sectors were to be eliminated by the middle of 1995. The March 1991 announcement calls for further phased tariff reductions to 15 percent in the passenger motor vehicle industry and to 25 percent in the textile, footwear, and clothing sectors by the year 2000. Tariffs on textiles, clothing, and footwear that are not subject to tariff quotas were to be halved on March 1, 1992 and eliminated on March 1, 1993. The tariff quota system for cheese and curd will lapse on June 30, 1992.

Australia’s antidumping procedures were simplified under the revised Customs Tariff (Antidumping) Act of 1988. They provide for stricter conditions for demonstrating the causal link between dumping and material injury to domestic industries. Industries that use imported products and other interested parties may also make submissions to the inquiry. Antidumping duties and undertakings will lapse automatically after five years, although domestic industries may renew the antidumping petition. In special circumstances, antidumping actions may be introduced retrospectively or in anticipation of the arrival of dumped or subsidized goods. The Antidumping Authority was established to advise the Government on these actions, although the Australian Customs Service remains responsible for the preliminary investigation of a complaint. In March 1991, the Government announced plans to strengthen the antidumping procedures, including accelerating the complaint process and extending the injury test to cover upstream agricultural industry. In December 1991, the Government announced it would reduce the time taken to process complaints and change the way in which dumping duties are levied.

Under the terms of the Australia-New Zealand Closer Economic Relations and Trade Agreement (Anzcerta), trade in goods across the Taswan became free from July 1, 1990 (five years ahead of schedule). Imports of motor vehicles from New Zealand were subject to a customs tariff until January 1, 1990. Antidumping actions against imports from New Zealand will not be taken after July 1, 1990, with existing antidumping actions against New Zealand firms being terminated on this date. Actions will be taken under domestic trade practices legislation if it is considered necessary to redress unfair competition.

The South Pacific Regional Trade and Economic Cooperation Agreement (Sparteca) provides for duty-free and unrestricted access to Australian and New Zealand markets on a nonreciprocal basis for most of the products exported by the member countries. In the case of Papua New Guinea, while it obtains trade concessions from New Zealand under Sparteca, its trade and commercial relations with Australia are covered by the Agreement on Trade and Commercial Relations between Australia and Papua New Guinea.3

Developing countries obtain tariff preferences on their exports to Australia under the Australian System of Tariff Preference. Since 1986, a uniform preferential margin of 5 percentage points on dutiable goods has applied to all developing countries; if the general tariff rate is below 5 percent, imports from developing countries enter duty free. The scheme was fully implemented during 1990. For Hong Kong, the Republic of Korea, Singapore, and Taiwan Province of China, tariffs will be fixed at July 1, 1992 levels until the preference is phased out through general tariff reductions.

Payments for Invisibles

Payments for invisibles are unrestricted, except for transactions involving Iraqi nationals. Travelers may take out of Australia unlimited amounts of Australian and foreign currency purchased from authorized dealers. Travelers who are not residents of Australia may also take out without restriction any amount in foreign currency they brought into Australia. Persons leaving Australia with Australian or foreign bank notes and coins totaling $A 5,000 or more are required under the Cash Transaction Reports Act to complete a report form; these forms are available at ports or airports from Australian customs.

The Anzcerta also provides, through a protocol, for the liberalization of the trade in services between Australia and New Zealand, subject to the foreign investment policies of both countries. In addition, certain service activities are excluded from the agreement. Among Australia’s exclusions are telecommunications, banking, airport services and aviation, coastal shipping, media, and postal services. The operation of the trade-in-services protocol was reviewed in December 1990 at the technical level and is expected to be reviewed again in the course of 1992.

Exports and Export Proceeds

The export regime is designed to encourage the relatively unrestricted exportation of Australian products. Bounties are paid to producers of a limited number of products, some of which may be exported. Export prohibitions and restrictions in effect are designed to ensure quality control over specified goods; administer trade embargoes and meet obligations under international arrangements; restrict the exportation of certain defense goods; regulate the exportation of goods that contain high technology and have dual civilian/military application;4 and maintain adequate measures of control over designated cultural property, resources, and flora and fauna. There are no formalities regulating the disposal of export proceeds.

The Government also exercises export controls to secure national conservation objectives and to respond to specific market distortions abroad that have an impact on the export prices of certain products. The Government abolished or amended export controls on many mineral and petroleum products in 1987–88. Remaining controls on primary products apply mainly to food and agricultural products.

In order to address distortions in the bauxite and alumina, coal, and iron sectors, the Government monitors trade in these products and retains the authority to withhold export approval for shipments at prices not in line with market conditions. Export controls apply to uranium to ensure compliance with the Government’s commercial and non-proliferation policy obligations. Restrictions also apply on the exportation of certain other nuclear and related materials. Export restrictions on copper scrap and copper alloy scrap were lifted in 1990. The exportation of crude oil and petroleum products to South Africa is banned.

Licenses are required for the exportation of unprocessed wood, including wood chips. Licensing requirements are intended to ensure compliance with the Government’s policy regarding environmental protection, elimination of market distortions, and the promotion of further processing in Australia.

Australia participates in several voluntary restraint agreements (VRAs) or similar restraint agreements affecting its exports. These comprise limits on exports of the meat of sheep and goats as well as high-quality “Hilton” beef to the EC, and bovine meat and a VRA on steel products to the United States. The Australian Dairy Corporation administers export control powers in relation to prescribed dairy products under the provisions of the Dairy Produce Act. All exporters of controlled dairy products must be licensed. This system allows the control of exports to markets where quantitative restrictions apply and ensures that export prices do not fall below minimum prices agreed to under the GATT for these products. Exports of red meat and livestock can only be made by persons or firms licensed by the Australian Meat and Livestock Corporation (AMLC). The AMLC has the power to engage in export trading in its own right and may introduce arrangements to control Australian exports to that market to observe quantitative restrictions in any particular market. Other Commonwealth statutory marketing authorities that have export control powers are the Australian Horticultural Corporation, the Australian Wool Corporation, the Australian Honey Board, the Australian Wheat Board, and the Australian Wine and Brandy Corporation. The Australian Wheat Board’s powers make it the sole exporter of Australian wheat. The remaining authorities’ export control powers are used to ensure the quality of exports.

Proceeds from Invisibles

Earnings from invisibles in foreign currencies may be retained or sold for Australian dollars. Travelers may bring in any amount in Australian or foreign bank notes and coins, subject to completion of a report form for amounts exceeding $A 5,000. (See section on Payments for Invisibles, above.)

Capital

The vast majority of transactions involving transfers of interest-bearing capital from Australia and nonresident investments in Australia may be undertaken without formality. The only exceptions are that foreign governments, their agencies, and international organizations are subject to certain modest restrictions on borrowing in Australia. These entities are barred from issuing bearer bonds and must consult with the Treasury or Reserve Bank on planned individual borrowings in excess of $A 100 million. While there are no limits on the interest-bearing investments of international organizations or of foreign central banks and other monetary authorities, the Reserve Bank may determine an amount up to which the investment of foreign government monetary institutions (which also undertake commercial investments) will be regarded as having been undertaken for official foreign reserve management purposes. All investing agencies are expected to be stable holders of Australian dollar assets and to keep the Reserve Bank informed of their Australian dollar portfolios. Interest-bearing investments of a foreign government’s official foreign reserves are exempt from taxation consistent with the principle of sovereign immunity. Income derived by a foreign government from the conduct of commercial operations is not exempt from Australian taxation.

The Government recognizes the substantial contribution foreign investment makes to the development of Australia’s industries and resources and has framed its policies so as to encourage direct investment in line consistent with the needs of the community. Under Australia’s foreign investment policy, certain types of proposals by foreign investors are subject to examination.5 These include (1) acquisitions of substantial interests in existing Australian businesses with total assets of $A 5 million or more ($A 3 million or more for rural properties); (2) proposals for the establishment of new businesses involving total investments of $A 10 million or more; (3) proposals for investment in the media irrespective of size; (4) direct investment by foreign governments or their agencies irrespective of size; (5) acquisitions of nonresidential commercial real estate valued at $A 5 million or more; and (6) proposals to acquire residential real estate irrespective of size (unless exempt under the regulations). Foreign investors may acquire residential estates within a designated integrated tourism resort (ITR) without obtaining approval under the foreign investment guidelines.

In most industry sectors, the Government approves proposals to establish new businesses involving total investments of $A 10 million or more and those to acquire existing businesses with total assets valued at $A 5 million or more ($A 3 million or more if more than half of the assets of the business are attributable to rural land) unless judged to be contrary to the national interest.

Certain restrictions apply to proposed acquisitions of real estate but approval is normally granted to (1) acquisitions of real estate for development; (2) purchases of vacant residential land (on condition that development occurs within 12 months) and home units and townhouses that are “off the plan” or under construction (on condition that no more than half of the units in any one development are sold to foreign interests); and (3) acquisitions of developed nonresidential commercial real estate, subject to 50 percent Australian equity participation (unless not available).

In applying the policy, the authorities make every effort to avoid unnecessary interference in normal commercial processes and recognize the special characteristics and circumstances that may arise in individual cases. The policy is nondiscriminatory as to the country of origin of investors, and the Foreign Investment Review Board, which acts as an independent advisor to the Government on foreign investment matters, stands ready to assist and advise foreign investors in formulating their proposals.

Gold

Australia has no restrictions applying to owning, buying, selling, importing, or exporting gold and gold coins, with the exception of the importing and exporting of Krugerrand. If the exportation or importation of coins (together with any notes) exceeds $A 5,000, it must be reported under the Cash Transaction Reports Act of 1988.

Changes During 1991

Administration of Control

April 5. Restrictions on payments and transfers to persons within the territory of Kuwait were lifted. Payments and transfers to the Government of Iraq, its agencies, or nationals remain prohibited without the specific approval of the Reserve Bank of Australia.

Imports and Import Payments

March 12. The Government announced a broad-based program of tariff reductions and other trade measures to be phased in by the year 2000.

December 5. The Government announced changes in antidumping legislation, extending the sunset period for antidumping actions to five years and changing the way in which dumping duties are levied.

Capital

April 19. The Government announced the relaxation of restrictions on borrowings in the Australian capital market by foreign governments, their agencies, and international organizations.

July 25. The Government announced that foreign investors may acquire any residential real estate within a designated ITR without obtaining approval under the foreign investment guidelines. Foreign investment regulations were amended accordingly.

Austria

(Position on December 31, 1991)

Exchange Arrangement

The currency of Austria is the Austrian Schilling. Without assuming any formal obligations, the authorities aim at maintaining a stable relationship with the currencies participating in the European Monetary System (EMS). Forward transactions are permitted. Forward premiums and discounts are left to the interplay of market forces, and the Austrian National Bank does not intervene in the forward market or provide cover for commercial banks’ forward positions. On December 31, 1991, the authorized banks’ buying and selling rates for the U.S. dollar were S 10.649 and S 10.729 respectively, per US$1. There are no exchange taxes or subsidies.

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

Most exchange transactions are effected through Austrian banks authorized by the Austrian National Bank. Certain restrictions on payments and transfers for current international transactions to the Government of Iraq are still in force.

Export and import licenses required for goods by the Foreign Trade Act of 1984, as amended in 1988, have to be issued by the Federal Ministry for Economic Affairs with respect to industrial products and by the Federal Ministry of Agriculture and Forestry with respect to agricultural products. In instances where the customs authorities are authorized to issue import and export licenses on behalf of the ministries mentioned above, these are granted without delay or formal application (automatic licensing) at the time of the clearance of goods through customs.

Prescription of Currency

Settlements with all countries may be made either in foreign currencies or through free schilling accounts.

Nonresident Accounts

There is only one category of nonresident account in schillings, namely, free schilling accounts. These accounts may be freely opened by Austrian banks on behalf of nonresidents and are not subject to restrictions. Balances may be freely converted into any foreign currency. Transfers between these accounts are free.

Nonresidents may also maintain nonresident accounts in foreign currencies. They are subject to the same conditions as free schilling accounts.

Imports and Import Payments

All commodities not included in the Annexes to the Foreign Trade Law are free of import licensing and may be imported from any country without quantitative restriction. For many goods, licenses are granted by customs at the time of clearance, irrespective of the country from which they are imported.1 Nearly all imports from General Agreement on Tariffs and Trade (GATT) countries, their associated territories, and certain other countries2 have been liberalized. Austria’s GATT liberalization is applied worldwide, except in respect of certain textiles and clothing as defined in Article XII, Section 1 of the Arrangement Regarding International Trade in Textiles. Nonliberalized imports may be obtained under various procedures, namely, state trading, global quotas, bilateral quotas, and discretionary licensing. State trading covers tobacco in any form, ethyl alcohol, and salt. Global quotas apply to specified imports from GATT countries; such quotas apply only to potatoes, wheat, cornstarch, preserved meat, and wine. Discretionary individual licensing is applicable to all other private imports not covered by the procedures listed above, including imports of certain textiles from specified countries. Licenses are usually granted if the imports concerned do not adversely affect domestic industries.

Grains, milk and butter, and cattle, pigs, sheep, goats, and horses for slaughter and products from these animals for human consumption are imported in accordance with a special system of controls and regulations maintained under the Agricultural Marketing Law and the law governing livestock farming and trading, and the marketing of livestock produce. Certain agricultural products are subject to import levies.

In some cases, import licenses are issued only to importers who have received export certificates from the countries of their trading partners. Import licenses are not transferable and are valid for six months, but this period may be extended for periods of three months at a time. Payments for imports from, and originating in, countries with which Austria makes settlements in convertible currencies do not require exchange licenses. Under the 1982 Customs Preference Act, which covers the second ten-year period of the Austrian Scheme of Generalized Preferences, special treatment is provided for imports from developing countries, and in particular, 31 least-developed countries as defined by the UN General Assembly; the list of products eligible for preferential treatment has also been extended under the act.

Payments for Invisibles

Residents are permitted to conclude transactions with nonresidents involving invisible payments without restriction.

Residents traveling abroad for tourism purposes may purchase foreign exchange from authorized banks or obtain short-term advances from nonresidents without limitation.

Exports and Export Proceeds

Licenses for exports regulated under the Foreign Trade Law have to be obtained from the relevant ministry or, at the time of clearance, from the customs authorities. For most 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.

Proceeds from Invisibles

Proceeds from invisibles may be deposited without restriction. Persons entering Austria may import Austrian or foreign bank notes and coins without limitation.

Capital

The acquisition by nonresidents of Austrian securities and shares and participation by nonresidents in Austrian companies are unrestricted. The acquisition of real estate is subject to approval by local authorities. Nonresidents are permitted to issue bonds on the domestic market.

Foreign banks cannot establish branches in Austria, except through an enterprise incorporated in Austria. Nonresidents are also not permitted to invest in the auditing, mining, energy, transport, or legal sectors, nor are they permitted to acquire a share of 25 percent or more in ships registered in Austria.

Residents and nonresidents may export capital freely without a license. Nonresidents’ direct investments in Austria and the purchases of Austrian or foreign equities do not require approval.

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 also grant loans to nonresidents as well as to foreign banks and financial institutions.

Residents are allowed to acquire participation rights in foreign companies, associations, and other enterprises, and to establish, acquire, or extend foreign agencies or individually owned firms; earnings accruing from such investment may be freely used. Residents are permitted to acquire real estate abroad, and to purchase from nonresidents securities denominated in Austrian and foreign currencies without restriction. Residents are also permitted to open bank accounts abroad and to issue bonds abroad.

Gold

The Foreign Trade Law prescribes import licenses for certain gold imports (for example, gold sheets). The licenses are issued either by the Ministry for Economic Affairs to industrial users or by the customs office.

Changes During 1991

Capital

November 4. All foreign exchange controls were abolished.

The Bahamas

(Position on December 31, 1991)

Exchange Arrangement

The currency of The Bahamas is the Bahamian Dollar, which is pegged to the U.S. dollar, the intervention currency, at B$1 per US$1. The U.S. dollar circulates concurrently with the Bahamian dollar. The official buying and selling rates for the U.S. dollar are B$1.0025 and B$1.0040, respectively, per US$1. Buying and selling rates for the pound sterling are also officially quoted, the buying rate being based on the New York market midrate; the selling rate is 0.5 percent above the buying rate. The Central Bank of The Bahamas deals only with commercial banks. For transactions with the public, commercial banks are authorized to charge a commission of 0.50 percent buying and 0.75 percent selling per US$1, and 0.50 percent buying or selling per £ stg. 1. These charges are additional to the Central Bank’s charges. A stamp tax of B$0.25 percent is applied to all outward remittances.

There is also a market in which “investment currency”1 may be negotiated between residents through the Central Bank at freely determined rates, usually attracting a premium over the official market rate.

Commercial banks may provide forward cover for residents of The Bahamas where the resident is due to receive or has to pay foreign currency under a firm contractual commitment. Commercial banks may not, however, sell foreign currency spot to be held on account in cover of future requirements unless the Central Bank’s permission has been given. Authorized dealers may deal in foreign currency forward with nonresidents without prior approval from the Central Bank. Commercial banks may deal among themselves forward at market rates and must ensure when carrying out all forward cover arrangements that their open position carried either spot or forward does not exceed the equivalent of B$500,000 long or short. There are no forward cover arrangements in the official sector.

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

Administration of Control

Exchange control is administered by the Central Bank, which delegates to authorized dealers the authority to approve allocations of foreign exchange for certain current payments; the approval authority for import payments, travel facilities, and cash gifts is not delegated, except in the Family Islands.2 Import and export licenses are not required except for crawfish, conch, arms and ammunition, and, in certain cases, industrial gold. The Department of Agriculture and Fisheries issues export licenses for crawfish and conch, and the Police Department issues import and export licenses for arms and ammunition.

Prescription of Currency

The exchange control system of The Bahamas makes no distinction between foreign territories. Settlements with residents of foreign countries may be made in any foreign currency3 or in Bahamian dollars through an external account.

Nonresident Accounts

Authorized banks may freely open external accounts denominated in Bahamian dollars for winter residents and for persons with residency permits who are not gainfully employed in The Bahamas. With the prior approval of the Central Bank, authorized banks may also open external accounts in Bahamian dollars for nonresident companies that have local expenses in The Bahamas and for nonresident investors. External accounts in Bahamian dollars are normally funded entirely from foreign currency originating outside The Bahamas, but income on registered investments may also be credited to these accounts with the Central Bank’s approval. Balances may be converted freely into foreign currency and transferred abroad.4

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

Imports and Import Payments

The importation of certain commodities is prohibited or controlled for health, social, or humanitarian reasons. All other goods may be imported without a license. The prior approval of the Central Bank is required for making payments for imports, irrespective of origin;5 this approval is normally given automatically upon submission of pro forma invoices or other relevant documents proving the existence of a purchase contract. Import duties vary from zero to 200 percent, depending on the type of good. Customs entries are subject to a stamp tax at a rate of 1.5 percent.

Payments for Invisibles

There are no restrictions on current payments. Authorized dealers can make payments to nonresidents on behalf of residents for certain services and other invisibles within specified limits. Such payments include freight, ships’ disbursements, commissions, royalties, education, and insurance payments. Residents are entitled, on application to the Central Bank, to a foreign currency travel allowance equivalent to B$1,000 a person a year for tourist travel and to B$5,000 a person a year for genuine business or professional travel. The allowance for tourist travel excludes the cost of fares and travel services, which are normally obtained against payment in Bahamian dollars to a travel agent in The Bahamas. Applications for foreign exchange in excess of these amounts must be referred to the Central Bank, which approves bona fide applications. Foreign exchange facilities obtained for travel may not be retained abroad or be used abroad for purposes other than travel; any unused balance must be surrendered within a week of issue or, if the traveler is still abroad, within one week of his return to The Bahamas.

Subject to adequate documentary evidence, an education allowance of up to B$10,000 a person an academic year is normally granted upon application. Applications for facilities in excess of this amount are referred to the Central Bank. Temporary residents may, with the approval of the Central Bank, remit up to 50 percent of their wages and salaries, but where commitments outside The Bahamas are larger than 50 percent of wages and salaries, additional amounts may be remitted. Temporary residents may also repatriate all of their accumulated savings resulting from their employment in The Bahamas.

A traveler may take out Bahamian bank notes not exceeding B$70 in value; Bahamian travelers may not take out notes of any other country, except with the specific approval of the Central Bank.

Exports and Export Proceeds

Export licenses are not required except for crawfish, conch, and arms and ammunition. The proceeds of exports must be offered for sale to an authorized dealer as soon as the goods have reached their destination or within six months of shipment; alternatively, export proceeds may be used in any manner acceptable to the Central Bank.

Proceeds from Invisibles

Residents are obliged to collect without delay all amounts due to them from nonresidents and to offer the foreign currency proceeds for sale to an authorized dealer without delay, but these requirements are seldom enforced. There are no restrictions on the importation of foreign bank notes. The importation of domestic bank notes is subject to the approval of the Central Bank.

Capital

All capital transfers to countries outside The Bahamas require exchange control approval, and outflows of resident-owned capital are restricted. Inward transfers by nonresidents do not require exchange control approval, although the subsequent utilization of the funds in The Bahamas may require authorization. The permission of the Central Bank is required in respect of any action whereby nonresidents acquire control of or participate in an incorporated company controlled by residents. Resident individuals and companies require the specific permission of the Central Bank to maintain foreign currency bank accounts abroad.6

The use of official exchange for direct investment abroad is limited to B$100,000 or 30 percent of the total cost of the investment, whichever is greater, for investments from which the additional benefits expected to accrue to the balance of payments from export receipts, profits, or other earnings within 18 months of the investment will at least equal the total amount of investment and will continue thereafter. Investments abroad that do not meet the above criteria may be financed by foreign currency borrowed on suitable terms subject to individual approval by the Central Bank, the purchase of foreign currency in the investment currency market, or the use of retained profits of foreign subsidiary companies. Permission is not given for investments that are likely to have adverse effects on the balance of payments.

In principle, inward investment by nonresidents is unrestricted. However, the consent of the Central Bank is required for the issue or transfer of shares in a Bahamian company to a nonresident and for the transfer of control of a Bahamian company to a nonresident. Special procedures apply to investments in the form of purchase of real property, as specified under the Immovable Property (Acquisition by Foreign Persons) Act, 1981, which came into effect on November 1, 1983: foreigners intending to purchase land must apply to the Foreign Investments Board, a group of designated ministers of the Government. If such application is approved, payment for the purchase may be made either in Bahamian dollars from an external account or in foreign currency.

For all investments with approved status, permission is given upon application for the transfer of profits and dividends representing earned trading profits and investment income. In the event of a sale or liquidation, nonresident investors are permitted to repatriate the proceeds, including any capital appreciation, through the official foreign exchange market. Residents require the specific approval of the Central Bank to buy property outside The Bahamas; such purchases, if for personal use, can be made only with investment currency, and approval is limited to one property for each family. Incidental expenses connected with the purchase of property for personal use may normally be met with investment currency; expenditures necessary for the maintenance of the property or arising directly from its ownership may, with permission, be met with foreign currency bought at the current market rate in the official foreign exchange market.

The transfer of legacies and inheritances due to nonresident beneficiaries under wills or intestacies of persons who were Bahamian residents at the time of their death is permitted. However, permission is not normally given for Bahamian residents to settle any property, other than by will, for the benefit of nonresidents, in line with the provisions of the Immovable Property (Acquisition by Foreign Persons) Act, 1981.

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

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

Nonresident buyers of Bahamian securities must pay for such purchases in Bahamian dollars from an external account, in funds eligible for credit to an external account, or in Bahamian dollars arising from the sale of foreign currency in the official foreign exchange market; interest, dividends, and capital payments on such securities may not be remitted outside The Bahamas unless the holdings have been properly acquired by nonresidents. Bahamian residents are not permitted to purchase foreign currency securities with official exchange or out of export proceeds or other current earnings; payment must be made with investment currency. All purchases, sales, and switches of foreign currency securities in The Bahamas and all switches in foreign currency securities by Bahamian residents, wherever the switch takes place, require permission from the Central Bank, and all transactions must take place through authorized agents.7 All foreign securities purchased by residents of The Bahamas must be held by or to the order of an authorized agent. Securities of other former Sterling Area countries are considered foreign currency securities, and sales proceeds of such securities held by residents, if registered at the Central Bank by December 31, 1972, are eligible for sale in the investment currency market; securities not so registered may be offered for sale at the official rate of exchange.

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

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

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

Gold

Residents of The Bahamas other than authorized dealers are not permitted to hold or deal in gold bullion. However, residents who are known users of gold for industrial purposes may, with the approval of the Central Bank, meet their current industrial requirements. Authorized dealers are not required to obtain licenses for bullion or coins. Commercial imports of gold jewelry do not require a license. There is no import duty on gold bullion or gold coins; however, an import duty of 35 percent is imposed on imports of gold jewelry from all sources. A 1.5 percent stamp tax payable to customs is also payable on commercial shipments of gold jewelry from any source. There is no restriction on residents’ acquisition or retention of gold coins. The Bahamas has issued commemorative coins in denominations of B$10, B$20, B$50, B$100, B$150, B$200, B$250, B$1,000, and B$2,500 in gold, and B$10 and B$25 in silver; these are legal tender but do not circulate.

Changes During 1991

Exchange Arrangement

October 7. The Second Schedule to the Stamp Act was amended, and the stamp tax was changed to a uniform rate of 1.5 percent.

Bahrain

(Position on December 31, 1991)

Exchange Arrangement

The currency of Bahrain is the Bahrain Dinar, which is pegged to the SDR at the rate of BD 0.476190 per SDR 1. The exchange rate for the Bahrain dinar in terms of the SDR may be set within margins of ± 7.25 percent of this fixed relationship. In practice, however, the Bahrain dinar has maintained a relatively stable relationship with the U.S. dollar, the intervention currency, and since December 1980, the exchange rate has remained unchanged at BD 1 = US$2.6596. The middle rate of the Bahrain dinar for the U.S. dollar is quoted by the Bahrain Monetary Agency (BMA) and has remained unchanged since December 1980.

The BMA provides daily recommended rates for banks dealing with the public for amounts up to BD 1,000 in U.S. dollars, pounds sterling, and deutsche mark, based on the latest available U.S. dollar rates against those currencies. On December 31, 1991, the BMA’s buying and selling rates for the U.S. dollar were BD 0.375 and BD 0.377, respectively, per US$1. The BMA does not deal with the public. In their dealings with the public, commercial banks are required to use the BMA’s rates for U.S. dollars, pounds sterling, and deutsche mark, but they are authorized to charge an exchange commission of 2 per mill (special rates of commission apply for transactions up to BD 1,000). The banks’ rates for other currencies are based on the BMA’s U.S. dollar rates and on the New York market rate for the currency concerned against the U.S. dollar.

There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official sector, while the BMA monitors forward exchange transactions of commercial banks through the open position of commercial banks’ monthly returns.

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

All imports from Israel are prohibited, as are products manufactured by foreign companies that are blacklisted by the League of Arab States. Imports of a few commodities are prohibited from all sources for reasons of health, public policy, or security. Imports of cultured pearls are also prohibited. Import licenses are required for arms and ammunition and alcoholic beverages. Rice and sugar are, in practice, imported only by the Bahrain Import-Export Company. The rates of customs tariffs range between 5 percent and 10 percent on most commodities; the customs tariffs on vehicles, tobacco, and alcoholic beverages are 20 percent, 50 percent, and 125 percent, respectively. Government procurements are required to give preference to goods produced in Bahrain and within the member countries of the Cooperation Council for the Arab States of the Gulf (GCC), provided that the prices of these goods are within specified margins of the prices of imported substitutes; the margins are 10 percent for goods produced in Bahrain and 5 percent for goods produced within the member countries of the GCC. Foreign exchange for payments in respect of permitted imports may be obtained freely.

Exports and Export Proceeds

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

Payments for and Proceeds from Invisibles

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

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents, but payments may not be made to or received from Israel. Profits from foreign investments in Bahrain may be transferred abroad freely, except that, under Article 72 of the Monetary Agency Law, the banks are subject to special rules regarding the payment of dividends and the remittance of their profits. Licensed offshore banking units may freely engage in transactions with nonresidents; transactions with residents are not normally permitted. The stock exchange began operations on January 2, 1989, and trading on the floor of the exchange began on June 17, 1989.

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. Imports and exports of gold in any form are freely permitted and do not require a license. Imports of gold jewelry are subject to a 10 percent customs duty, but gold ingots are exempt. Brokerage business in gold (as well as in other commodities) requires approval from the BMA before registering with the Ministry of Commerce and Agriculture; such business is subject to a minimum deposit requirement equivalent in the case of gold to BD 3,000 or 10 percent of the contract value, whichever is higher.

Changes During 1991

No significant changes occurred in the exchange and trade system.

Bangladesh

(Position on December 31, 1991)

Exchange Arrangement

The currency of Bangladesh is the Bangladesh Taka. The value of the taka in terms of the U.S. dollar, the intervention currency, is determined with reference to a weighted basket consisting of the currencies of the country’s major trading partners. On December 31, 1991, the official (spot) middle rate of the taka in terms of the U.S. dollar was Tk 38.58 per US$1, and the spot buying and selling rates of Bangladesh Bank (the central bank) for authorized dealers were Tk 38.53 and Tk 38.63, respectively, per US$1. On the same date, the spot buying and selling rates (telegraphic transfers) of authorized dealers were Tk 38.2165 and Tk 38.6713, respectively, per US$1. Exchange rates for currencies other than the U.S. dollar are based on the daily closing rates of the U.S. dollar in New York for the currencies concerned.

Different effective exchange rates arise from the operation of the Secondary Exchange Market (SEM), which comprises the Wage Earners’ Scheme (WES), and the Export Performance Benefit (XPB) scheme. Under the WES, foreign exchange earnings remitted by workers abroad, tourist receipts, and most service receipts are sold at a rate determined by a committee of authorized foreign exchange dealers (mainly banks) constituted by Bangladesh Bank. Under the XPB scheme, exporters and certain indirect exporters of nontraditional items are eligible to receive an exchange rate premium, which is set to equal the difference between the WES rate (in taka per U.S. dollar) and the official rate. Each eligible item receives a coefficient of either 40 percent, 70 percent, or 100 percent of the XPB, depending on that item’s domestic value added and the priority that the Government places on encouraging its exportation. At the end of 1991, 71 items were eligible for 100 percent of the XPB, covering domestic value added of 70 percent and higher. A coefficient of 70 percent was given to 40 items with a value added of between 50 percent and 69 percent. However, light engineering products, machine tools and equipment, cast-iron products, household electrical appliances, and electric cables with a value added of 60 percent and above, between 40 percent and 59 percent, and less than 40 percent were given coefficients of 100 percent, 70 percent, and 40 percent, respectively. Exports of garments and leather were subject to a schedule of coefficients. Garments received 70 percent XPB if they were made from imported raw materials, and 100 percent XPB if domestic materials were used. For leather items, the coefficients were 40 percent for products using imported raw materials and 100 percent for products using domestic materials. Seventy percent XPB was given to exports of intermediate textile products (that is, fabric) and to domestic sales of intermediate products that were finished locally and then exported. All other non-traditional exports, except wet-blue leather, received 40 percent XPB. On December 31, 1991, the middle exchange rate in the secondary market was Tk 36.505 per US$1.

Forward facilities at authorized banks are available in all approved foreign currencies and in currencies of the member countries of the Asian Clearing Union (ACU),1 covering periods of up to six months for export proceeds and import payments and covering up to three months for remittances of surplus collection of foreign shipping companies and airlines. The authorized banks may in their turn take forward cover in the interbank market or from Bangladesh Bank against transactions for which they have entered into forward contracts with their customers. Authorized banks may also take forward cover for one month from Bangladesh Bank against sight export bills negotiated by them, and enter into forward contracts with their overseas branches/correspondents against underlying export or import transactions. Authorized banks are permitted to retain relatively small working balances with their foreign correspondents, and currency swaps are not permitted unless they are against underlying approved commercial transactions. Forward transactions of Bangladesh Bank are confined to purchases and sales of deutsche mark, French francs, Japanese yen, pounds sterling, U.S. dollars, and all currencies of the member countries of the ACU.

Administration of Control

Exchange control is administered by Bangladesh Bank in accordance with general policy formulated in consultation with the Ministry of Finance. The 7 foreign and 11 domestic commercial banks (of which 3 are nationalized), together with 3 joint-venture banks and 4 specialized financial institutions, have been appointed authorized dealers (authorized banks) in foreign exchange. The Chief Controller of Imports and Exports of the Ministry of Commerce is responsible for registering exporters and importers and for issuing the Import Policy Order (IPO). Registered importers can make their imports in terms of the IPO against letters of credit. Letters of credit authorization forms are issued by authorized dealers and do not require a separate import license. Certain trade transactions are conducted through state trading agencies, including the Trading Corporation of Bangladesh (TCB).

Prescription of Currency

Settlements with all countries are subject to exchange control. Settlements with countries with which Bangladesh has commodity exchange agreements2 normally must be effected through nonconvertible U.S. dollar or pound sterling accounts for goods and services specified in the agreements up to agreed value limits; settlement with these countries can be made in convertible currencies for goods and services not specified in the agreements or beyond the value ceilings specified in the agreements. Payments to, and receipts from, the other member countries of the ACU in respect of current transactions must be effected through the ACU in terms of the Asian Monetary Unit (AMU).3 Settlements with other countries normally take place in convertible currencies and, in a few cases, through nonresident taka accounts. Payments for imports may be made to the country of origin of the goods or to any other country (with the exception of those countries from which importation is prohibited); they may be made (1) in taka for credit to a nonresident bank account in Bangladesh of the country concerned; (2) in the currency of the country concerned; or (3) in any freely convertible currency. Export proceeds must be received in freely convertible foreign exchange or in taka from a nonresident taka account. All settlements with Israel and South Africa are prohibited.

Resident and Nonresident Accounts

The accounts of individuals, firms, or companies resident in countries outside Bangladesh are designated nonresident accounts. All such accounts are regarded for exchange control purposes as accounts related to the country in which the account holder is a permanent resident.4 Nonresident foreign currency accounts may be opened by authorized dealers without the prior approval of Bangladesh Bank in respect of Bangladesh nationals/foreign nationals who reside abroad and in respect of foreign firms operating abroad. Specified debits and credits to these accounts may be made by authorized dealers without the prior approval of Bangladesh Bank during the absence of the account holder from Bangladesh. Certain other debits and credits may be made without the prior approval of Bangladesh Bank but are subject to reporting ex post.

Convertible Taka Accounts. All diplomatic missions operating in Bangladesh, their diplomatic officers, home-based members of the mission staffs, international nonprofit humanitarian organizations functioning in Bangladesh and their expatriate employees, foreign contractors and consultants engaged in specific projects, and foreign nationals residing in Bangladesh regardless of their status are allowed to maintain convertible taka accounts. These accounts may be credited freely with the proceeds of inward remittances in convertible foreign exchange and may be debited freely at any time for local disbursements in taka, as well as for remittances abroad in convertible currencies. Transfers between convertible taka accounts are freely permitted. Foreign missions and embassies, their expatriate personnel, foreign airline/shipping companies, and international nonprofit organizations in Bangladesh may open interest-bearing accounts, but the interest earned thereon can be disbursed only in local currency.

Wage Earners’ Scheme (WES). Under the WES, Bangladesh nationals and persons of Bangladesh origin who are working abroad are permitted to open foreign currency accounts denominated in pounds sterling or U.S. dollars. These accounts may be credited with (1) remittances in convertible currencies received from abroad through normal banking and postal channels; (2) proceeds of convertible currencies (currency notes, traveler’s checks, drafts, etc.) brought into Bangladesh by the account holders, provided they were declared to customs upon arrival in Bangladesh; (3) transfers from other foreign currency accounts opened under the WES; and (4) transfers from nonresident foreign currency deposit accounts. The accounts may be debited, without restriction, but must be reported to Bangladesh Bank, for the following purposes: (1) all local disbursements; (2) transfers to other foreign currency accounts opened under the WES; (3) payment for imports of specified goods against letters of credit; (4) payment of bank commissions and other bank charges connected with imports; and (5) travel expenditures abroad for business or private purposes up to prescribed limits. For travel on private purposes, the upper limit is the equivalent of $400 a person a year (regardless of the number of visits annually) for air travel to Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka (but up to $150 for overland travel to India); and $1,800 a person a year and a maximum of $1,200 a trip for travel to other countries.

Nonresident Foreign Currency Deposit Accounts. Bangladesh nationals residing abroad; foreign nationals, and foreign companies/firms registered and/or incorporated abroad; banks; and other financial institutions, including institutional investors, may open interest-bearing nonresident foreign currency deposit accounts denominated in pounds sterling or U.S. dollars. These accounts, whose terms range from one month to one year, may be credited, in initial minimum amounts of $1,000 or £500 ($25,000 for foreigners), with (1) remittances in convertible currencies, and (2) transfers from existing foreign currency deposit accounts maintained under the WES. The banks pay interest on balances in these accounts at rates that are 1 percentage point higher than Eurocurrency deposit rates. The balance, including interest earned, may be transferred in foreign exchange by the account holder to his country of residence or anywhere he chooses; the account holder, if not otherwise ineligible under the WES, may also transfer the balance to any foreign currency deposit account maintained under the WES. The balances in the accounts, which are freely convertible into taka at the SEM rate (the official rate for foreigners), must be reported by banks monthly to Bangladesh Bank, and the accounts may be retained up to five years from the date of the account holder’s return to take up permanent residence in Bangladesh; Bangladesh Bank may consider requests for further extension of the time limit.

Nonresident Bangladeshis who do not maintain or open a foreign currency deposit account while abroad may also open a nonresident foreign currency deposit with foreign exchange brought in from abroad within six months from the date of their return to take up permanent residence in Bangladesh. These accounts may also be maintained up to five years from the date of return to Bangladesh, and Bangladesh Bank may consider requests of further extension in cases of necessity.

Resident Foreign Currency Deposit (RFCD) Accounts. Resident Bangladeshis, at the time of their return from travel abroad, may bring in any amount of foreign currency with declaration and up to $2,500 or the equivalent without declaration and may maintain an RFCD account with the foreign exchange so brought in. However, proceeds of exports of goods and services from Bangladesh or commissions arising from business deals in Bangladesh are not allowed to be credited to such accounts. Balances in these accounts are freely transferable abroad and can be used for future travels in the usual manner. These accounts may be opened in U.S. dollars and pounds sterling up to five years from the date of last deposit or until the balance is exhausted, whichever is earlier. Payments of interest in foreign exchange at rates determined by Bangladesh Bank are allowed on balances of not less than $1,000 or £500 if the deposits are for a term of not less than one month.

Imports and Import Payments

Imports are financed either from Bangladesh’s own resources or from foreign aid, loans, and barter arrangements. Imports are guided by an annual IPO announced by the Government. The IPO for the fiscal years 1991/92 and 1992/93 (July to June) was, however, announced in July 1991. It is based on a list of controlled items described according to the Harmonized System of Nomenclature and the Import Trade Control (ITC) schedule. The controlled list contains 284 items in the 1,239 categories at the four-digit level of the Harmonized System Codes, following the announcement of liberalization of 70 categories of the list in July 1990. The importation of these items is restricted or prohibited either for social or religious reasons or because similar items are locally produced. Quantitative restrictions on 59 categories of imports were eliminated, and the “right of refusal” provisions on 51 items were removed. The IPO prohibits or restricts imports of some raw materials or inputs, certain textiles, factory rejects, goods of substandard quality, used items, and materials inimical to public order or religious beliefs. Items not on these lists are freely importable through the SEM, provided that the importer has a valid import registration certificate. Imports at the official exchange rate are subject to allocation on the basis of foreign exchange availability. Imports from Israel and South Africa are prohibited.

All importers (including all government departments with the exception of the Ministry of Defense) are required to obtain letter of credit authorization forms (LCAFs) for all imports. Under the authority of the IPO issued by the Chief Controller, registered commercial importers are allowed to effect imports against LCAFs issued by authorized dealer banks without an import license. For imports under the SEM scheme, an importer is required to have a valid import registration certificate either as a commercial importer or industrial consumer or under the SEM scheme. These documents are issued by a licensing office of the Chief Controller of Imports and Exports. Single-country LCAFs are issued for imports under bilateral trade or payments agreements and for imports under tied aid programs. LCAFs are otherwise valid worldwide, except that imports from Israel and South Africa and imports transported on the flag vessels of Israel and South Africa are prohibited. For shipment of imports in cash and under the SEM scheme, the validity of LCAFs is as follows: (1) 11 months from the date of issuance/registration of an LCAF for commercial items and industrial raw and packing materials; and (2) 17 months from the date of issuance/registration of an LCAF for the importation of capital machinery and spare parts. If these documents lapse for reasons beyond the control of the importer, they may be revalidated by the licensing authority. Authorized dealers may effect remittances within 12 months of the date of registration of an LCAF for the importation of commercial items and industrial raw materials and packing materials and within 18 months of the date of registration of an LCAF for the importation of capital machinery and spare parts. If the importers require additional time to make remittances, then authorized dealers may allow such remittances only under the SEM scheme.

Payment against imports is generally permissible only under cover of irrevocable letters of credit. Under the SEM scheme, a provision exists for the importation of machinery and equipment against letters of credit opened on a deferred-payment basis for up to 360 days. Raw materials may be imported under letters of credit on a deferred-payment basis up to 180 days. Recognized export-oriented readymade garments and specialized textile and hosiery units operating under the bonded warehouse system may effect imports of their raw and packing materials by opening letters of credit on a deferred-payment basis up to 180 days against export letters of credit received by them. Public sector importers may import on a cash-against-documents basis, subject to authorization from Bangladesh Bank.

Imports of specified raw materials and packing materials by industrial consumers are governed by an entitlement system, based on the requirements for various industries during each import program period established by the Board of Investment. Firms in the industrial sector are given an entitlement to import specified raw materials and packing materials, and letter of credit authorization forms are issued on the basis of the entitlement. The entitlement system does not apply to raw materials and packing materials that are freely importable—but does apply to items appearing on the controlled list—under the SEM scheme. Separately, industrial consumers may be issued with LCAFs for parts and accessories of machinery. Goods imported against LCAFs issued to industrial consumers must be used in the industry concerned and must not be sold or transferred without prior approval.

Authorized dealers may establish letters of credit on an f.o.b. basis without the approval of Bangladesh Bank, subject to the following conditions: (1) cost of goods, cost of freight, and insurance will be accommodated within the amount recorded in the LCAF issued in favor of the importer; (2) cost of freight will be paid out of the LCAF value locally in local currency; and (3) other directives of the IPO will be duly complied with. Foreign exchange for authorized imports is provided automatically by authorized dealers when payments are due. Advance payments for imports require approval from Bangladesh Bank, which is normally given only for specialized or capital goods.

Payments for Invisibles

Payments for invisibles connected with authorized trade transactions are generally not restricted. Payments for most other invisibles require prior approval and are restricted. Applications for foreign exchange for business travel, medical treatment, and education abroad are considered on an individual basis. The allowance for personal travel by resident Bangladesh nationals to countries other than Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka is $1,800 a year, subject to a maximum of $1,200 a visit; the allowance for travel to these seven countries is $400 a person a year.

Exporters with export earnings exceeding Tk 100 million during the preceding year are entitled to a maximum business travel allowance of $40,000 a year. Exporters with export earnings exceeding Tk 50 million but not exceeding Tk 100 million in the preceding year are entitled to an allowance equivalent to 2 percent of the f.o.b. value of their exports, subject to a maximum of $30,000 a year. Those with export earnings exceeding Tk 2.5 million but not exceeding Tk 50 million in the preceding year are also entitled to an allowance equivalent to 2 percent of the f.o.b. value of their exports, subject to a minimum of $6,000 and a maximum of $20,000 a year; exporters with a performance of up to Tk 2.5 million in the preceding year are allowed up to $6,000 a year. New exporters are allowed up to a maximum of $4,000 a year. Export houses are entitled to business travel allowances equivalent to 2.5 percent of their preceding year’s export earnings, subject to a minimum of $40,000 and a maximum of $150,000. All business travel allowances must be purchased at the SEM rate. For medical treatment, the amount granted is the actual requirement, which must be purchased at the SEM rate, subject to the approval of Bangladesh Bank. A Bangladesh national flying abroad is allowed to purchase foreign exchange from a foreign currency account under the WES, subject to certain limits (see section on Resident and Nonresident Accounts, above). Foreign nationals working in Bangladesh must obtain approval before making remittances abroad for family maintenance; such approval is usually granted for up to 50 percent of net salaries if the Government has approved the terms of employment.

Nonresident travelers may take out the foreign currency and traveler’s checks they declared on entry less the amount sold to authorized dealers or money changers; they may also, without obtaining the approval of Bangladesh Bank, reconvert taka notes up to Tk 6,000 into convertible foreign currencies at the time of their departure; if they made no declaration, they may reconvert up to $150. Resident travelers may take out foreign currency and traveler’s checks up to the amount of any travel allocation they have been granted. A Bangladeshi or a foreign national may take out Tk 100 in domestic currency; otherwise, the exportation of Bangladesh currency notes and coins is prohibited.

Authorized dealers are allowed to remit dividends to nonresident shareholders without the prior approval of Bangladesh Bank, on receipt of applications from the companies concerned, which are supported by an audited balance sheet and profit and loss account, a board resolution declaring dividends out of profit derived from the normal business activities of the company, and an auditor’s certificate that deduction/provision sufficient to cover tax liabilities has been made. Authorized dealers may remit profits of foreign firms operating in Bangladesh other than banks, insurance companies, financial institutions, shipping companies, and airlines to their head office on receipt of applications supported by documentation. These remittances are, however, subject to ex post checking by Bangladesh Bank. Applications for remittances of profits to head offices by the latter group of foreign firms are, however, subject to prior approval from Bangladesh Bank.

Exports and Export Proceeds

Exports to Israel and South Africa are prohibited. The proceeds from exports must be received within four months of shipment. Exports of jute and jute goods must be registered with Bangladesh Bank. Since July 1, 1989, cash assistance in lieu of XPB has been granted for exports of jute goods at the following rates (based on f.o.b. value): (1) 10 percent for sacking; (2) 15 percent for hessian and yarn; and (3) 20 percent for carpet backing and other nontraditional jute goods. For shipments made between July 1989 and June 1990, cash assistance was granted (1) at 5–20 percent of the net f.o.b. value of exports for frozen fish and leather products; (2) at 10 percent of gross value added of exports for nonquota items of garments; and (3) at 10–20 percent of net value added of local sales to exporters of garments for sales of locally produced yarn, hosiery, and handloom fabrics. Cash assistance on exports effected after March 5, 1990 is calculated on the basis of the exchange rate prevailing on March 4, 1990. (See section on Exchange Arrangement, above, regarding the XPB scheme.)

Joint ventures, other than in the garment industry, located in export processing zones (EPZs) are allowed to retain 70 percent of their export earnings in a foreign currency deposit account and convert the remaining 30 percent at the SEM rate and keep them in a bank account in domestic currency. Balances on domestic currency bank accounts may be converted into foreign exchange at the SEM rate for payments of imported goods. The retention rate for the garment industry is 75 percent.

Proceeds from Invisibles

All proceeds from invisibles must be surrendered, but Bangladesh nationals working abroad may retain their earnings in foreign currency accounts or in nonresident foreign currency deposit accounts. Unless specifically exempted by Bangladesh Bank, all Bangladesh nationals who are resident in Bangladesh must surrender any foreign exchange coming into their possession, whether held in Bangladesh or abroad, to an authorized dealer within one month of the date of acquisition.

Foreign nationals residing in Bangladesh continuously for more than six months are required to surrender within one month of the date of acquisition any foreign exchange representing their earnings in respect of business conducted in Bangladesh or services rendered while in Bangladesh. Foreign exchange held abroad or in Bangladesh by foreign diplomats and by foreign nationals employed in embassies and missions of foreign countries in Bangladesh is, however, exempt from this requirement.

The importation of Bangladesh currency notes and coins exceeding Tk 100 is prohibited. Foreign currency traveler’s checks and foreign currency notes may be brought in by nonresident travelers without limit, provided that the total amount brought in is declared to the customs authorities upon arrival. Foreign currency notes may be brought in without limit by any person, provided that the total amount brought in is declared upon arrival. No declaration is required for the importation of foreign exchange not exceeding $2,500 by any person.

Capital

All outward transfers of capital require approval, which is not normally granted in respect of resident-owned capital. Inward capital transfers also require approval. Movable and immovable assets, including foreign exchange, owned in any country other than Bangladesh must be declared to Bangladesh Bank by resident Bangladesh nationals. There is no restriction on the importation of securities into Bangladesh. The issuing and transfer of shares in favor of nonresidents against foreign investment are allowed without the prior permission of Bangladesh Bank subject to fulfillment of prescribed procedures. The transfer of Bangladesh shares and securities from one nonresident holder to another nonresident holder also does not require prior approval from Bangladesh Bank. Nonresident persons/institutions, including nonresident Bangladeshis, may buy Bangladesh shares and securities through stock exchanges in Bangladesh against freely convertible foreign currency remitted from abroad through the banking channels. Proceeds from sales and dividends earned on the shares/securities bought in this manner may be remitted abroad in freely convertible currency.

Authorized dealers may obtain short-term loans and overdrafts from overseas branches and correspondents for a period not exceeding seven days at a time. Private sector industrial units in Bangladesh may borrow funds from abroad with the approval of the Board of Investment. Borrowing by nonresident-owned or controlled enterprises and lending by authorized dealers in local currency against overseas guarantees or collateral outside Bangladesh also require approval. They may grant, without reference to Bangladesh Bank, an unlimited amount of loans in domestic currency to foreign-owned manufacturing companies located in Bangladesh according to the banking norms. Authorized dealers may also approve loans, overdrafts, or credit facilities against goods intended for exportation from Bangladesh to companies controlled by persons resident outside Bangladesh. Authorized dealers must obtain approval before making any loans in foreign currencies to residents or nonresidents, whether secured or unsecured. They are not normally permitted to hold short-term foreign assets other than small working balances.

Foreign private investment is governed by the Foreign Private Investment (Promotion and Protection) Act of 1980, and is permitted in collaboration with both the Government and private entrepreneurs. The act provides for the protection and equitable treatment of foreign private investment, indemnification, protection against expropriation and nationalization, and guarantee for repatriation of investment. In the private sector, however, foreign participation is limited to those industries where technical know-how is not locally available, where the technology involved is very complicated, or where capital outlay is high, and to industries that are either based on local raw materials or that are wholly export-oriented.

For a new investment, foreign investors are generally required to provide as equity capital the entire amount of the project’s foreign exchange component. There is no ceiling on private investment, but investments above Tk 100 million need special approval. Tax holidays are granted for periods of up to nine years, depending on location. All investments in which the foreign equity portion exceeds 49 percent require the approval of the Investment Board. Nonresidents must also obtain the permission of Bangladesh Bank to continue to operate or to establish an office or branch in Bangladesh for the purpose of trading, or for commercial or industrial activities. Dividends on foreign capital may be remitted freely after payment of taxes.

Gold

The importation and exportation of gold and silver in any form are prohibited without special permission, which is not normally granted. Exports of gold are allowed only in jewelry form under the Jewelry Export Scheme. There are no restrictions on the internal sale, purchase, or possession of gold or silver ornaments (including coins) and jewelry, but there is a prohibition on the holding of gold and silver in all other forms except by licensed industrialists or dentists.

Changes During 1991

Exchange Arrangement

February 27. The external value of the taka has been adjusted on several occasions since early July 1991, from Tk 35.79 per US$1 at the end of June 1991 to Tk 38.58 per US$1 on December 31, 1991; the secondary exchange market rate (SEM) changed from Tk 36.505 per US$1 to Tk 38.725 per US$1. As a result, the difference between the official and the SEM rates declined to 0.38 percent from 2 percent.

Prescription of Currency

January 3. A special trading agreement between Elite International Bangladesh and Eisner, Austria was signed. The agreement would be effective until January 2, 1992.

March 27. A special trading agreement between the Trading Corporation of Bangladesh (TCB) and Unitrac, Switzerland was signed. The agreement would be effective until March 26, 1992.

Resident and Nonresident Accounts

June 15. The time limit for maintaining NFCD accounts by Bangladesh nationals on their permanent return to Bangladesh was increased to five years from one year; Bangladesh Bank may consider requests for further extension of the time limit in cases of necessity. These returning Bangladesh nationals may maintain foreign currency accounts/NFCD accounts/education foreign currency accounts within six months from the date of their return with foreign exchange they brought in with them provided they did not maintain foreign currency accounts during their stay abroad.

June 15. Resident Bangladeshis were allowed to open and maintain foreign currency accounts with foreign exchange brought into Bangladesh at the time of their return from travel abroad. Amounts that are declared and amounts up to $2,500 that are not declared to the Customs Authority would be allowed to be credited to these accounts. Crediting of proceeds from exports of goods and services or commissions earned on businesses in Bangladesh to these accounts would not be allowed. These accounts may be maintained for up to five years from the date of deposit. Interest payments would be allowed on a prescribed minimum balance.

Imports and Import Payments

February 19. The advance deposit requirement for commercial imports was lowered to 25 percent from 50 percent.

April 12. The advance deposit requirement for commercial imports was lowered to 20 percent from 25 percent.

October 2. The advance deposit requirement for commercial imports was lowered to 10 percent from 20 percent.

November 30. The 10 percent advance deposit requirement for commercial imports was abolished.

Payments for Invisibles

June 15. The foreign exchange allowance for travel by Bangladesh nationals to countries other than Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka was increased to $1,800 a person a year, subject to a maximum of $1,200 a visit. The allowance for travel to the above seven countries was increased to $400 a person a year (the same levels as those that existed before August 20, 1990, when the respective limits were reduced to $1,200, $500, and $300).

Proceeds from Invisibles

June 15. The upper limit on foreign exchange that may be brought into Bangladesh without declaration at the time of arrival was increased to $2,500 a person, irrespective of the resident status of the person.

Capital

February 26. The upper limit on borrowing by foreign-owned and -controlled manufacturing companies incorporated in Bangladesh on the domestic capital market was removed.

June 15. (1) The requirement to obtain prior permission from Bangladesh Bank to issue and transfer shares in favor of nonresidents against foreign investment in industrial ventures in Bangladesh was waived, except for the requirement to meet certain procedural formalities; (2) the requirement to obtain prior permission from Bangladesh Bank to transfer Bangladesh shares and securities from one nonresident holder to another nonresident was waived; (3) purchases of Bangladesh shares and securities by nonresidents, including nonresident Bangladeshis, in stock exchange in Bangladesh were allowed, subject to meeting certain procedural requirements (transfers abroad of dividends from such shares and securities were also permitted); (4) industrial units in the private sector were permitted to borrow abroad on commercial terms with the approval of the Board of Investment; and (5) the requirement to obtain prior permission from Bangladesh Bank to remit profits earned by nonbank and nonfinancial foreign firms operating in Bangladesh was waived, subject to ex post checking of remittance records.

October 26. The restrictions on remittances of profits by tea companies were removed.

Barbados

(Position on December 31, 1991)

Exchange Arrangement

The currency of Barbados is the Barbados Dollar, which is pegged to the U.S. dollar, the intervention currency, at BDS$2 per US$1. On December 31, 1991, the official buying and selling rates for the U.S. dollar were BDS$1.9975 and BDS$2.0350, respectively, per US$1. Buying and selling rates for the Canadian dollar, the deutsche mark, and the pound sterling are also officially quoted. These rates include commission charges of 0.125 percent buying and 1.75 percent selling, against the U.S. dollar, and 0.1875 percent buying and 1.8125 percent selling, against the Canadian dollar, the deutsche mark, and the pound sterling. On December 31, 1991, the buying and selling rates of the Central Bank of Barbados for the Canadian dollar were BDS$1.7236 and BDS$1.7582, respectively, per Can$1; those for the deutsche mark were BDS$1.3137 and BDS$1.3400, respectively, per DM 1; and those for the pound sterling were BDS$3.7265 and BDS$3.8012, respectively, per £ stg. 1.

Under clearing arrangements with regional monetary authorities, the Central Bank sells currencies of the Caribbean Common Market (Caricom) countries1 at fixed rates (including a commission of 0.1875 percent) but purchases only Eastern Caribbean dollar notes. The rate applied mutually for the purchase of currency notes is the parity rate between each pair of currencies determined on the basis of the U.S. dollar rate. The Central Bank regulates the commission that the commercial banks may charge in dealings with their customers in Caricom currencies. Purchases of foreign exchange for private sector remittances abroad (except for remittances for payment of imports, travel allowances, education, and nontrade payments up to BDS$500 and certain other specified items) are subject to a levy collected in the approval process by the Central Bank at the rate of 1 percent of the value of the transaction.

The Central Bank periodically obtains forward cover in the international foreign exchange market to cover or hedge its own or the Central Government’s exchange risks associated with foreign exchange loans that are not denominated in U.S. dollars. Commercial banks are allowed to obtain forward cover in the international markets. The Central Bank and commercial banks enter into swap transactions in U.S. dollars, while commercial banks may freely switch between nonregional currencies.

Administration of Control

Exchange control applies to all countries and is administered by the Central Bank. The Central Bank delegates to authorized dealers the authority to approve normal import payments and the allocation of foreign exchange for certain other current payments and for cash gifts. The exchange control system stipulates that foreign exchange should normally be surrendered to an authorized dealer. The normal exchange control directives do not apply to transactions between residents and persons who are residents of South Africa. Trade controls are administered by the Ministry of Trade, Industry, and Commerce.

Prescription of Currency

Settlements with residents of countries outside the Caricom area other than South Africa may be made in any foreign currency,2 or through an external account in Barbados dollars. Settlements with residents of Caricom countries, other than Jamaica, must be made either through external accounts (in Barbados dollars) or in the currency of the Caricom country concerned, except that commercial banks may issue Caricom traveler’s checks denominated in Trinidad and Tobago dollars to Barbadian residents traveling to other Caricom countries, within the approved limits for travel allowances. With effect from September 21, 1991, the Bank of Jamaica abolished exchange control in Jamaica; as a result, settlements with residents of Jamaica are made in U.S. dollars.

Resident and Nonresident Accounts

With the permission of the Central Bank, authorized dealers may maintain in foreign currencies foreign currency accounts in the names of residents of Barbados and of other countries. Approval for opening these accounts 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 under the conditions of approval established at the time the account was opened. Other credits and debits require individual approval.

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

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

Imports and Import Payments

All imports from South Africa are prohibited, and certain imports originating in non-Caricom countries require individual licenses. Import-licensing requirements and quantitative restrictions are the chief tools of Barbadian external commercial policy. The list of products subject to licensing is extensive. However, not all goods that are subject to import licensing are subject to quantitative restriction. Some items on the import-licensing list may be freely imported throughout the year, while some others are subject to temporary restriction (particularly agricultural products, which tend to be subject to seasonal restriction). Certain imports are prohibited; these include various foodstuffs, blue jeans, and beer not produced within the Caricom area. There is also a “negative list” of certain garments, whose importation is prohibited if the product has less than a minimum c.i.f. value. Individual licenses are also required for imports of commodities that are subject to the provisions of the Oils and Fats Agreement between the governments of Barbados, Dominica, Grenada, Guyana, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago, whether the goods are being imported from Caricom countries or from elsewhere. Special licensing arrangements have been made for the regulation of trade between Barbados and other Caricom countries in 22 agricultural commodities.

Payments for authorized imports are permitted upon application and submission of documentary evidence (invoices and customs warrants) to authorized dealers; payments for imports of crude oil and its derivatives are subject to the prior approval of the Central Bank. Authorized dealers may release foreign currency for advance payments for imports into Barbados up to the equivalent of BD$20,000 (c.i.f.). Payments over BD$20,000 require the prior approval of the Central Bank.

Payments for Invisibles

Payments for invisibles require exchange control approval. Except for transactions involving residents of South Africa, payments for all commercial transactions are permitted freely when the application is supported by appropriate documentary evidence.

Authority has been delegated to authorized dealers to provide basic allocations of foreign exchange for certain payments of a personal nature and for sundry payments. These include foreign travel (for which up to BDS$2,000 a person a calendar year may be allocated for private travel inside or outside the Caricom area; and BDS$500 a day, up to BDS$10,000 a person a calendar year, for business travel inside the Caricom area, and BDS$15,000 outside the Caricom area), expenses for education abroad (BDS$20,000 a person a year), remittances of cash gifts not exceeding BDS$500 a donor a year, subscriptions to newspapers and magazines (BD$500 a person a year), income tax refunds, official payments, and life insurance premiums. 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 appears to be involved. The cost of transportation to any destination may be settled in domestic currency and is not deducted from the travel allocation.

Any person traveling to a destination outside Barbados may take out foreign currency notes and coins up to the value of BDS$500 and Barbados notes up to BDS$200. Nonresident visitors may freely export any foreign currency they previously brought in.

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

All outward capital transfers, including direct investments by residents and the purchase by residents of foreign currency securities and of real estate abroad, require exchange control approval. Certificates of title to foreign currency securities held by residents must be lodged with an authorized depository in Barbados, and earnings on these securities must be repatriated and surrendered to an authorized dealer.

Personal capital transfers, such as inheritances due to nonresidents, require exchange control approval. Transfers in respect of inheritances are restricted to BDS$20,000 a year for each nonresident beneficiary. Dowries in the form of settlements and cash gifts may be transferred to nonresidents under delegated authority, normally up to BDS$500 a donor a year. Emigrating Barbadian nationals are granted settling-in allowances from their declared assets at the rate of BDS$20,000 a family unit a year. The Central Bank also considers applications from foreign nationals who have resided in Barbados and are proceeding to take up permanent residence abroad, provided that they declare their assets held in Barbados.

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

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

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

A 6 percent tax is levied on portfolio investments of pension funds with foreign companies unregistered with the Barbados Supervisor of Insurance.

Gold

Gold coins with face values of BDS$100, BDS$150, BDS$200, and BDS$500 are legal tender and are in limited circulation. Residents who are private persons are permitted to acquire and hold gold coins for numismatic purposes only. Otherwise, any gold acquired in Barbados must be surrendered to an authorized dealer, unless exchange control approval is obtained for its retention. Residents other than the monetary authorities, authorized dealers, and industrial users are not permitted to hold or acquire gold in any form other than jewelry or coins for numismatic purposes. The importation of gold by residents is permitted for industrial purposes and is subject to customs duties and charges. Licenses to import gold are issued by the Ministry of Trade, Industry, and Commerce; no license is required to export gold, but exchange control permission is required to do so.

Changes During 1991

Imports and Import Payments

July 3. The list of merchandise imports for which authorized dealers are allowed to sell foreign exchange for advance payments was shortened. The limit of BDS$20,000 (c.i.f. basis), however, remained unchanged.

Belgium and Luxembourg

(Position on December 31, 1991)

Exchange Arrangement

The currency of Belgium is the Belgian Franc, and the currency of Luxembourg is the Luxembourg Franc. Belgium and Luxembourg are linked in a monetary association, and the Luxembourg franc is at par with the Belgian franc. Belgium and Luxembourg participate with Denmark, France, Germany, Ireland, Italy, the Netherlands, Portugal, Spain, and the United Kingdom in the exchange rate and intervention mechanism (ERM) of the European Monetary System (EMS).1 In accordance with this agreement, Belgium and Luxembourg maintain the spot exchange rates between their currencies and the currencies of the other participants within margins of 2.25 percent (in the case of the Portuguese escudo, the pound sterling, and the Spanish peseta, 6 percent) above or below the cross rates derived from the central rates expressed in European Currency Units (ECUs).

The agreement implies that the National Bank of Belgium stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1991, these rates were as follows:

Specified Intervention

Rates per:
Belgian Francs or

Luxembourg Francs
Upper limitLower limit
100Danish kroner553.000528.700
100deutsche mark2,109.5002,016.550
100French francs628.970601.295
1Irish pound56.511554.0250
1,000Italian lire28.193026.9530
100Netherlands guilders1,872.1501,789.850
1,000Portuguese escudos1251.900223.435
1pound sterling64.605057.3035
100Spanish pesetas33.693029.8850

Effective April 6, 1992.

Effective April 6, 1992.

The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits. However, in order to ensure a proper functioning of the system, they intervene in concert to smooth out fluctuations in exchange rates, the intervention currencies being each other’s and the U.S. dollar.

There are no taxes or subsidies on purchases or sales of foreign exchange. On December 31, 1991, the indicative middle rate for the U.S. dollar was BF 31.27 per US$1.

Banks are allowed to engage in spot and forward exchange transactions in any currency, and they may deal among themselves and with residents and nonresidents in foreign notes and coins.

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

Administration of Control

There are no exchange controls. The Belgium-Luxembourg Administrative Commission has the authority to license trade transactions; it determines import and export policy but has delegated authority to issue import and export licenses to the licensing offices of the Belgium-Luxembourg Economic Union (BLEU), one of which is located in each country. Bank supervision in Belgium is exercised by the Banking and Finance Commission, and in Luxembourg, by the Luxembourg Monetary Institute (LMI).

For purposes of compiling balance of payments statistics, residents are required to transmit to the Belgium-Luxembourg Exchange Institute (BLEI) the following information on all of their professional transactions with foreign countries: amount, currency, economic nature, and country of residence of the foreign party in the transaction. For foreign payments executed or received through a bank in Belgium or Luxembourg, residents provide this information to the BLEI through their banks; for all other professional foreign transactions, residents report to the BLEI directly on a monthly basis.

Prescription of Currency

No prescription of currency requirements are in force.

Imports and Import Payments

Payments for imports may be made freely. Individual licenses are required for (1) certain imports from Albania, Bulgaria, China, Czechoslovakia, Hungary, the Democratic People’s Republic of Korea, Mongolia, Poland, Romania, the former U.S.S.R., and Viet Nam;2 and (2) certain specified imports from all other countries.3 Products for which individual licenses are required include many textile and steel products, certain agricultural products and foodstuffs, coal and petroleum products, diamonds, semiprocessed gold, and weapons. All other commodities are free of license. Many commodities subject to individual licensing are also admitted without quantitative restriction. Along with other European Community (EC) countries, the BLEU applies quotas on a number of textile products from non-EC countries; the BLEU also applies a system of minimum import prices to foreign steel products.

Imports from non-EC countries of most products covered by the Common Agricultural Policy (CAP) of the EC are subject to import levies, which have replaced all previous barriers to imports; common EC regulations are also applied to imports from non-EC countries of most other agricultural and livestock products.

Payments for Invisibles

All payments for invisibles may be made freely. Domestic and foreign bank notes and coins and other means of payment may be exported freely.

Exports and Export Proceeds

Individual licenses are required for exports of specified products, such as weapons, strategic products, and agricultural products. Individual licenses are also required for steel products exported to the United States.4

All other exports are free of license. Foreign exchange proceeds from exports do not have to be surrendered and may be used for all payments.

Proceeds from Invisibles

There are no restrictions on the receipt of payments for services rendered to nonresidents. Domestic and foreign notes and coins and other means of payment may be imported freely.

Capital

Residents and nonresidents may export capital freely. Investments, whether direct or portfolio, may be freely made in the BLEU by nonresidents or abroad by residents. There are no restrictions on transactions in Belgian or Luxembourg franc or foreign currency securities, which may be exported or imported without formality. Banks may freely accept foreign currency deposits from residents or nonresidents.

The prior approval of the Ministry of Finance is required for issues of securities on the Belgian capital market by nonresidents and for public bids by nonresidents for the purchase or exchange of shares issued by Belgian companies.5

Franc-denominated bonds may be issued freely on the Luxembourg capital market. They are reported ex post to the Luxembourg Monetary Institute, mainly for statistical purposes.

Gold

Residents may freely purchase, hold, and sell gold in 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; licenses are required for imports of semiprocessed gold. Settlements of gold may be made freely. Imports and transactions in monetary gold are subject to a value-added tax in Belgium at a rate of 1 percent.

Changes During 1991

No significant changes occurred in the exchange and trade system.

(See Appendix for a summary of trade measures introduced and eliminated on an EC-wide basis during 1991, page 557.)

Belize

(Position on December 31, 1991)

Exchange Arrangement

The currency of Belize is the Belize Dollar, which is pegged to the U.S. dollar, the intervention currency, at a rate of BZ$1 = US$0.50. The buying and selling rates for transactions between the Central Bank of Belize and the commercial banks are BZ$1.9937 and BZ$2.0063 per US$1, respectively. On December 31, 1991, the buying and selling rates in transactions between the banks and members of the public were BZ$1.9825 and BZ$2.0175 per US$1, respectively. The Central Bank quotes daily rates for the Canadian dollar, the pound sterling, and a number of currencies of member countries of Caricom.1 A stamp duty of 1.25 percent is levied on all conversions from the Belize dollar to a foreign currency.

Belize accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on June 14, 1983.

Administration of Control

The Central Bank is responsible for administering exchange control, which is applicable to all countries. Authority covering a wide range of operations is delegated to the commercial banks in their capacity as authorized dealers. Only in exceptional cases or in applications involving substantial amounts is reference made directly to the Central Bank. However, all applications for foreign exchange processed by authorized dealers are regularly forwarded to the Central Bank for audit and record keeping. The Ministry of Commerce and Industry administers trade controls.

Prescription of Currency

The only prescription of currency requirement relates to a specified list of currencies2 in which authorized intermediaries are permitted to deal with the public. Payments to a Caricom member country must be made in the currency of that country.

Nonresident Accounts

The permission of the Central Bank is needed for banks to open external or foreign currency accounts. The Central Bank may also stipulate that sums to be credited or paid to foreign residents be credited to a blocked account.

Imports and Import Payments

Payments for imports require authorization from the Central Bank; in most cases such authorization is delegated to the commercial banks. For reasons of health, standardization, and protection of domestic industries, import licenses from the Ministry of Commerce and Industry are required for a number of goods—mostly food and agricultural products, and certain household and construction products; such licenses are liberally administered. There are no quota limits or other quantitative restrictions for balance of payments reasons. Most imports are subject to a stamp duty of 12 percent of the c.i.f. value; the rate of stamp duty on citrus is 25 percent. Imports by most of the public sector and certain nonprofit entities, imports of an emergency or humanitarian nature, and goods for re-export are exempt from import duties; goods originating from the Caricom area are also exempt.

Payments for Invisibles

There are no restrictions on payments for invisibles. Authorized dealers have the power to provide foreign exchange for such payments within certain limits. The following limits are applied to purchases of foreign exchange: (1) nonbusiness travel by residents, up to BZ$2,500 a person a calendar year; (2) business travel by residents, BZ$500 a day a person, up to BZ$10,000 a year; (3) business or nonbusiness travel by nonresidents, BZ$500 a person a year, except where payment is made from an external account or from proceeds of foreign currency; and (4) gifts, BZ$100 a donor. Requests in excess of these amounts are referred to the Central Bank, which grants all bona fide requests. Foreign exchange is provided for payment of correspondence courses by the authorized dealers when applications are properly documented.

Exports of foreign and domestic bank notes and currency are subject to limits as follows: each traveler may carry domestic bank notes up to BZ$100 and the equivalent of BZ$400 in foreign currency, except that a visitor may take out such notes up to the amount imported. Amounts beyond these limits require the approval of the Central Bank, which is liberally granted when justified.

Exports and Export Proceeds

Export licenses are required for most export products. Export proceeds must be surrendered to authorized dealers not later than six months after the date of shipment, unless directed otherwise by the Central Bank. A small number of items3 are subject to an ad valorem export duty of 5 percent. Reexports and transshipments are subject to a 3 percent customs administration fee.

Proceeds from Invisibles

Foreign currency proceeds from invisibles must be sold to an authorized dealer. Travelers to Belize are free to bring in notes and coins denominated in Belize dollars up to BZ$100 a person, but there are no restrictions on imports of foreign currency. Resident travelers are required to sell their excess holdings of foreign currencies to an authorized dealer upon their return to Belize.

Capital

All capital transfers require the approval of the Central Bank, but control is liberally administered. Direct foreign investment is encouraged and investors benefit from a number of fiscal incentives.

Gold

Residents may not hold gold except with specific authorization from the Central Bank. Gold may be neither imported nor exported without the approval of the Central Bank.

Changes During 1991

Payments for Invisibles

November 1. The limit on foreign exchange education allowance abroad was abolished, and authorized dealers were permitted to provide foreign exchange for correspondence courses when applications are properly documented.

Benin

(Position on December 31, 1991)

Exchange Arrangement

The currency of Benin is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.02. The official buying and selling rate is CFAF 50 per F 1. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris exchange market and the fixed rate between the French franc and the CFA franc. They include a bank commission of 2.5 per mill on transfers to all non-West African Monetary Union (WAMU) countries, which must be surrendered in its entirety to the Treasury. Banks may levy a flat commission of CFAF 100 on intra-WAMU transfers, which they may retain. There are no taxes or subsidies on purchases or sales of foreign exchange. Forward exchange contracts may be arranged, with the prior authorization of the Minister of Finance, for payments for specified imports. The maturity period cannot be extended.

With the exception of those relating to gold and the repatriation of export proceeds, Benin’s exchange control measures do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries but, for purposes of certain controls relating to capital flows, the countries specified in this paragraph are also regarded as foreign countries.

Administration of Control

Exchange control is administered by the Directorate of Monetary and Banking Affairs in the Ministry of Finance, in conjunction with the Directorate of External Commerce in the Ministry of Commerce, Handicrafts, and Tourism. The Ministry of Finance, however, has the main responsibility for drawing up the exchange control regulations, in collaboration with the BCEAO. The BCEAO is authorized to collect, either directly or through banks, financial institutions, the Postal Administration, and notaries public, any information necessary to compile balance of payments statistics. All exchange transactions relating to foreign countries must be carried out by authorized intermediaries. Import licenses for goods from Africa, the Caribbean, and Pacific (ACP) group countries under the Lomé Convention and from member countries of European Community (EC) and Operations Account countries have been abolished. Only imports from countries other than the above-mentioned countries are subject to an import license issued by the Directorate in charge of External Commerce. Exports of diamonds and other precious or semiprecious metals require authorization from the Directorate of External Commerce, upon recommendation by the Directorate of Monetary and Banking Affairs of the Minister of Finance.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since Benin is linked to the French Treasury through an Operations Account, settlements with France (as defined above), Monaco, and other countries linked to the French Treasury through an Operations Account are made in CFA francs, French francs, or the currency of any other Operations Account country. Current payments to or from The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Nigeria, and Sierra Leone are normally made through the West African Clearing House. Settlements with all other countries are usually effected through correspondent banks in France, in any of the currencies of those countries, or in French francs through foreign accounts in francs. Certain settlements with China and specified socialist countries, however, are made through special accounts.2 All settlements with South Africa are prohibited.

Nonresident Accounts

Nonresidents may hold foreign accounts in francs with authorized intermediary banks. The crediting to nonresident accounts of CFA bank notes, French bank notes, or bank notes issued by any other institute of issue that maintains an Operations Account with the French Treasury is not permitted, except for BCEAO bank notes mailed direct to the BCEAO agency in Cotonou by an authorized intermediary bank’s foreign correspondent for credit to a foreign account in francs opened by the latter with an authorized intermediary bank. Foreign accounts in francs may be debited, without prior authorization, with the value of BCEAO bank notes mailed by authorized intermediaries direct to their foreign correspondents.

Imports and Import Payments

All imports originating in or proceeding from South Africa are prohibited. Certain imports, such as narcotics, are prohibited from all sources. Certain agencies have an import monopoly for specified commodities.

Imports of goods originating from the EC, the Operations Account countries, and countries belonging to the ACP group are free of import-licensing requirements. All merchandise imports originating from the other countries are subject to prior authorization from the Directorate of Foreign Trade. Before shipment, goods from all sources are subject to inspection for quality and price.

All imports originating in foreign countries, when valued at more than CFAF 500,000, must be domiciled with an authorized intermediary 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 on the due date of payment if the commodities have already been imported. Import licenses are subject to a tax equivalent to 0.85 percent of the c.i.f. value of corresponding imports.

Payments for Invisibles

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

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the countries linked to the French Treasury through an Operations Account may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a trip for each person (CFAF 87,500 for children under 10 years) for any number of trips a year; any foreign exchange in excess of the equivalent of CFAF 5,000 remaining after return to Benin must be surrendered. For business travel, there is a special allocation of the equivalent of CFAF 20,000 a day, subject to a maximum of CFAF 400,000 a trip. However, with the special authorization of the Minister of Finance, larger allocations may be obtained up to the equivalent of CFAF 250,000 a person a trip for tourist travel and up to the equivalent of CFAF 1,750,000 for business travel.

The transfer of one half of the net salary of a foreigner working in Benin is permitted, subject to authorization from the Directorate of Monetary and Banking Affairs upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Residents traveling to Operations Account countries may take out any amount in BCEAO bank notes, but if proceeding to a country that is not a member of the WAMU, they must declare to customs the amount they take out if it exceeds CFAF 150,000.

Nonresident travelers may take out any unused foreign bank notes and coins up to the amount they declared on entry, subject to adjustment for amounts exchanged for CFA francs or obtained by exchange of foreign currency. Nonresident travelers may take out freely the equivalent of CFAF 25,000 in BCEAO bank notes, French bank notes, or bank notes issued by the countries linked to the French Treasury through an Operations Account; a maximum amount equivalent to CFAF 25,000 in foreign bank notes; and any amount in other foreign means of payment (traveler’s checks, etc.) established abroad and in their name.

Exports and Export Proceeds

All exports to South Africa are prohibited. Exports to all foreign countries, including the Operations Account Area, must be domiciled with an authorized intermediary bank when valued at more than CFAF 500,000. Exports are permitted on the basis of a simple authorization from the Directorate of Foreign Trade. Exports of gold, diamonds, and all other precious metals, however, are subject to prior authorization from the Ministry of Finance, with the exception of articles made of gold with a small gold content, travelers’ personal effects weighing less than 500 grams, and coins (fewer than ten pieces, irrespective of their face value and denomination). Prior authorization for exports of these three product categories is granted by the Directorate of Monetary and Banking Affairs of the Ministry of Finance. Receipts from exports must be collected within 180 days of the arrival of the shipment at its destination. Proceeds must be repatriated to Benin through the BCEAO, and they must be sold to authorized banks within 30 days of the contractual due date.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and countries maintaining Operations Accounts with the French Treasury 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 bank notes 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 bank notes and coins (except gold coins) of countries outside the Operations Account Area; residents bringing in foreign bank notes and foreign currency traveler’s checks in excess of CFAF 5,000 must declare them to customs upon entry and sell them to an authorized intermediary bank within eight days.

Capital

Transfers of capital between Benin and South Africa are prohibited. Capital movements between Benin and France (as defined above), Monaco, and countries linked to the French Treasury through an Operations Account are free of exchange control; most capital transfers to all other countries require prior approval from the Minister of Finance and are restricted, but capital receipts from such countries are permitted freely.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad, over inward foreign direct investment and all outward investment in foreign countries, and over the issuing, advertising, or offering for sale of foreign securities in Benin. Such operations require prior authorization from the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Beninese Government, and (2) shares that are similar to or may be substituted for securities whose issuance or sale in Benin has already been authorized. With the exception of controls over foreign securities, these measures do not apply to France (as defined above), Monaco, member countries of the WAMU, and the countries linked to the French Treasury through an Operations Account. Special controls are also maintained 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 publicity aimed at placing funds abroad or at subscribing to real estate and building operations abroad; these special controls also apply to France (as defined above), Monaco, and countries maintaining Operations Accounts.

All investments abroad by residents of Benin require prior authorization from the Minister of Finance; at least 75 percent of such investments must be financed from foreign borrowing.3 Foreign direct investments in Benin4 must be declared to the Minister before they are made. The Minister may request the postponement of the operations within a period of two months. The full or partial liquidation of either type of investment also requires declaration. Both the making and the liquidation of investments, whether these are Beninese investments abroad or foreign investments in Benin, must be reported to the Minister and to the BCEAO within 20 days of 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 percent of the capital of a company whose shares are quoted on a stock exchange.

Borrowing by residents from nonresidents requires prior authorization from the Minister of Finance. 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 and export-import firms (approved by the Minister of Finance) to finance transit trade, or by any type of firm to finance imports and exports; (3) loans contracted by authorized intermediary 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 of Finance 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 Finance.

The Investment Code (Law No. 90–002 of May 9, 1990) provides for preferential status that may be granted to foreign and domestic investments in industry, mining, fisheries, agriculture, and tourism, when such investments are deemed to contribute to national development. Fiscal benefits are extended to approved investors under two regimes: the preferential and the special regimes. The preferential regime consists of three categories: A, B, and C. Category A applies to small and medium-size enterprises; Category B, to large enterprises; and Category C, to very large enterprises.

Enterprises falling under Category A must have investments valued at between CFAF 20 million and CFAF 500 million and employ at least five permanent Beninese workers. These enterprises are entitled to customs duties and levy exemptions on equipment and materials during the investment period (excluding the local roads and statistical taxes) and exemption from income tax for five to nine years depending on the geographic location of their investment in Benin. Enterprises qualifying for Category B must undertake investments valued in excess of CFAF 500 million (but less than CFAF 3 billion) and employ at least twenty Beninese workers. These enterprises are exempt from virtually all border taxes on imports of equipment and materials for the period the investment is being undertaken, and, for the duration of the investment, they are exempt from export taxes and from taxes on profits. Enterprises qualifying for Category C benefits must undertake investments in excess of CFAF 3 billion. They enjoy the same tax and duty privileges as Category B enterprises. In addition, enterprises in this category are guaranteed stability of tax status for the duration of the agreement.

Enterprises qualifying under the special regime are those with investments valued at between CFAF 5 million and CFAF 20 million and provide services in the health, education, or public works areas. These enterprises benefit from a 75 percent reduction in the applicable border taxes (excluding the local roads and statistical taxes) on imported equipment and materials related to their operations. The modalities of implementing this legislation are set out in Decree No. 91–2 of January 4, 1991.

Gold

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

Changes During 1991

Imports and Import Payments

February 1. A system of inspection of goods imported into Benin was introduced (Decree No. 91–23).

Bhutan

(Position on December 31, 1991)

Exchange Arrangement

The currency of Bhutan is the Ngultrum. Since its introduction in 1974, it has been pegged to the Indian rupee, which also circulates in Bhutan, at a rate of Nu 1 per Rs 1. The rates for currencies other than the Indian rupee are determined on the basis of the prevailing quotations by the Reserve Bank of India for those currencies. If no large transactions are involved, exchange rates for other currencies may be determined on the basis of the most recent quotations by the Reserve Bank of India. No other exchange rates apply to international transactions, and there are no subsidies or taxes on exchange transactions. On December 31, 1991, the buying and selling rates of the ngultrum for the U.S. dollar were Nu 25.515 and Nu 26.230 per US$1, respectively. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

The Ministry of Finance controls external transactions and provides foreign exchange for most current and capital transactions. Beginning from July 26, 1985, substantial powers are delegated by the Ministry of Finance to the Royal Monetary Authority to release foreign exchange (other than Indian rupees) for current transactions. The Royal Monetary Authority is in charge of implementing the surrender requirements for proceeds from merchandise exports and approving the use of foreign exchange for imports.

Prescription of Currency

There are no regulations prescribing the use of specific currencies in external receipts and payments.

Imports and Import Payments

All import payments other than those made in Indian rupees are subject to prior permission from the Royal Monetary Authority, which has discretionary authority to deny foreign exchange for the payment of luxury imports.

Customs duties are levied on imports other than those from India.

Exports and Export Proceeds

There are no export taxes. Exports to countries other than India receive a rebate at one of four rates ranging from 5 percent to 20 percent of the c.i.f. value, with the lowest rate applying to unprocessed primary products and the highest rate applying to processed products. Exports of antiques of Bhutanese origin require approval by the Government. Proceeds of exports in currencies other than the Indian rupee must be surrendered to the Royal Monetary Authority either directly or through the Bank of Bhutan.

Payments for and Proceeds from Invisibles

Most invisible payments other than those made in Indian rupees are subject to approval by the Royal Monetary Authority. All receipts from invisible transactions in currencies other than the Indian rupee must be surrendered to the Royal Monetary Authority.

Capital

All capital transactions are subject to approval by the Ministry of Finance.

Gold

There are no specific regulations on transactions in gold.

Changes During 1991

Exports and Export Proceeds

July 1. The cash subsidy for exports to countries other than India was reduced from 30 percent to four rates ranging from 5 percent to 20 percent, with the lowest rate applying to unprocessed primary products and the highest rate applying to processed products.

Bolivia

(Position on December 31, 1991)

Exchange Arrangement

The currency of Bolivia is the Boliviano (Bs). The official selling rate is determined at an auction held daily by the Central Bank of Bolivia. On December 31, 1991, the official selling rate was Bs 3.75 per US$1. The official exchange rate applies to all foreign exchange operations in Bolivia. The auctions are conducted by the Committee for Exchange and Reserves (Comité de Cambio y Reservas) in the Central Bank. Before each auction, the Committee decides on the amount of foreign exchange to be auctioned and a floor price below which the Central Bank will not accept any bids. This floor price is the official exchange rate. The Central Bank is required to offer in all auctions unitary lots of $5,000 or multiples of this amount; the minimum allowable bid is $5,000. Successful bidders are charged the exchange rate specified in their bid. In general, the spreads between the maximum and minimum bids have been less than 2 percent.

Sales of foreign exchange by the Central Bank to the public are subject to a commission of Bs 0.01 per US$1 over its buying rate. Except for the requirement to surrender the net proceeds from the exportation of goods and services, all banks, exchange houses, companies, and individuals can buy and sell foreign exchange freely. Successful bids channeled through the banking system are voided if the banking institution submitting the bid is not complying with the legal reserve requirement on deposits at the time of the auction. However, banks must maintain a balanced spot position in foreign exchange at all times and sell to the Central Bank any excess balance at the end of each day. All public sector institutions, including the public enterprises, must purchase foreign exchange for imports of goods and services through the Central Bank auction market.

There is a parallel but tolerated exchange market, in which the exchange rate on December 31, 1991 was Bs 3.74 per US$1 buying and Bs 3.76 per US$1 selling. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

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

Administration of Control

The Central Bank is in charge of operating the auction market for foreign exchange. It is also the enforcing agency for export surrender requirements as well as for other exchange control regulations. The Ministry of Finance, together with the Central Bank, is in charge of approving public sector purchases of foreign exchange for debt-service payments. Arrears are maintained with respect to external payments.

Prescription of Currency

There are no prescription of currency requirements. Settlements are usually made in U.S. dollars or other convertible currencies. Payments between Bolivia and Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made through accounts maintained with each other by the Central Bank of Bolivia and the central bank of the country concerned, within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA).

Imports and Import Payments

All goods may be freely imported, with the exception of sugar, edible oil, and wheat flour, which are temporarily subject to licensing requirements, and those controlled for reasons of public health or national security.

Since January 11, 1990, capital goods have been subject to an import tariff of 5 percent.1 The customs tariff rate on all other goods (except books and printed materials on which the rate of 2 percent applies) was lowered on March 28, 1990 to 16 percent from 17 percent. On August 20, 1990, it was further lowered to 10 percent. Licenses with a validity period of 120 days are required for the importation of edible oil. Importers are required to pay an inspection charge of 1.85 percent of the f.o.b. value of imports.

Payments for Invisibles

There are no restrictions on payments for invisibles. Since July 26, 1990, residents traveling by air to neighboring countries have been required to pay a travel tax of Bs 100; the travel tax on travel to other foreign destinations is Bs 150. Public sector purchases of foreign exchange for debt service must be approved by the Ministry of Finance and the Central Bank. Outward remittances of profit are governed by the provisions of Decision Nos. 24 and 80 of the Cartagena Agreement.

Exports and Export Proceeds

All goods may be freely exported. All proceeds from exports of the public and private sectors must be sold to the Central Bank at the official exchange rate within three days of receipt, with the exception of reasonable amounts deducted for foreign exchange expenditures undertaken to effect the export. Exports, other than hydrocarbons, are subject to inspection fees at the following differentiated rates: nontraditional products, 1.55 percent and traditional products, 1.60 percent. Prior to March 15, 1991, exporters of non-traditional products received, at the time of the surrender of foreign exchange receipts, a customs duty rebate certificate (certificado de reintegro arancelario (CRA)) equivalent to 6 percent of the net value of exports as determined by the Central Bank. Effective March 15, 1991, the CRA was replaced by a duty drawback system, under which exporters may apply for reimbursement of actual duties paid by providing all pertinent documentation, or opt for a simplified procedure under which reimbursement is made at the rate of 2 percent or 4 percent of export value, depending on the degree of processing of the products exported. All exports of goods and services must be effected through documentary letters of credit drawn on domestic banks.

Proceeds from Invisibles

Banks, exchange houses, hotels, and travel agencies may retain the proceeds from their foreign exchange purchases from invisible transactions, including those from tourism. They are required, however, to report daily their purchases on account of these transactions.

Capital

Foreign exchange for outward capital transfers by residents or nonresidents can be purchased only from the commercial banks or from the Central Bank. Inward capital transfers may be made freely, but government receipts of transfers and grants and all proceeds of borrowings from foreign public sector agencies must be surrendered to the Central Bank. All foreign credits, including suppliers’ credits, to government agencies and autonomous entities and credits to the private sector with official guarantees are subject to prior authorization by the Ministry of Finance and to control by the Central Bank. Under Supreme Decree No. 19732 of August 11, 1983, financial institutions in Bolivia may make loans in the form of credits denominated in foreign currency for imports of capital goods and inputs for the external sector with resources from international financial institutions, foreign government agencies, or external lines of credit. Under Supreme Decree No. 21060 of August 29, 1985, banks are authorized to conduct foreign trade operations, such as letters of credit, bonds and guarantees, advances and acceptances, loans for required financing with their correspondents abroad, and other operations generally accepted in international banking, in favor of the country’s exporters and importers.

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law. In September 1990, the Investment Law of December 14, 1981 was replaced by another investment law, under which domestic and foreign investors are treated equally (Law No. 1182 on Investment). The law is administered by the National Investment Institute. Investments in petroleum and mining are governed by the Hydrocarbons Law and the Mining Law. Certain foreign investments are subject to Decision Nos. 24 and 103 of the Cartagena Agreement.

Gold

Under Supreme Decree No. 21060 of August 29, 1985, gold may be traded freely, subject to a tax of 1.5 percent.

Changes During 1991

Imports and Import Payments

July 9. The Andean Group Regional Tariff Preference (Preferencia Arancelaria Regional (PAR)) was concluded. The agreement provided for reductions in customs duties applicable to imports from developing countries to the basic rates of 11, 10, and 4 percent, depending on the level of development of the member countries. Some 2,400 items covered by Naladi (Nomenclatura de la Asociación Latino-americana de Integración) were excluded.

Exports and Export Proceeds

March 15. The customs duty rebate certificate for exporters of nontraditional products, equivalent to 6 percent of the net value of exports, was abolished and replaced by a customs duty reimbursement (Gravámen Aduanero Consolidado) at the rates of 4 percent and 2 percent. The system would apply to all products that are subject to customs duties, with certain exceptions (Supreme Decree No. 22753, March 15, 1991).

December 17. Export procedures were simplified with the establishment of SIVEX (Sistema de Ventanilla Unica de Exportatión).

Botswana

(Position on December 31, 1991)

Exchange Arrangement

The currency of Botswana is the Botswana Pula, which is pegged to a basket of currencies consisting of a weight of approximately 60 percent for the South African rand, approximately 30 percent for the SDR, and 10 percent for the Zimbabwe dollar. On December 31, 1991, the closing middle rate for the U.S. dollar, the intervention currency, was P 2.0725 per US$1; on the same date, the rate for the SDR was P 2.9656 per SDR 1. Buying and selling rates for certain other dealing currencies1 are quoted on the basis of their rates against the U.S. dollar in international markets. For information only, middle rates are quoted for certain other currencies.2 There are no taxes or subsidies on purchases or sales of foreign exchange.

External borrowings by parastatals are protected from exchange rate movements under a Foreign Exchange Risk Sharing Scheme. Effective October 1, 1990, however, the scheme ceased to apply to new borrowings undertaken by parastatals after that date. Under the scheme, risks associated with exchange rate fluctuations up to 4 percent are fully borne by the borrower, while risks associated with fluctuations between 4 percent and 15 percent are borne by the borrower and the Government on a 50:50 and 25:75 ratio, respectively. Risk associated with exchange rate fluctuations in excess of 15 percent is fully borne by the Government. The scheme is symmetrical in that the borrower and the Government share any gains from an appreciation in the external value of the pula on the same basis. Forward exchange cover is also offered by the commercial banks. The period for which forward cover may be given in respect of the foreign currency proceeds from the exportation of goods is up to six months, but not less than three months.

Administration of Control

Exchange control is applicable to transactions with all countries. The Minister of Finance and Development Planning has delegated most of the administration of exchange controls to the Bank of Botswana (the central bank). The latter, in turn, has delegated considerable powers to banks appointed as authorized dealers.

Prescription of Currency

Payments to or from residents of foreign countries must normally be made or received in a foreign currency or through a nonresident-held pula account in Botswana. Botswana does not maintain any bilateral payments agreements.

Imports and Import Payments

Botswana is a member of the Southern African Customs Union (SACU) with Lesotho, Namibia, South Africa, and Swaziland, and there are generally no import restrictions on goods moving between the five countries. Import permits are required, however, for most goods imported directly into Botswana from outside the SACU. Certain imported goods, including firearms, ammunition, fresh meat, and some agricultural and horticultural products, require permits regardless of the country of supply. There are no restrictions on payments for authorized imports. Goods of domestic origin may move freely between Botswana and Zimbabwe by virtue of a customs agreement of 1956, provided they meet certain local value-added requirements and are not intended for re-export. Import shipments of less than P 2,500 are exempt from exchange controls.

Applications in respect of forward purchases of foreign currency to cover payment for imports when the contract covers a period exceeding six months must be referred to the Bank of Botswana.

Exports and Export Proceeds

Certain exports are subject to licensing, mainly for revenue reasons. Proceeds from exports must be received in a foreign currency or from a nonresident pula account within six months from the date of exportation. Retention of export proceeds for up to one year to finance certain transactions may be permitted by the Bank of Botswana. A few items, such as precious and semiprecious stones, require permits before they can be exported.

Payments for and Proceeds from Invisibles

Payments to nonresidents for current transactions, although subject to control, are not restricted. Authority to approve a range of current payments within limits (that is, basic exchange allowances) is delegated to commercial banks; applications for amounts exceeding basic exchange allowances must be referred to the Bank of Botswana for prior approval. When the bona fide nature of applications has been established and all other requirements have been met by the applicant, payments are approved. The basic exchange allowance for tourist travel by permanent residents is the equivalent of P 12,000 a calendar year for an adult (P 6,000 for a child). The allowance for business travel by permanent residents is P 600 a day, up to a maximum of P 35,000 a calendar year. The amount of unused foreign currency for travel that a resident can retain for future travel use is the equivalent of P 1,000 in currency or traveler’s checks; any excess amount must be surrendered within two months of the date of return in the case of currency notes and coins, and six months in the case of traveler’s checks. The basic foreign study allowance for permanent residents for incidental expenses other than tuition is P 3,000 a month a person and P 5,000 a family, with a vacation travel allowance of P 2,000 a year. A temporary resident employed on a contractual basis may remit abroad annually, without reference to the Bank of Botswana, P 25,000 or 65 percent of total eligible earnings, whichever is greater; the limit applicable to a self-employed temporary resident is P 50,000. The period during which temporary residents are allowed to remit their earnings abroad is a block of 36 months, or the period of employment, whichever is shorter. Separately, travelers residing in Botswana may take out domestic bank notes and foreign currency in amounts of P 500 and P 1,000, respectively, and may freely bring in any amount of domestic bank notes and coins. Visitors may take out any foreign currency that they brought in with them in addition to a maximum of P 500 in domestic currency.

The Bank of Botswana may authorize the maintenance by residents of foreign currency accounts with banks abroad in cases where there is a proven commercial need for such a facility. The delegated limit up to which authorized dealers may approve transfers of dividends and profits to nonresidents without reference to the Bank of Botswana is P 75,000 a year for each company. Payments in excess of this limit may be authorized by the Bank of Botswana, which grants approval for all bona fide applications for foreign exchange.

Capital

Pension and life assurance funds may invest up to one half of their funds abroad. Applications for investment abroad of other funds are treated on their merits and in light of possible benefits to Botswana. Foreign inward investment in new or existing businesses is generally encouraged. Nonresident-controlled companies (including branches of foreign companies) are permitted to borrow locally to finance working capital requirements only, up to P 300,000. Applications for local finance in excess of P 300,000 by nonresident-controlled companies may be considered by the Bank of Botswana, provided that the resulting debt-equity ratio will not exceed 4:1. Equity is defined as paid-up capital, reserves, and retained earnings. The 4:1 limit may be exceeded if there is evidence that the project will provide a specialist skill to Botswana or will create significant employment. Any external borrowing by a local business must have at least a three-month grace period. Departing temporary residents are entitled to a basic remittable terminal allowance of up to P 25,000.

Permanent residents are eligible for an emigration allowance of up to P 150,000 in addition to household and personal effects whose value does not exceed P 75,000. Applications for remittances in excess of these amounts are dealt with by the Bank of Botswana. Such remittances are normally authorized if the amount is not too large; if the amount is excessive, remittances may be permitted in installments over three years.

Nonresident companies are allowed to invest domestically generated funds in pula as well as those from external sources in any securities issued by the Bank of Botswana.

Changes During 1991

Payments for and Proceeds from Invisibles

December 1. The following changes were introduced: (1) authorized dealers were empowered to approve the temporary residential status of non-citizens who would be employed on a full-time basis by any organization established in Botswana, provided that such persons have not engaged in business in Botswana (previously, this authority was limited to noncitizens to be employed by the Government or parastatal bodies); (2) the period during which temporary residents were allowed to remit their earnings abroad was extended from 1 calendar year to a block of 36 months, or the period of employment, whichever is shorter; (3) the maximum amount of foreign exchange that authorized dealers are allowed to sell to temporary resident contractual workers without reference to the Bank of Botswana was increased from P 25,000, or 50 percent of the total eligible earnings, to P 25,000, or 65 percent of total eligible earnings, whichever is greater, during one remittance period; (4) the amount of foreign exchange that authorized dealers are permitted to sell to self-employed temporary residents as part of their annual remittable allowance out of eligible income without reference to the Bank of Botswana was increased from a maximum of P 25,000 to P 50,000 a year; and (5) authorized dealers were empowered to approve, without reference to the Bank of Botswana, applications for remittance of unutilized balances of remittable allowance of self-employed temporary residents or temporary resident contractual workers provided that applications are submitted within the first two months following the remittance period.

Capital

December 1. Nonresident-controlled companies in Botswana were allowed to invest their funds in pula that were generated in the country as well as those from external sources in any securities issued by the Bank of Botswana.

Changes During 1992

Payments for Invisibles

January 3. The limit of P 75,000 that authorized dealers are allowed to provide for remittances of dividends was abolished.

Brazil

(Position on December 31, 1991)

Exchange Arrangement

The currency of Brazil is the Cruzeiro (Cr$). Since March 16, 1990, Brazil has followed a flexible exchange rate policy under which the cruzeiro floats independently with respect to the U.S. dollar in an interbank exchange market.

Transactions in the exchange market are carried out by the Central Bank of Brazil and by banks, dealers, brokers, and tourist agencies authorized to deal in foreign exchange; the tourist agencies deal only in bank notes and traveler’s checks in a “manual market.” On December 31, 1991, the buying and selling rates quoted by the Central Bank to the public for approved exchange transactions in the interbank exchange market were Cr$1,068.70 and Cr$1,068.80, respectively, per US$1. The same exchange rates apply to “agreement dollars” used for settlements with bilateral agreement countries. Rates for other currencies are based on the U.S. dollar rates in Brazil and the rates for the respective currencies in New York and Europe. Foreign exchange transactions for amounts exceeding US$100,000 are subject to brokerage fees. These fees, which are freely negotiated between parties, are calculated on a sliding scale and result in effective rates of up to 3/16 of 1 percent on either side of the rates.

A different effective rate arises, on the selling side, from the application of a financial transactions tax (imposto sobre operações de crédito, câmbio e seguro, e sobre operações relativas a títulos e valores mobiliarios (IOF)) of 25 percent to purchases of foreign exchange for imports of selected services. Different effective rates arise, on the buying side, from the operation of the manual market in which the exchange rate for receipts from tourism is freely determined by participants in the market.

Global limits are fixed for the authorized banks’ sold positions in foreign exchange up to US$5 million; there is no limit on bought positions. Banks that are authorized to operate exclusively in the manual market and tourist agencies are permitted to maintain a bought position but may not maintain a sold position. Authorized banks are required to deposit foreign exchange at the Central Bank overnight in amounts that are needed to eliminate an overbought position exceeding $2 million. The banks are permitted to sell foreign exchange to each other without restriction; such transactions may be carried out either on a spot basis by cable or on a forward basis, and must be executed within 2 working days for spot transactions or not later than 180 days for forward transactions. The commercial banks are permitted to provide forward exchange facilities to exporters, usually for a period of up to 180 days. The banks provide daily forward quotations for foreign currencies, with forward premiums reflecting corresponding interest differentials between the countries concerned. Commercial banks are not subject to daily limits on bought positions in foreign exchange.

Administration of Control

The National Monetary Council (CMN) is responsible for formulating overall foreign exchange policy. In accordance with the guidelines established by the Council, exchange controls, regulations affecting foreign capital, and the management of international reserves are under the jurisdiction of the Central Bank. The Ministry of Economy, Finance, and Planning enforces limits on foreign borrowing by the public sector.

The Ministry of Economy, Finance, and Planning formulates foreign trade policy, and its Department of Foreign Trade (DECEX) implements this policy. The DECEX issues export and import certificates (guias de exportação or declarações de exportação and guias de importação).

The Customs Policy Commission (CPA), established within the Ministry of Economy, Finance, and Planning, is responsible for formulating guidelines for tariff policy. The CPA also decides on changes in customs duties under the provisions of existing legislation. The Ministry of Economy, Finance, and Planning coordinates public sector import policy.

Prescription of Currency

In principle, prescription of currency is related to the country of origin of imports or the country of final destination of exports, unless otherwise prescribed or authorized. Settlements with bilateral payments agreement countries1 are made in clearing dollars through the relevant agreement account. Payments between Brazil and Argentina, Bolivia, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made through accounts maintained with each other by the Central Bank and the other central banks concerned, within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). Settlements with countries with which Brazil has no payments agreements or special payments arrangements are made in U.S. dollars or other freely usable currencies.

Foreign Exchange Accounts

Since October 30, 1986, exporters, importers, national companies with foreign capital participation, and official institutions in the field of education and technological research have been authorized to open foreign exchange accounts in U.S. dollars at the Central Bank. On June 29, 1988, foreign exchange accounts held by exporters and importers began to be gradually abolished, and were abolished in February 1989; however, effective November 16, 1989, they have been allowed to operate such accounts again, although funds on these accounts must be transferred to the Central Bank. The Central Bank is permitted to receive foreign currency deposits from abroad, provided that the holders of such deposits are national or foreign financial institutions. Companies whose foreign capital participation is registered at the Central Bank continue to be authorized to open foreign exchange accounts. These accounts can be credited with funds from new foreign direct investments and reinvestments, reserve profits, consolidated surplus, profit remittances, and returns and gains from capital remittances. Deposits are remunerated at LIBOR, and withdrawals require 90 days’ prior notice, or 30 days in cases of deposits from profits or dividends and sales of investments and participating capital stocks.

Imports and Import Payments

All importers must be registered with DECEX, and goods can be imported only by registered firms or persons. Imports may be grouped into the following three broad categories: (1) imports that are free of requirements to secure prior administrative documentation, including samples without commercial value and certain educational materials; (2) imports that require an import certificate, which is issued by DECEX; and (3) imports that are prohibited (luxury boats with an original sale price of US$3,500 or more, agrochemical products not authorized under Brazilian regulations, certain drugs that are not licensed for security, health, or moral reasons, as well as for reasons of industrial policy).

There is also a limit on the direct importation of consumer goods (and on the purchase on the domestic market of any imported consumer goods) by the public sector (the Government, autonomous agencies, and public enterprises).2

Most imports require the prior approval of DECEX, which is given automatically to registered importers of nonprohibited items.3 DECEX is authorized to levy a processing fee of up to 0.9 percent on the value of import certificates; as a rule, certificates are valid for 60 days, 90 days, or 180 days, depending on the product. For special bonded warehouse importers, DECEX issues clearance certificates for certain groups of commodities. For a number of specified imports, the import certificate may be obtained after the commodity has been landed but before customs clearance.

Certain products require the approval of the Special Secretariat for Information. For some commodities, eligibility for exemption from import duties may be precluded by the existence of satisfactory domestic equivalents (similares nacionais).

Goods imported into the Manaus and Tabatinga free zones are subject to an annual quota. Foreign goods imported into the Manaus free trade zone up to the equivalent of $600 can be transferred to other parts of Brazil (as a passenger’s baggage) free of import taxes.

As a general rule, imports may be cleared through customs before an exchange contract is closed. DECEX may approve applications for the payment of imports of any goods at terms of up to 720 days from the date of shipment without authorization from the Central Bank. External financing at terms in excess of 720 days for imports must be authorized by the Central Bank, which will evaluate them in the light of foreign debt policy. Payment of the amount financed, and the interest thereon, may be made only upon presentation of a certificate of authorization and of the related scheme of payments issued by the Department of Foreign Capital (FIRCE) of the Central Bank.

Spot exchange contracts can be closed if the contract is intended to settle drafts, at sight or on maturity, and once the appropriate shipping documents are presented. Spot exchange contracts must be settled on maturity of the draft; settlement may take place two working days before the maturity date. Exchange contracts for imports financed under letters of credit must be closed on the date of settlement or two working days before the maturity date of the letters of credit.

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 on remittances of all royalties and technical assistance fees (see below). Brazilian residents temporarily staying abroad may purchase foreign exchange up to the equivalent of $1,000 a month in the foreign exchange market. The limit for educational expenses is $4,000, and that for health care expenses is $100,000 plus $150 a day for incidental expenses for the patient and attendants, up to a total number of three. Payments for other current invisibles require approval from the Central Bank’s Exchange Department (DECAM) or FIRCE, which authorize remittances freely, subject to the presentation of supporting documents as evidence that a bona fide current transaction is involved.

Personal expenses connected with travel abroad may be obtained up to $4,000 a person, irrespective of age or destination, in the foreign exchange market, of which $100 is available in cash and the remainder in traveler’s checks. In addition, the use of credit cards up to the limit of $8,000 a month is permitted. A special daily allowance, ranging from $250 to $400, is available for business travel and representation expenses abroad. Applications for purchases of foreign exchange for travel in excess of these limits must be submitted to the Central Bank, which considers each case on its merits. Brazilian officials traveling abroad in the interest of the Government are granted allowances at a rate determined by the Central Bank.

Remittances abroad of income from foreign direct investments and reinvestments and remittances in respect of royalties and technical assistance are governed by Decree No. 55762 of February 17, 1965, which contains the regulations implementing the Foreign Investment Law. Remittances are allowed only when the foreign capital concerned, including reinvestments, and the contracts for patents and trademarks, and for technical, scientific, and administrative assistance are registered at FIRCE in accordance with the established rules (see section on Capital, below). The registration of contracts or deeds for technical assistance or the use of patents or trademarks is subject to approval by the National Institute of Industrial Property. Remittances are normally authorized in the currency of the country of domicile or of the head office of the beneficiaries. 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. Profit remittances are subject to withholding tax on income at a rate of 25 percent or another rate determined under agreements between Brazil and other countries for the purpose of avoiding double taxation. A supplementary income tax applies when profits paid to a foreign investor during a three-year period exceed an average of 12 percent of the foreign currency value of registered capital, at the rates of 40 percent, 50 percent, and 60 percent if the average profit paid is in the ranges of 12–15 percent, 16–25 percent, and above 25 percent, respectively.

Remittances of royalties by a branch or subsidiary established in Brazil to its head office abroad are not permitted when 50 percent or more of the local firm’s voting capital is directly or indirectly held by the foreign principal firm or when the majority of the firm’s capital in Brazil belongs to the recipients of the royalties abroad. Amounts due as royalties for patents or for the use of trademarks, as well as for technical, scientific, and administrative assistance, and the like, may be deducted from the income tax liability to determine the taxable income, up to the limit of 5 percent of gross receipts; amounts exceeding this limit are considered profits. The percentages are the same as those established in Brazil’s tax laws for determining the maximum permissible deductions for such expenses.

Purchasers of foreign exchange for a number of current invisibles are subject to the financial transactions tax (IOF) of 25 percent.

Travelers may freely take out domestic and foreign bank notes. Repurchases of foreign exchange by a foreign traveler are limited to US$100 a trip or to the U.S. dollar equivalent of the amount exchanged into domestic currency during the visit, whichever is smaller.

Exports and Export Proceeds

Exports are free of licensing requirements but require an export certificate issued by DECEX to ensure compliance with exchange and trade regulations. Some exports are free of controls, but exports of several commodities require the prior approval of DECEX, while exports of specified commodities are suspended. Exports requiring approval include those effected through bilateral accounts, exports without exchange cover, exports on consignment, re-exports, commodities for which minimum export prices are fixed by DECEX, and exports requiring prior authorization from government agencies.

The foreign exchange proceeds from all exports may be sold in the foreign exchange market. Foreign exchange contracts covering transactions may be closed either before the shipment of goods or within 10 working days of shipment. Export proceeds must be surrendered to the Central Bank within 45 days of shipment. The exportation of hides of wild animals in any form is suspended.

Proceeds from Invisibles

Exchange proceeds from current invisibles must be sold through the authorized banks at the prevailing market rate. Traveler’s checks and foreign bank notes are sold in the manual market. Travelers may freely bring in domestic and foreign currency notes.

Capital

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

Foreign capital other than capital invested in Brazilian securities is classified, for purposes of registration, as direct investments or loans, whether imported in the form of money or of goods, and it includes reinvested profits from foreign capital. Direct investment is defined as that foreign capital that 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 is considered to be a loan. Any loan obtained to purchase capital goods abroad, whether contracted by the manufacturer himself or by a third party, is considered to be financing (mostly suppliers’ credit).

Persons residing abroad may make portfolio investments in Brazilian commercial and industrial securities indirectly by acquiring shares in a Brazilian “investment company” quoted on Brazilian stock exchanges. Such capital is subject to registration with the Central Bank and must remain in the country for at least three months. The minimum participation in investment companies by foreign firms or individuals is $1,000. Portfolio investments are exempt from the capital gains tax. Portfolio investments may also be made through the purchase of quotas of the “Investment Fund—Foreign Capital.” The minimum participation in this fund is $5,000, and the money must stay in the country for at least three months. Funds and other collective investment entities established abroad may maintain, in Brazil, portfolios of bonds and other securities, once their constitution and administration have been approved by the Central Bank and the securities and exchange commission. On May 31, the Government liberalized the stock markets to foreign institutional investors by exempting profits from the income taxes but subjecting them to a 15 percent tax that would be collected at the time of remittance abroad. On June 6, the issuance of debentures that are convertible into stocks in domestic enterprises was authorized. On July 1, a facility for externally funded nonprofit organizations to undertake debt-for-nature swaps was introduced, with an initial limit on the total amount of $100 million.

For financial imports and for investments made in the form of goods, the registration is in the currency of the country of domicile of the creditor or investor (or of its head office) or, in special circumstances, in the currency of the country of origin of the goods or of the credit. To register loans that are made in foreign currency, it is necessary to certify that the interest rate corresponds to that prevailing in the original market of the loan, that the amortization schedule is not disproportionately heavy in the early stages of repayment, and, in the case of import-financing loans, that the prices of the imported goods correspond to the prices of comparable goods in the country of origin.

Capital entering Brazil is registered in foreign currency. Reinvestments are defined as profits of companies established in Brazil and accruing to persons or companies resident abroad when they have been reinvested in the same companies that produced them or in another sector of the Brazilian economy. The registration of reinvested profits is made simultaneously in Brazilian currency and in the currency of the country to which the profits could have been remitted. The conversion is calculated at the average exchange rate prevailing between the date on which the profits appeared on the balance sheet of a company and the date of their reinvestment. A progressive supplementary income tax is levied on distributions of profits and dividends to nonresidents in excess of 12 percent of registered capital and reinvestments over a three-year period; the tax is applied whether or not the profits are remitted abroad, but reinvested earnings are exempt.

Special regulations govern borrowing abroad. Under National Monetary Council Resolution No. 63, as amended, private, commercial, investment, and development banks, and the Banco Nacional de Desenvolvimento Econômico e Social may be authorized to take up foreign currency credits abroad for domestic relending for purposes of financing working capital. Safeguards against excessive use of such credits include limitations on the foreign obligations that each bank may assume (related to the terms of the credit and the size of the bank) and the provision that the ultimate borrower must agree to bear the exchange risk. Effective July 31, 1990, certain financial institutions are authorized to obtain resources from abroad through the issue of commercial papers. On March 1, Brazilian banks located abroad were allowed to issue medium- and long-term certificates of deposit. On June 1, exporters were allowed to issue medium-term debt instruments that are secured with future export receipts. All other financial loans in foreign currency are effected under the general provisions of the Foreign Investment Law (Law No. 4131). Loans under this law also require prior central bank authorization, but the Central Bank does not undertake to provide specific exchange cover for them. Loans under Resolution No. 63, as well as those under Law No. 4131, must have a minimum term of one year, but no maximum term is set. Foreign loans are subject to mandatory deposit at the Central Bank. In the case of private enterprises, the deposit applies to 75 percent of the loan proceeds converted into cruzeiros, and it is released as follows: one third after 60 days from the deposit date, one third after 90 days, and the balance after 120 days; for public enterprises, the deposit applies to 100 percent of the loan proceeds converted into cruzeiros and is released as follows: 20 percent after 150 days from the deposit date, 40 percent after 180 days, and the balance after 210 days.

In addition to these mandatory deposit regulations, the Central Bank authorizes voluntary deposits at the Central Bank by financial and nonfinancial institutions of the outstanding balances of their foreign loans; these deposits may be released only on the maturity dates for payment of principal, interest, and commissions. For as long as the deposit remains with the Central Bank, the Central Bank covers all costs on these loans, including the exchange cost.

Under a program for the management of external debt, the National Monetary Council imposes quantitative limits on the amount of financial loans for which authorization may be given by the Central Bank. Loans are authorized only if maturities conform to minimum requirements established from time to time by the Central Bank, which permits the total of loans outstanding to rise only to the extent that the servicing commitments on Brazil’s total external indebtedness do not depart from the guidelines set by the National Monetary Council. As of the end of 1989, the Central Bank’s minimum acceptable maturity was set at seven years. However, provided that the full amount of the foreign exchange remains committed to Brazil for the minimum specified maturity, loans to the final borrower in Brazil, as well as loans to banks under Resolution No. 63, may be made on terms shorter than the final maturity of the debt abroad, and these funds may subsequently be re-lent to the same or to a second borrower. Under the provisions of debt-rescheduling agreements, a similar mechanism applies to the foreign exchange equivalent of affected principal rescheduled with foreign commercial banks in 1989, subject to yearly quantitative limits.

Transfers of proceeds from sales of property and inheritance are permitted up to the limit of $300,000 or its equivalent in other currencies, provided that they are made through authorized dealers with supporting documentation.

Outward capital transfers not mentioned above require authorization from DECAM and FIRCE, which consider applications on their merits. Approved exchange transactions involving outward transfers of private capital are effected through authorized banks at the prevailing official market rate.

On January 1, 1991, upon reconciliation of debt statistics, the Central Bank allowed the private sector and the nonfinancial public sector access to foreign exchange for the purpose of servicing their debts, including those owed to nonresident banks. With effect on the same date, the Central Bank began making payment equivalent to 30 percent of contractual interest obligations on external public debt covered in the negotiations with bank creditors. On April 1, Brazil reached preliminary agreement with its nonresident credit banks for the elimination of arrears outstanding at the end of 1990. The agreement provided for payments of $2 billion in 1991 and conversion of the remaining amounts to bearer bonds once an agreement is reached on medium- and long-term debt. On April 5, debt-service payments of certain public enterprises falling due on April 1, 1991 were allowed.

Gold

Firms authorized by the Government may freely purchase, hold, and sell gold in Brazil. The first domestic negotiation of newly mined gold is subject to a mining tax of 1 percent, plus Finsocial fees (an income tax surcharge and a sales tax) (0.6 percent) and PIS/PASEP (Programa de Integração Assistencia Social de Empregados Públicos) contributions (a levy on the wage bill payable by employers) (0.75 percent), due on each transaction unless the operation takes place in the financial market when the Finsocial fees are due on the profits of the firm. The Central Bank is empowered to buy and sell gold on the domestic and international markets (CMN Resolution 1182 of April 4, 1986). Purchases of gold are made at current domestic and international prices; the international price is considered a target price. Imports of gold are subject to the issuance of an import certificate by DECEX and authorization from the Central Bank. Exports of gold are subject to the same procedures as those that are applied through DECEX in respect of other products, but the Central Bank is always the alternative buyer.

Changes During 1991

Imports and Import Payments

January 1. Two hundred fifty products used for data processing equipment that were on the restricted imports were liberalized.

February 16. The first stage of the Government’s multiyear tariff reform went into effect, reducing the average tariff rate on non-oil products to 25 percent from 32 percent.

February 22. Official institutions in the field of education and technological research as well as the Ministry of Health were authorized to buy foreign exchange up to 360 days before the due date of payments abroad (Circular 1900 of February 22, 1991).

February 27. The minimum financing requirement for all imports was abolished, and imports with financing terms from 361 to 720 days were exempted from prior authorization from the Central Bank.

Payments for Invisibles

January 1. Upon reconciliation of debt statistics, the Central Bank allowed the private sector and the nonfinancial public sector access to foreign exchange for the purpose of servicing their debts, including those owed to nonresident banks.

January 1. The Central Bank began making payment equivalent to 30 percent of contractual interest obligations on external public debt covered in the negotiations with bank creditors.

April 18. The remittance abroad of profits/dividends on investments that are still in the process of registration in the Central Bank was allowed (Carta-Circular 2161 of April 18, 1991).

Exports and Export Proceeds

March 1. The tax on exports of three-phase engines to Canada, which was imposed to avoid countervailing duties, was eliminated.

June 1. An export financing program (PROEX) to be financed from repayment of credits under the Government’s previous export financing program was established. It would be operated by the Bank of Brazil and would cover exports of capital goods and manufactured consumer goods, and interest on financing would vary according to the level of development of the country to which exports are destined.

Capital

January 24. The criteria for absorption or rebate of accumulated losses of foreign capital enterprises were defined (Circulares 1884 and 1885 of January 14, 1991).

February 8. The criteria for the conversion of debt into equity for private sector debt with maturities beginning 1991 were announced (Cartas-Circulares 2143 of August 2, 1991 and 2170 of May 20, 1991).

March 2. The conversion of external debt instruments of the federal public sector, bonds, and deposits denominated in foreign currency for use in the National Privatization Program was authorized.

March 27. The minimum term for exemptions of income tax on external loans was reduced to five years from ten years (Resoluçao 1803 of March 27, 1991).

April 1. A preliminary agreement was reached with nonresident creditor banks for the elimination of arrears outstanding at the end of 1990. The agreement provided for payments of US$2 billion in 1991 and conversion of remaining amounts to bearer bonds when an agreement is reached on medium- and long-term debt.

April 5. Debt-service payments on certain public enterprises falling due from April 1, 1991 were allowed.

May 31. The Government liberalized the stock markets to foreign institutional investors, by exempting profits from the income taxes. These investments would be exempt from the capital gains tax, but they would be subject to a 15 percent tax from the income that would be collected at the time of remittance abroad.

June 1. Exporters were allowed to issue medium-term debt instruments that are secured with future export receipts.

June 6. The issuance of debentures that are convertible into stocks in domestic enterprises was authorized.

July 16. A facility for externally funded nonprofit organizations to undertake debt-for-nature swaps was introduced, with an initial limit on the total amount of $100 million.

July 23. The remittance abroad of late interest was exempted from specific authorization (Cartas-Circulares 2188 of July 23, 1991 and 2205 of August 23, 1991).

July 31. Rules for borrowing external resources through the ADR/IDR mechanism were adopted (Resoluçao 1848 of January 31, 1991).

September 25. Borrowing abroad for the financing of agricultural development was permitted.

December 30. The supplementary income tax related to remittances of profits abroad was abolished, effective January 1.

Republic of Bulgaria

(Position on December 31, 1991)

Exchange Arrangement1

The currency of Bulgaria is the Lev. The Bulgarian National Bank quotes daily the exchange rate of the lev in terms of the U.S. dollar based on developments in the domestic interbank exchange market. This rate is called the central exchange rate. Exchange rates for other currencies are determined by their cross rate relationships with the U.S. dollar in the international exchange market. On December 30, 1991, the exchange rate quoted by the Bulgarian National Bank in terms of the U.S. dollar was leva 21.811 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Exchange controls are administered by the Ministry of Finance and the Bulgarian National Bank. The Bulgarian National Bank is responsible for implementing the exchange rate policy. Eleven commercial banks and one financial institution conduct foreign exchange (forex) transactions. At the end of 1991, a total of 78 commercial banks were in operation, 14 of them with banking licenses for domestic and cross-border operations, 58 of them with licenses for domestic operations (including buying and selling of foreign exchange) only, and 6 banks with licenses for domestic banking operations only. The 14 banks with full licenses for domestic and cross-border operations are authorized to perform the following foreign exchange activities.

Arrears are maintained with respect to certain external payments.

Prescription of Currency

Payments to and from countries with which Bulgaria maintains bilateral agreements are made in the currencies and in accordance with the procedures set forth in those agreements.2 Transactions are generally settled through clearing accounts. Balances in these accounts (annual and multiyear) are generally to be settled in goods during the six months after the termination of the agreement; thereafter, they are settled in convertible currencies.

Resident and Nonresident Accounts

Residents may maintain foreign currency deposit accounts, which may be credited without restriction, and from which transfers may be made freely for transactions that are permitted under the existing exchange control regulations. Balances on these accounts earn interest at international market rates. Nonresidents may maintain accounts in foreign currencies and leva without any specific requirement on authorization, limitation, or restrictions. The crediting and debiting of these accounts are not subject to any regulations, and transfers abroad from these accounts are free of restriction.

Imports and Exports

There are no import quotas, and most imports are subject only to declaration and registration at the Ministry of Foreign Economic Relations for statistical purposes.3 The import customs tariff system is based on the harmonized system of nomenclature. There are separate tariffs for imports from 42 low-income countries (total exemptions), for imports from other developing countries (preferential rates), for imports from developed countries that grant most-favored-nation (MFN) treatment to Bulgaria, and for imports from countries that do not grant MFN treatment to Bulgaria. Tariffs on industrial goods generally do not exceed 10 percent (the maximum is 13.8 percent); tariffs on agricultural products range from zero to 90 percent. However, the MFN clauses apply to most of these duties. In addition to customs tariffs, a temporary fee of 15 percent is applied to a range of products, mostly consumer goods. Tariffs are calculated on the transaction values (actual invoice price paid) in foreign currency and converted to leva.

Proceeds from exports must be repatriated within one month but do not have to be surrendered; they may be retained in foreign currencies or sold in the interbank exchange market. Under Government Decree No. 13 (February 8, 1991), as amended by Decree No. 73 (April 22, 1991), export taxes are levied on a variety of products. The range of rates is as follows: (1) 30 percent on the lev equivalent of the forex proceeds from exports of wheat, animal livestock, meat and meat products, and cheese; and (2) 20 percent on the lev equivalent of proceeds from exports of 26 items, including gasoline, diesel fuel, synthetic textile fibers, ferrous and nonferrous metals and their shaped products, steel tubes, zinc and lead ingots (spelter), electrolytic copper, soda ash, timber, all sorts of packing and wrapping material, soaps and detergents, textiles, garments and clothing, electric batteries, and medicines and pharmaceuticals. Taxes on the above-mentioned items are exempt when they are exported under barter operations approved by the Government or similar arrangements.

Exports of 14 product groups were temporarily banned in 1991. These included crude oil; raw hides of cattle; pigs; small farm animals; fodder and grain; cotton; silk; rice; powdered milk; sugar; edible fats and oil; and ferrous and nonferrous metal scraps. However, the Government may lift the ban on a case-by-case basis. Exports of meat and meat products to the European Community (EC) are subject to EC quotas.

Special licenses are required for exports and imports of tobacco leaves and products; liquors, wines, and beer; essential oils; military hardware and related technologies; endangered flora and fauna; radioactive materials; crafts and antiques; intellectual property; jewelry; and rare and precious metals.

Payments for and Proceeds from Invisibles

Foreign exchange allowances for business travel are granted without restriction. Allowances for tourist travel are limited to the equivalent of up to leva 10,000 a person a year for people without foreign currency deposits. Resident holders of forex deposits receive unlimited tourist travel allowances.

Proceeds from invisibles do not have to be surrendered and may be retained in foreign currencies or sold in the interbank exchange market. Commercial banks may sell foreign exchange freely to resident individuals or resident legal persons if proper documentation certifies that foreign exchange is needed for (1) transportation and other expenses related to the conveyance of goods and passengers carried out by nonresidents; (2) interest and amortization with respect to credits approved by the Bulgarian National Bank; (3) business travel in compliance with the established procedures; (4) insurance fees; (5) banking commissions; (6) education and training; (7) health care; and (8) payments authorized by local judicial bodies. Remittances of earnings by foreign workers and remittances for family maintenance are not explicitly mentioned in Decree No. 15 (of February 8, 1991), which governs foreign exchange control, but they have been treated implicitly as transfers abroad that are not related to merchandise imports. The latter group of transfers requires prior permission from the Bulgarian National Bank as stipulated by the decree; it includes (1) indirect investments; (2) official credits extended to and received from abroad; (3) investments abroad; and (4) free transfers in foreign currency when they are not connected with imports of goods and services.

The exportation and importation of domestic bank notes are prohibited.

Capital

Licensed banks may borrow abroad without the authorization of the Bulgarian National Bank. The forex licensed commercial banks, however, may borrow abroad only if they do not request a guarantee from the Government of Bulgaria and if their borrowing complies with the prudential regulations set up by the Bulgarian National Bank. They may also extend foreign currency and lev loans to residents and nonresidents.

Foreign direct investments in Bulgaria are governed by Decree No. 56 of 1989, as amended in 1990, 1991, and 1992. Nonresidents may own domestic enterprises partly or fully, or may enter into joint-venture arrangements, subject to authorization, when the foreign participation in the shares and stocks of the partnership exceeds 50 percent in limited liability firms and 20 percent in joint-stock firms. A foreign person acting in a single merchant capacity or through a branch may not acquire property over land, and a partnership with foreign participation exceeding 50 percent may not own agricultural land. Foreign direct investments must be registered but require authorization only if they are undertaken in sectors that are considered sensitive. Foreign direct investments are guaranteed against expropriation, except for nationalization through legal process. Foreign firms are granted the same status as domestic firms; they may, under certain conditions, benefit from preferential treatment, including reduced taxation and access to judicial appeal outside the system of state arbitration. In general, fully owned foreign firms are subject to a profit tax of 40 percent, and joint ventures are subject to a profit tax of 30 percent; all other firms with foreign participation are subject to the same profit tax as domestic firms (40 percent). Repatriation of liquidated capital and after-tax profits is not restricted; however, transfers of profits in domestic currency require a special authorization.

Gold

The Ministry of Finance controls the acquisition, possession, manufacture, and disposal of gold, silver, and platinum. The Bulgarian National Bank is the only institution entitled to purchase, sell, hold, import, or export gold for monetary and nonmonetary purposes. All domestic transactions for industrial purposes must be conducted at current prices through the Bulgarian National Bank. Commercial banks are not authorized to deal or speculate (on their own or on their customers’ behalf) in precious metals, with the exception that the Bulgarian Foreign Trade Bank is licensed to deal in silver. Resident individuals may hold gold but may not trade or deal in it. The amount of gold and jewelry products they may import is limited. Nonresidents are permitted to bring in and take out their jewelry but may not trade. Nonresidents must have permission from the Ministry of Finance, the Bulgarian National Bank, and the Ministry of Industry and Commerce to buy gold, silver, and platinum products.

Changes During 1991

Administration of Control

March 28. Enterprises were allowed to purchase and sell foreign exchange, subject to the requirement that transactions must be registered with a commercial bank (Regulation No. 2 of the Bulgarian National Bank).

Payments for and Proceeds from Invisibles

December 23. Residents traveling abroad were allowed to purchase foreign exchange up to the equivalent of leva 10,000 a year (Decree No. 15 of 1991, as amended).

Burkina Faso

(Position on December 31, 1991)

Exchange Arrangement

The currency of Burkina Faso is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.02. The official buying and selling rate is CFAF 50 per F 1. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris exchange market and the fixed rate between the French franc and the CFA franc. Banks levy a commission of 2.5 per mill on transfers to all countries outside the West African Monetary Union (WAMU), all of which must be surrendered to the Treasury.2 There are no taxes or subsidies on purchases or sales of foreign exchange.

In the official and commercial banking sectors, forward exchange cover may only be arranged by residents for settlements with respect to imports of goods on specified lists. All contracts for forward exchange cover must be denominated in the currency of payments stipulated in the contract, and they are subject to the prior authorization of the Minister of Finance. Forward exchange contracts may be concluded for a period of one month and may not be renewed; for certain products, the maturity period of forward exchange cover may be renewed once for a period of three months.

With the exception of measures relating to gold and to the repatriation of export proceeds, Burkina Faso’s exchange controls do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries.

Administration of Control

Exchange control is administered by the Directorate of the Treasury in the Ministry of Finance. The approval authority in respect of exchange control (except for imports and exports of gold, forward exchange cover, opening of external accounts in foreign currency, and business travel allocations in excess of CFAF 400,000) has been delegated to the BCEAO and, within limits specified in the exchange control regulations, to authorized intermediaries. The BCEAO is also authorized to collect, either directly or through banks, financial institutions, the Postal Administration, and judicial agents, any information necessary to compile balance of payments statistics. All exchange transactions relating to foreign countries must be effected through authorized banks, the Postal Administration, or the BCEAO. Import and export licenses are issued by the Directorate-General of Foreign Trade in the Ministry of Industry, Commerce, and Mines. Import certificates for liberalized commodities and export attestations are made out by the importer or exporter himself and, when settlement takes place with a country outside the Operations Account Area, are visaed by the Customs Administration.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since Burkina Faso is an Operations Account country, settlements with France (as defined above), Monaco, and the other Operations Account countries are made in CFA francs, French francs, or the currency of any Operations Account country. Current transactions with The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Nigeria, and Sierra Leone are normally settled through the West African Clearing House. Certain settlements with China, Germany, and Ghana3 are channeled through special accounts. Settlements with all other countries are usually effected either through correspondent banks in France or the country concerned in any of the currencies of those countries, or in French francs (or in other currencies of the Operations Account Area) through foreign accounts in francs. All settlements with South Africa are prohibited.

Nonresident Accounts

BCEAO bank notes may be credited to foreign accounts in francs when they have been mailed to the BCEAO agency in Ouagadougou by an authorized bank’s foreign correspondent. Otherwise, the crediting to nonresident accounts of BCEAO bank notes, French bank notes, or bank notes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited. Foreign accounts in francs may be debited, without prior authorization, with the value of BCEAO bank notes mailed directly by authorized intermediaries to their foreign correspondents.

Imports and Import Payments

Imports of goods originating in or shipped from any country for commercial purposes and under any customs regulations may be made freely; prior acquisition of an official import document is necessary for imports exceeding values of CFAF 250,000. A special import authorization (autorisation spéciale d’importation (ASI)) is required for the following products: sugar, paddy and milled rice, wheat and cereal flour, cement, edible oils, soap, concrete-reinforcing bars, sheet metal, batteries, tires and inner tubes for motorcycles and mopeds originating from outside the West African Economic Community (WAEC), tire-vulcanization products, foam rubber for mattresses, tiles, furniture, bicycle spare parts, polythene bags, cloth, mats and bags made of polypropylene, printed fabric, bleached and tinted threads, tomato puree, frozen sea fish, PVC tubes, audio and video tapes, oil-carrying tank trucks, used buses, used shoes, small fishing nets, plastic shoes, training shoes originating from outside the WAEC, “DAN FANI” fabrics, and automated teller machines.

A prior import authorization (autorisation préalable d’ importation (API)) or an exceptional import authorization (autorisation exceptionnelle d’importation (AEI)) is required for the following products: tobacco; organic chemical products; cardboard and cardboard products; machines, appliances, and electrical devices; electrotechnical objects; cars; and tractors. A technical import visa is required for the following products: plants, plant extracts, seeds and fruits used in perfumery or medicine or used as insecticides or for any similar purpose, plant extracts and juices, alcoholic beverages, tobacco, inorganic chemical products, organic or inorganic precious metal compounds, organic chemical compounds, pharmaceutical products, fertilizers, explosives and similar flammable materials, various chemical products, military uniforms and any men’s khaki or olive green clothes, military and police helmets, kepis and bonnets, audio and video tapes, and arms and ammunition. Imports of certain other products, a list of which is established by decree, may be exempted from the import document requirement. The Minister of Industry, Commerce, and Mines may, on the basis of criteria established by his Ministry, waive the prescribed formalities for imports from countries with which Burkina Faso has concluded a customs union or free trade area agreement. Most imports are subject to a customs stamp tax of 6 percent, an import surcharge of 6 percent, and a statistical tax of 4 percent. Imports of the following products are prohibited: oil-carrying tank trucks, used coaches and buses, moped inner tubes from non-WAEC countries, bicycle tires and inner tubes from non-WAEC countries, wheat flour from non-WAEC countries, fishing nets with a mesh not greater than 3 square meters, and ivory.

All import transactions relating to foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 500,000. Import licenses or prior import authorizations entitle importers to purchase the necessary exchange not earlier than eight days before shipment if a documentary credit is opened, on the due date for payment if the commodities have already been imported, or at the time of the payment on account if such a payment has to be made before importation.

Payments for Invisibles

All payments to South Africa are prohibited. Payments for invisibles to France (as defined above), Monaco, and other Operations Account countries are permitted freely; those to other countries are subject to exchange control approval, which, for many invisibles, has been delegated to authorized intermediaries. Authorized intermediary banks and the Postal Administration are empowered to make payments up to CFAF 50,000 a transfer to foreign countries on behalf of residents without requiring justification. 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.

Residents traveling for tourism to countries other than France (as defined above), Monaco, and other Operations Account countries may purchase exchange equivalent to CFAF 175,000 a person a trip (CFAF 87,500 for children under 10 years) for any number of trips a year; any foreign exchange in excess of CFAF 5,000 remaining after their return to Burkina Faso must be surrendered. The basic allocation for travel abroad for business purposes is the equivalent of CFAF 20,000 a day, with a maximum of CFAF 400,000 a trip. Larger allocations are granted, however, for bona fide reasons. Residents traveling to foreign countries may take out up to a maximum of CFAF 25,000 in BCEAO bank notes or the equivalent in French bank notes or bank notes of other Operations Account countries. Residents traveling to other countries of the Operations Account Area may take out any amount in BCEAO bank notes, but if proceeding to a country that is not a member of the WAMU, they must declare to customs the amount they take out if it exceeds CFAF 150,000.

Nonresident travelers may freely take out foreign bank notes up to the equivalent of CFAF 175,000, or any larger amount, if declared upon entry or acquired by drawing on a foreign account in francs, or an account in foreign currency, or by exchange of foreign traveler’s checks. They may take out any foreign means of payment other than bank notes acquired in Burkina Faso by debit to a foreign account in francs or an account in foreign currency, subject to submission of documentation. They may also take out freely up to CFAF 25,000 in BCEAO bank notes or the equivalent in French bank notes or bank notes of other Operations Account countries.

Exports and Export Proceeds

Exports and re-exports from Burkina Faso may be made freely. However, for the purpose of monitoring, exports or re-exports of certain products may require prior official authorization from the competent services of the Ministry of Industry, Commerce, and Mines, except in the case of certain goods, a list of which is established by decree. In accordance with criteria defined by the Minister of Industry, Commerce, and Mines, exports of certain products may be subject to special regulations. Exports requiring prior authorization are grains and grain flours, natural phosphates, and fertilizers. A special export authorization (autorisation spéciale d’exportation (ASE)) is required for shelled beans and ground nuts. Exports of maize, millet, sorghum, rice, and ivory are prohibited. Exports to Ghana are subject to special regulations. Export proceeds must be surrendered within one month of the date on which the payment falls due (the due date stipulated in the commercial contract, which must not, in principle, be later than 180 days after arrival of the goods at their destination). All export transactions relating to foreign countries, including countries in the Operations Account Area, must be domiciled with an authorized bank when their value exceeds CFAF 500,000, and the exporter must sign a foreign exchange commitment and submit an export attestation form. Most exports are subject to a customs stamp tax of 6 percent and a statistical duty of 3 percent.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), 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 collected and surrendered within two months of the due date. Such proceeds and earnings may not be received in or from South Africa. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BCEAO, the Bank of France, or any bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area. Resident travelers must declare to customs any foreign means of payment in excess of CFAF 5,000 that they bring in and must surrender these to an authorized bank within eight days after return.

Capital

All capital movements between Burkina Faso and South Africa are prohibited. Capital movements between Burkina Faso and France (as defined above), Monaco, and the Operations Account countries 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 direct investment and all outward investment, and over the issuing, advertising, or offering for sale of foreign securities in Burkina Faso. Such operations require prior authorization from the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Burkinabé Government, and (2) shares that are similar to or may be substituted for securities whose issue, advertising, or sale in Burkina Faso has already been authorized. With the exception of controls over foreign securities, these measures do not apply to France (as defined above), Monaco, member countries of the WAMU, and the Operations Account countries. Special controls are maintained also over imports and exports of gold, over the soliciting of funds for deposit with foreign private persons and foreign firms and institutions, and over publicity aimed at placing funds abroad or at subscribing to real estate and building operations abroad; these special controls also apply to France, Monaco, and the Operations Account countries. All the special provisions described in this paragraph apply only to transactions and not to the associated payments or collections.

All investments abroad by residents of Burkina Faso require prior authorization from the Minister of Finance4 and, unless specifically exempted by the Minister of Finance, 75 percent of such investments must be financed from borrowing abroad. Foreign direct investments in Burkina Faso5 must be declared to the Minister of Finance before they are made. The Minister has a period of two months from receipt of the declaration during which he may request postponement of the project. The full or partial liquidation of either type of investment also requires prior declaration to the Minister. Both the making and the liquidation of investments, whether these are Burkinabé investments abroad or foreign investments in Burkina Faso, must be reported to the Minister of Finance. Direct investments constitute investments implying control of a company or enterprise. Mere participation is not considered direct investment, provided that it does not exceed 20 percent of the capital of a company whose shares are quoted on a stock exchange. Foreign firms operating in Burkina Faso in vital or priority sectors are required to have Burkinabé participation in their capital of at least 51 percent and of at least 35 percent in all other sectors. The sale to residents of Burkina Faso of securities of foreign companies operating in Burkina Faso requires prior authorization from the Minister of Finance, who establishes the sale value.

Borrowing by residents from nonresidents requires prior authorization from the Minister of Finance. 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 any type of firm to finance imports into or exports from Burkina Faso, or by international trading houses previously approved by the Minister of Finance to finance international merchanting transactions; (3) loans contracted by authorized banks; and (4) loans other than those mentioned above, when the total amount outstanding of these loans, including the new borrowing, does not exceed CFAF 100 million for any one borrower, provided that the annual interest rate does not exceed the normal market rate and that the proceeds are immediately surrendered by the sale of foreign currency on the exchange market or debited to a foreign account in Francs. 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 only to exchange control authorization by the BCEAO, acting on behalf of the Minister of Finance.

The Investment Code provides preferential treatment for foreign investment in Burkina Faso, except for enterprises whose capital stock belongs entirely to foreigners. Three preferential categories (A, B, and C) are established, in accordance with which special guarantees and tax and customs incentives may be granted for up to eight years to any enterprise that undertakes to create or considerably expand activities likely to contribute to the country’s economic and social development. Enterprises that the Government deems to be of a priority nature may also be given privileged treatment.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Burkina Faso. Imports and exports of gold from or to any other country require prior authorization from the Minister of Finance. 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-lined or gold-plated articles); and (3) imports and exports by travelers of gold objects up to a combined weight of 500 grams. Both licensed and exempt imports of gold are subject to customs declaration.

The Comptoir burkinabé des métaux précieux (CBMP) has a monopoly on exports of gold from Burkina Faso.

Changes During 1991

Imports and Import Payments

January 1. The following items were added to the list of products that are subject to prior import authorization (API): tobacco; organic chemical products; cardboard and cardboard products; machines, appliances, and electrical devices; electrotechnical objects; cars; and tractors.

July 17. The following items were added to the list of products that are subject to special import authorization (ASI): sugar, wheat, rice, edible oils, sheet metal, tiles, cement, furniture, cloth seeds, bags made of polypropylene, bicycle and motor bicycles and their spare parts, printed fabric, bleached and tinted threads, certain types of slats, tomato puree, inner tubes for mopeds, frozen fish, foam rubber for mattresses, PVC tubes, audio and video tapes, toilet soap, and certain batteries, and the following products were prohibited: trucks, moped inner tubes from non- WAEC countries, bicycle tires and inner tubes from non-WAEC countries, wheat flour from non-WAEC countries, fishing nets with a mesh not greater than 3 square meters, and ivory.

Exports and Export Proceeds

July 17. Exports of maize, millet, sorghum, rice, and ivory were prohibited.

Burundi

(Position on December 31, 1991)

Exchange Arrangement

The currency of Burundi is the Burundi Franc, which is pegged to the SDR. In August 1986, Burundi introduced a flexible exchange rate system under which the exchange rate was to be adjusted periodically to reflect underlying economic conditions. On December 31, 1991, the exchange rate was FBu 273.07 per SDR 1, and the official buying and selling rates for the U.S. dollar were FBu 190.14 and FBu 192.05, respectively, per US$1. Exchange rates for 19 currencies1 and for 2 units of accounts (European Currency Units (ECUs) and Units of Account of the Preferential Trade Area (UAPTAs)) are quoted by the Bank of the Republic of Burundi (the central bank) on the basis of the Burundi franc-SDR rate and the transaction value of these currencies and units in terms of the SDR. Authorized banks must carry out permitted exchange transactions at the buying and selling rates established by the central bank for currencies quoted by that bank. An exchange fee of 3 per mill is collected on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Control over foreign exchange transactions and foreign trade is vested in the central bank; authority to carry out some transactions is delegated to four authorized banks (Bancobu, BCB, Burundi Bank for Commerce and Investment, and Meridien Bank).

Prescription of Currency

Settlements relating to trade with Rwanda and Zaïre in products specified in the commercial agreements between these countries are effected through convertible currency accounts maintained with the central bank and authorized banks of each signatory country. With these exceptions, outgoing payments may be made and receipts may be obtained in any currency quoted by the central bank.

Nonresident Accounts

Nonresident accounts in convertible Burundi francs may be maintained by (1) natural persons of foreign nationality, such as diplomats, who are temporarily established in Burundi and are not considered as residents, (2) juridical persons of foreign nationality with special status, such as foreign embassies and international organizations, and (3) any other natural or juridical persons authorized by the central bank. These accounts may be credited freely with the proceeds of foreign currencies quoted by the central bank, and they may be debited freely for withdrawals of Burundi francs for any normal current payments in Burundi and for conversion into foreign exchange. Up to FBu 20,000 may be withdrawn in bank notes upon presentation of travel documents (a passport and an airline ticket). Withdrawals in excess of this amount are subject to the prior authorization of the central bank. These accounts may bear interest freely and must not be overdrawn. Interest earned must be credited to an ordinary Burundi franc account.

Certain nonresidents whose main activities are outside Burundi may maintain nonresident accounts in foreign currencies with an authorized bank. These accounts may be maintained by (1) natural and juridical persons of foreign nationality who are resident abroad, and (2) any other natural or juridical persons authorized by the central bank. These accounts may be credited freely with any foreign currency quoted by the central bank that is received from abroad. They may be debited freely for (1) conversion into Burundi francs of any payments in Burundi; and (2) payments abroad for travel and representation or for the purchase of foreign goods, except for bank notes. These accounts must not be overdrawn. However, they may bear interest with prior authorization from the central bank. The related bank charges and commissions must be settled in foreign exchange; and (3) as in the case of accounts in convertible Burundi francs, up to FBu 20,000 may be withdrawn upon presentation of travel documents (a passport and an airline ticket). Withdrawals in excess of this amount are subject to the prior authorization of the central bank.

Imports and Import Payments

All imports require licenses, except (1) trade samples without commercial value; (2) merchandise not intended for sale whose declared consumer value is FBu 50,000 or less c. & f. Bujumbura; (3) travelers’ luggage and personal effects; (4) gifts and supplies for diplomatic missions and UN agencies; and (5) capital goods and spare parts intended for sale whose value does not exceed FBu 500,000 (c. & f. Bujumbura).

Authorized banks are allowed to approve applications for licenses; the approval of license application also constitutes an authorization to obtain foreign exchange. An administrative fee amounting to 1 percent of the f.o.b. value of the goods is collected at the time of validation of the license. All goods imported into Burundi must be insured by approved Burundi insurers, and premiums must be paid in Burundi francs. All consignments of imports exceeding FBu 1 million in value (f.o.b.) may be subject to preshipment inspection with regard to quality and price by an international supervising and oversight organization on behalf of the Burundi authorities.

In principle, foreign exchange is made available either at the time of shipment of the goods on the basis of the shipping documents or following importation of goods. For goods under global licenses, foreign exchange is not made available until after customs clearance. All imports are subject to a service tax of 4 percent ad valorem, in addition to any applicable customs duties and fiscal duties.

Payments for Invisibles

All payments for invisibles require approval. Shipping insurance on coffee exports normally must be taken out in Burundi francs with a Burundi insurer. Transportation expenses on certain routes to Burundi or abroad must be paid in Burundi francs. Upon presentation of evidence of payment of taxes, foreign nationals residing and working in Burundi are permitted to transfer freely up to 60 percent of their net annual income; the proportion for those working in firms that export at least 50 percent of their production is 70 percent. The permitted annual transfer is 60 percent of income for experts working for the Government under individual employment contracts containing a transfer clause and receiving remuneration entirely in Burundi francs. Private joint-stock companies may freely and immediately transfer 100 percent of the return on foreign capital and of the share allocated to foreign directors.

Persons leaving Burundi permanently are authorized to transfer abroad their holdings of Burundi francs that consist of unremitted savings or the sale proceeds of their personal effects. Transfer of rental income from foreign owners of new commercial, industrial, office, and residential buildings is permitted up to 50 percent of net rental income (after payment of taxes and deduction of 20 percent for maintenance expenses); the remainder, plus any accrued interest, may be transferred later, provided that the funds have been held on deposit with a domestic financial institution for two years for commercial, industrial, and office buildings, and for three years for residential buildings. Transfer of up to 50 percent is permitted after at least three years of placement in investment or savings bonds.

Residents may apply for exchange needed for foreign travel. The foreign exchange allowance for business travel purposes is $200 a person a day or its equivalent, subject to a maximum limit of 15 days a year; the daily foreign exchange allowance for travel in Africa is $125 a person. These limits may be increased for travel requiring a longer stay abroad. All travelers may take out up to FBu 5,000 in Burundi bank notes.

Exports and Export Proceeds

All exports valued above FBu 10,000 require a prior declaration, which can be obtained through an authorized bank. Declarations are valid for six months, but extensions may be granted by the central bank. Payments must be collected within 90 days of the date of export declaration at customs. All exchange proceeds from exports must be surrendered to an authorized bank within 8 days of their collection. Exports of mineral products, coffee, hides, and all exports by exporters not authorized by ministerial order are subject to export duties. Exporters of manufactured goods may receive a refund of duties paid, 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 currency quoted by the central bank and traveler’s checks and up to FBu 5,000 in Burundi bank notes.

Nonresidents staying in a hotel or guest house in Burundi must pay their hotel bills by selling foreign currencies quoted by the Bank of the Republic of Burundi or by using a credit card. Payment in Burundi francs is, however, acceptable in the case of guests for whom a resident company or individual has assumed responsibility with prior authorization from the central bank, and in the case of nationals of Zaïre or Rwanda who produce declarations of means of payment issued under the auspices of the Economic Community of the Great Lakes Countries (CEPGL).

Capital

Under the Investment Code introduced on January 14, 1987, new investments that fulfill 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 five years, for other merchandise needed for the manufacturing process or for the upkeep of the original investment. Taxes on profits and real estate may likewise be reduced or suspended for up to eight years. Enterprises accorded priority status may be granted a reduction or suspension of export taxes and import taxes on equipment and raw materials for renewable periods of five years. 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 agreement, a guarantee that direct taxes on their activities will not be increased for ten years. An investment commission under the Planning Secretariat is responsible for examining requests for priority status and granting the necessary authorization. In addition, Burundi guarantees each foreign investor the right to move into the country; foreign investors are also assured an allocation of foreign exchange for the purchase of raw materials abroad as well as for the repayment of loans taken out under the investment agreement.

Capital transfers by residents and transfers of foreign capital on which a repatriation guarantee has been granted require individual authorization. The guarantee is furnished for foreign exchange imported by resident enterprises to provide working capital in foreign exchange; it applies to any of the currencies quoted by the central bank, is valid for one year, and may be renewed. The guarantee provides for the transfer of the original amount surrendered at the official rate prevailing on the day of transfer. The repatriation of invested capital in the event of the sale or shutdown of the business is also guaranteed.

Gold

All natural and juridical persons holding gold mining permits issued by the Ministers responsible for Mining and Customs may open purchasing houses for gold mined by artisans in Burundi. Gold produced by artisans may be sold only to approved houses. Exports of gold must be declared in Burundi francs at the average monthly rates communicated by the central bank. Gold exports are authorized jointly by the Mining and Customs Departments.

Changes During 1991

Imports and Import Payments

January 21. The value of import licenses that the commercial banks are authorized to approve was raised to FBu 50 million from FBu 25 million.

December 30. The limit on the value of import licenses that the commercial banks are authorized to approve was removed.

Payments for Invisibles

August 1. The limit on the transfer abroad of salaries by foreign nationals was increased to 60 percent from 50 percent of total earning. One hundred percent of the return on foreign capital and the share of profits allocated to foreign directors was allowed to be freely transferred abroad.

November 11. The commercial banks were authorized to open nonresident accounts in convertible Burundi francs and foreign exchange. (They must send a copy of the relevant documentation to the central bank on opening these accounts.)

Exports and Export Proceeds

April 23. The commercial banks were authorized to issue export licenses.

June 30. Private traders were permitted to export up to 30 percent of the current (1991/92) coffee crop; previously, exportation of the coffee crop was a monopoly of the Burundi Coffee Company.

Cameroon

(Position on December 31, 1991)

Exchange Arrangement

The currency of Cameroon is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the same rate. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rate for the currency concerned in the Paris exchange market. A commission of 0.50 percent is levied on transfers to countries that are not members of the BEAC, except transfers in respect of central and local government operations, payments for imports covered by a duly issued license domiciled with a bank, scheduled repayments on loans properly obtained abroad, travel allowances and official representation expenses paid by the Government and its agencies for official missions, and payments of reinsurance premiums. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, Cameroon’s exchange control measures generally do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely, but all financial transfers in excess of CFAF 500,000 to the Operations Account countries must be declared to the authorities for statistical purposes.

Forward exchange cover requires the prior authorization of the exchange control authorities. It must be denominated in the currency of settlement prescribed in the contract, and the maturity period must not be less than three months or exceed nine months. Settlements must be effected within eight days of the maturity date of the forward contract.

Administration of Control

Exchange control is administered by the Directorate of Economic Controls and External Finance in the Ministry of Finance. Exchange transactions relating to all countries must be effected through authorized intermediaries—that is, the Postal Administration and authorized banks. Import licenses for goods other than gold are issued by the Ministry of Commerce and Industry, and those for gold by the Ministry of Mines, Water, and Energy. Export licenses are issued by the Ministry of Finance. Arrears are maintained with respect to external payments.

Prescription of Currency

Since Cameroon is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other Operations Account country. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through foreign accounts in francs. All settlements between Cameroon and South Africa are prohibited.

Resident and Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC bank notes may be credited to foreign accounts in francs when mailed to the National Directorate of the BEAC in Yaoundé by the foreign correspondents of authorized banks. Transactions of accounts in CFA francs by nonresidents are permitted freely; accounts of nonresidents in foreign currency are not permitted to be credited or debited in CFA francs. Residents are not permitted to maintain accounts in foreign currency in Cameroon or abroad, and residents and nonresidents are not permitted to maintain accounts in CFA francs abroad.

Imports and Import Payments

All imports from South Africa and imports of tobacco from Malawi are prohibited. Some imports from countries outside the Central African Customs and Economic Union (UDEAC) are subject to quantitative restrictions. Certain imports require technical licenses proving that they are for use by professionals. Certain other imports are prohibited for political, ecological, health, or safety reasons. Surcharges apply to imports from non-UDEAC countries.

All import transactions valued at more than CFAF 50,000 must be domiciled with an authorized bank if the goods are not considered in transit. Transactions involving transit goods must be domiciled with a foreign bank. Advance import deposits are permitted if underlying contracts stipulate them.

Payments for Invisibles

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

The transfer of rent from real property owned in Cameroon by foreign nationals is limited, in principle, to up to 50 percent of the income declared for taxation purposes, net of repair costs and tax payments. Remittances for current repair and management of real property abroad are normally limited to the equivalent of CFAF 200,000 every two or three years. Depending on the number of dependents abroad, the transfer of 20 percent or 50 percent 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 and insured previously, payments of insurance premiums to foreign countries are not permitted if the same type of insurance is available in Cameroon. Resident and nonresident travelers to countries outside the Operations Account Area may take out up to CFAF 20,000 in BEAC bank notes. Travelers to other countries of the Operations Account Area may, subject to prior declaration, take out any amount in BEAC bank notes.

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

Exports and Export Proceeds

All exports to South Africa are prohibited. Export transactions valued at CFAF 50,000 or more must be domiciled with an authorized bank. Exports to all countries are subject to domiciliation requirements for the appropriate documents. Proceeds from exports to all countries must be repatriated within 60 days of the payment date stipulated in the sales contract, and proceeds received in currencies other than those of France or an Operations Account country must be surrendered within a month of collection.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), 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 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 bank notes and coins issued by the BEAC, the Bank of France, or a bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area.

Capital

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

With the exception of controls over the sale or introduction of foreign securities in Cameroon, the controls on capital movements do not apply to relations with France (as defined above), Monaco, and the Operations Account countries. All foreign securities and titles embodying claims on nonresidents must be deposited with an authorized intermediary and be classified as foreign, 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 or they do not exceed 20 percent of the fair market value of the company being purchased. The full or partial liquidation of such investments requires only a report after the fact to the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting 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 postponement. The full or partial liquidation of direct investments in Cameroon requires only reporting to the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting 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 of 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 percent 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 from the Minister of Finance and must subsequently be reported to him. Exempt from authorization, however, and subject only to a report after the fact are operations in connection with (1) loans backed by a guarantee from the Cameroonian Government, and (2) shares similar to securities whose issuing, advertising, or offering for sale in Cameroon has already been authorized.

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

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

The Investment Code of November 1990 aims to promote the development of natural resources, job creation, production, and exportation, especially of manufactures, and the transfer of appropriate technology. Under the code, generalized fiscal benefits are provided to encourage exports and the development of natural resources, and further benefits are provided to enterprises qualifying for inclusion in one of five regimes.

The generalized fiscal benefits include an exemption of export duties and taxes on insurance and transportation for exports and a deduction of 5 percent of the value of exports from the exporter’s taxable income. In addition, firms are exempted under certain conditions from all duties and purchase taxes on raw materials or intermediate inputs produced in Cameroon or in the UDEAC region. The new code grants fiscal benefits to domestic and foreign firms undertaking new projects in the raw material processing, mining, forestry, agriculture, fishing, food, construction, equipment maintenance, industrial research, and tourism sectors. These benefits are provided under five regimes, as follows: (1) The basic regime applies to firms whose investment is labor intensive (defined as one job per CFAF 10 million investment), is export-oriented, or uses domestic natural resources. During a three-year installation phase, firms under this regime are entitled to a reduced tax rate of 15 percent, including their fiscal and customs duties, internal turnover tax, and all other import taxes relating to imported inputs; in addition, they are entitled to certain fiscal exemptions. During a five-year exploitation phase, certain tax exemptions are maintained. (2) The small and medium-size enterprise regime applies to firms that are labor intensive (defined as one job per CFAF 5 million investment), whose investment is of modest size (less than CFAF 1.5 billion), and where Cameroonian participation is at least 35 percent of capital. The benefits under this regime are the same as those under the basic regime, except that during the exploitation phase of seven years, firms may deduct from taxable income 25 percent of salaries paid to Cameroonian nationals. (3) The strategic regime applies to enterprises declared strategic by the Cameroonian authorities and fulfilling certain other conditions. The installation phase is 5 years and receives the same benefits as those under the basic regime. The exploitation phase is 12 years, and receives the same benefits as under the small and medium-size enterprise regime. (4) The free trade zone regime is available to enterprises that are devoted exclusively to exporting; terms are fixed by individual agreements. (5) Firms that expand by more than 20 percent or that satisfy certain other conditions are eligible for benefits under the reinvestment regime. For three years, firms are subject to a reduced tax rate of 15 percent, which includes their fiscal and customs duties, internal turnover tax, and all other import taxes relating to imported inputs; in addition, they are entitled to certain fiscal exemptions.

Law No. 90/19 of August 10, 1990 provides that Cameroonian interests should hold at least one third of the share capital of each banking institution. This law also requires banks with foreign majority participation to submit to the monetary authorities’ information on all their current transactions abroad and to obtain prior approval for any changes in the structure of their equity holdings. Foreign managers must be approved by the monetary authorities and reside in Cameroon.

Gold

Residents are free to hold, acquire, and dispose of gold jewelry in Cameroon. They require the approval of the Ministry of Mines, Water, and Energy to hold gold in any other form. Such approval is normally given only to industrial users, including jewelers. Newly mined gold must be declared to the Ministry of Mines, Water, and Energy, 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 Ministry of Mines, Water, and Energy and by 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 1991

No significant changes occurred in the exchange and trade system.

Canada

(Position on December 31, 1991)

Exchange Arrangement

The currency of Canada is the Canadian Dollar. The Canadian authorities do not maintain margins in respect of exchange transactions, and exchange rates are determined on the basis of demand and supply conditions in the exchange market; however, the authorities intervene from time to time to maintain orderly conditions in that market. The principal intervention currency is the U.S. dollar. The closing exchange rate (midpoint) for the U.S. dollar on December 31, 1991 was Can$1.1556 per US$1. Forward exchange rates are similarly determined in the market, and it is not the practice of the authorities to intervene. There are no taxes or subsidies on purchases or sales of foreign exchange.

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.

Administration of Control

There are no exchange controls. The licensing of imports and exports, where required, is handled mostly by the Department of External Affairs and International Trade, but other departments also issue licenses in specialized fields.

Prescription of Currency

No prescription of currency requirements are in force.

Imports and Import Payments

Import permits are required only for drugs, a few agricultural items, certain textile products and clothing, certain endangered species of fauna and flora, natural gas, and material and equipment for the production or use of atomic energy. Import permits are required for carbon and specialty steel products for monitoring purposes only. For some agricultural items, such as butter and milk, permits are rarely issued, while others may be subject to a quota. Commercial imports of certain products from any source are tightly controlled or prohibited; the main products affected are margarine and motor vehicles. Pursuant to the Canada-United States Free Trade Agreement, the prohibition on imports of used vehicles from the United States is being phased out over a five-year period starting in 1989. Imports of clothing and certain textile products are subject to special measures of protection for domestic industries. These measures usually take the form of bilateral restraint agreements (Memoranda of Understanding) concluded under the Multifiber Arrangement that was negotiated within the framework of the General Agreement on Tariffs and Trade.

Exports and Export Proceeds

The surrender of the proceeds from exports is not required, and exchange receipts are freely disposable. The principal legal instrument governing export controls is the Export and Import Permits Act, which controls trade through the establishment of an Export Control List and an Area Control List. The Export Control List identifies all goods that are controlled for reasons of security, supply considerations, resource upgrading, and implementing intergovernmental arrangements. It includes all items identified in the Coordinating Committee for Multilateral Export Controls munitions list, the industrial list of strategic goods, and the Atomic Energy List. Permits are required for the exportation of all goods listed to all countries except the United States. Items on the Atomic Energy List require permits regardless of destination. The Area Control List includes a limited number of countries to which all exports are controlled unless they are specifically exempted by a general permit. At present, two countries are on the Area Control List: the Libyan Arab Jamahiriya and South Africa. All exporters are eligible for certain financial facilities operated by the Export Development Corporation, including political risk insurance.

Payments for and Proceeds from Invisibles

No exchange control requirements are imposed on exchange payments for, or exchange receipts from, invisibles.

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents. Specific restrictions exist on inward direct investments in the financial, broadcasting, telecommunication, transportation, fisheries, and energy sectors. In addition, under the provisions of the Investment Canada Act, new foreign investments are in general subject to notification requirements but not to review, and direct acquisitions of businesses with assets exceeding Can$5 million and indirect acquisitions involving assets exceeding Can$50 million are subject to review. In addition, acquisitions below these limits and investments to establish new businesses in culturally sensitive sectors may be reviewed. Investments that are subject to review are required only to pass a test of yielding net benefit to Canada. There are no controls over outward direct investment, nor over inward or outward portfolio investment. Although higher ratios may be authorized on a case-by-case basis, in general the domestic assets of a foreign-owned bank operating in Canada must not exceed twenty times its authorized capital; the total domestic assets of all non-U.S. banks must not exceed 12 percent of the total domestic assets of all banks operating in Canada.1

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. However, exports of gold and all other products containing gold to countries named in the Area Control List require an export permit from the Minister of External Affairs, under the authority of the Export and Import Permits Act. Gold of U.S. origin requires a permit when re-exported to all countries except the United States. Commercial imports of articles containing minor quantities of gold, such as watches, are unrestricted and free of license. Legal tender gold coins with a face value of Can$100 have been issued annually since 1976, and Can$50 “bullion” coins, containing 1 ounce of gold, have also been issued since 1979. In 1982, Can$5 and Can$10 coins containing 1/10 and ¼ of an ounce of gold, respectively, were issued; in 1986, a coin containing ½ an ounce of gold with a face value of Can$50 was issued.

Changes During 1991

Imports and Import Payments

January 2. Following a positive injury finding by the Canadian International Trade Tribunal (CITT), definitive antidumping duties were imposed on imports of photo albums and self-adhesive leaves from Indonesia, the Philippines, and Thailand.

January 25. The CITT rescinded its injury finding against imports of drywell screws from Germany, Japan, the Republic of Korea, Sweden, the United Kingdom, and the United States; the assessment of definitive antidumping duties was therefore terminated, effective from the date of the CITT decision.

February 1. The CITT found no injury with respect to allegedly dumped importations of lint rollers, lint roller refills, lint brushes, and fabric combs from the United States.

March 6. The CITT rescinded its injury finding against imports of vehicle-washing equipment from the United States; the assessment of definitive antidumping duties was therefore terminated, effective from the date of the CITT decision.

July 26. Following a positive finding of injury by the CITT, definitive antidumping duties were imposed on imports of carbon welded steel pipes from Argentina, India, Romania, Taiwan province of China, Thailand, and Venezuela.

September 6. Following a positive finding of injury by the CITT, definitive antidumping duties were imposed on imports of stainless steel welded pipe from Taiwan province of China.

September 25. Following a preliminary determination of dumping by the National Revenue, a provisional antidumping duty at the rate of 26.1 percent was imposed on imports of carbon steel welded pipe from Brazil, Luxembourg, Poland, Turkey, and Yugoslavia.

September 30. The CITT rescinded its injury finding against imports of ABS resins from the Republic of Korea; the assessment of definitive antidumping duties was therefore terminated, effective from the date of the CITT decision.

October 2. Following a positive finding of injury by the CITT, definitive antidumping duties were imposed on imports of beer from the United States for use or consumption in the Province of British Columbia.

October 10. Following a preliminary determination of dumping by the National Revenue, a provisional antidumping duty at the rate of 18.5 percent was imposed on imports of flat wooden toothpicks from the United States.

November 27. The CITT rescinded its injury finding against imports of artificial graphite electrodes and connecting pins from Belgium, Japan, Sweden, and the United States; the assessment of antidumping duties was therefore terminated, effective from the date of the CITT decision.

December 19. Following a preliminary determination of dumping by the National Revenue, a provisional antidumping duty at the rate of 14.26 percent was imposed on imports of broadloom carpets from the United States.

December 22. The CITT injury finding against imports of alpine ski poles from France and Italy expired in accordance with the sunset provision of the Special Import Measures Act; the assessment of definitive antidumping duties was therefore terminated, effective from the expiration date of the finding.

Cape Verde

(Position on December 31, 1991)

Exchange Arrangement

The currency of Cape Verde is the Cape Verde Escudo, which is pegged to a weighted basket of currencies representing nine important trading partners. The exchange rate of the Cape Verde escudo in terms of the U.S. dollar, the intervention currency, is fixed daily on the basis of quotations for the U.S. dollar and the other currencies included in the basket. On December 31, 1991, the buying and selling rates for the U.S. dollar were C.V. Esc 65.86 and C.V. Esc 66.47, respectively, per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

All foreign exchange transactions are under the control of the Department of Foreign Relations and Exchange Control (DRE), which is a department of the Bank of Cape Verde (the central bank). All imports, exports, and re-exports are subject to licensing, except for transactions not exceeding C.V. Esc 2.5 million. Foreign exchange transactions, including the surrender of foreign exchange proceeds, are effected through the central bank.

Arrears are maintained with respect to external payments.

Prescription of Currency

The central bank determines the currency in which export proceeds should be repatriated. Cape Verde has bilateral payments agreements with Angola and Sao Tome and Principe, which are currently inoperative.

Nonresident Accounts

Nonresidents may open demand deposit accounts in local currency. These accounts may be credited only with the proceeds from the sale or surrender of receipts of convertible currencies and may be debited for payment of any obligations in Cape Verde. Outward transfers of balances from such accounts may be made freely. Embassies and foreign officials of embassies are required to open special accounts in foreign currency and in local currency; such accounts must be replenished exclusively with foreign exchange. Foreign enterprises may maintain accounts in foreign currency.

Special Accounts (Emigrants)

Three types of special interest-bearing deposit accounts are available for emigrants: (1) foreign exchange deposit accounts; (2) savings-credit deposit accounts; and (3) special accounts in Cape Verde escudos. These accounts can be credited only with convertible foreign currencies. Holders of savings-credit deposit accounts can benefit from loans on special terms for financing small-scale projects.

Imports and Import Payments

All imports are subject to licensing or prior registration requirement, except for transactions not exceeding C.V. Esc 50,000 and unaccompanied baggage.1 Imports of goods not exceeding C.V. Esc 100 million and not involving payments from the country’s foreign exchange resources are also exempted from the preregistration requirement. Licenses, which are issued by the General Directorate of Commerce in the Ministry of Economy, Transportation and Communications, require the endorsement of the central bank and are generally valid for 90 days; they are renewable. The provision of foreign exchange is guaranteed when the license has been previously certified by the central bank. Licenses are, in general, granted liberally for imports of medicines, capital goods, and other development-related equipment. Imports of nonessentials are restricted.

Payments for Invisibles

All payments for invisibles require prior authorization. Any person traveling abroad may take out foreign currency equivalent to C.V. Esc 20,000. Cape Verdean nationals traveling abroad as tourists are required to buy round-trip tickets in advance and to make a deposit equivalent to a one-way ticket to the country of destination; this deposit is refunded upon return to Cape Verde. Cape Verdean nationals studying abroad are allowed up to a maximum of C.V. Esc 20,000 on leaving the country; students who do not hold scholarships are, in addition, entitled to a monthly allowance that varies according to the country of destination. Persons traveling abroad on business may take an amount of foreign currency that varies according to the country of destination and the duration of each business trip. Persons traveling abroad for medical treatment may take out an amount of foreign currency that varies according to medical needs. Applications for these allowances must be accompanied by medical certification before the trip, and medical bills must be presented on return to Cape Verde.

Transfers by foreign technical assistance personnel working in Cape Verde are authorized within the limits specified in the individual contracts. These contracts, as well as other contracts involving foreign exchange expenditures, are subject to prior screening by the central bank. Requests by other foreigners are examined on a case-by-case basis. The exportation of domestic currency by travelers is prohibited. Foreign travelers may bring in any amount of foreign currency, but may re-export only up to the amount of currency they declared upon entry.

Exports and Export Proceeds

All exports are subject to licensing and to approval by the central bank, except for transactions not exceeding C.V. Esc 2,500.2 Export proceeds must be repatriated within three months from the date of issuance of the license, but this period may be extended.

Proceeds from Invisibles

Receipts from invisibles must be surrendered to the central bank. The importation of domestic currency is prohibited.

Capital

Any private capital transaction must be approved in advance by the central bank, but legally imported capital may be re-exported without limitation. The exportation of resident-owned capital is not normally permitted. Capital in certain foreign investments is allowed to be repatriated in equal installments within a period of less than two years.

Gold

Imports, exports, or re-exports of gold in either coins or bars require prior licensing by the monetary authorities.

Changes During 1991

Imports and Import Payments

December 30. The import-licensing system (plafond) was liberalized, and import procedures were simplified (Decree 193/91).

Changes During 1992

Exports and Export Proceeds

January 1. The licensing requirement for exports and re-exports was eliminated.

Central African Republic

(Position on December 31, 1991)

Exchange Arrangement

The currency of the Central African Republic is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the rate of CFAF 50 per F 1, free of commission. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rates for the currencies concerned in the Paris exchange market. A commission of 0.25 percent is levied on all capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury and for the expenses of students. There are are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, the exchange control measures of the Central African Republic do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Chad, Comoros, Congo, Côte d’Ivoire, Gabon, Equatorial Guinea, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries.

Administration of Control

All draft legislation, directives, correspondence, and contracts having a direct or indirect bearing on the finances of the state require the prior approval of the Minister of Finance, who has delegated his approval authority to the Director of the Budget. The Autonomous Amortization Fund (CAADE) in the Ministry of Finance supervises borrowing abroad, and the Office of Foreign Financial Relations in the same ministry supervises lending abroad, issuing, advertising, or offering for sale of foreign securities in the Central African Republic, and inward and outward direct investment. Exchange control is administered by the Minister of Finance, who has delegated some of his approval authority to the BEAC,2 to the authorized banks, and to the Postal Administration. All exchange transactions relating to foreign countries must be effected through authorized banks. Export declarations are to be made through the Directorate of Foreign Trade in the Ministry of Commerce and Industry, except those for gold, which are to be made through the BEAC.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since the Central African Republic is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries 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.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The principal nonresident accounts are foreign accounts in francs. BEAC bank notes received by the foreign correspondents of authorized banks and mailed to the BEAC agency in Bangui by the Bank of France or the Banque centrale des Etats de l’Afrique de I’Ouest (BCEAO) may be credited freely to foreign accounts in francs.

Imports and Import Payments

All imports from South Africa are suspended. Imports from all other countries are not subject to licensing requirements or quotas. Imports of firearms are prohibited irrespective of origin. Import declarations are required for all imports, and all import transactions relating to foreign countries must be domiciled with an authorized bank. The import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries 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.

There are no limits on foreign exchange allocations for tourist and business travel, and residents may obtain foreign bank notes and traveler’s checks in foreign currencies or make payments through commercial banks without restriction. Residents traveling as tourists may take with them a maximum of CFAF 50,000 a year a person in domestic bank notes. For business travel, the maximum limit on domestic bank notes that can be exported is CFAF 10,000 a person a day.

Foreigners working in the Central African Republic are permitted to transfer their entire net salary upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period.

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

Exports and Export Proceeds

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

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), 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 collected within one month of the due date and, if received in foreign currency, surrendered within one month of the date of receipt. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area.

Capital

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

Special controls (additional to any exchange control requirements that may apply) 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 controls over the sale or introduction of foreign securities in the Central African Republic, the measures do not apply to France (as defined above), Monaco, and the Operations Account countries.

Direct investments abroad3 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires prior approval from the Ministry of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting a direct investment abroad. Foreign direct investments in the Central African Republic4 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 postponement. 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 a direct investment in the Central African Republic. Both the making and the liquidation of direct investments, whether these are Central African Republic investments abroad or foreign investments in the Central African Republic, must be reported to the Minister within 20 days of each operation. Direct investments are defined as those that imply control of a company or an enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 percent 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 the Central African Republic requires prior authorization from the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a government guarantee, 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 natural or juridical persons, whether public or private, 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 from 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 the foreign countries in which those 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 the 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 less than CFAF 500,000.

Lending abroad by natural or juridical persons, whether public or private, 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 from 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 the loans does not exceed CFAF 50 million for any one lender. Making 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, a reduction in duties and taxes on the importation 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 (A, B, and C), in accordance with which fiscal and other privileges may be accorded to firms investing in new enterprises or in the expansion of existing ones in most sectors of the economy, except the commercial sector. Requests for approval for preferential treatment must be submitted to the Minister of Industry, who is the Chairman of the Investment Commission, which considers the application. If a positive decision is 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 Equatorial Customs Union upon the recommendation of the Council of Ministers.

Gold

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

Changes During 1991

No significant changes occurred in the exchange and trade system.

Chad

(Position on December 31, 1991)

Exchange Arrangement

The currency of Chad is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the same rate. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rates for the currencies concerned in the Paris exchange market. A commission of 0.25 percent is levied on all capital transfers abroad by the banks for their own account, except those made for the account of the Treasury, for students’ bursaries, and to the member countries of the BEAC. There are no taxes or subsidies on the purchase or sale of foreign exchange.

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) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Comoros, Congo, Côte d’Ivoire, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. However, they must be declared and be made only through authorized banks and with bank checks. Payments to all other countries are subject to exchange control.

Forward cover for imports is permitted only for specified commodities and requires the prior approval of the Office of the Minister of Economy and Commerce.

Administration of Control

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 administered by the Minister of Finance, who has delegated his approval authority in part to the External Finance and Exchange Control Subdirectorate, which issues instructions to the authorized intermediaries. All exchange transactions relating to countries outside the Operations Account Area must be effected through authorized banks. Import and export licenses are issued by the Foreign Trade Office in the Ministry of Commerce and Industry.

Arrears are maintained with respect to external payments.

Prescription of Currency

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

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC bank notes may be credited freely to foreign accounts in francs maintained by the foreign correspondent of an authorized bank, provided that the notes are repatriated to the BEAC agency in Chad by the correspondent bank concerned.

Imports and Import Payments

Imports from South Africa are prohibited. Imports of wheat, wheat flour, and sugar from all sources require licenses. All other imports from countries in the Operations Account Area and from European Community (EC) countries (the original member states) other than France may be made freely. All imports from non-EC countries outside the Operations Account Area are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by the Ministry of Commerce and Industry on the basis of proposals drawn up by the Committee on Imports.

The import program contains global quotas for imports from non-EC countries outside the Operations Account Area and a special quota for imports of cotton textiles from countries judged to have abnormal competitive advantages. In addition, the program contains global quotas for imports of wheat, wheat flour, and sugar from EC countries, countries in the Operations Account Area, as well as from other countries. Specified goods from certain neighboring countries not belonging to the Operations Account Area, up to a value of CFAF 3 million a year in each direction for a single importer, may be imported through compensation transactions. The issuance of import licenses for sugar and a specified brand of cigarettes has been suspended until further notice.

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.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries 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 bona fide income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely. Some current payments, however, may be subject to delay.

Insurance on all imports shipped to Chad with values exceeding CFA 500,000 on f.o.b. terms must be arranged with local insurance companies by the importer.

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation of an amount equivalent to CFAF 200,000 a person a trip, for any number of trips a year. This allocation is increased by the equivalent of CFAF 50,000 for each child under 10 years of age. For pilgrimages to Mecca, an additional allocation of the equivalent of CFAF 200,000 may be granted. Business travelers to foreign countries receive a daily allocation of the equivalent of CFAF 60,000, with a maximum allocation of the equivalent of up to CFAF 500,000 a person a trip; the External Finance and Exchange Control Subdirectorate may approve additional amounts. Travelers to foreign countries may take out a maximum of CFAF 30,000 in BEAC bank notes; the limit for children under 10 is CFAF 5,000.

Nonresident travelers may take out foreign bank notes and coins up to the amount they declared on entry, in addition to amounts they remitted from foreign bank accounts. If they made no declaration, they may take out up to the equivalent of CFAF 150,000, in addition to a maximum of CFAF 30,000 in BEAC bank notes.

Exports and Export Proceeds

Exports to South Africa are prohibited. All exports to non-EC countries outside the Operations Account Area require licenses. Specified exports to certain neighboring countries, including Nigeria and Sudan, may be made through compensation transactions. Exports of cotton are the monopoly of Cotontchad.

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

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and 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 collected and, if received in foreign currency, be surrendered within two months of the due date. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) and other foreign means of payment. Residents bringing in foreign bank notes and coins in excess of the equivalent of CFAF 20,000 must exchange them for CFA francs within eight days of their return.

Capital

Capital movements between Chad and France (as defined above), Monaco, and the Operations Account countries 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 currencies, 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 controls over the sale or introduction of foreign securities in Chad, the measures do not apply to France (as defined above), Monaco, and the Operations Account countries.

Direct investments abroad2 require the prior approval of the Minister of Finance, irrespective of the method of financing as does the full or partial liquidation of such investments. Foreign direct investments in Chad3 require the prior approval of the Minister of Finance unless they take the form of a mixed-economy enterprise. The full or partial liquidation of direct investments in Chad must also be declared to the Minister of Finance. Both the making and the liquidation of direct investments, whether these are Chadian investments abroad or foreign investments in Chad, must be reported to the Minister within 30 days of each operation. Direct investments are defined as investments implying control of a company or enterprise.

The issuing, advertising, or offering for sale of foreign securities in Chad requires prior authorization from 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 issuing, advertising, or offering for sale in Chad has previously been authorized.

Borrowing abroad by natural or juridical persons, whether public or private, 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 from 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; and (3) loans other than those mentioned above, when the total amount outstanding of the loan does not exceed CFAF 10 million for any one borrower, with an interest rate no higher than 7 percent and a maturity of two years or less. The contracting of loans referred to under (3) that are free of authorization, and each repayment thereon, must be declared to the Minister of Finance within 30 days of the operation.

Lending abroad by natural or juridical persons, whether public or private, 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 from the Minister of Finance. The following are, however, exempt from this authorization: (1) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Chad and countries abroad or between foreign countries in which these persons or firms take part; and (2) other loans, when the total amount outstanding of these loans does not exceed CFAF 5 million for any one lender. The making of loans referred to under (2) that are free of authorization, and each repayment thereon, must be declared to the Minister of Finance within 30 days of the operation. Commercial banks must maintain a specified minimum proportion of their assets in Chad.

Under the Investment Code published on December 9, 1987, 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 provides for four categories of enterprises that would receive various forms of preferential treatment, including certain tax and other privileges. Requests for preferential treatment must be submitted to the Minister of Finance, who, after examining the documents, transmits them to the Investment Commission. With the recommendation of this Commission, the project is submitted to the Council of Ministers for approval.

Gold

Chad has issued gold coins with face values of CFAF 1,000, CFAF 3,000, CFAF 5,000, CFAF 10,000, and CFAF 20,000, which are legal tender. Residents who are not producers of gold may not hold unworked gold unless specifically authorized. Imports and exports of gold, whether unworked or refined, require prior authorization from the Ministry of Finance and from the Directorate of Energy, Mines, and Geology, as well as a visa from the External Finance Department. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities, and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Exports of unworked gold and of raw diamonds (as well as domestic purchases and sales of both) are the monopoly of the Office for Purchases, Sales, Imports, and Exports, which is an approved private company. Unworked gold may be exported only to France. Both licensed and exempt imports of gold are subject to customs declaration.

Changes During 1991

No significant changes occurred in the exchange and trade system.

Chile

(Position on December 31, 1991)

Exchange Arrangement

The currency of Chile is the Chilean Peso (Ch$). The official exchange rate of the Chilean peso is pegged to the U.S. dollar at a rate adjusted at daily intervals according to a schedule established on the basis of the domestic rate of inflation during the previous month, less the estimated world rate of inflation. On December 31, 1991, the official exchange rate was Ch$372.16 per US$1. The official foreign exchange market (formal exchange market) consists of commercial banks, exchange houses, and other entities that are authorized by the Central Bank. Proceeds from exports of goods and services, payments for imports of goods and services, debt-service payments, remittances of dividends and profits, and authorized capital transactions, including loan receipts, must be transacted through this market. In addition, there is an informal exchange market through which all transactions not required to be channeled through the official foreign exchange market take place. In both markets, private parties are free to negotiate exchange rates.

The Central Bank conducts foreign exchange transactions vis-à-vis the official exchange market entities within margins of 5 percent above and below the official exchange rate.

The Central Bank provides forward cover against exchange risk in the form of currency swaps. The maturity periods of forward transactions range from 5 days to 720 days. Commissions on exchange transactions are subject to an 18 percent value-added tax. The exchange rates of the Chilean peso against other currencies are determined on the basis of the peso exchange rate with respect to the U.S. dollar and of the U.S. dollar exchange rate with respect to other currencies quoted in foreign markets.

The Central Bank has provided an exchange subsidy on the following service payments on some debts contracted before August 6, 1982 (the original amount of the debt was about US$8 billion): (1) debtors to Chilean banks or financial companies whose debt is indexed to the official exchange rate; and (2) debtors with direct obligations abroad whose obligations were registered with the Central Bank. The subsidy is paid by means of notes indexed to inflation with a minimum maturity of six years, and carrying a 3 percent rate of interest. On December 31, 1991, the difference between the official rate and the subsidized rate was Ch$62.3 per US$1. As of this date, only those debtors whose obligations were equal to or less than US$50,000 on June 30, 1985 had access to this subsidized rate. The stock of debt eligible in principle for the preferential exchange rate is estimated at US$67 million. However, the actual amount for which this exchange rate will apply is expected to be negligible owing in part to the bankruptcy of many of the affected debtors, and the subsidy operations are expected to stop soon.

Administration of Control

The Council of the Central Bank is responsible for carrying out exchange control policy. The Chilean Copper Commission is responsible for supervising copper exports and all imports of the copper industry in accordance with general rules enacted by the Central Bank.

A free trade agreement with Mexico was signed in September 1991.

Prescription of Currency

Settlements with Argentina, Bolivia, Brazil, Colombia, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained with each other by the Central Bank and the central banks of each of the countries concerned, within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). Net balances under the clearing system are settled in U.S. dollars.

Imports and Import Payments

Most imports are free of controls, with the exception of used motor vehicles. Most imports require a document (known as Informe de Importactión) issued by the Central Bank, which must be obtained and processed through the intermediary local commercial bank. Payment for visible trade transactions, through the official foreign exchange market, is not permitted unless an Informe de Importctión has been issued.

Importers who meet the documentary requirements are granted access to the official foreign exchange market regardless of the terms of the obligation involved, provided that the supplier’s interest continues to accrue until the date on which the foreign currency is sold.

Tariffs are bound under the General Agreement on Tariffs and Trade (GATT) at 35 percent. At present, imports are subject to a uniform tariff rate of 11 percent. A few items are exempted from the general tariff regime. Exemptions include tariffs negotiated with LAIA countries. Imports of wheat, edible oil, and sugar are subject to a special regime involving price margins within which the after-duty price has to remain. In addition, tariff duties or surcharges are applied, on a temporary basis, to imports of certain products that are subsidized in the country of origin or dumped in Chile.

Payments for Invisibles

Specified allowances exist for certain transactions; central bank authorization is required for others and is provided upon presentation of appropriate documentation. The established limit for tourist travel (in addition to the fares) is the equivalent of US$1,000 a trip for travel to Latin American and Caribbean countries and US$3,000 a trip to other countries. For travel by land to neighboring destinations, 20 percent of the allowance is provided in the form of foreign exchange and the rest in money orders. Higher amounts for travel other than tourism may be authorized by the Central Bank, upon presentation of adequate justification. Travelers may also obtain additional foreign currency in the informal exchange market.

Residents may purchase from commercial banks foreign exchange up to US$200 a month for study abroad, subscriptions to magazines, book purchases, registration in seminars, social security payments, medical treatment payments, and remittances of rents earned by real estate owners living abroad. Purchases over US$200 a month require prior approval from the Central Bank. All of these transactions are subject to presentation of appropriate documents. Remittances of earnings by foreign workers must be channeled through the informal exchange market. Remittances of profits and dividends earned from foreign direct investments require the prior approval of the Central Bank.

There are no special provisions for exports of domestic bank notes.

Insurance activities within the country are limited to Chilean companies or to authorized foreign companies.

Exports and Export Proceeds

All products may be freely exported. All foreign exchange proceeds from exports in excess of US$1,000 must be surrendered through commercial banks, which are required to advise the Central Bank. Commercial banks are authorized to purchase all foreign exchange proceeds spot from exporters. Exporters are allowed to retain up to 5 percent of export proceeds in a special foreign exchange account, which may be drawn upon to cover travel expenses and consultants’ fees, bank costs and/or commissions, and other expenses involved in export schemes, but the cumulative deposits in any such account during a 12-month period may not exceed US$500,000. Windfall receipts from copper exports of Codelco (the state copper mines) must be deposited in a special foreign currency account at the Central Bank, and withdrawals from this account are permitted only under certain circumstances.

Export proceeds subject to surrender requirements must be repatriated within 150 days of shipment and surrendered within 11 days. However, export proceeds may be surrendered within 240 days of shipment if they are held as foreign exchange deposits with resident banks. Extension of repatriation periods may be granted for certain products.

As a means of expediting the operation of the drawback system in respect of small export values, exporters of eligible products (approximately 6 percent of the country’s annual exports) have an option of taking a tax reimbursement (within 120 days of the surrender of the proceeds) in lieu of benefits under the existing import duty drawback scheme; alternatively, such exporters may avail themselves of the provisions of Law No. 19.024, under which they may draw back their payments of duties on imported inputs. Eligible products were defined initially as those whose average annual export values in 1990 were equal to or less than US$5 million. The list of eligible products is reviewed annually in the light of their export value during the previous year. Annual export values are also subject to adjustment each year. This tax refund was equal to 10 percent of the net export value of sales for those exporters of products whose annual export value was less than or equal to US$10 million; 5 percent for those exporters of products whose annual export value was between US$10 million and US$15 million; and 3 percent for products with an annual export value of US$15–18 million.

Proceeds from Invisibles

In general, foreign exchange proceeds from invisibles must be surrendered only when required by a legal provision. The same rule applies to royalties and copyright fees, commissions, proceeds from insurance, and other benefits related to foreign trade. There are no similar rules governing the proceeds from family remittances or the surplus foreign exchange from travel allocations.

There are no special provisions for imports of domestic bank notes.

Capital

All new foreign borrowing or refinancing of existing credits by commercial banks requires prior registration or approval from the Central Bank; the exceptions to this regulation are lines of credit of up to one-year maturity with foreign correspondents, and short-term loans for domestic relending. Short-term loans are subject to a limit determined mainly by a bank’s capital and reserves. However, the Central Bank must still be notified of foreign borrowings even if they do not require its approval. All foreign borrowings, except for credits that are provided directly to Chilean exporters by foreign importers, are subject to a reserve requirement of 20 percent, and this requirement may be satisfied by depositing the required balance in the Central Bank without interest or by entering into a special repurchase agreement with the Central Bank that effectively imposes a cost equivalent to the interest forgone. The length of the period during which the reserve requirement must be held in the Central Bank varies inversely with the maturity of the credit. Credits granted by foreign commercial banks to Chilean commercial banks as part of restructuring packages are exempt from the reserve requirement. Foreign capital may enter Chile under one of the following arrangements, depending on the purpose and type of the investment.

(1) Title I, Chapter XIV of the Compendium of Rules on International Exchange stipulates, inter alia, that capital brought into the country in the form of foreign borrowing (créditos externos) must be sold through authorized banks. There is no minimum term on the maturity of foreign borrowing. Repatriation normally is allowed only in accordance with the amortization schedule established at the time of registration. Accelerated payments or extensions of payment are subject to special authorization. Since June 1990, under Chapter XXVI of Title I, individuals and legal entities, domiciled and resident abroad, and meeting certain conditions, have been permitted to remit abroad proceeds from the sale of stocks of registered corporations domiciled in Chile that were purchased with funds abroad through the official exchange market. The remittance of dividends and profits accruing from such stocks is also allowed through the official exchange market.

(2) Chapter XIV of Title I of the Compendium of Rules authorizes the Central Bank to make exemptions to the general rules enacted by it concerning the inflow and outflow of capital or credits.

(3) Decree-Law No. 600 of July 7, 1974 (amended by Decree-Law No. 1748 of March 18, 1977), the Foreign Investment Statute, establishes a regime for long-term capital investment. Authorization to make a foreign exchange investment in Chile is granted by the Foreign Investment Committee through a contract containing undertakings that capital transfers to Chile will not normally exceed eight years for mining and three years for other projects. Investments of less than US$5 million may be approved by the Executive Secretary of the Committee, with a few exceptions. There are no general limitations on profit remittances, but specific agreements in this regard may be included in the above-mentioned investment contract. Capital may be repatriated after three years unless specified otherwise in the investment contract. Foreign investors can opt for a guaranteed annual corporate income tax at the rate of 49.5 percent over a period of ten years or may subject themselves to a tax system similar to that which is applied to domestic corporations. (According to this system, foreign investors are subject to an effective tax rate of 32.5 percent.) Any foreign credits involved must be on terms authorized by the Central Bank. Foreign capital that entered Chile before the promulgation of Decree-Law No. 600 and that is not subject to that law continues to be subject to the regulations prevailing on the date of entry. Contract awards in the oil sector are decided by the Government under presidential decree; rights and responsibilities under such a decree may be vested in the Empresa Nacional de Petróleo (ENAP) by the Ministry of Mines.

(4) Chapters XVIII and XIX of the Chilean Compendium of Rules on International Exchange, introduced in May 1985 and amended several times since, regulate the purchase of selected Chilean foreign debt instruments abroad at a discount as well as their repatriation. Eligible instruments are defined as external debt payable in foreign currency outside Chile with a maturity of more than one year, the debtor of which may be either the Treasury, the Central Bank, a public sector entity, the Development Corporation (CORFO), a financial institution, or a private sector resident having a guarantee from a financial institution. Chapter XIX governs the use of Chilean debt instruments by foreign residents for direct investment in Chile with remittance rights. Upon approval from the Central Bank, the foreign currency obligation is exchanged into a domestic currency obligation, the proceeds of which must be used for direct investment purposes, with the intermediation of a financial institution; special regulations apply to repatriation of such capital as well as to dividend payments. Chapter XVIII specifies the regulations for the conversion into peso assets (without remittance rights) by residents and nonresidents of debt purchased at a discount abroad with foreign exchange not obtained in the official market and of private sector external debt not guaranteed by the Government. Transactions under Chapter XVIII are also channeled through financial institutions, subject to an overall quota assigned on the basis of an auction system. Under Chapter XIX foreign investors may sell their investments to domestic investors after paying a fee to the Central Bank.

(5) Chapter XXVII of Title I of the Chilean Compendium of Rules on International Exchange, introduced in August 1990, provides that foreign capital investment funds may have access to the official exchange market for repatriation abroad of imported capital, profits earned on such capital, and payments of expenses involved in foreign investment activities under certain conditions.

Gold

Chile has issued three gold coins, which are not legal tender. Monetary gold may be traded only by authorized houses, but ordinary transactions in gold between private individuals may be freely undertaken. Imports and exports of gold are unrestricted, subject to compliance with the normal formalities for import and export transactions, including registration with the Central Bank.

Changes During 1991

Imports and Import Payments

June 15. The ad valorem import tariff was reduced to 11 percent from 15 percent.

Capital

June 5. A reserve requirement of 20 percent was imposed on all new foreign borrowings, except for credits that are provided directly to Chilean exporters by foreign importers.

June 20. Credits granted by foreign commercial banks to Chilean commercial banks as part of restructuring packages were exempted from the 20 percent reserve requirement.

June 27. An alternative means of satisfying the 20 percent reserve requirement on new foreign borrowing in the form of a special repurchase agreement with the Central Bank was established.

July 11. The 20 percent reserve requirement was extended to existing credits, except for credits with maturity of less than six months. The requirement on existing credits maturing between July 11 and December 31, however, would be phased.

October 14. Under Chapter XIX, after paying a fee to the Central Bank, foreign investors were allowed to sell their investments to domestic residents.

People’s Republic of China

(Position on December 31, 1991)

Exchange Arrangement

The currency of the People’s Republic of China is the Renminbi, and its unit is the Yuan. From July 5, 1986 until December 15, 1989, the exchange rate for the renminbi remained unchanged at Y 3.72 per US$1. On December 15, 1989, the authorities announced that the renminbi would be depreciated by 21.2 percent, effective December 16, to Y 4.72 per US$1. On November 17, 1990, the renminbi was depreciated by a further 9.6 percent. On April 9, 1991, China adjusted the official exchange rate for the renminbi based on long-run developments in the balance of payments and in the costs and exchange rates of China’s major competitors and daily fluctuations in the exchange rates of major currencies. Subsequently, the rate was adjusted on 22 occasions and, by the end of 1991, it had depreciated by a further 3.9 percent against the U.S. dollar. The exchange rates for the U.S. dollar and 20 other currencies are published daily by the State Administration of Exchange Control (SAEC);1 on December 31, 1991, the buying and selling rates for the U.S. dollar were Y 5.4206 and Y 5.4478, respectively, per US$1.

Published rates for currencies other than those that are important in China’s international transactions are changed whenever the calculated rate diverges from the previously published rate by between 0.5 percent and 1 percent. Beginning in November 1986, Chinese enterprises in the four economic zones of Shantou, Shenzhen, Ziamen, and Zhuhai, and foreign-funded enterprises (FFEs) (wholly owned subsidiaries of foreign companies and joint ventures) were permitted to transact rights to foreign exchange earnings in foreign exchange adjustment centers at rates agreed upon between buyers and sellers under the supervision of the SAEC.2 In early 1988, all domestic economic entities that were allowed to retain foreign exchange earning rights were granted permission to trade in the adjustment centers, and, at present, over ninety such centers have been established. Since December 1991, individual residents can buy and sell foreign exchange through authorized banks at rates established in the centers in conformity with the exchange control regulations. Each center is organized to match, buy, and sell orders or use the competitive offering rate system under local SAEC authority—the centers are not integrated into a national clearinghouse. Initially, a relatively small volume of transactions took place in these markets, but the volume has increased substantially since access to the centers was expanded. The renminbi depreciated in these markets from an average of Y 5.25 per US$1 in the first quarter of 1987 to Y 6.7 per US$1 in the first half of 1989, but subsequently appreciated to Y 5.7 per US$1 by December 1990. At the end of 1991, the average rate in the foreign exchange adjustment centers was Y 5.9 per US$1.

Sales of foreign exchange consist of sales of actual foreign exchange by FFEs and of foreign exchange retention quotas by Chinese enterprises (the actual foreign exchange having been surrendered to the state). Purchases of actual foreign exchange are effected by FFEs, which, according to the terms of their contracts as approved by the Ministry of Foreign Economic Relations and Trade (Mofert), can be used for designated purposes including their own operating needs, debt repayment, and remittances. Domestic enterprises, which are approved by Mofert to import, can purchase foreign exchange that is registered at the local SAEC and can be used to acquire foreign exchange from the state reserves at the prevailing official rate. SAEC authorization depends on conformity with the priority uses of foreign exchange as set out in the industrial policy consistent with the purposes of the enterprise. Requests for foreign exchange to finance imports of luxuries or judged to be speculative in nature are not permitted. The SAEC must approve the use of foreign exchange purchased in the adjustment centers, and in February 1989, regulations were issued specifying the priority uses of foreign exchange. Imports of inputs for the agricultural sector, textiles, and technologically advanced and light industries were given priority, while purchases of foreign exchange for imports of a wide range of consumer goods, including clothing and electronic products, were prohibited.

Forward exchange rates are published for 15 currencies.3 China does not apply a system of forward premiums and discounts but instead uses the spot rate plus a forward charge. Forward transactions are permitted only in connection with an underlying trade transaction. When banks sell renminbi forward, they levy a charge; when they buy, they levy a charge only on the deutsche mark, Netherlands guilder, Japanese yen, and Swiss franc. Rates are given for one to six months; transactions can be renewed for a further six months, but not for longer than one year. Forward charges reflect interest rates and trends in international markets in the currencies concerned. In recent years, the Bank of China has rarely engaged in forward transactions in renminbi.

Administration of Control

The People’s Bank of China (PBC) exercises central bank functions and control over foreign exchange; the SAEC, as a government institution under the leadership of the PBC, is responsible for implementing exchange regulations and for controlling all foreign exchange transactions in accordance with state policy. There are a number of SAEC sub-bureaus in the provinces, main municipalities, autonomous regions, and special economic zones. The Bank of China (BOC) is China’s specialized foreign exchange bank. Other banks and financial institutions, including affiliates of nonresident banks, may handle designated transactions with the approval of the SAEC. Currently, more than one hundred institutions are authorized to handle foreign exchange transactions. The China International Trust and Investment Corporation (CITIC) and other local financial institutions are authorized to conduct transactions connected with investments of foreign capital in China. Individuals and financial institutions may hold foreign exchange but generally may not deal in it or conduct arbitrage operations. Special exchange control measures are applied to special economic zones, the 14 designated coastal cities, and border regions.

Foreign exchange transactions at the official exchange rate are generally conducted in accordance with a foreign exchange plan. The PBC has responsibility for foreign exchange reserves and external borrowing. Within guidelines recommended to the State Council by the PBC on balance of payments management and total external borrowing, Mofert prepares estimates for those parts of the foreign exchange plan dealing with foreign trade, foreign loans, and China’s external assistance program; the Ministry of Finance prepares the foreign exchange budgets of other government departments. The SAEC draws up the section of the plan covering local and provincial nontrade transactions, receipts from overseas Chinese, and individual receipts. The State Planning Commission (SPC) coordinates and balances the overall foreign exchange plan and submits it to the State Council for approval. Following approval, the plan is sent back to the various localities and ministries for implementation. The SAEC is responsible for supervising the implementation of the foreign exchange plan.

The foreign exchange plan includes transactions with countries with which China maintains bilateral payments agreements. The annual plan is divided into quarterly plans, and, at the end of each quarter, the SAEC and the SPC review the implementation of the plan and determine whether corrections are necessary. That part of the foreign exchange plan dealing with trade is broken down by commodity. The actual implementation of the plan is delegated to the local level, where enterprises are assigned foreign exchange targets and ceilings on foreign exchange use, which determine access to the foreign exchange adjustment centers. Unexpected events, such as changes in foreign trade policies, might necessitate a revision of the plan.

Prescription of Currency

During 1991, bilateral payments agreements with Afghanistan, Albania, Bulgaria, Czechoslovakia, Ghana, Guinea, Hungary, the Islamic Republic of Iran, Mongolia, Pakistan, Poland, Romania, and the former U.S.S.R. were transformed into trade agreements based on normal commercial settlement terms in convertible currencies. As of the end of 1991, operative bilateral payments agreements were maintained with Bangladesh, Cuba, and the Democratic People’s Republic of Korea. Under these agreements, imbalances emerging toward the end of each year are settled in additional deliveries of goods. Noncommercial transactions are settled on a current basis in convertible currencies, except for part of such transactions with the Democratic People’s Republic of Korea and all transactions with Cuba, which pass through the clearing account. Payments to and from countries with which China has bilateral payments agreements are made in the currencies of these countries and in accordance with the procedures set forth in those agreements. In other cases, where there are no specific regulations prescribing the currencies to be used in transactions, they are determined by terms agreed under the respective contracts.

Nonresident and Foreign Currency Accounts

Nonresidents4 in China for a short period may open nonresident accounts with the BOC and other authorized banks and financial institutions. FFEs, including joint ventures, may also open foreign exchange current accounts and use them to make payments abroad and certain authorized transactions in China, for instance, between holders of such accounts. On a case-by-case basis, the SAEC may authorize Chinese enterprises to open foreign exchange accounts. Branches of foreign banks may hold convertible renminbi accounts in connection with commercial or noncommercial transactions. Renminbi may be purchased for such an account only on presentation of documentary evidence that the money will be used in the designated transaction. The BOC and other authorized banks and financial institutions may check any use made of renminbi in such accounts. Branches of foreign banks in the special economic zones may lend in foreign exchange and accept foreign currency deposits from FFEs.

Individuals may open resident foreign currency savings accounts at the BOC and other authorized banks and may withdraw foreign currency from, or deposit it to, such accounts without restriction, make payments abroad, or sell the proceeds in a foreign exchange adjustment center.

Imports and Exports

All trade, both direct and indirect, with South Africa is prohibited.

The primary responsibility for formulating foreign trade policies and ensuring the implementation of regulations and policy measures rests with Mofert, which also issues the licenses required for restricted imports and a large number of exports;5 following the reform in the exchange and trade system effected in early 1985, Mofert no longer engages in direct foreign trade transactions and is no longer involved in the daily enterprise management of trading corporations. Foreign trade is conducted by foreign trade corporations (FTCs) and other entities licensed by Mofert to conduct foreign trade.

In early 1988, control over FTCs was decentralized when local branches of most of these corporations were made independent entities accountable to local government authorities and responsible for their own profits and losses under the contract responsibility system. Application of the agency system, under which companies conduct foreign trade as agents on a commission basis, was also expanded; a larger number of domestic enterprises were given the authority to export their products directly or to import needed materials directly. There are 14 essential products, which continue to be imported by state-designated foreign trade corporations.

All enterprises, other than registered foreign trade corporations, need approval from the local foreign trade bureau in accordance with the authorization of Mofert and a license from the local bureau for industry and commerce to engage in foreign trade. All foreign exchange earnings from exports must be repatriated and, except those of FFEs, they must be surrendered to the state through the BOC or another specialized bank—unless specific exception is granted by the SAEC—and may not be used directly to offset import payments.

Part of the proceeds of exports (including foreign exchange earned in compensation trade) may be held as foreign exchange retention quotas6 in an account at the SAEC or its sub-bureaus. For general products, enterprises surrender 20 percent of foreign exchange earnings to the state at the official rate. Of the remaining 80 percent valued at rates established in foreign exchange adjustment centers (FETCs), the supplying enterprise keeps retention quotas equivalent to 10 percent of the foreign exchange earnings, 10 percent accrues to local government, and the foreign trade corporation retains the remaining 60 percent (exporters of products may retain 40 percent of their foreign exchange quotas). For mechanical and electrical products, exchange quotas are shared by the supplying enterprise (10 percent) and the foreign trade corporation (90 percent). The state may, however, purchase 20 percentage points of the retention from foreign trade corporations and the 10 percentage points from the supplying enterprise at the prevailing FETC rate. Foreign-funded enterprises operating in special economic zones (SEZs) and their joint ventures can still retain 100 percent of their export earnings in foreign currency accounts in resident banks; their foreign exchange position must remain in balance. Retained foreign exchange and quotas can be sold at the FETCs for renminbi or used to purchase foreign exchange to finance imports. Foreign-funded enterprises retain all of their foreign exchange earnings. Retention quotas can be traded in the foreign exchange centers or used for acquiring foreign exchange to purchase approved imports. The BOC and other specialized banks provide foreign exchange for imports on the basis of a general Mofert authorization to import licenses where required and approval by the SAEC. Residents may not pay for imports with local currency.

The number of trading companies and other enterprises engaged in foreign trade expanded rapidly in 1988. Many of the new firms lacked the necessary expertise to engage in foreign trade, and in February 1989, the State Council established guidelines for the rationalization of foreign trade companies. Trade in certain products was to be limited to government-designated trade corporations; provincial and local government regulation of local FTCs was to be improved; and companies with poor operating results or engaged in disorderly operations were to be closed or merged with other trading companies. As a result of the rationalization, the number of FTCs was reduced from 5,000 to about 4,000 by the end of 1991. An additional 431 production enterprises have been granted direct trading rights.

Imports consist of those included in the annual import plan and those outside the plan. The foreign trade plan is drawn up by Mofert in conjunction with the SPC. The former sends directives on the preparation of the plan to all foreign trade corporations and to the foreign trade bureaus in the provinces, municipalities, and autonomous regions, which, in turn, meet with other interested entities and prepare lists of needed imports and goods available for exportation. The plans prepared at the local level are coordinated and balanced by Mofert and the SPC at national foreign trade planning conferences. The State Council grants final approval to the foreign trade plan.

Goods that can be produced domestically or for which adequate domestic substitutes are available are not included in the import plan. Priority is given in the import plan to goods that cannot be produced domestically in adequate quantities and those that are urgently needed by the state, especially for key projects. In the case of goods that are not produced in adequate quantities but for which a strong demand exists in the foreign market, a portion of production is set aside for exportation.

Imports into China are also classified into two other categories—restricted imports and unrestricted imports.7 A number of restricted imports overlap with those included in the annual import plan.8 Import licensing serves to limit, and in some cases, prohibit imports of restricted goods that are included in the annual plan. Imports of seven assembly lines on the restricted list (for television sets, household refrigerators, household washing machines, radiocassette recorders, room air conditioners, motorcycles, and light motor vehicles) are restricted through the licensing system; imports of these lines require approval from the State Economic Commission, which currently does not grant approval.

Apart from imports that are restricted through the licensing system, a few types of imports, such as all secondhand garments, are explicitly banned. Imports of poisons, narcotic drugs, diseased animals, and plants are prohibited, as are exports of valuable cultural relics and rare books, rare animals, seeds and plants, and precious metals and artifacts made from these metals. In addition, the importation and exportation of weapons, ammunition and explosives, radio receivers and transmitters, Chinese currency, manuscripts, printed and recorded materials, and films that are deemed to be detrimental to Chinese political, economic, cultural, and moral interests are prohibited. All imports and exports require prior inspection before release by customs at the port of entry or exit. Exports of specified machine tools require a license from the State Administration for the Inspection of Import and Export Commodities, as a means of quality control.

The customs regulations in force are the Customs Law of the People’s Republic of China and the Regulations on Import and Export Tariff of the People’s Republic of China. The tariff rates for imports fall into two categories: general and preferential. The former apply to imports originating in the countries with which China has not concluded trade treaties or agreements with reciprocal favorable tariff clauses; the latter apply to imports originating in the countries with which China has concluded trade treaties or agreements with reciprocal favorable tariff clauses therein. The duties are calculated on the basis of the c.i.f. value of imported goods.

Imports into Tibet through border trade with the neighboring countries are subject to a separate system of customs duties established by the People’s Government of the Tibet Autonomous Region. The tariff, however, applies only to goods imported directly for use in Tibet. It does not apply to imports from other provinces, municipalities, and autonomous regions through Tibet, or to imports through Tibet by mail or brought in as part of the luggage carried by travelers; such imports are subject to the regular Chinese tariff.

In addition to customs duties, a consolidated industrial and commercial tax (a turnover tax also applies to other commodities) is levied on imports in accordance with the list contained in the Draft Regulations of the Consolidated Industrial and Commercial Tax of the People’s Republic of China. Raw materials imported for further processing are exempted from both customs duties and commercial taxes, provided that the products are exported within a specified period. Most imports and exports by joint ventures are exempt from customs duties.

Special economic zones have been set up in Shantou, Shenzhen, Ziamen, and Zhuhai. Economic and technological development areas have been established in 14 designated coastal cities. Foreigners, overseas Chinese, and Chinese from the Hong Kong and Macao regions are permitted to invest in and open factories in these zones and areas. Raw materials, equipment, and machinery or parts and components thereof, means of transportation, and other means of production imported by and intended to be used in the production of the enterprises in the zones are exempted from import duties and the consolidated industrial and commercial tax.

A number of restrictions are imposed on exports. Certain products (primarily raw materials and food products) are subject to export licensing. Since May 1990, 189 items have been subject to export-licensing requirements. Exports of some products are prohibited. In December 1988, the number of items whose exportation is banned was raised from 4 to 10. In addition, exports of 58 products are subject to duties.

Payments for and Proceeds from Invisibles

Enterprises must sell their foreign exchange earnings from invisible transactions to the BOC and other authorized banks, except for enterprises with foreign investment and some foreign trade sectors designated as experimental areas for trade reforms. Foreign exchange remitted from abroad or from the Hong Kong and Macao regions to Chinese residents may be retained and used to open a savings account at an authorized bank or sold for renminbi at FETC rates. Similarly, foreign exchange owned by immigrants or returning Chinese before becoming residents may be retained.

All foreign exchange earned by Chinese residents when working abroad, or in the Hong Kong or Macao regions, or earned from publication fees, copyright fees, awards, subsidies, honoraria, or other premiums must be repatriated and may not be deposited abroad; but individuals may retain part of such earnings according to prevailing regulations.

Foreign staff members and employees of foreign joint ventures, as well as those from the Hong Kong and Macao regions,9 may remit their salaries and other income earned in China, after payment of taxes and deduction of their living expenses in China and approval by the relevant local authorities. Profits of joint ventures may be remitted after taxation, in accordance with foreign exchange regulations; such remittances should be paid through the foreign exchange account of the joint venture. Since June 1991, remitted profits are no longer subject to an additional tax of 10 percent.

If a Chinese resident wishes to spend money on travel abroad, or remit money abroad, he must apply to the local SAEC bureau for approval. All transactions, except for those of an official nature, are carried out through FETCs. Such factors as the individual’s normal income need not be examined to determine if approval is to be granted for remittances. In cases of serious illness, death, or injury affecting a Chinese resident’s parents, spouse, or children outside China, he/she may apply for foreign exchange up to a specified limit on presentation of documentary verification. If permission is granted to travel abroad, a Chinese resident is normally allowed to take a reasonable amount of his/her own foreign exchange to cover expenses for transport and subsistence. There is no tax on travel. A Chinese resident who retires and emigrates is normally permitted to receive his/her pension abroad, but transfers of proceeds from the sale of his/her assets in China are limited.

Foreign exchange remitted or brought in by nonresidents may be converted into foreign exchange certificates (FECs) denominated in renminbi. FECs can be used by nonresidents in hotels, restaurants, and shops serving nonresidents for purchasing airline tickets and train or ship fares to Hong Kong and Macao and for international telecommunications and parcel post charges. Special regulations apply in Guangdong province. Persons entering China must declare their holdings of foreign currency and may take out of China any unused foreign currency on presentation of the import declaration form issued by customs. FECs may be imported, but their exportation is subject to the provision of documentation showing that they have been acquired legitimately. Chinese residents must show their authorization to export foreign currency at the border. Foreign organizations resident in China are not allowed to reconvert FECs into foreign currency. Nonresidents and resident foreigners in China are permitted to reconvert only up to 50 percent of original purchases of FECs when they leave China upon presentation of documented FEC purchases.

Income from royalties, dividends, interest, and rentals earned by foreign businesses without establishments in China is subject to a 20 percent withholding tax; a preferential rate of 10 percent is applied to foreign and overseas Chinese partners in joint ventures set up in the special economic zones and the economic and technological development areas in the old urban areas of the 14 coastal cities.

Joint ventures are required to be insured with Chinese insurance companies.

Capital

Foreign borrowing is classified either as “plan” or “nonplan” borrowing.10 Plan borrowing includes (1) borrowing by the Central Government (through the PBC, the Ministry of Finance, the Ministry of Agriculture, Animal Husbandry, and Forestry, and Mofert and enterprises under the control of Mofert) from international organizations and bilateral sources; (2) official borrowing including those by CITIC and international trust and investment companies (ITICs) (mostly in the form of bond issues and bond borrowing abroad) to finance plan projects; (3) borrowing by the BOC from foreign commercial banks to finance plan projects; (4) borrowing by provincial financial institutions (either directly or through the BOC) for large projects included in provincial governments’ annual plans; and (5) borrowing by the BOC and other financial institutions. Nonplan borrowing includes (1) borrowing by the BOC for purposes other than projects included in the annual plan (this includes interbank loans and foreign exchange deposits held in BOC headquarters and abroad); (2) foreign exchange deposit taking by other financial institutions; (3) short-term trade credits; (4) borrowing by joint-venture companies and 100 percent foreign-owned companies; (5) all borrowing at the provincial level to finance small projects; (6) lease financing; and (7) borrowing from offshore Chinese enterprises (mainly in Hong Kong).

The plan of external borrowing for a specified future period is approved by the SPC. Within these limits, the SPC coordinates foreign borrowing for projects included in the annual and five-year plans. Under this procedure, the project-executing agencies (the Ministry of Finance, Mofert, foreign trade corporations, and provincial governments) propose projects to the SPC. Proposals indicate the total amount of foreign exchange needed, how much of it will be earned and how much will be borrowed from abroad, and the kinds of imports for which loans are intended. The SPC reviews these plans and, in cooperation with the SAEC, the Ministry of Finance, and Mofert, recommends to the State Council the overall number of projects and their associated financing. Loans for vital projects or projects that have a rapid rate of return are given priority approval.

Within these guidelines, loans from international financial institutions and foreign governments require the clearance of the SPC and the approval of the State Council. Loans from international development agencies are generally the responsibility of the Ministry of Finance or the China Investment Bank (an organization under the direction of the Ministry); intergovernmental loans are the responsibility of Mofert, and loans from international financial institutions are the responsibility of the SAEC. Local governments and enterprises usually borrow through the BOC (or with its guarantee) or through specialized agencies such as ITICs rather than borrowing directly abroad themselves. The SPC sets an annual limit on such borrowing. Resident organizations may not issue securities for foreign exchange.

According to regulations issued in February 1989, all commercial borrowing abroad (including bond issues) requires prior approval from the SAEC. Commercial borrowing can be channeled through one of several domestic entities—the Bank of China, the specialized banks, the China International Trust and Investment Corporation, and other regional ITICs—which are allocated borrowing quotas under the annual plan. The short-term external debt of each institution is to be used only for working capital purposes.

All foreign direct investment projects are in principle subject to the approval of Mofert. However, a number of provincial and local authorities have been granted the authority to approve foreign direct investment projects up to specified amounts. The policy with respect to foreign capital is designed both to make up the insufficiency of domestic capital and to facilitate the introduction of modern technology and management.

Joint-venture enterprises and 100 percent foreign-owned companies are required to balance their foreign exchange receipts and payments, and foreign borrowing must be reported to the SAEC.11 Most foreign exchange earned by joint ventures and other enterprises involving nonresident capital must be deposited with the BOC or an authorized bank; outward transfers of capital generally require SAEC approval. Enterprises involved in the exploitation of offshore petroleum reserves may also hold foreign exchange abroad or in the Hong Kong or Macao regions. When a joint venture is wound up, the net claims belonging to the foreign investor may be remitted with SAEC approval through the foreign exchange account of the joint venture. Alternatively, the foreign investor may apply for repayment of his paid-in capital.

Profits of joint ventures, with the exception of firms in special economic zones and the 14 coastal cities and those exploiting petroleum, natural gas, and other specified resources,12 are subject to tax at 33 percent (30 percent basic rate plus a 10 percent surcharge on the assessed tax). A joint venture scheduled to operate for ten years or more may be exempted from income tax in the first one or two profit-making years and be allowed reductions of 50 percent for the following three years. Joint ventures in low-profit operations, such as farming and forestry, or located in areas considered to be economically underdeveloped may, upon the approval of the Ministry of Finance, be allowed a further 15–30 percent reduction in income tax for another ten years. A participant in a joint venture that reinvests its share of profit in China for a period of not less than five years may obtain a refund of 40 percent of the tax paid on the reinvested profit. Certain joint ventures established before the passing of tax regulations in August 1980 are subject to taxes at different rates.

Foreign companies, enterprises, and other economic organizations that have establishments in China engaged in independent business operations, cooperative production, or joint business operations with Chinese enterprises are subject to tax on their net income. There are five levels of tax rates, ranging from 20 percent for the first Y 250,000 of profits to 40 percent for profits exceeding Y 1 million. In addition, a local income tax of 10 percent of the same taxable income is levied. Income from interest on deposits of foreign banks in China’s state banks and on loans from foreign banks to China’s state banks with a normal interest rate is subject to a 20 percent withholding tax. Foreign state banks located in countries where income from interest on the deposits and loans of China’s state banks is exempted from income tax are correspondingly exempted from this Chinese tax. For interest income or leasing fees (less than the value of equipment) earned under credit agreements by foreign businesses without establishments in China, under trade agreements, and under leasing agreements signed by them with Chinese companies and enterprises during the period 1983–85, income tax is to be levied at the reduced rate of 10 percent (half the normal rate) during the validity of the aforesaid agreements; interest earnings from export credits are entitled to income tax exemption. For fees collected by foreign businessmen for the use of special technology provided by them in such fields as agriculture, animal husbandry, research, energy, communications, transport, environmental protection, and the development of important techniques, income tax may, with the approval of the tax authorities, be levied at the reduced rate of 10 percent, or be waived if the technology is advanced and is provided on favorable terms.

Foreign investment by Chinese enterprises is subject to approval; profits earned thereby must be sold to the BOC, except for a portion that may be retained locally as a working balance. Chinese diplomatic and commercial organizations abroad, as well as businesses abroad and in the Hong Kong and Macao regions, are required to draw up annual foreign exchange plans.

Gold

The PBC buys and sells gold and has central control over dealings in gold and silver. Sales of gold and silver are restricted to pharmaceutical, industrial, and other approved uses. Private persons may hold gold but may not trade or deal in it. The amount of gold, gold products, silver, and silver products that may be imported is unlimited but must be declared on entry. When exporting gold or silver, the exporter must present an import document from customs or a PBC export permit. Nonresidents may buy gold and silver and gold and silver products at special stores but must present the invoice when exporting them.

Changes During 1991

Exchange Arrangement

April 9. The management of the exchange rate was altered to a procedure under which the rate would be adjusted frequently in light of certain indicators including development in international exchange markets, relative price performance, and trends in export production costs.

September 11. New regulations governing the use of official foreign exchange were introduced. Priority for using foreign exchange would be given to imports of agricultural inputs such as chemical fertilizers, pesticides, and agricultural commodities such as grain and sugar; interest and amortization payments and remittances; and imports of key construction projects and technology. The next priority level would include raw materials used for industrial production, certain spare parts, educational materials, and medicines. Items for which the use of official foreign exchange is strictly prohibited would include cigarettes, wine, clothes, shoes, small household appliances, soft drinks, and film.

October 1. Specialized banks other than the BOC and foreign banks that are engaged in foreign exchange business in Zhejiang and Jiangsu began to sell foreign exchange from export and service receipts directly to local branches of the PBC; these banks were allowed to purchase foreign exchange directly from the PBC to finance imports. The State Administration for Exchange Control would manage this part of the exchange reserves under the authorization of the PBC.

Administration of Control

August 1. Wool was added to the list of products that must be handled by designated foreign trade corporations (the list now contains 14 product items).

August 29. Mofert promulgated the “Interim Regulations on Foreign Trade Agency System,” which set forth the rights and obligations of the parties to an agency agreement.

Prescription of Currency

January–December. All bilateral payments agreements were transformed into trade agreements to be settled on normal commercial terms in convertible currencies, with the exception of those with Bangladesh, Cuba, and the Democratic People’s Republic of Korea.

Imports and Exports

January 1. All export subsidies were eliminated.

January 1. New rules to govern foreign exchange retention on a uniform basis were introduced, under which the proportion of foreign exchange quotas an enterprise could retain would no longer depend on its location. Instead, for general goods, enterprises would surrender 20 percent of foreign exchange earnings to the PBC at the official rate. Of the remaining 80 percent, which would be valued at rates established in foreign exchange adjustment centers (FETCs), the supplying enterprise would keep retention quotas equivalent to 10 percent of the foreign exchange earnings, 10 percent would accrue to local government, and the foreign trade corporation would retain the remaining 60 percent (exporters of goods may retain 40 percent of their foreign exchange quotas). For mechanical and electrical products, exchange quotas would be shared by the supplying enterprise at a rate of 10 percent and the foreign trade corporation, at 90 percent. The PBC may, however, purchase 20 percent of the retention from foreign trade corporations and 10 percent from the supplying enterprise at the prevailing FETC rate. Foreign-funded enterprises operating in SEZs and their joint ventures can still retain 100 percent of their export earnings in foreign currency accounts in resident banks; their foreign exchange position, however, must remain in balance. Retained foreign exchange and quotas can be sold at the FETCs for renminbi or used to purchase foreign exchange to finance imports.

January 10. Import duties were lowered on forty products (including chemical fertilizers, farming chemicals, and some raw materials used in agricultural and industrial production, constituting 16.5 percent of total imports in the first 11 months of 1990). Import duties were raised from 9–50 percent (minimum) to 12–70 percent (maximum) on some items (mainly telecommunications equipment).

March 15. It was announced that import regulatory duties would be abolished by April 1, 1992. It was also announced that the coverage of import licensing would be cut by two thirds by the end of 1994, with licenses on 16 product categories to be removed in 1992.

May 1. The General Customs Administration promulgated the Rules on the Appraisal of Imported Goods by the Customs. The system of valuation of import and export goods was thus completed with the issue of these rules, which would govern the implementation of policies on tariffs; protection of the interests of honest traders; prevention of underdeclaration of prices, price fraud, and duty evasion; and harmonization of international standards.

June 15. Import tariffs were lowered on three products (sulphur, cellulose acetates, and gas insulator switch gear), and import tariffs on two products (acetate fiber and welding tubes and pipes) were raised.

August 15. The export duties on a number of products, including lead ore, phosphorus, ferromanganese, aluminum, and zinc ore, were reduced to 20–30 percent from 50 percent.

November 1. A Harmonized Commodity Description and Coding System, to be effective January 1, 1992, was promulgated. This system, which would replace existing import and export regulations, would be applied to customs tariffs and compilation of trade statistics. The average level of duty rates transposed in the new tariff on the whole is intended to be equivalent to that under the old tariff structure.

Payments for and Proceeds from Invisibles

June 1. Profit remittances were exempted from the 10 percent tax.

December 1. Chinese citizens and permanent foreign residents were permitted to sell their foreign exchange remitted from abroad, foreign currency deposits in Chinese banks, or foreign currency bank notes to designated banks at the exchange rates prevailing at the FETCs, upon presentation of identity papers. Chinese residents were permitted to purchase foreign exchange with domestic currency at FETC rates in order to travel, live, or study abroad, after showing passports, visas, and supporting documents. Prospective emigrants were required to produce official documents confirming their status and were subject to an overall ceiling; retired people who want to settle abroad were allowed to buy foreign exchange equivalent to the value of their pension funds. Emigrants who need foreign exchange to buy tickets for international transport were permitted to purchase the amount needed. Chinese residents were also allowed to obtain foreign exchange to pay membership dues to international academic bodies or to pay application fees for foreign language tests. Overseas Chinese, people from Hong Kong, Macao, and Taiwan Province of China, foreign experts and students in China, tourists, and foreigners visiting China or working in foreign representative offices in China were required to continue to trade in exchange foreign currency for FETCs.

Capital

April 9. The National People’s Congress adopted the Law Concerning the Income Tax of Foreign-Funded Enterprises and Foreign Enterprises and eliminated a 10 percent tax imposed on distributed profits remitted abroad by the foreign investors in foreign-funded enterprises. This law unified the tax rates for Chinese foreign equity joint ventures, Chinese foreign contractual joint ventures, and wholly owned foreign enterprises. It would also provide for more tax benefits in the priority industrial sectors, with effect from July 1, 1991.

September 26. “Regulations on Borrowing Overseas of Commercial Loans by Resident Institutions” and “Rules on Foreign Exchange Guarantee by Resident Institutions in China” were issued.

Changes During 1992

Imports and Exports

January 1. Import tariffs on 225 items, including raw and semifinished materials, agricultural inputs, machinery, equipment, and spare parts, were reduced.

Colombia

(Position on December 31, 1991)

Exchange Arrangement

The currency of Colombia is the Colombian Peso. All foreign exchange operations take place at a market-determined exchange rate, with the Banco de la República setting a reference exchange rate.1 The Banco de la República sets the reference rate, taking into account the movements of prices in Colombia relative to those in its major trading partners, the level of Colombia’s foreign exchange reserves, and Colombia’s overall balance of payments performance. The Banco de la República conducts foreign exchange transactions with the Central Government, decentralized public agencies, and financial intermediaries, but since June 1991, no longer conducts foreign exchange transactions directly with the private sector. The only authorized foreign exchange intermediaries are commercial banks and financial corporations, which are required to hold a net foreign exchange position equivalent to at least 30 percent of their foreign exchange liabilities. There are no regulations governing the net foreign exchange positions of exchange houses; they may sell their excess foreign assets to a financial intermediary. Foreign exchange proceeds earned by the private sector must be surrendered to financial intermediaries for exchange certificates issued by the Banco de la República, which may be sold in the foreign exchange market.2 Foreign exchange proceeds earned by the public sector may be surrendered to financial intermediaries or to the Banco de la República for foreign exchange certificates. The Banco de la República stands ready to redeem exchange certificates before their maturity date at its reference exchange rate at a maximum discount rate of 12.5 percent. Exchange proceeds from tourism, personal services rendered abroad, and donations of less than $20,000 are not required to be surrendered through the foreign exchange market but may be sold to an exchange house or to financial intermediaries.

Payments abroad can be made through exchange certificates (which are converted into foreign exchange by the Banco de la República on demand) or through the purchase of foreign exchange from authorized financial institutions.

On December 31, 1991, the reference rate of the Banco de la República was Col$707 per US$1, and the free market exchange rate was Col$632 per US$1. Buying and selling rates for certain other currencies3 are also officially quoted, with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad.

Other effective exchange rates result from (1) a 7.4 percent tax on coffee export proceeds; (2) tax credit certificates (certificados de reembolso tributario or CERTs) granted at three different percentage rates; (3) the imposition of a remittance tax at two different rates on transfers of earnings from foreign capital and repatriation of this capital; and (4) a 3 percent tax on foreign exchange receipts from personal services and on other transfers.

The Government purchases foreign exchange for all public debt payments and other expenditures included in the national budget at the average market rate.

The Banco de la República stands ready to sell foreign exchange warrants (tìtulos canjeables por certificados de cambio) to public enterprises in the electric sector and the National Federation of Coffee Growers (Federación National de Cafeteros) in accordance with the terms of Resolution 16/1991 of the Banco de la República. These warrants, expressed in U.S. dollars, have a maturity of 12 months, and, in some cases, may also be exchanged for exchange certificates. Within their period of validity, warrants may also be sold to the Banco de la República for pesos at the certificate market buying rate on the date of repurchase. Warrants bear interest at the rate equal to that of the external loan, but never higher than the average 30-day rate on primary certificates of deposit at the close of operations in the New York market for the day before the certificate is issued less 1 percentage point if held by public sector recipients of external loans. Warrants held longer than 12 months cannot be converted into exchange certificates but may be resold to the Banco de la República at the certificate market rate on the last day of the twelfth month.

All foreign exchange debts registered in the Banco de la República4 are permitted to buy forward cover against exchange risks. All future contracts of foreign exchange must be registered in the Banco de la República, and exchange rate guarantees are allowed to be provided only for the U.S. dollar against most of the other convertible currencies.

Administration of Control

All imports require registration at the Colombian Institute of Foreign Trade (Incomex). Administrative control is exercised by authorized foreign exchange intermediaries, and the Exchange Superintendency, an autonomous agency reporting to the Ministry of Finance, enforces expost control and supervision over exchange transactions and is responsible for applying penalties for any violation of the exchange regulations.

The Foreign Trade Council (FTC), which includes representatives of the Ministry of Finance, Incomex, other public entities, and two officers of the FTC, determines overall import and export policy. Incomex, through its Import Board, controls those imports that are subject to prior licensing, and administers Plan Vallejo, which is a special import-export arrangement concerning a rebate of taxes paid on imported inputs used in the production of exported goods. Incomex, together with the Committee on Commercial Practices, administers antidumping cases. The National Council for Economic and Social Policy issues directives to the Banco de la República and the National Planning Department concerning direct investment in Colombia. The Banco de la República 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.

Prescription of Currency

The Banco de la República establishes the list of currencies that it accepts for exchange surrender and provides for import payments. Payments and receipts are normally effected in U.S. dollars, but importers and exporters are also free to use quoted currencies (see footnote 3). Settlements for commercial transactions with countries with which Colombia has reciprocal credit agreements must be made through special accounts in accordance with the provisions of such agreements. Settlements between Colombia and Argentina, Bolivia, Brazil, Chile, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). There are also reciprocal credit agreements with China, Costa Rica, Cuba, the Dominican Republic, El Salvador, Guatemala, Honduras, Hungary, Nicaragua, Spain, the former U.S.S.R., and Yugoslavia.

Nonresident Accounts

Residents of Colombia may maintain foreign exchange accounts abroad, but they may only deposit exchange proceeds from tourism, personal services rendered abroad, or donations of up to $20,000 in these accounts. Credit institutions are authorized to receive short-term deposits in foreign currency from natural or juridical persons not resident in Colombia; these deposits are freely available to the holders, but any foreign currency deposits that they may wish to convert into Colombian currency must be sold to the Banco de la República. Banks must report transactions through these accounts to the Banco de la República and the Exchange Office.

Imports and Import Payments

Importers must obtain foreign exchange from a financial intermediary with exchange certificates purchased in the market, or may purchase foreign exchange directly from a financial intermediary. Foreign enterprises in the oil, coal, and natural gas sectors and firms in the free trade areas are not permitted to purchase foreign exchange from financial intermediaries. Payments must be made within three months of the due date of payment indicated in the import registration form, except for goods for immediate use (for example, raw materials, inputs, and consumer goods), payment for which may be made in six months.

Imports are subject to one of the following two regimes: (1) freely importable goods, requiring registration only with Incomex;5 and (2) goods subject to prior approval and requiring an import license. In the free-import regime, there is a global free list applicable to all countries, a national list applicable only to member countries of the LAIA, and special lists applicable only to member countries of the LAIA and to members of the Andean Pact. Imports subject to a prior licensing requirement consist of medicines and chemical products (30 tariff positions) and weapons and munitions (39 tariff positions).

A distinction is drawn between reimbursable and nonreimbursable imports. Reimbursable imports involve purchase of official foreign exchange from a financial intermediary, including imports of machinery and equipment financed by international credit institutions. Nonreimbursable imports consist mainly of aid imports under grants and commodities constituting part of a direct investment.

Import registrations are granted automatically. However, import registrations by some public sector agencies are screened by Incomex to determine whether local substitutes are available. Both import licenses and registrations are valid for six months, except those for agricultural and livestock products, which are valid for 3 months, and those for capital goods, which are valid for 12 months. Import licenses can be extended for only one period. All imports other than those classified as minor imports or shipments with an f.o.b. value of less than $500 are subject to registration with Incomex. Urgently needed spare parts not exceeding $10,000 are not subject to prior registration. The charge for import registration is Col$8,500. Imports of crude oil and petroleum products are effected by Empresa Colombiana de Petroleo (Escopetrol).

Import duties are calculated at the average selling rate for exchange certificates during the previous month, as determined by the Ministry of Finance. In addition to customs duties, there is a surtax of 5 percent. Exempted from this tax are temporary imports; imports by public entities; goods of LAIA origin; imports under the Vallejo Plan; diplomatic, consular, and similar imports; gifts; and imports destined for the International Commerce Fair of Bogotá, for the free port of San Andrés y Providencia, or effected through the Port of Leticia.

Payments for Invisibles

All payments for invisibles may be effected through the exchange market. Foreign exchange for payments of less than $20,000 may also be obtained through exchange houses or commercial financing companies. Foreign exchange to finance private expenditures abroad and to pay for personal services provided by nonresidents in amounts of less than $20,000 may be obtained from an exchange house.

Foreign investors may transfer abroad up to 100 percent of profits. A remittance tax of 12 percent is applicable to transfers of profits and dividends from new foreign investment and from foreign capital investment funds; the tax is 19 percent for transfers of profits and dividends from existing foreign investment.

Exports and Export Proceeds

Export licenses are not required. The periods for surrendering export proceeds are normally as follows: (1) for green coffee, within 90 days of the date of registration of exports (180 days for instant coffee); and (2) for other goods, 3 months after the payment date as specified by the exporter.

All exchange proceeds from exports must be surrendered to authorized financial intermediaries or for exchange certificates that can be sold in the free market, with the exception of export proceeds of Ecopetrol, Federación Nacional de Cafeteros, and exports of minerals associated with state enterprises; these institutions are permitted to retain part of their export proceeds abroad for the settlement of their import costs. In addition, foreign enterprises in the oil, coal, and natural gas sectors and firms in free trade areas are not required to surrender their foreign exchange. On surrendering their export proceeds in the foreign exchange market, exporters of products other than coffee, petroleum and petroleum products, and exports effected through special arrangements (such as barter and compensation) may receive tax credit certificates in an amount corresponding to a specified percentage of the f.o.b. value surrendered, converted at the average selling rate for the exchange certificates during the previous month as determined by the Ministry of Finance. Three rates—5 percent, 9 percent, and 10 percent—are applied, depending on the product and the country of destination; the rates are calculated on domestic value added. These certificates, which are freely negotiable and are quoted on the stock exchange, are accepted at par by tax offices for the payment of income tax, customs duties, and certain other taxes.

Exports of coffee are subject to the following regulations: (1) a minimum surrender price (reintegro) is fixed on the basis of international market prices; (2) exporters pay a coffee contribution (contribución cafetera), which is determined by the difference between the export value of coffee surrendered and its estimated cost, taking into account the domestic buying price for export-type coffee (precio interno de sustentación); (3) exporters pay a 7.4 percent tax on surrendered export proceeds, of which 2.7 percent is earmarked for the National Federation of Coffee Growers, 2.7 percent for the National Coffee Fund, and the remainder provides revenue for the Treasury; (4) exporters must either surrender without payment (in the form of untreated coffee) a certain proportion of the volume of excelso coffee that they wish to export (retención cafetera) or pay the national Federation of Coffee Growers the peso equivalent if the national Coffee Committee (composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation) so decides (as of the end of 1991, this provision was not in operation); and (5) the National Coffee Committee establishes a domestic buying price for export-type coffee, expressed in pesos per carga of 125 kilograms.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered, except for proceeds from tourism, labor contracts performed abroad, and donations amounting to less than $20,000, for exchange certificates, which can be sold on the exchange market. There is no restriction on the amount of foreign exchange travelers may bring into the country.

Capital

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

All foreign investments and foreign loans with maturities exceeding one year, direct lines of foreign credit obtained by nonbank residents,6 and the transfer of capital previously imported (except loans previously registered under Decree No. 2322 of September 2, 1965) must be registered with the Banco de la República. Foreign direct investments in Colombia are governed by Law 9 of 1991 (January 17, 1991) and National Council for Economic and Social Planning (CONPES) Resolution 51 (October 22, 1991) and are in accordance with the provisions of Decisions Nos. 291 and 292 of the Cartagena Agreement, which govern foreign investments within the member countries of the Andean Pact. Foreign investment is freely allowed up to 10 percent of ownership in any sector of the economy except in defense and waste disposal. Special regimes remain in effect in the financial, petroleum, and mining sectors. Foreign capital participation in the financial sector up to 100 percent is permitted under Law No. 45 of 1990. The purchase of 10 percent or more of the shares of a Colombian financial institution requires the prior approval of the Superintendent of Banks. CONPES can legislate special conditions affecting foreign investment in specific sectors of the economy so as to overrule the above-mentioned provisions (CONPES Resolution 51 of October 1991). Member countries of the Andean Pact are treated as Colombian investors for purposes of fulfilling the Colombian ownership requirement, provided that profit and capital remittances remain within the country of origin and shares are not sold outside the area.

Colombian investment abroad is granted automatically up to $200,000 by the National Planning Department. Investments over that amount require the approval of the National Planning Department.

Registration of capital with the Banco de la República entitles the investor to export profits and to repatriate capital under specified conditions. Up to 100 percent of profits may be transferred abroad. Foreign investors may not repatriate their capital within one year of registration but are free to do so thereafter.

Foreign loans contracted by private Colombian individuals or firms are generally subject to a minimum maturity of five years with two years of grace and an interest rate ceiling of 2.5 percent over the New York prime rate or LIBOR. Such loans are normally permitted only for financing working capital or fixed investment. Special regulations govern the periods for which resident banks may provide import financing from foreign currency borrowed abroad. Foreign loans for government entities in excess of specified amounts require prior authorization by the Ministry of Finance and the National Planning Department. For loans to the Government, or guaranteed by the Government, the following are also required: prior authorization from the National Council for Economic and Social Policy and from the Banco de la República; prior consultation with the Interparliamentary Committee on Public Credit; and ex post approval from the President of the Republic. Such loans are also subject to the executive decree that authorizes the initiation of negotiations.

Foreign investments in the form of placement of shares in a fund established to make investments in the stock exchange and in debt papers issued by the financial sector are permitted with the approval of the National Planning Board. Foreign capital invested in these funds can be repatriated only one year after investment.

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 also require approval from the Royalties Committee before they can be registered.

Colombian residents are authorized to maintain assets and earned income abroad, provided that assets were owned before September 1, 1990 or that they have been acquired from exchange receipts that do not have to be surrendered.

Gold

Under Law 9 of January 17, 1991, Colombian residents are allowed to purchase, sell, hold, import, and export gold. However, for a period of two years, the Government would impose certain restrictions on these activities, including eligibility of the institutions or persons allowed to export gold.

The Banco de la República makes domestic sales of gold for industrial use directly at a price equivalent to the average quotation in the gold market in London during the previous day; this price is converted into pesos at the prevailing rate of exchange certificates on the date of sale.

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

The Banco de la República issues from time to time commemorative gold coins, which are legal tender. Residents and nonresidents may freely buy such coins, but export licenses are not normally granted.

Changes During 1991

Exchange Arrangement

January 9. The exchange rate, except for transactions relating to tourism, personal services rendered abroad, and donations of less than $20,000, would continue to be determined by the Banco de la República (Law 9). The exchange rate for personal services and for transfer transactions exceeding $20,000 would be allowed to be set by the market. The authorized financial intermediaries were required to surrender every week their net foreign asset position to the Banco de la República at the official exchange rate.

April 26. The Banco de la República began to charge a 5 percent commission on its purchases of U.S. dollars from residents of Colombia and a 3.8 percent commission on its purchases of U.S. dollars from financial intermediaries. (In June 1991, the commission for foreign exchange intermediaries was lowered to 1.5 percent as was the commission for Colombian residents.)

June 24. All foreign exchange operations would be transacted at a market-determined exchange rate, with the Banco de la República setting a reference exchange rate. The Banco de la República would conduct foreign exchange transactions only with the Central Government, decentralized public agencies, and financial intermediaries and would not conduct foreign exchange transactions directly with the public. Commercial banks and financial corporations would be the only authorized foreign exchange intermediaries, and they were required to hold a net foreign exchange position of up to 20 percent of their capital (modified to at least 30 percent of their foreign exchange liabilities on October 9, 1991). Exchange houses may purchase exchange proceeds from tourism, personal services rendered abroad, and donations of up to $20,000.

Resident and Nonresident Accounts

June 24. Residents of Colombia were authorized to open foreign exchange accounts abroad, and were granted a six-month period to legalize foreign exchange accounts held abroad through the payment of a 3 percent tax amnesty on the amount held abroad; after June 26, the rate of tax payment would be raised to 5 percent.

Imports and Import Payments

January 9. The advance deposit requirement for imports was abolished.

June 24. Importers were required to obtain foreign exchange from a financial intermediary.

September 1. The number of tariff rates was reduced from nine to four, with a maximum rate of 15 percent (except for automobile and agricultural imports for which import duties would range from 20 percent to 72 percent). As a result, the average tariff rate decreased from 23.4 percent to 17.3 percent (and further to 6.7 percent in September). The rate of import surcharge was decreased from 13 percent to 10 percent (and further to 8 percent in August). With these reductions, the average effective rate of protection (including the import surcharge) decreased from about 65.2 percent to 26.2 percent.

October 1. Exchange licenses were abolished.

December 31. The rate of import surcharge was decreased to 5 percent.

Payments for Invisibles

January 9. The 80-day waiting period requirement for the redemption of exchange certificates for transfers and service payments was abolished.

January 28. The limit on profits foreign investors registered with the Banco de la República were allowed to transfer abroad was raised to 100 percent from 25 percent of the value of registered capital.

October 22. Profits of up to 100 percent were permitted to be transferred abroad.

Exports and Export Proceeds

January 9. The pasilla y ripio tax and the ad valorem tax on coffee exports were abolished and replaced by a coffee contribution (contribución cafetera). This contribution would be determined by the difference between the export value of coffee surrendered and its estimated cost, taking into account the domestic price for export-type coffee (precio interno de sustentación).

June 24. The surrender requirement was modified, whereby all recipients of foreign exchange, including those in the public sector, would have the following three options at the time of their surrender: (1) they may exchange their foreign exchange for a 90-day maturity exchange certificate issued by the Banco de la República, and then convert it into pesos at the Banco de la República’s reference rate prevailing at the maturity date (effective October 29, the maturity period was changed to 360 days); (2) they may sell their exchange certificates immediately to the Banco de la República at its reference rate at a 10 percent discount; and (3) they may sell foreign exchange for pesos at a market-determined rate.

Proceeds from Invisibles

January 9. Exchange receipts from tourism, labor contracts abroad, and donations of up to $20,000 were not required to be surrendered.

May 31. A 3 percent tax was imposed on foreign exchange receipts from personal services.

Capital

January 9. The regulations on foreign direct investment were amended. New foreign investments would receive the same tax treatment as domestic investments, but the tax on profit and income remittances would continue to be levied. The 85 percent advance deposit requirement for all capital transfers abroad was abolished. Colombian residents were authorized to maintain assets and earned income abroad, provided that assets were owned before September 1, 1990 or had been acquired from exchange receipts that did not have to be surrendered.

Comoros

(Position on December 31, 1991)

Exchange Arrangement

The currency of the Comoros is the Comorian Franc, which is pegged to the French franc, the intervention currency, at the fixed rate of CF 1 per F 0.02. The current buying and selling rates for the French franc are CF 50 per F 1. Exchange rates for other currencies1 are also officially quoted on the basis of the fixed rate of the Comorian franc for the French franc and the Paris exchange market rate for the respective currencies in terms of the French franc. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, the exchange control measures of the Comoros do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose institute of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries. Forward cover against exchange rate risk is authorized by the Central Bank of the Comoros and is provided to traders by the commercial banks for up to three months.

Administration of Control

Exchange control is administered by the Central Bank of the Comoros. The Ministry of Finance and Budget supervises borrowing and lending abroad, inward direct investment, and all outward investments. Part of the approval authority in respect of exchange control has been delegated to an authorized bank—the sole commercial bank—and to the Postal Administration. All exchange transactions relating to foreign countries must be effected through the authorized bank or the Postal Administration. Import and export licenses are issued by the Directorate-General of Economic Affairs in the Ministry of Economy and Trade. Arrears are maintained with respect to external payments.

Prescription of Currency

The Central Bank of the Comoros maintains an Operations Account with the French Treasury; settlements with France (as defined above), Monaco, and the Operations Account countries are made in Comorian francs, French francs, or the currency of any other Operations Account country. Settlements with all other countries are usually made through correspondent banks in France, in any of the currencies of those countries, or in French francs through foreign accounts in francs. All settlements with South Africa are prohibited.

Imports and Import Payments

Imports of South African origin are prohibited, and the importation of certain other goods is prohibited from all countries. The importation from any source of certain other commodities is subject to individual licensing. All import transactions relating to foreign countries must be domiciled with the authorized bank if the value is CF 500,000 or more.

Payments for Invisibles

All payments to South Africa are prohibited. Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely. Payments for invisibles related to authorized imports are not restricted. Invisible payments to other countries are subject to approval, which is granted on production of supporting documents, in accordance with Article 3 of Instruction No. 2 of the Exchange Regulations. These regulations apply to allowances for education, family maintenance, and medical treatment, and remittances by foreign workers of savings from their earnings.

For tourist travel, residents traveling to France (as defined above), Monaco, and the other Operations Account countries may take out the equivalent of CF 500,000 in bank notes and any amount in other means of payment. Residents traveling to countries other than France (as defined above), Monaco, and the other Operations Account countries may take out in any means of payment up to the equivalent of CF 500,000 a person a trip. For business travel, the Central Bank of the Comoros may authorize a special allowance upon request of the authorized bank.

Nonresident travelers may export the equivalent of CF 500,000 in bank notes and any means of payment issued abroad in their name without providing documentary justification. Other cases are authorized pursuant to the exchange regulations upon production of supporting documents.

Repatriations of dividends and other earnings from nonresidents’ direct investment are authorized and guaranteed under the Investment Code.

Exports and Export Proceeds

All exports to South Africa are prohibited. With a few exceptions, exports to France (as defined above), Monaco, and the Operations Account countries are free of license. Most exports to other countries require licenses. Proceeds from exports to foreign countries must normally be collected, and the receipts repatriated within 30 days of the expiration of the commercial contract and sold immediately to the authorized bank. All export transactions relating to foreign countries must be domiciled with the authorized bank if the value is CF 500,000 or more.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), 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 collected and, if received in foreign currency, must be surrendered within one month of the due date or the date of receipt. Resident and nonresident travelers may bring in any amount of domestic and foreign bank notes and coins.

Capital

All settlements between the Comoros and South Africa are prohibited. Capital movements between the Comoros and France (as defined above), Monaco, and the Operations Account countries are, in principle, free of exchange control; capital transfers to all other countries require exchange control approval, but capital receipts from such countries are normally permitted freely.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad, inward direct investment, and all outward investment; these controls relate to the transactions themselves, not to payments or receipts.

Gold

Imports and exports of monetary gold require prior authorization. Imports and exports of articles containing gold are subject to declaration, but transfers of personal jewelry within the limit of 500 grams a person are exempted from such declaration.

Changes During 1991

No significant changes occurred in the exchange and trade system.

People’s Republic of the Congo

(Position on December 31, 1991)

Exchange Arrangement

The currency of the People’s Republic of the Congo is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the same rate. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rates for the currencies concerned in the Paris exchange market.

Payments to France and its overseas departments and territories, Monaco, and the Operations Account countries (see section on Administration of Control, below), as well as the purchase of these countries’ bank notes and traveler’s checks, are subject to a commission of 0.75 percent, with a minimum charge of CFAF 75; exempt from this commission are payments of the state, the Postal Administration, and the BEAC, salaries of Congolese diplomats abroad, expenditures of official missions abroad, scholarships of persons studying or training abroad, and debt-service payments due from companies that have entered into an agreement with the Congo. Most payments to other foreign countries and credits to foreign accounts in francs are subject to a commission of 1 percent, and foreign exchange purchased by the Diamond Purchase Office is subject to a commission of 0.50 percent, with a minimum of CFAF 100. A commission of 0.25 percent is levied on all capital transfers to countries that are not members of the BEAC. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

Payments to the following countries, although subject to declaration, are unrestricted: (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Settlements and investment transactions with all foreign countries, however, are subject to control. Foreign countries are defined as all countries other than the Congo.

The General Directorate of Credit and Financial Relations in the Ministry of Finance and the Budget supervises borrowing and lending abroad. Exchange control is administered by the Minister of Finance and the Budget, who has delegated his approval authority to the General Directorate. All exchange transactions must be effected through authorized banks or the Postal Administration. Import and export licenses are issued by the Foreign Trade Directorate in the Ministry of Commerce. With the exception of 13 products, the system of import licenses has been replaced by a system of ex post declarations (Decree No. 88/414, May 28, 1988).

Arrears are maintained with respect to external payments.

Prescription of Currency

Since the Congo is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries 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.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting of BEAC bank notes to foreign accounts in francs is permitted when they have been mailed to the BEAC agency in Brazzaville by the foreign correspondent of an authorized bank.

Imports and Import Payments

Imports from all sources require a declaration of license. An indicative annual import program distinguishes five zones: (1) the countries of the central African Customs and Economic UD (UDEAC); (2) France; (3) other Operations Accounting countries; (4) European Community (EC) country other than France; and (5) all remaining countries. Thirteen product items under this program reason licenses, and others are subject to expost declaration. The quotas for non-EC countries may be to import goods originating in any non-Operations Account country.

All import transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank. Licenses for imports from countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank, and they require a visa from the Foreign Trade Directorate and the General Directorate of Credit and Financial Relations. The approved import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to an authorized bank.

All imports must be insured with the state insurance company, Société d’assurances et de réassurances du Congo (SARC). To implement this measure, the Congolese Customs Service releases imports only after an insurance certificate issued by the SARC has been produced.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely, provided they have been declared and are made through an authorized intermediary; those to other foreign countries are subject to approval. 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 permitted with the authorization of the General Directorate of Credit and Financial Relations.

Residents traveling as tourists to countries other than France (as defined above), Monaco, the Operations Account countries, or Zaïre may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip (CFAF 87,500 for children under 10 years) or CFAF 10,000 if the duration of the trip is less than 24 hours, for any number of trips a year; they must surrender any foreign exchange in excess of CFAF 5,000 remaining after their return to the Congo.

Business travelers receive 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 may be authorized in appropriate cases. The use of credit cards abroad by residents is prohibited. There are special facilities for travelers to Kinshasa who request no foreign means of payment other than Zaïrian bank notes. Residents traveling to France (as defined above), Monaco, or an Operations Account country may take out CFAF 25,000 (CFAF 12,500 for children under 10 years) in BEAC bank notes. Residents and nonresidents traveling to foreign countries other than France (as defined above), Monaco, the Operations Account countries, or Zaïre may freely take out up to a maximum of CFAF 10,000 in BEAC bank notes, French bank notes, and bank notes issued by any other institute of issue maintaining an Operations Account with the French Treasury.

The transfer of the entire net salary of a foreigner working in the Congo is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period.

Exports and Export Proceeds

In principle, all exports require prior authorization, but most exports to France (as defined above), Monaco, and the Operations Account countries may be made freely; among the exceptions are commodities exported by the National Marketing Office for Agricultural Products (Office du café et du cacao and Office des cultures vivrières) and by the Congolese Marketing Office for Timber (Office congolais du bois).

Proceeds from exports to foreign countries must be collected and repatriated, generally within 180 days of arrival of the commodities at their destination. Export proceeds must be surrendered within a month of the due date. All export transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank.

Proceeds from Invisibles

All amounts due from residents of foreign countries in respect of services and all income earned in those countries from foreign assets must be collected when due and surrendered within a month of the due date. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins).

Capital

Capital movements between the Congo and France (as defined above), Monaco, and the Operations Account countries are free, although ex post declarations are required. Such movements to countries that are not members of the BEAC are subject to a commission of 0.25 percent. Most international capital transactions are subject to prior authorization. Capital transfers abroad require exchange control approval and are restricted, but capital receipts from abroad are generally permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in the Congo by residents or nonresidents must be deposited with authorized banks in the Congo.

Special controls (additional to any exchange control requirements that may apply) 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 the Congo; these controls relate to the transactions themselves, not to payments or receipts.

Direct investments abroad2 require the prior approval of the Minister of Finance and the Budget; the full or partial liquidation of such investments also requires the prior approval of the Minister. Foreign direct investments in the Congo3 require the prior approval of the Minister of Finance and the Budget, unless they involve the creation of a mixed-economy enterprise. The full or partial liquidation of direct investments in the Congo must be declared to the Minister. Both the making and the liquidation of direct investments, whether these are Congolese investments abroad or foreign investments in the Congo, must be reported to the Minister within 20 days. Direct investments are defined as investments implying control of a company or enterprise.

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

Borrowing by residents from nonresidents requires prior authorization from the Minister of Finance and the Budget. However, loans contracted by registered banks and small loans, where the total amount outstanding does not exceed CFAF 10 million for any one borrower, are exempt from this requirement. The contracting of loans that are free of authorization, and each repayment thereon, must be reported to the General Directorate of Credit and Financial Relations within 20 days of the operation.

Lending by residents to nonresidents is subject to exchange control, and all lending in CFA francs to nonresidents is prohibited, unless special authorization is obtained from the Minister of Finance and the Budget. The following are, however, exempt from this authorization: (1) loans in foreign currencies granted by registered banks; (2) other loans in foreign currencies when the total amount outstanding of these loans does not exceed the equivalent of CFAF 5 million for any one lender; and (3) foreign currency loans whose interest rate does not exceed 5 percent a year and whose maturity is two years or less. The making of loans that are free of authorization, and each repayment thereon, must be reported to the General Directorate of Credit and Financial Relations within 20 days.

Under the Investment Code of April 26, 1973, a number of privileges may be granted to approved foreign investments. The Code provides for four categories of preferential treatment.

Gold

By virtue of Decree No. 66/236 of July 29, 1966, as amended by Decree No. 66/265 of August 29, 1966, residents are free to hold gold in the form of coins, art objects, or jewelry; however, to hold gold in any other form or to import or export gold in any form, from or to any other country, the prior authorization of the Minister of Finance and the Budget is required. Exempt from the latter requirement are (1) imports and exports by or on behalf of the Treasury or the BEAC, and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration. There are no official exports of gold.

Changes During 1991

No significant changes occurred in the exchange and trade system.

Costa Rica

(Position on December 31, 1991)

Exchange Arrangement

The currency of Costa Rica is the Costa Rican Colón. Costa Rica follows a flexible exchange rate system, under which the exchange rate is adjusted periodically, taking into account relative rates of inflation between Costa Rica and its trading partners and balance of payments developments. All transactions take place at the unified exchange rate. On December 31, 1991, the buying and selling bank rates were ₵ 134.10 and ₵ 136.75 per US$1, respectively. The official exchange rate of ₵ 20.0 per US$1 is not used in transactions. The maximum spread between the buying and selling rates in the banking exchange market did not exceed 2 percent during 1991. Purchases and sales of currencies of Central American countries are effected on the basis of quotations in colones, taking into account the value of those currencies in terms of U.S. dollars in the parallel exchange markets of the respective countries. There are no arrangements for forward cover against exchange rate risks operating in the official or the commercial banking sector.

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

Exchange controls are operated by the Central Bank of Costa Rica. The only institutions authorized to deal with foreign exchange transactions are the Central Bank, the state commercial banks, and private banks authorized by the Central Bank.

Arrears are maintained with respect to external payments.

Prescription of Currency

Nearly all payments for exchange transactions are made in U.S. dollars. Payments to Central America in respect of trade may be made in U.S. dollars or in local currencies through the Central American Clearing System.

Imports and Import Payments

There is no import licensing, and all import payments may be made freely. All imports must be registered in the Central Bank before removal from customs or before the submission of requests for foreign exchange, with the following exceptions: (1) temporary imports; (2) domestically produced goods reimported into Costa Rica; (3) imports by diplomatic and foreign missions and international organizations; and (4) household items. Imports made on a barter basis require a barter license (licencia de trueque), issued by the Ministry of Economy and Commerce. Imports from South Africa are prohibited.

Customs tariff rates on most goods range from zero to 40 percent. In addition to any applicable customs tariff, the following taxes are levied on imports: (1) a tax of 1 percent on import value; (2) a sales tax of 13 percent ad valorem, from which certain essential items are exempt; and (3) a selective consumption tax at rates varying from zero to 75 percent, depending on the essentiality of items.

Vehicles used in paid (public service) transportation, trucks, ambulances, hearses, and chassis with a single or dual cab are exempted from the surcharge. Other vehicles with an import value of up to $6,000 are subject to a surcharge of 15 percent. Pickup trucks with a weight capacity of up to 1 ton are subject to a surcharge of 17 percent and those with a weight of more than 1 ton are subject to a surcharge of 2 percent plus a tax of 2 percent.

Minibuses for collective transportation and vehicles are subject to the selective consumption tax at the following rates: (1) those with a customs value of less than $7,000, 12 percent; (2) those with a customs value exceeding $7,000, with displacement of up to 1,500 cubic centimeters, 20 percent; (3) those with a customs value exceeding $7,000, with displacement of more than 1,500 cubic centimeters, 30 percent; and (4) others, depending on value, displacement, and accessories, 25 percent. Pickup trucks with a standard weight of up to 1 ton are also subject to a selective consumption tax of 25 percent; those with a weight of over 1 ton are exempt. Pickup trucks are subject to a selective consumption tax of 15 percent. Chassis of less than 1 ton are also subject to a selective consumption tax of 25 percent; dual-cab chassis weighting less than 1 ton are subject to a selective consumption tax of 15 percent; and dual-cab pickup trucks weighing more than 1 ton are subject to 15 percent.

An advance deposit equivalent to 30 percent of the value of imports is required at the time of submission of applications for foreign exchange to authorized commercial banks.

Payments for Invisibles

Withholding taxes of 15 percent are levied on remittances of dividends. The 5 percent withholding tax is levied on dividends distributed by stock companies whose shares were acquired at the stock exchange and are registered at an officially acknowledged stock exchange. Remittances abroad of interest are subject to a 15 percent withholding tax, except for remittances to foreign banks or to their financial entities recognized by the Central Bank as institutions normally engaged in international transactions, including payments to foreign suppliers for commodity imports. Interest on loans from foreign institutions recognized by the Central Bank as first-rate institutions is not taxed if the funds are used by resident firms for industrial or agricultural/livestock activities. Interest on government borrowing abroad is exempt. Costa Rican nationals and resident foreigners traveling abroad by air, land, or sea must pay a travel exit tax in colones equivalent to $31; Costa Rican nationals who reside abroad must pay, in addition, a consular fee of $20 upon renewal of their passports abroad. Costa Rican diplomats and their dependents and certain Peace Corps officials pay an exit fee of only ₵ 117, provided their passport states that they are exempt from the above charges. Civil servants and students are not exempt from these payments, unless so determined by the Ministry of Finance or the Migration Council.

Commercial banks dealing in the unified market may sell foreign exchange, without the prior authorization of the Central Bank, in the following amounts: (1) for foreign travel to destinations outside Central America, a limit of $125 a day up to $2,000 a traveler (upon presentation of passport and travel tickets, commercial banks are authorized to sell the equivalent of this amount) for travel within Central America, $75 a day up to $750 a traveler); (2) for family remittances, up to $500 a person a month to a maximum of $1,000 a family; and (3) for registered students, a maximum of $500 a month for living expenses, in addition to tuition, textbooks, and insurance, upon presentation of documents. Subject to approval from the Central Bank, these limits may be exceeded where justified by evidence of bona fide current expenditures for the specified purpose. Prior authorization is also required for any foreign exchange purchases for professional services, royalties, and patent rights. For the servicing of private foreign debt, and foreign payment of dividends, it is also required that the capital inflow be registered in advance at the Central Bank.

Exports and Export Proceeds

The Central Bank monitors exports to ensure that exchange proceeds are surrendered to the commercial banks, which sell to the Central Bank all of their purchases. Exporters of nontraditional products to markets outside Central America are entitled to receive freely negotiable tax credit certificates (CATs) at the following rates based on the f.o.b. value: (1) 15 percent for exports to the United States, Puerto Rico, and Europe, and (2) 20 percent for exports to Canada.

Exports are subject to a formulario único de exportación (issued by Centro para la Promoción de Exportaciones) for foreign exchange control purposes. In addition to this license, other export licenses are required for strategic goods, such as armaments, munitions, scrap iron, and scrap of nonferrous base metals (from the Ministry of Economy and Commerce); sugar (from the Agricultural Industrial Board for Sugarcane); beans, rice, root of ipecacuanha, onions, cotton, meat, and purebred cattle (from the National Council of Production); airplanes (from the Civil Aviation Board and the Ministry of Economy and Commerce); Indian art objects made of gold, stone, or clay (from the National Museum); tobacco (from the Tobacco Defense Board); lumber, certain livestock, and animals and plants of forest origin (from the Ministry of Agriculture and Livestock); and coffee (from the Coffee Institute); in addition, when there is a lien on 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. Exports to Central America may be made through the Central American Clearing System.

Exchange proceeds from exports of coffee, bananas, sugar, beef, and bovine cattle must be surrendered within 30 days of shipment; those from exports of other perishable items, within 60 days of shipment; those from exports of industrial products except for capital goods, within 120 days of shipment; and those from exports of capital goods, within 360 days of shipment. There are no taxes on nontraditional exports to countries outside the Central American area and Panama; taxes are levied on traditional exports, in some cases, graduated in line with the international prices.

Proceeds from Invisibles

Proceeds from invisibles are free from controls or restrictions, but receipts from invisibles may be exchanged into colones only at the Central Bank or other authorized institutions.

Capital

All capital transfers between residents and nonresidents may be made, subject to prior authorization by the Central Bank. Capital received by the private sector may be registered at the Central Bank, provided that it meets various requirements, including that (1) the amount of the capital is not less than $5,000; and (2) the individual concerned sells the foreign exchange to the Central Bank or to any other bank in the national banking system. The registration guarantees the individual that the Central Bank will sell to him the exchange required to service the debt at the exchange rate in force at the time the servicing is effected. An annual limit of 6.25 percent of the face value of the debt converted is imposed on dividend remittances associated with debt/equity conversions.

The National Budget Authority1 is in charge of authorizing the negotiation of new external credits contemplated by the Central Government, decentralized agencies, and state enterprises. Foreign and domestic capital transferred from abroad may be deposited as time deposits in U.S. dollars with agent banks in the form of specified foreign currencies or be invested in certificates of deposit denominated in colones; such funds, when they mature, are repaid in the currency in which the deposits were made.

Gold

The Central Bank may purchase, sell, or hold gold coins or bars as part of the monetary reserves in accordance with regulations established by its Board. Natural and juridical persons may negotiate, subject to approval from the Central Bank, at home or abroad, domestically produced gold (except national archaeological treasures, pursuant to Law No. 6703 of December 18, 1981), provided there is no infraction of international agreements. As in the case of other exports, licenses from the Central Bank are required for exports of gold. Gold may also be held in any form in Costa Rica. The Central Bank may sell unrefined gold to artistic or professional users or to enterprises that export jewelry.

Changes During 1991

Imports and Import Payments

January 7. The rate of advance import deposit was fixed at 30 percent. A 10 percent import surcharge was imposed on all imports.

January 15. The rate of advance import deposit was increased to 70 percent.

February 15. The rate of advance import deposit was lowered to 50 percent.

March 12. Imports from Central American countries and Panama were exempted from the 10 percent import surcharge.

May 14. The rate of advance import deposit was lowered to 30 percent.

August 31. The 10 percent import surcharge applying to imports from countries other than Central American countries was eliminated.

Côte d’Ivoire

(Position on December 31, 1991)

Exchange Arrangement

The currency of Côte d’Ivoire is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. The official buying and selling rates are CFAF 50 per F 1. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris exchange market and the fixed rate between the French franc and the CFA franc. The BCEAO levies no commission on transfers to or from countries outside the West African Monetary Union (WAMU).2 Banks and the postal system levy a commission on transfers to all countries outside the WAMU, all of which must be surrendered to the Treasury. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of measures relating to gold and the repatriation of export proceeds, the exchange control measures of Côte d’Ivoire do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries.

Spot foreign exchange cover is limited to imports effected by means of documentary credits; the transaction must be domiciled with an authorized intermediary, and goods must be shipped within eight days of the exchange operation. Forward exchange cover for eligible imports must not extend beyond one month for certain specified goods and three months for goods designated essential commodities; no renewal of cover is possible. Forward cover against exchange rate risk is permitted, with prior authorization from the Directorate of External Finance and Credit, only in respect of payments for imports of goods and only for the currency stipulated in the commercial contract. There are no official schemes for currency swaps or guaranteed exchange rates for debt servicing.

Administration of Control

Exchange control is administered by the Directorate of External Finance and Credit in the Ministry of Economy and Finance. The BCEAO is authorized to collect any information necessary to compile the balance of payments statistics, either directly or through the banks, other financial institutions, the Postal Administration, and notaries public. All exchange transactions relating to foreign countries must be effected through authorized banks or the Postal Administration. Import and export licenses are issued by the Directorate of External Trade in the Ministry of Commerce.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since Côte d’Ivoire is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other Operations Account country. Current payments to or from The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Nigeria, and Sierra Leone are normally made through the West African Clearing House. Settlements with all other countries are usually effected through correspondent banks in France, in any of the currencies of those countries, or in French francs through foreign accounts in francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BCEAO bank notes may be credited to foreign accounts in francs when they have been mailed to the BCEAO agency in Abidjan by authorized banks’ foreign correspondents. Otherwise, the crediting to nonresident accounts of BCEAO bank notes, French bank notes, or bank notes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited. Foreign accounts in francs may be debited, without prior authorization, with the value of BCEAO bank notes that are mailed by authorized intermediaries to their foreign correspondents.

Imports and Import Payments

Imports from South Africa are prohibited. Under the current regulations, all imports are classified into four categories, as follows: (1) prohibited imports (for example, wheat flour and used garments); (2) import items (for example, paints, matches, and detergents) for which import licenses are obligatory for each import transaction equal to or exceeding CFAF 25,000, f.o.b.; (3) import items requiring both prior authorization and a declaration of intent to import (these requirements apply only to individual transactions equal to or exceeding CFAF 100,000, f.o.b.); and (4) freely importable items (a declaration of intent to import is required for individual transactions equal to or exceeding CFAF 1.5 million).

As noted below, certain other import items are subject to annual volume or value quotas. Thus, imports of rice depend on domestic production, since they are intended as a supplementary means of satisfying domestic demand; such imports take place on the basis of an international invitation to bid. All other imports may be made freely from any country; however, as mentioned above, imports made freely are subject to submission of an import declaration when their f.o.b. value is CFAF 100,000 or more, and, in some instances, authorization is also required when the f.o.b. value exceeds CFAF 1.5 million, and, unless specifically exempted, a preshipment inspection by international agencies to verify their price, quantity, and quality is mandatory. A special import duty of 10 percent is levied on all imports with only a few exceptions; exempted from the duty are live animals, fish, dairy products, petroleum products, pharmaceuticals, books, and products imported under the investment code. A statistical tax of 2.5 percent is levied on the c.i.f. value of all imports, except petroleum. During 1989, tariffs were raised with a view to harmonizing effective protection of local production; in the case of some goods, quotas were replaced by temporary surcharges scheduled to decline progressively during a five-year period that began in 1988. Imports from member countries of the West African Economic Community (WAEC) and the Economic Community of West African States (ECOWAS) are exempt from the surcharges.

All import operations relating to foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 500,000; transactions of lower value must also be domiciled with an authorized bank if a financial transaction is to be undertaken before customs clearance. The import licenses or import attestations entitle importers to purchase the necessary foreign exchange, but not earlier than eight days before shipment if a documentary credit is opened, or only on the due date of payment if the commodities have already been imported. Since June 15, 1981, foreign exchange for import payments must be purchased either on the settlement date specified in the commercial contract or when the required down payment is made.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely; those to other countries must be approved. 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 underlying transaction has been approved. Any resident may make payments abroad freely at any time through an authorized bank, up to the equivalent of CFAF 50,000 a month without submitting any documentation.

Residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation for tourism of an amount equivalent to CFAF 175,000 a person a year (CFAF 87,500 for children under 10 years). For business travel, a special foreign exchange allocation is authorized up to a maximum of CFAF 20,000 a day and CFAF 400,000 a trip. Any foreign exchange remaining in excess of CFAF 5,000 must be surrendered after return to Côte d’Ivoire. The transfer of the full basic salary of a foreigner working in Côte d’Ivoire 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 to foreign countries may take out BCEAO bank notes up to a value of CFAF 25,000. Travelers to other countries of the Operations Account Area may take out any amount in BCEAO bank notes; however, if they travel to a country that is not a member of the WAMU, they must declare to customs the amount they take out if it exceeds CFAF 150,000.

Nonresident travelers to foreign countries may freely take out foreign bank notes and coins up to the equivalent of CFAF 175,000, as well as any traveler’s checks issued abroad. Subject to documentation, they may also take out any amount of traveler’s checks in their name in foreign currency purchased with CFA francs in Cote d’Ivoire or purchased with funds drawn from a foreign account in francs. Nonresidents who have made a currency declaration upon entry or are able to show the proper banking notices may take out larger amounts.

Exports and Export Proceeds

Exports to South Africa are prohibited. Most exports are free of license and require a declaration only. Exports of certain processed and unprocessed agricultural commodities, however, require an export license issued by the Directorate of External Trade. An export premium is applicable to locally manufactured products and agricultural products on the basis of the export value added, excluding unprocessed coffee, cocoa, cotton, and pineapples. The export reference prices for cocoa and coffee (in f.o.b.) are fixed in advance of the beginning of the new crop season on October 1, based on a combination of the spot prices on the world market and the actual sales prices realized in forward sales of parts of the forthcoming crop. The Agricultural Price Stabilization Fund (Cssppa) establishes a schedule of domestic costs associated with the collection, transportation, and storage of the harvested crops and announces the price to be paid to the producers. The Ministry of Finance may impose a unitary export tax to absorb any resulting surplus, the proceeds of which accrue directly to the Treasury. Export taxes are waived for products receiving the premium, and products covered by taxation agreements under the WAEC are not eligible for the premium. The due date for payment in respect of exports to foreign countries, including those in the Operations Account Area, must not be later than 180 days after the arrival of the goods at their destination. Regardless of the currency of settlement and of the country of destination, export receipts must be collected and repatriated through authorized intermediary banks within one month of the due date. Regardless of destination, all export transactions must be domiciled with an authorized bank when valued at more than CFAF 500,000.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), 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 collected and surrendered within two months of the due date or the date of receipt. Resident and nonresident travelers may import any amount of bank notes and coins issued by the BCEAO, the Bank of France, or any bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area; residents bringing in foreign bank notes or other foreign means of payment must surrender any amount in excess of CFAF 5,000 to an authorized bank within eight days and must make a declaration to customs upon entry.

Capital

Capital movements between Côte d’Ivoire and France (as defined above), Monaco, and the Operations Account countries are free of exchange control; capital transfers to all other countries require exchange control approval, but capital receipts from such countries are permitted freely.

Special controls (additional to any exchange control requirements that may apply) are maintained over borrowing abroad by the private sector, foreign inward direct investment, all outward direct investment in foreign countries, and over the issuing, advertising, or offering for sale of foreign securities in Côte d’Ivoire. Such operations require prior authorization from the Ministry of Economy and Finance, as do issues by Côte d’Ivoire companies. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Government of Côte d’Ivoire, and (2) foreign shares similar to securities whose issuing, advertising, or offering for sale in Côte d’Ivoire has already been authorized. With the exception of controls relating to foreign securities, these measures do not apply to relations with France (as defined above), Monaco, member countries of the WAMU, and the Operations Account countries. Special controls are also maintained over the soliciting of funds for deposit with foreign private persons and foreign firms and institutions, and over publicity aimed at placing funds abroad or at subscribing to real estate and building operations abroad; these special controls also apply to France (as defined above), Monaco, and the Operations Account countries.

All investments abroad by residents of Côte d’Ivoire require prior authorization from the Minister of Economy and Finance.3 Foreign direct investments in Côte d’Ivoire must be authorized in advance by the Minister of Economy and Finance.4 Effective June 15, 1981, at least 75 percent of investments abroad by residents of Côte d’Ivoire must be financed by borrowing abroad. The liquidation of direct and other investments in Côte d’Ivoire or abroad must similarly be reported in advance to the Minister. Both the making and the liquidation of investments, whether these are Ivorien investments abroad or foreign investments in Côte d’Ivoire, must be reported to the Minister within 20 days of each operation. Direct investments are defined as investments implying control of a company or an enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 percent of the capital of a company whose shares are quoted on a stock exchange.

Borrowing by residents from nonresidents must be authorized in advance by the Minister of Economy and Finance. The following are, however, exempt from this authorization: (1) loans taken up by industrial firms to finance transactions abroad, to finance imports into or exports from Côte d’Ivoire, or by approved international trading houses to finance international trade transactions; (2) loans contracted by authorized banks; and (3) 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, and provided that the annual interest rate does not exceed the normal market rate. The repayment of loans constituting a direct investment is subject to the formalities prescribed for the liquidation of direct investments. The repayment of other loans requires authorization only if the loan itself was subject to prior approval. Lending abroad is subject to exchange control authorization.

Under the investment code introduced in 1984, special incentives are provided for foreign and domestic investments in certain priority sectors and priority geographical areas. The incentives include exemption from customs duties and tariffs on all imported capital equipment and spare parts for investment projects, provided that no equivalent item is produced in Côte d’Ivoire. In addition, all such investments are exempted for a specified period, depending on the investment sector or area, from corporate profit taxes, patent contributions, and capital assets taxes. In general, the exemption covers 100 percent of applicable tax up to the fourth-to-last year of the exemption period, is reduced progressively to 75 percent of the tax in the third-to-last year of the exemption period, 50 percent in the second-to-last year, and 25 percent in the last year of the exemption period. Imports of intermediate goods or raw materials for which no equivalents are produced locally are not exempt from import duties and taxes.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Côte d’Ivoire. Imports and exports of gold to or from any other country require prior authorization from the Minister of Economy and Finance, which is rarely granted. Exempt from this requirement are (1) imports and exports by 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 weight of 250 grams. Both licensed and exempt imports and exports of gold are subject to customs declaration.

Changes During 1991

Imports and Import Payments

May 5. The surcharge on crude palm oil was eliminated.

Exports and Export Proceeds

January 2. The list of wood products subject to export quotas was expanded to include products that had undergone the first stage of processing, and a system of establishing export quotas through auction was introduced.

October 1. A new system of export licensing for coffee and cocoa was put into effect as well as a new system for determining the export price of coffee and cocoa. Under the new system, their f.o.b. export reference prices would be fixed in advance of the beginning of the new crop season on October 1, based on a combination of the spot prices on the world market and the actual sales prices realized in forward sales of parts of the forthcoming crop. The Agricultural Price Stabilization Fund (Cssppa) would establish a schedule of domestic costs associated with the collection, transportation, and storage of the harvested crops and would announce the price to be paid to the producers. The Ministry of Finance reserves the right to impose a unitary export tax to absorb any resulting surplus, the proceeds of which would accrue directly to the Treasury.

Cyprus

(Position on December 31, 1991)

Exchange Arrangement

The currency of Cyprus is the Cyprus Pound. The exchange rate of the Cyprus pound is adjusted daily, with the aim of maintaining its effective relationship with the currencies of its main trading partners. On December 31, 1991, the official buying and selling rates for the U.S. dollar, the intervention currency, were £C 0.4382 and £C 0.4399 respectively, per US$1. The Central Bank of Cyprus also quotes daily buying and selling rates for the deutsche mark, the Greek drachma, and the pound sterling. These rates are subject to change throughout the day. It also quotes indicative rates for other foreign currencies1 on the basis of market rates in international money market centers. Subject to certain limitations, including a limit on spreads between the buying and selling rates, authorized dealers (banks) are free to determine and quote their own buying and selling rates. There are no taxes or subsidies on purchases or sales of foreign exchange.

Authorized dealers are allowed to trade in the forward market at rates that may be freely negotiated with their customers. For U.S. dollars and pounds sterling, however, forward rates may not differ by more than the premiums or discounts that are applied by the Central Bank for cover for a similar period. Authorized dealers are allowed to purchase forward cover from the Central Bank at prevailing rates or to conduct forward operations between two foreign currencies for cover in one of the two currencies. The Central Bank offers authorized dealers facilities for forward purchases of U.S. dollars and pounds sterling for exports, for periods of up to 24 months. Cover for imports is normally provided for up to 6 months. When justified (for example, payments for imports of raw materials for exports or capital goods), rates are quoted for up to 15 months. Forward contracts must be based on genuine commercial commitments. Forward cover may also be provided for up to 12 months to residents for specific financial commitments.

Cyprus formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from January 9, 1991.

Administration of Control

Exchange controls are administered by the Central Bank in cooperation with authorized dealers. Authority to approve applications for the allocation of foreign exchange for a number of purposes has been delegated to authorized dealers.

Prescription of Currency

Payments may be made by crediting Cyprus pounds to an external account, or in any foreign currency;2 the proceeds of exports to all countries may be received in Cyprus pounds from an external account, or in any foreign currency.

Nonresident and Resident Accounts

Residents of countries outside Cyprus may open and maintain with authorized dealers nonresident accounts in Cyprus pounds, designated external accounts, or foreign currency accounts. These accounts may be credited freely with payments from nonresidents of Cyprus (such as transfers from other external accounts or foreign currency accounts), proceeds from sales of any foreign currency by nonresidents (including declared bank notes), and the entire proceeds, including capital appreciation, from the sale of an investment made by a nonresident in Cyprus with the approval of the Central Bank and with authorized payments in Cyprus pounds. External accounts and foreign currency accounts may be debited for payments to residents and nonresidents, for remittances abroad, for transfers to other external accounts or foreign currency accounts, and for payments in cash (Cyprus pounds) in Cyprus. Companies registered or incorporated in Cyprus that are accorded nonresident status by the Central Bank as well as their nonresident employees may maintain external accounts and foreign currency accounts in Cyprus or abroad, as well as local disbursement accounts for meeting their payments in Cyprus. Resident persons and firms dealing with transit trade or engaged in producer-exporter activities may open and maintain foreign currency accounts subject to certain requirements. Exporters may deposit up to 50 percent of export proceeds in these accounts and use balances to pay for imports of raw materials used in production. Account holders are, however, required to convert into Cyprus pounds at the end of each year any balances they had not used to pay for imports. Expatriates (considered as residents for foreign exchange control purposes) may keep in foreign currency, in external accounts in Cyprus, or in accounts abroad all of their foreign currency holdings and earnings accruing from properties they own abroad.

Blocked accounts are maintained in the name of nonresidents for funds that may not immediately and in their entirety be transferred outside Cyprus under the existing exchange control regulations. Blocked funds may either be held as deposits or be invested in government securities or government-guaranteed securities. Income earned on blocked funds is freely transferable to the nonresident beneficiary or it may be credited to an external account or foreign currency account. In addition to income, the principal that may be released annually from blocked funds for transfer outside Cyprus is up to £C 5,000. Funds can also be released from blocked accounts to meet reasonable expenses in Cyprus of the account holder and his family, including educational expenses, donations to charitable institutions in Cyprus, payments for the acquisition of immovable property in Cyprus, and any other amounts authorized by the Central Bank.

Imports and Import Payments

Most imports are free of licensing requirements. Only imports of certain commodities require an import license, including fresh fruits, fresh vegetables, fresh meat, goods produced or manufactured locally, and plant and equipment.

The Minister of Commerce and Industry may take measures whenever required to regulate the importation of goods for the encouragement of local production and manufacture. Exchange is allocated freely and without restriction through authorized dealers to pay for imports, provided that documentary evidence of shipment or actual importation of goods is available.

Advance payments before shipment require the prior approval of the Central Bank, except for imports whose value does not exceed £C 2,000. Authorized dealers are allowed to sell to departing residents of Cyprus foreign exchange up to £C 20,000 for purchases and for the importation of goods to Cyprus; foreign exchange in excess of this limit may be sold to departing residents with the approval of the Central Bank. An import surcharge of 3.8 percent (2.5 percent for imports from European Community (EC) countries) ad valorem is levied on all imports, except food, pharmaceuticals, and goods imported by the Government.

Payments for Invisibles

Payments for invisibles abroad require the approval of the Central Bank, but approval authority for certain types of payments has been delegated to authorized dealers. Profits, dividends, and interest from approved foreign investments are transferable abroad without limitation, after payment of any due charges and taxes. Insurance premiums owed to foreign insurance companies are remittable after deduction of all contingencies.

Allowances are granted for study abroad at colleges, universities, or other institutions of higher education, and certain lower-level institutions of learning. Exchange allowances are based on the cost of living and cover the full amount of tuition fees plus living expenses for the student. The maximum annual allowance for living expenses for studies in Western European countries, excluding Greece, is £C 4,000; for Greece, £C 2,500; for Canada and the United States, £C 5,600; for Eastern European and Middle Eastern countries, £C 2,200; and for all other countries, £C 3,000. There is no limit on the remittance of foreign exchange for payment of tuition fees. Any amount of foreign exchange may be allocated for tourist travel abroad. The ceiling on foreign exchange for tourist travel was lifted on November 1, 1990 in the context of the liberalization measures taken by the Central Bank. Authorized dealers have been allowed, without any reference to the Central Bank, to provide foreign exchange up to £C 750 a person a trip. In addition, the Central Bank approves applications for allocations of additional foreign exchange without limitation to cover genuine travel expenses for tourism purposes. The allowance for business travel is not fixed but depends on the length of stay abroad, the country or countries to be visited, and the purpose. Authorized dealers are empowered to provide up to £C 100 a day with a maximum of £C 1,000. Company credit cards valid abroad are issued to businessmen and professionals traveling abroad on business. Credit cards entitle the holders to charge their expenses for hotel and restaurant bills and transportation expenses without limit and personal expenses not exceeding £C 400 a trip, including cash withdrawals of up to £C 100. If the traveler holds an international card, authorized dealers are allowed to provide up to £C 60 a day in foreign exchange. Authorized dealers are also allowed to issue personal credit cards to certain categories of persons. Enterprises may use credit cards for payments of up to £C 300 for mail orders of books or other items. Additional amounts for business travel may be provided with the approval of the Central Bank. Foreign exchange for medical expenses abroad is granted without limit, and authorized dealers are empowered to provide allowances of up to £C 3,000 for medical expenses.

On leaving Cyprus, travelers may take out with them up to £C 50 in Cyprus currency notes. There is no limit on the amount of foreign currency notes that departing residents may take out of the country as part of any of their foreign exchange allowances. Nonresident travelers may take out any amount of foreign currency notes they declared on arrival. Individuals possessing foreign exchange must declare it if they plan to use it to purchase goods to export, or to purchase properties, or to deposit it with authorized dealers. Nonresidents may export foreign currency notes equivalent to up to $1,000 even if they did not declare them on arrival. In addition, authorized dealers may convert up to £C 100 into foreign currency for departing nonresidents and are permitted to issue to nonresidents as well as to resident employees of offshore companies any amount of foreign currency notes against external funds.

Exports and Export Proceeds

Exports of potatoes and carrots are subject to control by the respective marketing boards, and exports of wheat, barley, and maize are subject to control by the Cyprus Grain Commission. All exports are subject to licensing when their f.o.b. value exceeds £C 100 to ensure the repatriation of the sale proceeds. Export proceeds must be surrendered without delay.

Proceeds from Invisibles

Receipts from invisibles must be sold to an authorized dealer. Persons entering Cyprus may bring in any amount in foreign currency notes and up to £C 50 in Cyprus currency notes.

Capital

Transfers abroad of a capital nature require authorization from the Central Bank. Permission for direct investment abroad by residents is granted, provided that the proposed investments will promote exports of goods and services or they will benefit the Cypriot economy.

Investments in Cyprus by nonresidents require the prior approval of the Central Bank, which, in considering applications, gives due regard to the purpose of the investment, the extent of possible foreign exchange savings or earnings, the introduction of know-how, and, in general, the benefits accruing to the national economy. Foreign direct investment is normally permitted in selected fields of production, such as export-oriented industries and new technology projects. Annual profits and proceeds from the liquidation of approved foreign investments, including capital gains, may be repatriated in full at any time, after payment of any charges and taxes.

With the permission of the Council of Ministers, alien nonresidents may acquire in Cyprus immovable property for use as a residence or holiday home; they are required to pay the value of such property in foreign exchange. The sales proceeds of such property are transferable abroad up to the amount originally paid for the purchase of the property; the balance, if any, is transferable at the yearly rate of £C 5,000, plus interest. The same treatment is accorded to nonresident Cypriots purchasing a holiday home in Cyprus.

Residents of Cyprus (Cypriots or foreign nationals) who take up residence outside Cyprus may immediately transfer abroad up to £C 10,000; any excess amount is deposited in a blocked account and released at the rate of £C 5,000 a year. The transfer abroad of funds resulting from estates and intestacies and from the sale of real estate, other than that referred to in the preceding paragraph, is limited to £C 5,000, with any excess amount to be credited to a blocked account and also released at the rate of £C 5,000 a year. Interest earned on a blocked account is freely transferable abroad.

Transactions in foreign securities owned by residents require prior permission from the Central Bank. In principle, all securities held abroad by residents are subject to registration.

Gold

Residents may hold and acquire gold coins in Cyprus for numismatic purposes. With this exception, residents other than the monetary authorities, authorized dealers in gold, and industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Authorized dealers in gold are permitted to import gold only for the purpose of disposing of it to industrial users. The exportation of gold requires the permission of the exchange control authorities.

Changes During 1991

Nonresident and Resident Accounts

March 1. The Central Bank delegated authority to authorized dealers to open and operate foreign currency accounts in the name of resident manufacturers. Exporters may deposit up to 50 percent of export proceeds in these accounts and use balances to pay for imports of raw materials used in production. Account holders would be required to convert into Cyprus pounds at the end of each year any balances they had not used to pay for imports.

May 31. The Central Bank delegated authority to authorized dealers to open and operate foreign currency accounts in the name of residents who are engaged in transit trade.

Czech and Slovak Federal Republic

(Position on December 31, 1991)

Exchange Arrangement

The currency of Czechoslovakia is the Koruna (100 hallers = 1 koruna). The exchange rate of the koruna is determined on the basis of a weighted basket of the convertible currencies that have the most important shares in the external transactions of Czechoslovakia, namely, the currencies of Austria, France, Germany, Switzerland, and the United States; the weights for these currencies are adjusted annually. On December 31, 1991, the buying and selling rates for the U.S. dollar were Kcs 27.56 and Kcs 28.12, respectively, per US$1. The State Bank of Czechoslovakia quotes exchange rates daily for 21 convertible currencies1 and for the European Currency Unit (ECU) and the SDR. The buying and selling rates for these currencies are based on their cross rates in relation to the U.S. dollar in international markets. The spread between the buying and selling rates quoted by commercial banks for commercial transactions is subject to a maximum limit of 2 percent, except for bank notes, which may have larger spreads (normally 3–4 percent). The State Bank provides forward cover against exchange rate risk in the form of swap operations with commercial banks for up to a two-year maturity period.

Administration of Control

Foreign exchange controls and regulations are stipulated in the revised Foreign Exchange Law, which came into effect on January 1, 1991. This law introduced a system of internal convertibility of the Czechoslovak currency. Annual foreign exchange plans, under which foreign exchange was centrally allocated, have been abolished, and restrictions on payments and transfers related to current account transactions by enterprises have been eliminated. Commercial banks are authorized to effect payments that have been properly documented. Resident juridical persons and individual entrepreneurs registered in commercial registers are required to repatriate export proceeds in full and convert them into domestic currency. The State Bank is responsible for carrying out exchange controls and regulations in coordination with the federal and republic ministries of finance. In general, the Federal Ministry of Finance has authority over governmental credits and over budgetary and subsidized organizations, civic associations, churches, foundations, and juridical persons who fall within federal jurisdiction and are not engaged in entrepreneurial activities. The republic ministries of finance have authority over budgetary and subsidized organizations, civic associations operating within the jurisdiction of the respective republics, churches, foundations, and juridical persons who fall within the jurisdiction of the respective republics and who are not engaged in entrepreneurial activities, as well as natural persons resident in the territory of the respective republics. The State Bank has authority over the activities of all registered enterprises and entrepreneurs.

Prescription of Currency

Payments to and receipts from countries with which Czechoslovakia has multilateral and bilateral agreements may be effected in the currencies stipulated or in accordance with the procedures set forth in these agreements. At the end of 1991, Czechoslovakia had bilateral payments agreements with Afghanistan, Albania, India, and the Democratic People’s Republic of Korea. The multilateral agreement within the framework of the former Council for Mutual Economic Assistance (CMEA) trade agreement has been terminated since January 1, 1991. However, interim agreements exist with all former CMEA members for purposes of settling outstanding balances and unfulfilled trade contracts. In the case of the former U.S.S.R., the agreements also cover arrangements for payments for trade during 1991 through clearing accounts denominated in U.S. dollars. In cases where specific agreements do not exist, or trade takes place outside the framework of the agreements, settlements are effected in a convertible currency.

Resident and Nonresident Accounts

Resident Accounts

Czechoslovak resident individuals (including unregistered entrepreneurs) may open interest-bearing foreign exchange accounts at any resident commercial bank without revealing the source of foreign exchange. Balances on these accounts may be used by the account holder without restriction. Resident enterprises that had outstanding foreign exchange accounts on December 31, 1990 have been allowed to maintain such accounts; new foreign exchange accounts, however, may be opened by enterprises after December 31, 1990 only with a prior permit that exempts enterprises from the 100 percent surrender requirement. Balances on these accounts may be freely used to finance enterprises’ activities.

Nonresident Accounts

Nonresidents (natural and juridical persons) may maintain two types of interest-bearing accounts in Czechoslovakia:

(1) Domestic currency accounts may be opened with Czechoslovak banks in koruna. Balances on these accounts may be used freely to make payments in Czechoslovakia. All payments abroad from these accounts, except transfers relating to inheritance and alimony, require a permit from the State Bank.

(2) Foreign currency accounts may be opened by nonresidents. Foreign exchange may be deposited freely in these accounts, and payments may be made from these accounts, in Czechoslovakia or abroad, without restriction.

Imports and Exports

Imports and exports may be undertaken by any registered enterprise or private entrepreneur. Import licenses are required for a few strategic items, namely, crude oil, natural gas, firearms and ammunition, and narcotics. In addition, temporary import quotas have been imposed on 12 agricultural products and coal, to be replaced in 1992 by an automatic licensing system that will be accompanied by variable levies. All imports are subject to an ad valorem import tariff, ranging from zero to 35 percent. Imports by individuals for personal use that are not subject to domestic turnover tax are subject to a 15 percent import surcharge. Beginning in 1992, imports by individual registered traders for resale or for purposes of manufacturing production that are not subject to domestic turnover tax have also been subject to a special tax equivalent to the turnover tax. Imports from developing countries are granted preferential treatment under the Generalized System of Preferences (GSP). Under the GSP, 42 developing countries benefit from a duty exemption, and 80 others are granted a 75 percent reduction from the applicable customs duties; tropical products are granted an 85 percent reduction from the applicable customs duties.

A resident individual is required to repatriate foreign exchange acquired abroad and is required to sell to a bank or deposit in a private foreign exchange account foreign exchange (including gold, with the exception of gold coins) exceeding the equivalent of Kcs 5,000; he may freely withdraw funds from this account. Resident enterprises are required to repatriate, without delay, foreign exchange receipts from exports and surrender them; with permission from the State Bank, they may maintain foreign exchange receipts in foreign exchange accounts, and may freely use funds on these accounts to finance enterprises’ activities.

A limited number of products require export licenses, for purposes of health control (including livestock and plants), of facilitating voluntary restraints on products on which partner countries have imposed import quotas (such as textiles and steel products), or of preserving for the internal market natural resources or imported raw materials (such as energy, metallurgical materials, wood, foodstuffs, pharmaceutical products, and construction materials). For the two latter groups of products, neither quantitative nor value limits are in force. Fees are applied to noncommercial exports of a few products (certain food items and selected types of porcelain and glassware) in excess of a certain value.

Payments for and Proceeds from Invisibles

Czechoslovak resident individuals may withdraw an unlimited amount of foreign exchange from their foreign currency accounts to make invisible payments. They may also use, without limitation, the equivalent of Kcs 5,000 in foreign exchange receipts, which they are allowed to keep (see section on Imports and Exports, above). In addition, residents are entitled to buy foreign exchange for traveling abroad, up to a maximum amount specified by the State Bank (currently, the equivalent of Kcs 5,000 a year). Official travel by employees of budgetary and subsidized organizations is subject to different allowances, depending on the country of destination. Transfers of alimony may be made to a country with which a reciprocal agreement has been concluded. In case a resident individual does not have sufficient foreign exchange, a special permit is required in most instances for remittances relating to family maintenance, education, and medical treatment.

Repatriation of wage savings by nonresident workers must be authorized by the State Bank. With certain exceptions related to tourism, exports and imports of Czechoslovak currency notes and their transfer abroad are permitted only with a foreign exchange license issued by the State Bank. Licenses are not required for the importation or exportation of foreign exchange assets, including foreign currencies, by nonresidents.

Capital

Registered enterprises may freely obtain suppliers’ credits and credits not related to trade abroad. Financial credits require a special permit from the State Bank. Direct investments abroad are subject to the approval of the State Bank; approval is normally granted if such investments are considered to facilitate Czechoslovak exports.

There is no limit on equity participation by nonresidents. Credits may be obtained from foreign banks with the approval of the State Bank. Shareholdings in foreign exchange of foreign investors can be deposited in a foreign exchange account with a resident commercial bank. Foreign investors may freely transfer abroad their dividends, profits, capital gains, and interest earnings. In accordance with the Foreign Exchange Act, they are allowed, in the event of liquidation of the enterprise, to repatriate freely the full value of their capital participation and capital gains in the original currency after payment of taxes.

Transfers of inherited assets abroad are allowed to all countries on a reciprocal basis.

Gold

Residents are required to sell gold (with the exception of gold coins) to financial institutions dealing in foreign exchange within 30 days of acquisition. Without a foreign exchange license, nonresidents may export inherited gold coins, provided that they submit a certificate confirming that the coins are of no historical value, and they may export gold that they have imported into the country. To export any other gold, nonresidents must have a foreign exchange license.

Changes During 1991

Exchange Arrangement

April 29. Forward cover operations against exchange rate risk were introduced.

Prescription of Currency

August 1. The bilateral payments agreement with the Islamic Republic of Iran was terminated.

Imports and Exports

May 1. Export-licensing requirements for several products, including pharmaceutical and medical products, pulp and paper products, and flour, were abolished.

June 13. Quotas for 1991 for imports of cattle, beef, coal, butter, and nine other agricultural products were established.

October 1. The regulations on import financing were abolished.

October 15. A surcharge of 15 percent was imposed on imports by individuals for personal use of goods that are not subject to the turnover tax.

December 31. The surcharge on commercial imports was reduced to 10 percent. (The surcharge was 20 percent at the end of 1990 when it was introduced, lowered to 18 percent on May 1, 1991, and reduced further to 15 percent on June 15, 1991.)

Payments for and Proceeds from Invisibles

January 1. Obligatory conversion of a minimum amount of foreign exchange for tourists was abolished.

April 1. The annual foreign exchange entitlement for travel abroad by private citizens was increased to Kcs 5,000 from the equivalent of Kcs 2,000.

Denmark

(Position on December 31, 1991)

Exchange Arrangement

The currency of Denmark is the Danish Krone. Denmark participates with Belgium, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom in the exchange rate and intervention mechanism (ERM) of the European Monetary System (EMS).1 In accordance with this agreement, Denmark maintains the spot exchange rates between the Danish krone and the currencies of the other participants within margins of 2.25 percent (in the case of the Portugese escudo, the pound sterling, and the Spanish peseta, 6 percent) above or below the cross rates based on the central rates expressed in European Currency Units (ECUs).

The agreement implies that the Danmarks Nationalbank (central bank) stands ready to buy or sell the currencies of the other countries participating in the EMS in unlimited amounts at specified intervention rates. On December 31, 1991, these rates were as follows:

Specified Intervention

Rates per:
Danish Kroner
Upper limitLower limit
100Belgian or Luxembourg francs18.914318.0831
100deutsche mark390.160373.000
100French francs116.320111.200
1Irish pound10.45119.9913
1,000Italian lire5.21404.9850
100Netherlands guilders346.240331.020
1,000Portuguese escudos146.586041.3210
1pound sterling11.947910.5976
100Spanish pesetas6.23105.5260

Effective April 6, 1992.

Effective April 6, 1992.

The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits. Danmarks Nationalbank, however, does intervene in other situations for the purpose of smoothing out fluctuations in exchange rates. Danmarks Nationalbank has an obligation to intervene on the Danish foreign exchange market only at the intervention rates agreed within the EMS. Middle rates (average of buying and selling rates) for 22 foreign currencies (including the ECU);2 are officially fixed daily and reflect the going rates at the time of the fixing. On December 31, 1991, the official rates for the deutsche mark and the U.S. dollar were DKr 389.56 and DKr 591.35, respectively, per 100 units.

All remaining foreign exchange regulations were lifted with effect from October 1, 1988. Residents may hold positions in foreign currencies without limitation with respect to the amounts, currencies, or instruments involved.

There are no restrictions on foreign exchange dealing. The Executive Order on Foreign Exchange Regulations, issued by the Ministry of Industry with effect from October 1, 1988, contains rules concerning payments between residents and nonresidents, which—for statistical purposes—must be reported to Danmarks Nationalbank when payments exceed DKr 60,000.

Residents (with certain exceptions) must deposit foreign securities and Danish bonds issued abroad either with a Danish or a foreign bank or with the issuer. Residents who are holding accounts with foreign banking institutions, have deposited securities abroad, or have entered into contracts with foreign life insurance companies are required to provide the Danish tax authorities with relevant information concerning these transactions.

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 Faeroe Islands. The Faeroe Islands are still subject to the regulations in force before October 1, 1988.

Administration of Control

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents. Exchange control rules on reporting requirements for statistical purposes, on depositing foreign securities, and on holding accounts abroad for tax purposes are administered by the Danmarks Nationalbank and foreign exchange dealers. Foreign exchange dealers are commercial banks, savings banks, and stockbrokerage companies or other financial institutes, as defined in the Executive Order, provided that they settle payments between residents and nonresidents on a commercial basis through accounts held in or on behalf of foreign banking institutions (correspondent banks). Danmarks Nationalbank has drawn up a list of foreign exchange dealers.

Licenses for imports and exports, where required, are issued by the Ministry of Industry, the Ministry of Agriculture, or the Ministry of Fisheries.

Prescription of Currency

There are no prescription of currency requirements.

Imports and Import Payments

Imports of most products, except for textiles, are free of licensing from all sources. For textiles, a common European Community (EC) system of export-import licenses has now been established for almost all countries exporting low-priced textiles. A few items require a license when originating in Japan, the Republic of Korea, or any other non-state-trading, non-EC country. A larger number of items require a license when originating in or purchased from Albania, Bulgaria, China, Czechoslovakia, Hungary, the Democratic People’s Republic of Korea, Mongolia, Poland, Romania, the former U.S.S.R., and Viet Nam.

No exchange control requirements are imposed on payments for imports.

Exports and Export Proceeds

Except for certain items subject to strategic controls, licenses for exports are required only for waste and scrap of certain metals. Nearly all exports of goods and services to South Africa are prohibited.

No exchange control requirements are imposed on receipts from exports.

Payments for and Proceeds from Invisibles

No exchange control requirements are imposed on payments for or receipts from invisibles.

Capital

There are no restrictions on inward or outward capital transfers. The general rules on exchange control issued by the Ministry of Industry are based on EC directives on capital movements and on the Organization for Economic Cooperation and Development Capital Code; no distinction is made in these rules between residents of member countries of the EC and those of the rest of the world.

No special permission is required for residents to make transfers abroad in connection with direct investments or with private acquisitions of real estate abroad. Private acquisition of real estate for noncommercial purposes and expenses related to building and construction work on such property can be made without limitation. Exchange dealers do not need special permission to grant loans to nonresidents for the financing of payments to residents for purchases of Danish goods and services.

Inward direct investment in the form of equity capital may be made without prior license.

The sale to nonresidents of Danish bonds listed on a stock exchange does not require a special license. Nonresidents may freely purchase or subscribe to all types of Danish shares, including shares of joint stock and private companies; they may also acquire private mortgage deeds.

Residents may take up loans from nonresidents to finance imports of goods and services; they may also take up such loans to finance the granting of credits for exports of commodities and services. Business enterprises may borrow abroad without permission.

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 are permitted freely, irrespective of the manner in which 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 without restriction.

Inheritances and gifts to relatives may be transferred to any country without limitation. Gift remittances to other persons may also be made without limitation.

Imports and exports of securities are permitted. Danish securities held in Denmark and belonging to nonresidents may be sold freely to residents. Foreign securities held in Denmark may be negotiated freely between residents.

Gold

Residents may freely buy, hold, and sell gold in bars or coins in Denmark; they may also import gold in bars or coins. Imports of gold in bars or coins, unless made by or on behalf of the monetary authorities, are subject to a value-added tax at the rate of 22 percent; domestic transactions in gold are also taxed at the rate of 22 percent. There is no customs duty on imports of gold in bars or coins.

Changes During 1991

No significant changes occurred in the exchange and trade system.

(See Appendix for a summary of trade measures introduced and eliminated on an EC-wide basis during 1991, page 557.)

Djibouti

(Position on December 31, 1991)

Exchange Arrangement

The currency of Djibouti is the Djibouti Franc, which is freely convertible into U.S. dollars, the intervention currency, at the fixed rate of DF 177.721 per US$1. Buying and selling rates for other currencies are set by local banks on the basis of cross rates for the U.S. dollar in international markets. The posted rates are subject to commission charges of 0.5-3.0 percent set by the commercial banks, depending on the currency concerned. There is a fixed commission of about DF 1,000 (or $6.00) for transfers in foreign currencies. There are no taxes or subsidies on purchases or sales of foreign exchange. Commercial enterprises are free to negotiate forward exchange contracts in respect of commercial and financial transactions through local banks or banks abroad. All transactions are negotiated at free market rates. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

On September 19, 1980, Djibouti formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Administration of Control

There is no exchange control. The Djibouti franc is issued in notes and coins by the National Bank of Djibouti, which issues and redeems the currency against U.S. dollars. Deposits in U.S. dollars constitute the cover for the notes issued.

Prescription of Currency

All settlements with Israel and South Africa are prohibited. Otherwise, no prescription of currency requirements are in force.

Imports and Import Payments

Imports from Israel and South Africa are prohibited. Djibouti has a free trade zone in the port of Djibouti, but the territory as a whole does not constitute a free zone. Formally, customs duties are not charged on imports, but in practice, fiscal duties are levied by means of the general consumption tax, at the rate of 30 percent on luxury goods and 20 percent on all other goods. Certain commodities, including alcoholic beverages, noncarbonated mineral water, petroleum products, khat, and tobacco, are subject to a surtax at various rates. Additional taxes are levied on imported milk products and fruit juice.

Exports and Export Proceeds

Exports to Israel and South Africa are prohibited. Otherwise, there are virtually no restrictions. Export proceeds may be retained.

Payments for and Proceeds from Invisibles

No restrictions are imposed on payments for or proceeds from invisibles, except that payments must not be made to or received from Israel or South Africa. A tax of 20 percent applies to fees and salaries paid to individuals and legal entities who are not permanent residents of Djibouti for professional purposes.

Capital

No restrictions are imposed on inward or outward capital transfers, but payments may not be made to or received from Israel or South Africa. Under the Investment Code of February 13, 1984, enterprises established or expanded to undertake certain specific economic activities are eligible for various tax exemptions.

Changes During 1991

No significant changes occurred in the exchange and trade system.

Dominica

(Position on December 31, 1991)

Exchange Arrangement

The currency of Dominica is the Eastern Caribbean Dollar,1 which is issued by the Eastern Caribbean Central Bank (ECCB). The Eastern Caribbean dollar is pegged to the U.S. dollar, the intervention currency, at EC$2.70 per US$1. On December 31, 1991, the buying and selling rates for the U.S. dollar were EC$2.6949 and EC$2.7084, respectively, per US$1. The ECCB also quotes daily rates for the Canadian dollar and the pound sterling.

There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Dominica informed the Fund on December 13, 1979 that it formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Administration of Control

Exchange control is administered by the Ministry of Finance and applies to all countries outside the ECCB area. The Ministry of Finance has delegated to commercial banks certain of its powers to approve sales of foreign currencies within specified limits. The Ministry of Trade administers import and export arrangements and controls.

Prescription of Currency

Settlements with residents of territories participating in the ECCB Agreement must be made in Eastern Caribbean dollars; those with member countries of the Caribbean Common Market (Caricom)2 must be made in the currency of the Caricom country concerned. Settlements with residents of other countries may be made in any foreign currency that is acceptable to the country where the settlement is being made.3

Foreign Currency Accounts

Foreign currency accounts may be operated only with the permission of the Ministry of Finance; such permission is normally confined to major exporters and foreign nationals not ordinarily resident in Dominica. The accounts can only be credited with foreign currencies obtained outside Dominica. Payments from these accounts do not require approval.

Imports and Import Payments

All imports from South Africa are prohibited, and all imports originating from the member countries of the former Council for Mutual Economic Assistance, Albania, Cambodia, China, and Democratic People’s Republic of Korea require a license. The Common External Tariff of Caricom states is applied to all imports.

Payments for authorized imports are permitted upon presentation to a commercial bank of documentary evidence of purchase. Advance payments for imports require prior approval from the Ministry of Finance.

Payments for Invisibles

All settlements overseas require exchange control approval. However, commercial banks have been delegated authority to sell foreign currency to local residents, as specified below: (1) for incidentals, EC$100, subject to a limit of EC$500 a person a year; (2) for each trip outside the area served by the ECCB, EC$3,000, subject to a maximum of two trips in any 12-month period and upon presentation of travel documents; (3) for bona fide business travelers, EC$1,000 for each day outside Dominica, provided the total does not exceed EC$30,000 in any 12-month period and upon presentation of travel documents; (4) for overseas travel for medical treatment, EC$1,000 a day up to a maximum of EC$30,000 in any 12-month period, subject to the presentation of a medical certificate stating that the journey is necessary and upon presentation of travel documents; (5) for educational expenses, including accommodation, up to EC$15,000 a student in each academic year; and (6) for dependents residing abroad, EC$2,400 in any 12-month period (EC$3,600 for minor or incapacitated dependents).

Amounts in excess of specified limits may be obtained with approval from the Ministry of Finance. Specific approval from the Ministry of Finance must also be obtained for outward remittances of cash gifts up to EC$1,000 a year to each recipient. Earnings of foreign workers and profits/dividends from foreign direct investment may be remitted after settlement of all tax or other public liabilities.

The exportation of East Caribbean bank notes and coins (other than numismatic coins) by residents and nonresidents traveling to destinations outside the ECCB area is limited to amounts prescribed by the central bank.

Exports and Export Proceeds

Exports to South Africa are prohibited, and specific licenses are required for the exportation of certain goods to any destination. The conversion of export proceeds to an ECCB currency account is mandatory, except when the exporter has a foreign currency account into which the proceeds may be paid. Exports of bananas are subject to a levy when the export price exceeds a minimum level.

Proceeds from Invisibles

Foreign currency proceeds from transactions in invisibles must be sold to a bank or paid into a foreign currency account. There is no restriction on the importation of foreign bank notes and coins.

Capital

All outward transfers of capital or profits require exchange control approval. The purchase by residents of foreign currency securities and of real estate located abroad is not normally permitted. Capital transfers, such as inheritances, to nonresidents require approval, which is normally granted, subject to the payment of any taxes due. Emigrants leaving Dominica to take up residence outside the ECCB area may transfer up to EC$30,000 from their assets for each family, subject to income tax clearance.

Direct investment in Dominica by nonresidents may be made with exchange control approval. The remittance of earnings on, and liquidation proceeds from, such investment is permitted, subject to the discharge of any liabilities related to the investment. The approval of the Ministry of Finance is required for nonresidents to borrow in Dominica.

Gold

Residents are permitted to acquire and hold gold coins for numismatic purposes only. Small quantities of gold may be imported for industrial purposes only with the approval of the Ministry of Finance.

Changes During 1991

Imports and Import Payments

June 1. The Common External Tariff of Caricom states was implemented, and quantitative restrictions on certain imports were removed.

Dominican Republic

(Position on December 31, 1991)

Exchange Arrangement

The currency of the Dominican Republic is the Dominican Peso. During January–July 1991, two exchange rates were in operation. The official rate, which was pegged to the U.S. dollar, was applied to exports and essential import transactions, effected through the Central Bank; a freely floating rate, which was determined in the interbank market, was applied to all other transactions. In July 1991, the exchange rate system was unified, and the official rate has been set on the basis of the interbank market rate of the previous day. On December 31, 1991, the buying and selling rates of the Central Bank in terms of the U.S. dollar were RD$12.50 and RD$12.82, respectively, per US$1.

A commission equivalent to 15 percent of the f.o.b. value of imports is collected by the Customs Office, and the proceeds are deposited in the Central Bank for the servicing of external debt.1 In addition, a commission of 2.0 percent is charged on sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Exchange control policy is determined by the Monetary Board and is administered by the Central Bank. At the end of 1991, 20 commercial banks (including the state-owned Reserve Bank) were operating in the foreign exchange market in the Dominican Republic.

Arrears are maintained with respect to external payments.

Prescription of Currency

Goods from the United States that are financed by the U.S. Agency for International Development must be imported under special letters of credit. Settlements with Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela may be made through special accounts established under reciprocal credit agreements within the framework of the Latin American Integration Association (LAIA). Import payments in currencies other than the U.S. dollar must be made through letters of credit. Otherwise, no obligations are imposed on importers, exporters, or other residents regarding the currency to be used for payments to or from nonresidents.

Imports and Import Payments

Payments for imports of petroleum and other essential products, such as medicines, materials for the production of medicines, coal for the use of the electric company, and priority imports for public enterprises, are transacted through the Central Bank at the official rate. Imports on a document-against-payments basis must be denominated in U.S. dollars; for these imports, central bank certification of the use of foreign currency is required for customs clearance. All other imports are transacted through the free interbank market, and are subject only to central bank verification of appropriate documentation and returned within a period of 48 hours. Most imports are subject to an exchange commission equivalent to 15 percent of the f.o.b. value.

In September 1990, the Government established a tariff regime, under which most rates range from 5 percent to 35 percent; the regime had not yet been approved by Congress at the end of 1991. The selective consumption tax ranges from 15 percent to 80 percent.

Payments for Invisibles

All invisible payments may be made freely through commercial banks, subject to documentation requirements. Annual profit remittances cannot exceed the equivalent of 25 percent of the net value of original and additional investment plus reinvestment minus repatriation, duly registered in the Foreign Department of the Central Bank.

Nonresident tourists who surrender foreign exchange to commercial banks upon arrival may reconvert up to 30 percent of the total amount surrendered (maximum of up to the equivalent of $5,000) upon departure. The exportation of domestic bank notes and coins is prohibited.

Exports and Export Proceeds

Certain exports are temporarily prohibited, including some food products and animal species, unprocessed wood (for environmental protection purposes), and blood (for public health reasons). In addition, products imported under specified bilateral trade agreements are prohibited from being exported under the terms of such agreements. A number of products (such as sugar, molasses, coffee, and cocoa) are subject to prior authorization. Export licenses, issued by the Dominican Center for Export Promotion (Cedopex), are required for all products.

With specified exceptions, exporters must surrender to the Central Bank through the commercial banks the entire proceeds from exports within 30 days of the date of bill of lading. For the purposes of exchange surrender, declared export prices must equal or exceed the minimum export prices established by Cedopex for certain exports.

Firms operating in industrial free zones and dealing in ferro-nickel exports are exempt from the exchange surrender requirements and are required to convert only the foreign exchange needed by them to cover local costs and taxes.

Law No. 69 provides for the issuance of tax credit certificates (certificados de abono tributario—CATs) for a value not exceeding 15 percent of the f.o.b. or c.i.f. value of exports; the percentage can be up to 25 percent when exports contain a high degree of domestic agricultural inputs. The CATs are, in principle, fully negotiable and can be used for the payment of taxes or other obligations to the Government. However, only a limited number of CATs have been issued. Law No. 69 also regulates the system of temporary admission for imports, under which duties are waived for any imports used in the manufacture of nontraditional products to be exported within a year.

A portion of import duties paid on raw materials and component parts used in the production of nontraditional exports is refunded; the percentage of the refund is 90 percent for exports containing only imported inputs, 95 percent for exports containing domestic inputs, and 100 percent for exports produced in the industrial free trade zone.2 Exporters are also eligible for a refund of 95 percent of any internal tax levied on locally manufactured goods that are exported. Exporters may not extend credit to foreign buyers for more than 90 days from the date of shipment without authorization from the Central Bank.

Proceeds from Invisibles

Foreign exchange proceeds from all invisibles may be sold in the interbank market, except for proceeds originating in transactions with foreigners using international credit cards, which must be sold in the Central Bank. The importation of domestic bank notes and coins is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. However, direct foreign investment is regulated by Law No. 861 of July 19, 1978, which created a Directorate of Foreign Investment to approve direct investment requests. Such investments must be registered with the Central Bank. Outward remittances related to investments require the approval of the Central Bank.

Foreign debt can be contracted directly by the Central Government, subject to congressional authorization. According to Law No. 251 of 1964, new loans by other public and private entities require Monetary Board authorization. According to a set of criteria established by the Monetary Board on November 19, 1981, priority in the approval of new loans is given to borrowings associated with exports, import substitution, and social projects, such as housing and education. Total financial charges on foreign loans are not allowed to exceed the principal international interest rate by more than a certain margin. There are also minimum maturity requirements according to the type of financing.

Since January 23, 1985, the Central Bank has provided foreign exchange for the servicing of public external debt at the market rate; the servicing of private external debt is effected through the interbank market.

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 1991

Exchange Arrangement

January 24. A new exchange system, consisting of an official rate that would apply to all exports and essential imports to be transacted through the Central Bank and an interbank market in which the exchange rate would be freely determined and to be applied to all other transactions was introduced. The official rate was set at RD$11.70 (buying rate) per US$1, which was about 7 percent more appreciated than that in the interbank market.

January 24. The official and free interbank market rates were unified, with the official rate to be set on the basis of the interbank market rate of the previous day. The spread between the official and interbank rate would be kept within 2 percent.

July 7. A foreign exchange commission of 2.5 percent was introduced on the sale of foreign exchange.

December 19. The foreign exchange commission was lowered to 2 percent.

Ecuador

(Position on December 31, 1991)

Exchange Arrangement

The currency of Ecuador is the Ecuadoran Sucre. At present, there are three exchange rates: the official rate of S/. 390 per US$1, which is used for the accounting purposes of the Central Bank of Ecuador only; the intervention market rate of the Central Bank; and the free market rate. All foreign trade transactions of the private sector, as well as some other private sector foreign exchange transactions (mainly those of the national press and of eligible students abroad), take place on the intervention market of the Central Bank. This market has a single rate but operationally has two segments—one for the public sector (where all public sector transactions take place) and the other for the private sector (where a foreign exchange allocation system governs private sector transactions). Private sector transactions that do not take place in the intervention market take place in the free market. The intervention rate of the Central Bank is adjusted weekly, on the basis of a preannounced peg rate (a weekly depreciation of S/. 3.00 during May 15, 1989–March 5, 1990, and after March 6, 1990, S/. 3.50, against the U.S. dollar).1 The selling rate is set at 2 percent above the buying rate. On December 31, 1991, the exchange rate (averages of buying and selling rates) was S/. 1,270.58 per US$1 in the intervention market of the Central Bank, and S/. 1,297.04 per US$1 in the free market.

In the public sector segment of the intervention market, the Central Bank is authorized to purchase the foreign exchange proceeds that derive from the following transactions: the f.o.b. value of all public sector exports; all public sector income in foreign currency, including foreign loan disbursements; foreign exchange balances on public sector deposits in foreign currency at the Central Bank (when considered in excess of the normal requirements of each entity); and all other transactions of the Central Bank. The Central Bank is authorized to sell foreign exchange that derives from payments of the following operations in the public sector segment of the intervention market: the c. & f. value of public sector imports; the transfer of surpluses of foreign oil companies operating in Ecuador; purchases of services abroad by the public sector; interest payments and principal amortization in foreign currency of the public sector; and all other transactions of the Central Bank.

In the intervention market for the private sector, the Central Bank is authorized to buy 100 percent of the f.o.b. value of all private sector export proceeds and 100 percent of the proceeds from credits granted by multilateral agencies and foreign governments to the private sector previously authorized by the Monetary Board. Twice a week, the Central Bank determines the maximum amount of foreign exchange available (the limit of 90 percent of export proceeds from the private sector was raised to 100 percent in December 1989). It sells this amount for the payment of the c. & f. value of private sector imports; for the foreign exchange required by the national press and by students abroad who have obtained financing from the Ecuadoran Institute for Education Loans; and for the servicing of loans granted by multilateral agencies and governments or their agencies to Ecuadoran financial institutions in the private sector to finance private investment projects.

Requests for foreign exchange have to be submitted to the Committee for Foreign Exchange Sales (Comité de Venta de Divisas) through authorized banks, financial companies, or professional organizations (Federaciones Nacionales de Cámaras), none of which can submit requests for more than 20 percent of the total amount offered at each biweekly session. Requests for foreign exchange for import payments can be presented only on the basis of import permits granted at least 60 days before the session. Requests are satisfied according to the chronological order of the date of issuance of the import permits. The amount of foreign exchange received by each participating institution is determined on a pro rata basis, given by the ratio of the total amount offered to the total amount requested multiplied by the amount requested by the institution in question.2

Under transitional arrangements, the Central Bank is obliged to provide foreign exchange at the intervention market rate for the following payments: imports for which permits were granted up to August 11, 1986; the redemption of foreign currency stabilization bonds; the servicing of the private sector external debt for which the foreign exchange was sold to the Central Bank up to August 11, 1986; profit remittances and capital repatriation generated by foreign investments for which the foreign currency was sold to the Central Bank up to August 11, 1986; and expenses incurred abroad by students and handicapped persons for which a contract was approved by the Central Bank up to August 11, 1986. To meet obligations arising from import permits granted up to August 11, 1986, the Central Bank is authorized to issue foreign currency stabilization bonds, provided the counter-value in sucres has been deposited with the Central Bank and all the requirements for payment abroad have been fulfilled. The maturity of the bonds runs from the date of issue. The Central Bank has issued four stabilization bonds, each amounting to 25 percent of its obligation, which carry an interest rate equal to the three-month LIBOR (or equivalent rate in non-U.S. dollar currencies).

Most borrowings abroad by the private sector are subject to an exchange tax ranging from 0.5 percent to 2 percent.

There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

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

Exchange controls are administered by the Central Bank.

Prescription of Currency

Most settlements with Hungary, Poland, and the states of the former U.S.S.R. take place through bilateral accounts. Payments between Ecuador and Argentina, Bolivia, Brazil, Chile, Colombia, the Dominican Republic, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). 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 priority goods (“Special” Group), essential goods (Group A, consisting of capital goods, inputs for agriculture and industry, and consumer goods with no local substitutes), and semi-essential goods (Group B, consisting of products with some local equivalent, except luxury goods); and List II, consisting of luxury goods. All goods not included on these two lists are prohibited. Mainly for reasons of industrial, environmental, and health protection, certain imports require prior authorization from government ministries or agencies. Imports of motor vehicles are prohibited, as are antiquities and certain items related to health and national security.

Prior import licenses are required for all permitted imports, except for books, newspapers, periodicals, printed music, and medicines; spare parts for machinery and automotive vehicles are free of license when valued at $1,500 f.o.b. or less. In addition, the State Petroleum Corporation (Petroecuador) may, without a license, import supplies, materials, and equipment during emergencies. Import licenses are issued free of charge irrespective of the origin of goods, provided that 80 percent of the import tax has been paid, prior ministerial authorization (when needed) has been obtained, and the insurance has been arranged in Ecuador. All private sector imports are subject to a value-added tax of 10 percent, and all public and private sector imports are subject to a service charge of 1 percent of the c. & f. value. There is a temporary duty-free import scheme for inputs used in export production. Labor legislation has been modified to enable employers to hire part-time workers in in-bond plants and to ease the dismissal of workers.

Payments for Invisibles

All public sector payments for invisibles, including interest on public debt, are transacted in the intervention market of the Central Bank. Other payments for current invisibles must be settled in the free market. There are no limitations on the amounts of domestic and foreign bank notes that travelers may take out. The arrangement for the refinancing of private external debt involves different implicit exchange rates arising from the imposition of charges on the official rate to compensate for possible exchange losses. These rates apply to the refinancing of private external credits contracted or endorsed by the domestic financial system or directly by the private sector. They also apply to the payment of interest on loan proceeds sold to the Central Bank under the refinancing scheme of 1983 (Resolution No. 1202). Interest, commissions, and other financial charges on foreign loans to petroleum companies may not exceed the equivalent of 2 percentage points above the interest rates in the creditor country.

Residents and nonresidents traveling abroad by air must pay a tax of $25 for each exit visa. Airline tickets for foreign travel are taxed at 10 percent, and tickets for travel by ship are taxed at the rate of 8 percent for departure from Ecuador and 4 percent for the return trip.

Exports and Export Proceeds

All exports require licenses; licenses are issued freely without fees subject to guarantee and may be provisional (with a validity of 30 days) or definitive (with a validity of 90 days). There is a list of prohibited exports and a list of exports subject to quota (“exportable surplus”), reviewed quarterly by the relevant ministries. All goods not on these lists are freely exportable. All export proceeds must be surrendered in the intervention market of the Central Bank not later than (1) 15 days from the date of shipment for exports against cash payment; (2) 30 days from the date of shipment for bananas, provided that sales were made on an installment basis; (3) 60 days from the date of shipment for coffee beans, cocoa beans, fish, shrimp, and other unprocessed seafood products, provided that the sale was made on an installment basis; (4) 90 days from the date of shipment for other primary products, provided that the sale was made on an installment basis; and (5) 180 days from the date of shipment for products not covered in (1)–(4), provided that the sale was made on an installment basis. Those who disregard the above surrender requirements are subject to penalty, and the Central Bank is authorized to carry out the inspections it considers necessary to verify the proper surrender of export proceeds. However, the Central Bank is authorized to purchase foreign exchange in anticipation of future exports, within a maximum period of 150 days after shipment (with exceptions made for exports of coffee grain, shrimp, and fish meal) and within a maximum period of 80 days for other products. In November 1991, a scheme by which exporters were compensated for sucre devaluations occurring between the time of foreign exchange surrender and export shipment was eliminated. The surrender requirement does not apply to exports effected under authorized barter transactions. However, barter transactions require the prior approval of the Ministry of Industry, Commerce, Integration, and Fisheries; they must be registered with the Central Bank and are subject to specific limitations. Minimum reference prices are established for exports of bananas, coffee, fish products, cocoa, and semifinished products of cocoa to help ensure that exchange proceeds are fully surrendered. Payment of foreign exchange for petroleum exports will be made on the basis of the sale prices stated in the sale contracts and must be surrendered within 20 days of the date of shipment.

Proceeds from Invisibles

All receipts from invisibles must be sold in the free market, except for interest income on foreign reserves of the Central Bank and all invisible receipts of the public sector, which are transacted in the intervention market. Travelers may bring in any amount of foreign or domestic bank notes.

Capital

Capital may freely enter or leave the country through the free market, except capital in the petroleum sector, which must be transacted through the intervention market. Most borrowings abroad by the private sector are subject to an exchange tax ranging from 0.5 percent to 2 percent.

New foreign direct investments do not require prior authorization from the Ministry of Industry, Commerce, Integration, and Fisheries unless specifically stated.

Authorization from the Ministry of Industry, Commerce, Integration, and Fisheries is required when the foreign investment involves a stock transfer from a resident to a nonresident or between nonresidents. Authorization from this Ministry is also needed for new investments in public and financial services. The latter also require the authorization of the Superintendence of Banks.

Repatriations of capital and remittances of profits on foreign investments are handled through the free exchange market in respect of those investments that have been effected through this market. The limits on the repatriation of profit remittances in all sectors were abolished in 1991.

All foreign loans granted to the Government or to official entities, or guaranteed by them, whether or not they involve the disbursement of foreign exchange, are subject to prior approval from the Monetary Board. Suppliers’ credits of up to one year’s maturity are exempt from this requirement. The request for such authorization, to be submitted to the Minister of Finance and the Monetary Board, must be accompanied by detailed information on the loan contract and on the investment projects it is intended to finance. In examining the request, the Monetary Board considers the effects that the loan and the related investment may have on the balance of payments and on monetary aggregates. For public sector entities, the projects to be financed must be included in the General Development Plan or receive a favorable ruling from the National Council for Development (Conade), and at least 20 percent of the total cost of the project must be covered by domestic funds. This requirement does not apply to loans granted by international organizations or national development agencies. New external credits with a maturity of over one year contracted by the private sector, either directly or through the domestic financial system, must be authorized and registered by the Central Bank.

Gold

The private sector is now authorized to import and export gold and to buy and sell gold in the domestic market.

Changes During 1991

Exchange Arrangement

September 26. The preferential exchange rate for imports of medicines and inputs for their manufacture was eliminated.

Imports and Import Payments

February 14 (and November 6). The number of prohibited imports was reduced to 53 tariff nomenclatures from 900, and the number of items subject to prior authorization was reduced to 830 from 1,400.

Exports and Export Proceeds

November 22. A scheme by which exporters were compensated for sucre devaluations occurring between the time of foreign exchange surrender and shipment was eliminated.

Capital

June 13. The limits on profit remittances were abolished.

Gold

May 31. The restrictions on private sector imports and exports of gold and on domestic sales were eliminated. However, exporters, importers, and traders are required to register their transactions with the Central Bank.

Egypt

(Position on December 31, 1991)

Exchange Arrangement

The currency of Egypt is the Egyptian Pound; the U.S. dollar is used as the intervention currency. From May 11, 1987 to February 26, 1991, the exchange system consisted of three exchange markets. The first exchange market (the central bank pool) handled, on the receipts side, exports of petroleum, cotton, and rice, Suez Canal dues, and Sumed pipeline royalties; and on the payments side, imports of certain essential subsidized foodstuffs, subsidized insecticides and fertilizers, and specified public sector capital transactions including public sector external debt-service payments. The second exchange market (the commercial bank pool or new bank market) consisted of all authorized commercial banks and three travel agencies. The supply of foreign exchange in this market derived mainly from workers’ remittances, tourist expenditures, and specified public and private sector export earnings. On the payments side, this market provided foreign exchange for specified public sector visible and invisible transactions, all private sector imports, and certain private sector invisible payments primarily related to imports. The third market (the outside banks’ free market) covered transactions involving residents’ holdings of foreign exchange deposits in free accounts with domestic banks and an unofficial market in Port Said, a free trade zone.

At the end of June 1991, the central bank pool rate was LE 1.1 per US$1. On July 1, 1991, the central bank pool exchange rate was adjusted to LE 2 per US$1. With the introduction of the new exchange system on February 27, 1991, the following three exchange rates came into effect: the central bank pool rate of LE 2 per US$1, the primary market exchange rate of LE 3.01 per US$1, which was managed to remain within 5 percent of the free market exchange rate, and the free market exchange rate. At the end of fiscal year 1990/91 (June 30, 1991), the central bank pool rate and the related subaccount arrangement were discontinued, and henceforth central bank pool transactions were undertaken at the primary market exchange rate. On October 8, 1991, the primary and free market exchange rates were unified into a new free market rate at LE 3.31 per US$1. At the same time, an administered exchange rate of LE 3.29 per US$1 and the related subaccounts arrangement were established for certain public sector transactions. On November 28, 1991, this administered exchange rate and the related subaccount arrangement were discontinued, and the free market exchange rate was applied to all transactions. On December 31, 1991, the free market exchange rate was LE 3.332 per US$1. The exchange rates for 16 other convertible currencies1 are based on the cross rates of these currencies against the U.S. dollar quoted in London.

Under the exchange reform of February 1991, nonbank foreign exchange dealers have been permitted to operate in the free market. Nonbank dealers may buy and sell domestic and foreign means of payment (bank notes, coins, and traveler’s checks), including purchases and sales on their own account. In addition, authorized nonbank dealers may broker any foreign exchange operation and transaction, except transfers to and from the country, for the account of their bank or nonbank customers, whether resident or nonresident. At present, nonbank dealers are not permitted to transact for their own account any type of foreign exchange transactions.

A number of special exchange rates are also in effect. At the end of December 1991, a rate of LE 3.0 per £1 applied to visible trade transactions effected under the bilateral payments agreement with the former U.S.S.R., and a rate of LE 1.30 per US$1 applied to transactions effected under the bilateral payments agreement with Sudan. In addition, a rate of LE 0.3913 per US$1 is being used for the liquidation of accounts related to past bilateral payments agreements.

Authorized commercial banks are permitted to conduct forward foreign exchange transactions for their own account. No prior approval by the Central Bank is required, and the banks are free to determine the rates applied for forward transactions.

Administration of Control

A foreign exchange budget is established annually for the Government and the public authorities. Banks are authorized to execute foreign exchange transactions, within the framework of a general authorization, without obtaining specific exchange control approval. The Ministry of Economy and Foreign Trade supervises imports and exports by the public sector. Certain imports and exports are reserved for public sector entities. Port Said City is accorded the status of a free zone. Arrears are maintained with respect to external payments.

Prescription of Currency

Payments to and from countries with which Egypt does not have bilateral payments agreements may be made in any convertible currency, in Egyptian pounds, or in a convertible currency to the debit or credit of the appropriate free account (see section on Nonresident Accounts, below), or in any other manner prescribed or permitted by the foreign exchange regulations.

Settlements with countries with which Egypt has bilateral payments agreements are made according to the terms of these agreements.2 However, payments to such countries for imports and various other purposes not covered by these agreements may be made in convertible currency. Certain settlements with countries with which indemnity agreements concerning compensation for nationalized property are in force are made through special accounts in Egyptian pounds with the Central Bank of Egypt. Suez Canal dues are expressed in SDRs and may be paid by debiting canal dues accounts, advance payment Canal dues accounts, or free accounts in foreign currency. Canal dues accounts must be opened in foreign currency, and balances are transferable abroad.

Nonresident Accounts

In addition to the special accounts related to Egypt’s bilateral payments agreements, the indemnity agreements concluded with certain countries, and Canal dues accounts, there are three types of accounts: free accounts, D accounts, and nonconvertible capital accounts.

Free accounts may be opened in the name of any entity other than the Egyptian Government, public authorities, and public sector entities. They may be opened in either foreign currency or Egyptian pounds; the latter are freely convertible. Free accounts in foreign currency may be credited with transfers of convertible currencies from abroad and transfers from other similar accounts. Foreign currencies from funds transferred from a free account in Egyptian pounds, and interest earned on these accounts may be debited for transfers abroad, transfers to other similar accounts, withdrawals in foreign bank notes to the owner or others, transfers to free accounts in Egyptian pounds, and for any payment in Egypt, including those for exports and for bank charges and commissions.

D accounts may be opened in the name of any resident of a country with which Egypt has a bilateral payments agreement. The accounts must be designated by the name of the partner country concerned. These accounts may be credited with receipts under the respective payments agreement and with the equivalent of transfers authorized from the country of the account holder. They may be debited for transfers to the country of the account holder and for local payments (including those for Egyptian exports) authorized by the implementing regulations and within the scope of the relevant payments agreement.

Nonconvertible capital accounts may be credited with any payment of a capital nature to a foreigner living outside Egypt that is not remittable under the exchange control regulations. Banks may debit these accounts for charges legally due from the account holder. Accounts held by individuals may be debited up to a limit of LE 10,000 a year for use by the account holder. Accounts held by juridical persons may be debited for settlement of outstanding obligations to the Egyptian authorities; they may also be used for payments to residents for services rendered, up to a limit of LE 20,000 a year for expenses incurred in connection with the activities or residence of the holder’s employees in Egypt.

Resident Accounts

In addition to free accounts, which may be opened by both nonresidents and residents, residents may hold foreign exchange retention accounts and capital and working accounts.

Foreign exchange retention accounts may be opened in the name of authorized recipients and credited with the proceeds from certain exports of goods and invisible receipts. Public sector companies may transfer these funds to other public sector companies within the same industrial group or sell them to the authorized banks at the commercial bank rate. Private sector exporters may debit these accounts for visible and invisible payments related to their economic activity or sell the exchange in the commercial bank market, but may not transfer these funds to free accounts. Holders of export retention accounts in the private sector are entitled—without the need to submit any documentation—to use up to 25 percent of the proceeds of their exports for financing travel expenses for the exporter or his employees, for other invisible payments related to the account holder’s activity, and for settling repatriation requirements. Unused balances in retention accounts owned by the public sector, unless exempted, must be sold periodically to the banking system. If the balances in the retention accounts owned by the public sector entities originate from invisible proceeds, unused balances must be surrendered monthly. In addition, balances in these accounts must be fully used by the account holder before authorized transactions can be effected by the public or private sector.

Capital and working accounts may be opened by companies covered by Law No. 230 (of July 1989). These accounts may be credited with transfers from abroad, advance payments and long-term rents in foreign exchange, loans, funds purchased from the free bank market, and funds purchased from the free accounts to meet the project requirement; they may be debited for payments by the account holder (for example, imports, profit remittances, interest, other invisibles, and financing of local expenditures). Holders of these accounts are not permitted to use the commercial bank market resources before the balances in their accounts are fully used.

Imports and Import Payments

The Supreme Council for the Planning of Foreign Trade formulates a long-term policy for exports and imports, controls the annual export and import plan, and supervises the execution of the foreign exchange budget. Imports under payments agreements and imports of specified goods from any source are reserved for the public sector. Private sector trade with payments agreement countries is permitted in convertible currencies in items not covered by trade protocol agreements.

Imports by the Government and the public authorities are effected within the provisions of the foreign exchange budget. For purposes of the foreign exchange budget, the economy is divided into several sectors (agriculture, industry, and transportation). The annual foreign exchange budget provides for a specific quota for each sector, and the authorities in charge of each sector decide on the goods to be imported and the entities that are to import them within that quota. All imports financed by the Central Bank are effected at the free market rate, with the exception of imports under bilateral payments agreements, which are effected at a special, more appreciated, rate (except for imports from the former U.S.S.R. (see section on Exchange Arrangement, above)).

Import payments in foreign exchange by the private sector are effected through the commercial banks, licensed nonbank dealers, Port Said, or through importers’ own foreign exchange resources. All commodities not included on the prohibited list of 105 items can be freely imported. Certain goods (for example, imports financed with bilateral and multilateral assistance, components imported by licensed local manufacturers and assembly units, and free zone imports) are exempted from the negative list, and items on the negative list may be imported with the approval of the Ministry of Economy. On application to open a letter of credit, private sector importers (including companies covered by Law No. 230) must lodge with an authorized bank a prior import deposit at the rate of 10 percent or 20 percent in domestic or foreign currency, depending on whether imports are brought in for own use or for resale. These deposits have to be financed from the importers’ own resources and are remunerated at an interest rate agreed upon by the customer and the bank. Banks are allowed to finance all or part of the remaining 90 percent or 80 percent, respectively. When suppliers’ credit facilities are available, the importer may not be required to cover the remaining percentage of the letter of credit, depending on the conditions of the suppliers’ credit agreement.

For purposes of customs tariffs, products are classified under 12 groups. The rates range from 5 percent to 100 percent (with several exceptions). The weighted average rate was 25–30 percent in 1991.

Payments for Invisibles

Banks are authorized to provide foreign exchange for all invisible payments by the Government, the public authorities, and the public sector, within the framework of the foreign exchange budget and in accordance with current rules and regulations. Banks and other agencies authorized to deal in foreign exchange may sell without any restriction foreign currencies for payments for invisibles to individuals, private and public sector units and companies, and companies established under the domestic investment regime, in accordance with the provisions of the Investment Law.

Only Egyptian nationals, foreigners who have lived in the country for a continuous period of five years, and foreigners permitted to reside in Egypt for a period of ten years can purchase airline tickets (one-way or round-trip originating in Egypt) under certain conditions in Egyptian pounds. With this exception, all others must purchase tickets with convertible currencies or with Egyptian pounds converted at the commercial bank exchange rate.

Persons traveling abroad are entitled to carry foreign bank notes and other instruments of payment in foreign currency without limitation provided that the amounts are (1) purchased from authorized banks or from authorized nonbank dealers in foreign exchange and recorded on the passport by the selling agency; (2) stated in the customs declaration upon arrival from the most recent trip abroad; (3) drawn from free accounts in foreign currency recorded on the passport by one of the authorized banks; (4) shown as a deduction from foreign currency set aside accounts; or (5) in bank notes or traveler’s checks up to $500 or its equivalent in foreign currency, in which case no record in the passport is required.

Exports and Export Proceeds

Apart from commodities required for the national economy that may be restricted, exports may be made without license. Exports of many products are organized and supervised by foreign trade committees. Cotton, rice, and petroleum are exported by the public sector only, and their proceeds must be repatriated within three months.

Proceeds from exports of books, newspapers, and other publications must be repatriated as soon as they are received and, in any case, within a period of not more than five years from the date of shipment. Proceeds from all other exports must be repatriated within one year of the date of shipment. Proceeds from exports of other products may be fully retained in foreign exchange retention accounts. Proceeds from exports by both private and public sectors to bilateral payments agreement countries are obtained in Egyptian pounds, in accordance with the provisions of the relevant agreement.

All departing foreigners who are carrying on their person gifts valued at more than LE 250 are required to show evidence that they exchanged foreign exchange equivalent to the excess value at an authorized bank. The corresponding limit on excess value applied to Egyptian nationals is LE 100, and that for purchases left behind with Khan El Khalil merchants is LE 500 (provided that they are exported within three months of the date of the traveler’s departure and that proof is provided that he visited Egypt).

Proceeds from Invisibles

Foreign exchange earned abroad by persons and juridical entities other than the Egyptian Government, public authorities, and public sector entities may be held abroad or retained indefinitely in free accounts.

Receipts from tourism must be surrendered to the banking system. However, hotels are allowed to retain 25 percent of their foreign exchange earnings in their working accounts. Hotels operating under Law No. 230 are allowed to retain all of their foreign exchange earnings in their working accounts. With the approval of the Ministry of Economy and Foreign Trade, hotels other than those operating under Law No. 230 may also retain an additional 15 percent of their foreign exchange earnings to meet their debt-service obligations. Travel agencies belonging to the private sector are allowed to retain 10 percent of their foreign exchange earnings, and 100 percent if they operate under Law No. 230; Misr Travel is allowed to retain 25 percent.

Other invisible earnings by public sector entities may be retained to the extent of 10 percent of the total; authorization to retain more or exemption from periodic surrender requirements must be approved by the Ministry of Economy and Foreign Trade. Certain travel in Egypt by foreigners may be financed from various special accounts, such as those under indemnity agreements with certain countries.

Persons arriving in Egypt from abroad may import up to LE 100 in Egyptian bank notes and are permitted to bring in, and to use locally, unlimited amounts in foreign exchange.

Capital

Transfers of funds by foreign nationals leaving the country permanently, by emigrants, and by accrued alimony beneficiaries living abroad (within the limits prescribed by the pertinent legal provisions) are not restricted. Imports and exports of securities and transfers related to their purchase or sale must be effected through authorized banks. Securities dealers registered at the stock market of Cairo and Alexandria are authorized to act as intermediaries in property transfer operations related to these securities both inside and outside Egypt. Foreign exchange may be released in order to transfer the amounts requested by government units, public agencies, and public sector companies to pay for investments abroad, and to pay their share of capital in foreign exchange projects inside the country, with the approval of the responsible authorities and in conformity with the prevailing laws and regulations.

The total cash assets from estates accruing to foreigners living abroad may be deposited in capital nontransferable accounts to be opened with authorized banks. The net shares of the heirs of foreigners living abroad may be deposited in nontransferable capital accounts. Authorized banks may pay from such nontransferable capital accounts legal expenses accruing against the holder of accounts opened in the names of natural or juridical persons up to a maximum of LE 10,000 each calendar year. In addition to settlement of expenses and fees for local services and government claims, amounts may be paid from these accounts in settlement of expenses related to the activities or stay of employees of the juridical person in Egypt, up to a maximum of LE 20,000 each calendar year.

Payments for real estate and land which foreigners are allowed to own must be made in convertible currencies. Proceeds from sales of property owned in Egypt by foreigners or their heirs must be deposited in a special capital account in the name of the foreign seller at an authorized bank. The authorized bank may transfer funds abroad from the account, but the transfer must be limited to the amount of foreign exchange units that was previously transferred and surrendered in return for Egyptian pounds at the time of the acquisition of the property, plus 5 percent of the value of the property for each year following the first five years of ownership until the property was sold; afterwards, up to a maximum of LE 50,000 a year may be transferred.

The ratio of foreign currency liabilities to foreign currency assets of authorized commercial banks is subject to a maximum limit of 105 percent, and the difference between foreign currency liabilities and foreign currency assets is subject to a limit of 15 percent of individual banks’ capital. (Although banks are encouraged to comply with these requirements, the applicable limits will not become mandatory until June 30, 1992.)

Gold

Banks are not authorized to deal or speculate (for their own or their customers’ account) in precious metals. The importation of precious metals and stones for industrial and local market requirements is regulated. The exportation of gold and silver fabrics may be permitted, provided that the sales proceeds are repatriated in convertible currencies. Travelers are permitted to take out and bring in their gold jewelry up to LE 20,000; a security acceptable to the Customs Department is required for such objects in excess of LE 2,000.

Changes During 1991

Exchange Arrangement

February 27. A new exchange system consisting of a free exchange market, a primary exchange market, and a central bank pool rate was introduced. The exchange rate in the free market would be set freely by market forces, and the exchange rate in the primary market would be managed so that it would not deviate from the exchange rate in the free exchange market by more than 5 percent. The central bank pool rate was set at LE 2 per US$1. The difference between the central bank pool rate and the primary exchange market rate would be accounted for through subaccounts in the profit and loss accounts on foreign exchange operations of the Central Bank of Egypt.

June 30. The central bank pool rate and the subaccount arrangement were discontinued, and central bank pool transactions were undertaken at the primary market exchange rate.

October 8. The primary and free market exchange rates were unified. At the same time, an administered exchange rate of LE 3.29 per US$1 and the related subaccount arrangement were established for certain public sector transactions.

November 28. The administered exchange rate of LE 3.29 per US$1 and the related subaccount arrangement were discontinued, and the free market exchange rate was applied to all transactions.

Administration of Control

February 27. The foreign exchange budget system ceased to be used for public enterprises.

Resident Accounts

February 26. Import accounts in foreign exchange were abolished.

Imports and Import Payments

May 15. The requirement that letters of credit be opened for all imports was abolished.

May 30. The advanced import deposit rate for imports that are settled with letters of credit was reduced to 10 percent from 35 percent in respect of imports for own use and to 20 percent in respect of imports for resale.

May 30. The minimum and maximum tariff rates were set at 5 percent and 100 percent, respectively, with a few exceptions.

Payments for Invisibles

February 27. The amount of Egyptian bank notes that could be taken out of the country was increased to LE 100 from LE 20.

Exports and Export Proceeds

February 27. The requirement that 50 percent of proceeds from exports of peanuts, onions, garlic, potatoes, citrus fruits, live goats and sheep, fish, and molasses must be sold to the commercial banks was abolished.

October 8. The Government, Suez Canal authorities, Sumed, the Egyptian Petroleum Corporation, and cotton and rice exporters were no longer required to sell their foreign exchange receipts exclusively to the Central Bank.

El Salvador

(Position on December 31, 1991)

Exchange Arrangement

The currency of El Salvador is the Salvadoran Colón. El Salvador maintains a unified floating exchange rate system under which commercial banks and exchange houses are free to purchase and sell foreign exchange for authorized transactions at rates determined by supply and demand conditions in the market. The Central Reserve Bank establishes weekly the exchange rate applicable to transactions between the Central Reserve Bank and the public sector, to foreign exchange surrendered by coffee exporters to the Central Reserve Bank, and to the calculation of tax obligations. This exchange rate is the simple average of the exchange rates set by commercial banks and exchange houses during the previous week. In addition, the Central Reserve Bank may purchase or sell foreign exchange to commercial banks at the rate prevailing in the market at the time of the transaction. On December 31, 1991, the Central Reserve Bank’s buying and selling exchange rates were ₵ 8.08 and ₵ 8.13, respectively, per US$1, the average rate of commercial banks was ₵ 8.06 per US$1, and the average rate of exchange houses was ₵ 8.05 per US$1. There are no arrangements for forward cover against exchange rate risk operating in the official, commercial banking, or exchange houses sectors.

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 in accordance with its general directives. Authorization for all private sector imports and invisible payments is delegated to the commercial banks and exchange houses.

Exports of a number of products require licenses issued by the Ministry of Economy, subject to agreement by the Ministry of Agriculture. The Salvadoran Coffee Council issues permits freely to private sector traders to conduct external or domestic trade in coffee.

Prescription of Currency

There are no prescription of currency requirements. Settlements are usually made in U.S. dollars or other convertible currencies.

Foreign Currency Deposit Accounts

Both residents and nonresidents may maintain deposit accounts in foreign currency with authorized banks. Balances on these accounts may be sold to the commercial banks or used to make payments abroad without restriction. Transfers of funds between these accounts are also not restricted. The commercial banks are required to submit periodic reports to the Central Reserve Bank on the use of such accounts.

Imports and Import Payments

Import licenses are issued by the Ministry of Economy and are required for only a few items, including airplanes, firearms, ammunition, military equipment, dynamite, cotton for industrial use, jute sacks, skins, leather, some chemical and pharmaceutical products, coffee for seeding, sugar, and saccharin.

Imports from the member countries of the Central American Common Market (CACM) can be financed by sight drafts, or letters of credit with unrestricted maturity, or direct payments. Imports from countries outside the CACM that apply discriminatory restrictions against exports from El Salvador must be paid for before customs clearance, with the exception of industrial raw materials, which may be paid for within three years.

Authorization for private sector import payments is delegated to the commercial banks and exchange houses. Payments for imports by the public sector are made by the Central Reserve Bank, which is also responsible for all official bilateral lines of credit and lines of credit.

Import tariffs range from 5 percent to 20 percent, with some luxury items subject to rates of up to 30 percent.

Payments for Invisibles

Restrictions on payments for invisibles of a personal nature (that is, medical treatment, study abroad, and foreign travel) were eliminated in December 1990, and the authority to grant foreign exchange for expenses relating to foreign travel and study abroad is delegated to the commercial banks and exchange houses. Travelers may not take out more than ₵ 200 in domestic bank notes and coins.

Exports and Export Proceeds

Export licenses are not required except for certain foodstuffs and other items for which the authorities wish to ensure an adequate local supply. An export registration certificate from the Central Reserve Bank is required for all exports exceeding an f.o.b. value of $5,000; exports requiring a certificate of origin or a health certificate, however, must be registered irrespective of the value.

Export proceeds from coffee are required to be surrendered to the Central Reserve Bank within 40 days of the issuance of the export registration certificate; proceeds from exports of all other goods must be surrendered to the commercial banks within 120 days of the issuance of the export registration certificate. The terms for export receipts on a collection basis normally must not exceed 30 days after the issuance of the export registration certificate.

Exporters of nontraditional products to markets outside the Central American market receive a drawback of taxes paid on imported raw materials equivalent to 8 percent of the f.o.b. value of exports in the form of certificates. These certificates may be used for payments of direct or indirect taxes.

Exports of coffee from the 1991/92 crop are subject to an export tax of 25 percent, which is applied to prices exceeding $55 a quintal.1

Proceeds from Invisibles

All exchange receipts from invisibles in excess of $5,000 must be surrendered to an authorized commercial bank. Travelers may bring in ₡ 200 in domestic bank notes and coins; this limit is, however, subject to modification to facilitate border trade with other Central American countries.

Capital

All exchange receipts resulting from capital transactions must be surrendered to the monetary authorities, including direct and indirect foreign investment. The entry of capital with a maturity of more than one year in the form of foreign investment must be registered with the Ministry of Economy. Registration ensures (1) free remittance of net profits on foreign capital invested in industrial enterprises, enterprises engaged in the extraction of nonrenewable natural resources, and tourist enterprises; (2) remittance of net profits of enterprises engaged in other activities up to a limit of 10 percent 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 enterprises (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) payment of interest and amortization as determined at the time of registration. In the case of (3) and (4), in addition to approval from the Central Reserve Bank, prior approval from the Ministry of Economy is also required.

Payments abroad representing capital transfers require exchange licenses. Prior approval from the Central Reserve Bank is required for outward remittances of interest and amortization on external loans. Foreign loans with a maturity of up to one year must be authorized by the Central Reserve Bank, while foreign loans with a maturity of more than one year must be authorized by the Ministry of Economy.

Decree No. 279 of March 27, 1969 sets certain minimum capital requirements for businesses that are owned by foreign nationals and for those in which foreign nationals have a shareholding interest. For purposes of this decree, foreign nationals are defined as persons who are not citizens of one of the five CACM member countries.

Gold

Gold coins in denominations of ₵ 25, ₵ 50, ₵ 100, and ₵ 200 have been issued as legal tender but do not circulate. Residents may hold and acquire gold coins in El Salvador for numismatic purposes. With this exception, residents other than the monetary authorities are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Imports and exports of gold in any form other than jewelry require licenses issued by the Central Reserve Bank; such licenses are granted for imports and exports by or on behalf of the monetary authorities and industrial users. In practice, imports of nonmonetary unworked gold are made only by jewelers’ cooperatives acting on behalf of their members and other users for dental purposes.

Changes During 1991

May 16. El Salvador became a contracting party to the GATT.

Imports and Import Payments

July 3. The maximum import tariff rate was lowered to 30 percent from 50 percent.

Capital

August 1. Capital transactions were liberalized.

Equatorial Guinea

(Position on December 31, 1991)

Exchange Arrangement

The currency of Equatorial Guinea is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the rate of CFAF 50 per F 1, free of commission. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rate for the currency concerned in the Paris exchange market. A commission of 0.50 percent is levied on transfers to countries that are not members of the BEAC, except transfers in respect of central and local government operations, payments for imports covered by a duly issued license domiciled with a bank, scheduled repayments on loans properly obtained abroad, travel allowances paid by the Government and its agencies for official missions, and payments of reinsurance premiums. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, Equatorial Guinea’s exchange control measures generally do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely, but all financial transfers of more than CFAF 500,000 to countries of the Operations Account Area must be declared to the authorities for statistical purposes. All other countries are considered foreign countries. There are no arrangements for forward cover against exchange risk operating in the official or the commercial banking sector.

Administration of Control

Exchange control is administered by the Directorate General of Exchange Control (ONCC) in the Ministry of Finance. Exchange transactions relating to all countries must be effected through authorized intermediaries—that is, authorized banks. Import and export licenses are issued by the Ministry of Commerce and Industry. Arrears are maintained with respect to external payments.

Prescription of Currency

Because Equatorial Guinea is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through foreign accounts in francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The principal nonresident accounts are foreign accounts in francs. BEAC bank notes received by the foreign correspondents of authorized banks and mailed to the BEAC agency in Equatorial Guinea by the Bank of France or the Central Bank of West African States (BCEAO) may be credited freely to foreign accounts in francs.

Imports and Import Payments

Imports from South Africa are prohibited. All other imports valued at more than CFAF 50,000 are subject to license, but licenses are issued freely.

All import transactions whose value exceeds CFAF 50,000 must be domiciled with an authorized bank. Import transactions by residents involving goods for use outside Equatorial Guinea must be domiciled with a bank in the country of final destination. Settlements for imports effected under an import license benefit from the authorization of uninterrupted transfer given to the authorized banks by the Ministry of Finance.

Payments for Invisibles

Payments in excess of CFAF 500,000 for invisibles to France (as defined above), Monaco, and the Operations Account countries require prior declaration but are permitted freely; those to other countries are subject to the approval of the Ministry of Finance. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation of an amount equivalent to CFAF 200,000 a person a trip; any foreign exchange remaining after their return to Equatorial Guinea must be surrendered. For business travel, the corresponding allocation is the equivalent of CFAF 15,000 a day, subject to a maximum of CFAF 350,000 in bills a trip. Travelers must present certificates of their activity and permission from their enterprise to travel. Additional allocations may be allowed.

The transfer of rent from real property owned in Equatorial Guinea by foreign nationals is permitted up to a limit equivalent to 50 percent of the income declared for taxation purposes, net of tax. Remittances for current repair and management of real property abroad are to be limited to the equivalent of CFAF 200,000 every two or three years. The transfer of the salary of a foreigner working in Equatorial Guinea will be permitted upon presentation of the appropriate pay voucher as well as justification of expenses, provided that the transfer takes place within three months of the pay period concerned. Except in the case of foreigners working in Equatorial Guinea temporarily, payments of insurance premiums to foreign countries up to CFAF 50,000 are permitted; larger amounts may be authorized by the ONCC. Resident and nonresident travelers to countries outside the Operations Account Area may take out up to CFAF 50,000 in BEAC bank notes. Travelers to other countries of the Operations Account Area may, subject to prior declaration, take out any amount in BEAC bank notes.

Nonresident travelers may take out bank notes and coins up to the amount they declared on entry, or up to CFAF 50,000 if they made no declaration.

Exports and Export Proceeds

All exports to South Africa are prohibited. Export transactions valued at CFAF 50,000 or more must be domiciled with an authorized bank. Exports to all countries are subject to domiciliation requirements for the appropriate documents. Proceeds from exports to all countries must be repatriated within 30 days of the payment date stipulated in the sales contract. Payments for exports must be made within 30 days of the arrival date of the merchandise at its destination.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), 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 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 bank notes and coins issued by the BEAC, the Bank of France, or a bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area.

Capital

Capital movements between Equatorial Guinea and France (as defined above), Monaco, and the Operations Account countries 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 freely permitted.2

Gold

Residents are free to hold, acquire, and dispose of gold jewelry in Equatorial Guinea. They must have the approval of the Directorate of Mines to hold gold in any other form. Such approval is not normally given, as there are no industrial users in Equatorial Guinea. Newly mined gold must be declared to the Directorate of Mines, which authorizes either its exportation or its sale in the domestic market. Exports are allowed only to France. Imports and exports of gold require prior authorization from 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 1991

Payments for Invisibles

December 1. A new regulation governing remittances by expatriate workers was introduced.

Ethiopia

(Position on December 31, 1991)

Exchange Arrangement

The currency of Ethiopia is the Ethiopian Birr, which is pegged to the U.S. dollar, the intervention currency, at the official rate of Br 2.07 per US$1. Buying and selling rates for certain other currencies are also officially posted; daily quotations by the National Bank of Ethiopia (central bank) are set on the basis of the official rate for the U.S. dollar and the previous day’s closing rate of the currency concerned against the U.S. dollar in London. The National Bank does not deal with the public; its transactions in U.S. dollars with the authorized dealers take place at the official rate. Authorized dealers must observe the official rate for the U.S. dollar and prescribed commission charges, which accrue to the National Bank, of 0.50 percent buying and 1.50 percent selling; in addition, they are authorized, but not obliged, to levy service charges for their own account of up to 0.25 percent buying and 0.75 percent selling and, for currencies other than the U.S. dollar, to include the margin charges applied by the correspondents abroad. In practice, the authorized charges are usually levied. These commissions are applied also to the National Bank’s dealings with the Government and certain public sector entities. There are no taxes or subsidies on purchases or sales of foreign exchange. Authorized dealers require the approval of the National Bank to undertake forward exchange transactions. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

All transactions in foreign exchange must be carried out through authorized dealers under the control of the National Bank. All payments abroad require licenses issued by the Exchange Controller, whose office is a department of the National Bank. All exports are licensed by the Exchange Controller to ensure the surrender of the foreign exchange proceeds, and shipments require permits issued by that office. The Minister of Trade has statutory authority to prohibit, restrict, or regulate imports and exports. Arrears are maintained with respect to external payments.

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 freely convertible foreign currency or in any other acceptable foreign currency.

Nonresident Accounts

Nonresidents may, subject to exchange control approval, open nonresident accounts either in birr or in foreign currencies at authorized banks. Deposits to these accounts can be made only in foreign exchange. Balances on nonresident foreign currency accounts may be freely transferred abroad. Transfers between nonresident accounts do not require prior approval. Members of the diplomatic community must use transferable or nontransferable birr accounts for payments of local expenses. No resident Ethiopian national may maintain a bank account abroad. Joint ventures may be permitted to open foreign currency accounts, or transferable or nontransferable birr accounts to purchase raw materials, equipment, and spare parts not available in the local market. As soon as the goods are received, documentary evidence of entry of the goods purchased with such funds must be submitted to the Exchange Control Department. In general, the accounts may be replenished only after such documents have been presented.

Blocked accounts of nonresidents are maintained with authorized banks and are used to retain funds in excess of Br 20,000 arising from disinvestments in Ethiopia (see section on Capital, below).

Imports and Import Payments

All imports from South Africa are prohibited, and all imports from other sources require a license. Payments abroad for imports require exchange licenses, which are obtainable upon presentation of a valid importer’s license. Approval of applications for exchange licenses is conditional upon the provision of satisfactory information on costs and payment terms and upon the submission of evidence that adequate insurance has been arranged with the Ethiopian Insurance Corporation, particularly for goods imported under letters of credit. Foreign exchange is not made available for a specified group of imported goods (including alcoholic beverages and certain durable consumer goods) considered to be nonessential or readily substitutable by domestic products. Imports of cars and other vehicles require prior authorization from the Minister of Transport and Communications. Such authorization is readily granted without restriction as to frequency if imports are financed with foreign exchange balances held abroad. Exchange licenses are granted in the currency appropriate to the country of origin or in any convertible currency that may be requested. Payments by letter of credit, mail transfer, telegraphic transfer, or cash against documents at sight are all normally acceptable, but the National Bank must be consulted regarding imports on a cash-against-documents basis.

Certain imports (about one hundred items, mostly consumer goods) may not be financed on an acceptance basis, and virtually no imports take place on this basis. Importation on suppliers’ credits requires prior approval of the terms and conditions of the credit, and such imports are limited to raw and intermediate materials, pharmaceuticals, and machinery and transport equipment.

All imports are subject to a general (ad valorem) sales tax.

Payments for Invisibles

Payments for invisibles require exchange licenses. Invisibles connected with trade transactions are treated on the same basis as the goods to which they relate. Foreign employees may remit monthly up to 30 percent of their net earnings (but only for the first three years of their contract if employed by the private sector); they may remit a maximum of between 40 percent and 50 percent of total net earnings during the period of service and upon final departure. Other expatriate employees may on final departure take out the same maximum amount, but not more than Br 20,000 in any one year. Foreign nationals who are not entitled to remittance facilities may, however, remit up to 30 percent of their net earnings for the education of their children.

Persons traveling abroad are allowed foreign exchange equivalent to Br 125 a day for a maximum period of 20 days in any one calendar year if the journey is made for business purposes; for tourism, persons 18 years of age and over are allowed up to the equivalent of Br 600 a year. Students are allowed foreign exchange up to the equivalent of Br 500 to study abroad, and Ethiopian nationals with dependents who are pursuing higher studies at accredited institutions abroad are allowed to remit funds to meet school fees and reasonable expenses. Residents may remit premiums on insurance policies taken out before April 1962. Subject to certain limits and to submission of evidence, persons may obtain a foreign exchange allocation of up to Br 10,000 for medical treatment and travel abroad. After providing for payment of local taxes, foreign companies may, in principle, remit dividends on their invested and reinvested capital in any currency. Travelers may take with them a maximum of Br 10 in Ethiopian bank notes.

Exports and Export Proceeds

All exports to South Africa are prohibited. Exports of most cereals to any destination other than Djibouti are also prohibited. All commodity exports require permits from the Exchange Controller and some require, in addition, the approval of specified public bodies. When applying for a permit, an exporter must specify the goods to be exported, their destination, and their value. For exports on a c.i.f. basis, exporters must obtain full insurance from the Ethiopian Insurance Corporation. The granting of a permit by the Exchange Controller enables the goods to pass through customs. The licensing system is used to ensure that foreign exchange receipts are surrendered to the National Bank, generally within three months, and that export proceeds are received in an appropriate currency (see section on Prescription of Currency, above). Exports of hides and skins are regulated and are prohibited until the needs of local factories have been met.

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Travelers may bring in Br 10 in Ethiopian currency. Foreign exchange must be declared by travelers on entry, and its re-exportation is subject to authorization, except for temporary visitors. Reconversion of birr must be supported by documentary evidence of prior exchange of foreign currency.

Capital

Controls over capital movements are designed to restrict outflows, to prevent an unwarranted accumulation of external debt, and to keep the authorities informed of the country’s external debt position.

All receipts of capital in the form of foreign exchange must be surrendered. Exchange control authorization is required, and registration of capital inflows with the exchange control authorities establishes evidence of receipt, which is required for repatriation. All recognized and registered foreign investments may be terminated on presentation of documents regarding liquidation and on payment of all taxes and other liabilities. Subject to appropriate documentation, foreign businessmen having nonregistered investments may transfer their capital abroad on liquidation and final departure from Ethiopia but may not transfer more than Br 20,000 in any one calendar year; funds in excess of this amount must be deposited in a blocked account with an authorized bank. This regulation does not apply to investments undertaken under the Council of State Special Decree No. 17/1990 of May 19, 1990 and joint ventures established under the Council of State Special Decree No. 11/1989 of July 5, 1989. Transfers by emigrants who had operated their own businesses are restricted to Br 20,000 in any one calendar year.

Foreign investors are permitted to hold a majority share in a joint venture, except in the precious metals, public utilities, telecommunications, banking and insurance, transport, and retail trade sectors. All applications for joint ventures must be approved by the Office of the State Committee for Foreign Economic Relations and registered with the Ministry of Domestic Trade; a minimum of 25 percent of share capital must be paid before registration. Exemptions from income taxes are granted for up to five years for new projects and for up to three years for major extensions to existing projects. Imports of investment goods and spare parts for such ventures are also eligible for exemption from customs duties and other specified import levies in the case of new projects or major expansions to existing projects. Proceeds from the liquidation of a joint venture (as well as dividends received from the activities of a joint venture and payments received from the sale or transfer of shares) can be remitted abroad in convertible currency without restriction. A joint venture may also transfer abroad in convertible currency payments in respect of debt contracted and fees/royalties in respect of technology transfer agreements relating to a joint venture.

Borrowing abroad requires exchange control approval and is restricted. Authorized banks may freely place their funds abroad, except on fixed-term deposit, but they may not acquire securities denominated in foreign currency without the permission of the National Bank. In addition, they need the prior approval of the National Bank to overdraw their accounts with foreign correspondents, to borrow funds abroad, or to accept deposits in foreign currency.

Gold

The ownership of personal jewelry of which gold or platinum forms a part is permitted. Unless specifically authorized by the Minister of Mines and Energy, the possession or custody of 50 ounces or more of raw or refined gold or platinum, or of gold or platinum in the form of nuggets, ores, or bullion, is not permitted. Newly mined gold is sold by the Ethiopian Mineral Resources Development Corporation to the National Bank. Imports and exports of gold in any form other than jewelry require exchange licenses issued by the National Bank. Such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities.

Changes During 1991

No significant changes occurred in the exchange and trade system.

Fiji

(Position on December 31, 1991)

Exchange Arrangement

The currency of Fiji is the Fiji Dollar, the external value of which is determined on the basis of the fixed relationship between the Fiji dollar and a weighted basket consisting of the Australian dollar, the Japanese yen, the New Zealand dollar, the pound sterling, and the U.S. dollar. The weighting formula is normally reviewed every three years; the most recent revision was made in 1991. The exchange rate of the Fiji dollar in terms of the U.S. dollar, the intervention currency, is fixed daily on the basis of quotations for the U.S. dollar and other currencies included in the basket. On December 31, 1991, the midpoint exchange rate for the Fiji dollar in terms of the U.S. dollar was F$1.4727 per US$1. The Reserve Bank of Fiji provides official quotations only for the U.S. dollar. There are no taxes or subsidies on purchases or sales of foreign exchange.

Fiji formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from August 4, 1972.

Administration of Control

Exchange control is administered by the Reserve Bank of Fiji acting as agent of the Government; the Reserve Bank delegates to authorized dealers the authority to approve normal import payments. Except with the specific permission of the Reserve Bank, residents of Fiji are required to offer for sale to an authorized dealer all foreign currencies they receive.1 The Ministry of Trade and Commerce is responsible for issuing import licenses, with the exception of those for gold, timber, rice, and dairy products. Import licenses for gold are issued by the Ministry of Finance and Economic Planning, for timber by the Ministry of Forestry, and for rice and dairy products by the Ministry of Primary Industries and Cooperatives. Export licenses are issued by the Comptroller of Customs.

Prescription of Currency

Transactions with all countries are subject to exchange control. Settlements with residents of any country may be made in Fiji currency through an external account or in any foreign currency.

Nonresident Accounts

A nonresident2 may maintain an external account in Fiji currency or a foreign currency account with an authorized bank; such accounts may be opened without the specific approval of the Reserve Bank. These accounts may be credited freely with interest payable on the account, with payments from other external accounts, with the proceeds of sales of foreign currency or foreign coins by the account holder, and with Fiji currency notes that the account holder brought into Fiji or acquired by debit to an external account or by the sale of foreign currency in the country during a temporary visit. External accounts may also be credited with payments by residents for which either general or specific authority has been given. External accounts may be debited for payments to residents of Fiji, transfers to other external accounts, payments in cash in Fiji, and purchases of foreign exchange.

Imports and Import Payments

Imports of most goods are under open general license; imports of seed potatoes, butter, canned fish, rice, milk, petroleum products, and coffee in any form require a license. A wide range of consumer goods are imported by national cooperative societies under a joint arrangement with six other Pacific Island countries. Import prohibitions are imposed on a few commodities from all sources, mainly for security, health, or public policy reasons.

Payments for authorized imports are permitted upon application and submission of documentary evidence to authorized dealers, who may allow payments for goods that have been imported under either a specific import license or an open general license. Authorized banks may allow advance payments of up to F$2,000 for all imports, provided the goods are imported into Fiji within 90 days of the date the advance payment is made. The approval of the Reserve Bank is required in cases where amounts exceed F$2,000.

Payments for Invisibles

Payments for invisibles are permitted either under a delegated authority to banks or, where large amounts or nondelegated payments are involved, upon application to the Reserve Bank. Payments may be made freely for all bona fide current transactions. The approval of the Reserve Bank, however, is required in cases where amounts exceed the established limits. Residents of Fiji traveling to other countries may obtain from a bank, without reference to the Reserve Bank, a foreign currency travel allowance for a private or business visit up to the equivalent of F$2,000 a person a journey; amounts in excess of this limit are approved by the Reserve Bank in cases of genuine need supported by documentary proof. There is no restriction on the number of trips a resident may make in any one year. Each traveler may take with him F$100 in Fiji currency and the equivalent of F$500 in other currencies, provided that these amounts are not in addition to travel allowances approved by a commercial bank or the Reserve Bank. Residents of Fiji are allowed to make cash gifts to nonresidents equivalent to F$200 a donor a year; additional funds are permitted in compassionate cases.

Foreign-owned companies must apply to the Reserve Bank for permission to transfer dividends abroad. The policy of the Reserve Bank is to allow the remittance of the current year’s profits and one year’s retained earnings. The transfer abroad of rent to nonresidents must be approved by the Reserve Bank.

Exports and Export Proceeds

Specific licenses are required only for exports of rice, sugar, wheat bran, copra meal, certain lumber, scrap metals, certain animals, and a few other items. Irrespective of any export-licensing requirements, however, exporters are required to produce an export permit for commercial consignment of all goods with an f.o.b. value of more than F$1,000; this permit is required for exchange control purposes. Exporters are required to collect the proceeds of exports within six months of the date of exportation of the goods from Fiji and may not grant credit to a nonresident buyer in excess of six months without specific permission. All foreign currencies must be offered for sale to an authorized dealer within one month of receipt.

Proceeds from Invisibles

All receipts from invisibles must be surrendered to authorized dealers. Travelers may bring in freely any amount in Fiji notes or foreign currency notes. Residents are required to sell their foreign currency holdings to an authorized dealer within one month of their return.

Receipts of interest, dividends, and amortization must be surrendered on a half-yearly basis unless approval for reinvestment abroad was given by the Reserve Bank.

Capital

The inflow of capital in any form requires the specific permission of the Reserve Bank. Foreign investment in Fiji is normally 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. Overseas investments and other forms of capital transfers abroad have been temporarily suspended. The purchase of personal real property abroad is not permitted.

Foreign-owned companies are permitted to repatriate proceeds from the sale of assets up to the limit of F$1 million a company a year.

The transfer of inheritances and dowries due to nonresidents is permitted, as is the transfer of the proceeds from the sale of a house owned by a nonresident. The transfer of funds by emigrants on departure is limited to F$20,000 for married and F$13,000 for single applicants. Thereafter, the emigrant is allowed an automatic transfer of F$3,000 a month commencing three months after emigration until the amount cleared by the Inland Revenue Department has been fully transferred.

Authority is delegated to banks operating in Fiji to approve transactions involving F$50,000 or more arising from (1) the conversion of foreign currency into Fiji currency, whether for credit to a resident account or to an external account; and (2) the crediting of an external account with Fiji currency emanating from another external account (including Fiji currency accounts of overseas banks). The banks must send confirmation of such inflows to the Reserve Bank; they must also have the approval of the Bank before granting any loans of more than F$10,000 to a company or branch in Fiji (other than a bank) that is controlled directly or indirectly by persons resident outside Fiji or by individuals designated as nonresidents; however, the banks do not need such approval to lend up to F$10,000 to individual nonresident customers, who must repay such loans before their departure from Fiji. The banks may not lend foreign currency to any resident of Fiji without the specific permission of the Reserve Bank. Residents require permission from the Reserve Bank before they may borrow foreign currency in Fiji or abroad.

The facility for residents to purchase foreign currency up to a maximum of F$5,000 a family a year to acquire foreign currency securities has been suspended. The purchase of personal real property outside Fiji is not permitted. Special tax incentives are granted for investments in the tourism industry, and an investment allowance similar to that for the hotel industry is provided for large outlay investment projects that support the tourist industry. Portfolio investment in Fiji by nonresidents requires the approval of the Reserve Bank; the proceeds of the sale or realization of such investment may be repatriated. Banks require exchange control permission to borrow abroad; they may accept deposits from nonresidents. During 1990, the Reserve Bank encouraged accelerated repayments of more expensive external loans.

Gold

Residents may freely purchase, hold, and sell gold coins in Fiji but not gold bullion. The exportation of gold coins, except numismatic coins and collectors’ pieces, requires the specific permission of the Reserve Bank. Gold imports from all sources, other than imports of gold coins, require a specific import license issued by the Ministry of Finance and Economic Planning; these are restricted to authorized gold dealers. Gold coins are free of fiscal tax but are subject to a customs duty of 10 percent. Gold bullion is exempt from customs duty but is subject to a fiscal tax of 10 percent, and gold jewelry is subject to a customs duty of 10 percent but is exempt from a fiscal tax and does not require a license when valued at less than F$200. Samples of gold and gold jewelry sent by foreign manufacturers require import licenses if over F$200 in value.

Exports of gold jewelry are free of export duty but require licenses if their value exceeds F$1,000. Exports of gold bullion are subject to an export duty of 3 percent. All newly mined gold is refined in Australia and sold at free market prices. Commemorative gold coins of F$100, F$200, and F$250 have been issued; these are legal tender but do not normally circulate.

Changes During 1991

No significant changes occurred in the exchange and trade system.

Finland

(Position on December 31, 1991)

Exchange Arrangement

The currency of Finland is the Finnish Markka, the external value of which is pegged to the European Currency Unit (ECU). The authorities, however, have adjusted the exchange rate from the level determined at the introduction of this arrangement in June 1991, and, since November 15, 1991, the exchange rate of the markka has been set at Fmk 5.55841 per ECU 1 within margins of 3 percent. On December 31, 1991, buying and selling rates for the U.S. dollar were Fmk 4.125 and Fmk 4.141, respectively. There are no taxes or subsidies on purchases or sales of foreign exchange.

Authorized banks may deal among themselves, with residents, and with nonresident banks in U.S. dollars and other convertible currencies. Forward premiums and discounts quoted by authorized banks reflect interest rate differentials in the countries of various currencies. The Suomen Pankki (Bank of Finland) does not provide forward cover for commercial banks.

Finland formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from September 25, 1979.

Administration of Control

There are no exchange controls. Import and export licensing are administered by the Export and Import Permits Office (a unit subordinate to the Ministry of Trade and Industry), which is headed by a board composed of government officials, including a representative of the Suomen Pankki. Licensing and other procedures that were applied to imports from the former U.S.S.R. are applied to the independent republics on a temporary basis.

Prescription of Currency

Settlements with all countries may be made in any convertible currency or through convertible accounts. Settlement of clearing account (debit) balances with Bulgaria is effected under a payments agreement.

Nonresident Accounts

Nonresident accounts may be held in an authorized bank in any convertible currency, including Finnish markkaa. These accounts may be freely credited and debited.

Imports and Import Payments

Most goods may be imported free of license from the multilateral countries, provided that the goods are purchased from, and originate in, those countries. However, certain goods1 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 quotas for specified commodity groups.

With the exception of the commodities to which reference was made in the preceding paragraph, import licenses are not required for most commodities originating in and purchased from the former U.S.S.R., or originating in and purchased from the four countries with which agreements on the reciprocal removal of obstacles to trade have been concluded (Bulgaria, Czechoslovakia, Hungary, and Poland). All imports of commodities originating in countries or areas not classified2 in either the multilateral area or the bilateral area require individual licenses. The State Granary is the main agency responsible for the importation of wheat, rye, barley, oats, and products of these grains for human consumption, but individual importers may also import these commodities under license. There is a state monopoly for imports of alcoholic beverages.

Authorized banks freely grant foreign exchange for all imports for which licenses are granted, on presentation of a notification form and the import license (when required for imports from countries with nonconvertible currencies).

Payments for Invisibles

Payments for invisible transactions are not restricted.

Exports and Export Proceeds

Export licenses are required only for exports of scrap metal. Sales of arms are strictly controlled.

Proceeds from Invisibles

Receipts from current invisibles are not subject to any control. The funds may be held in a domestic foreign currency account in Finland. The importation of domestic and foreign currency and coins is unrestricted.

Capital

All capital transactions are freely allowed without restriction. International banking activities of Finnish authorized banks are free of regulations but are subject to certain supervisory reporting requirements. Nonresidents may purchase Finnish securities only if they are “free shares.”

Gold

Residents may freely hold, buy, and sell gold in any form in Finland.

Changes During 1991

Exchange Arrangement

June 7. The Finnish markka was pegged to the ECU at Fmk 4.87580 per ECU 1.

November 15. The markka was devalued by 12.3 percent following a temporary float on the previous day, and pegged at Fmk 5.55841 per ECU 1 within margins of 3 percent.

Administration of Control

January 1. All remaining foreign exchange controls, except those relating to the contracting of loans abroad by private individuals and comparable corporate entities, were abolished.

October 1. Exchange controls on the contracting of loans abroad by private individuals and comparable corporate entities were abolished.

Prescription of Currency

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

France

(Position on December 31, 1991)

Exchange Arrangement

The currency of France is the Franc. France participates with Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom in the exchange rate and intervention mechanism (ERM) of the European Monetary System (EMS).1 In accordance with this agreement, France maintains the spot exchange rates between the franc and the currencies of the other participants within margins of plus 2.2753 percent or minus 2.2247 percent (in the case of the Portuguese escudo, the Spanish peseta, and the pound sterling, plus 6.18 percent or minus 5.82 percent) against the cross rates derived from the central rates expressed in European Currency Units (ECUs). The agreement implies that the Bank of France (the central bank) stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1991, these rates were as follows:

Specified Intervention

Rates per:
Francs
Upper limitLower limit
100Belgian or

Luxembourg francs
16.631015.899
100Danish kroner89.925085.970
100deutsche mark343.050327.920
1Irish pound9.18908.7850
1,000Italian lire4.58454.3830
100Netherlands guilders304.440291.040
1,000Portuguese escudos140.961036.3320
1pound sterling10.50559.3180
100Spanish pesetas5.47854.8595

Effective April 6, 1992.

Effective April 6, 1992.

The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits. However, in order to ensure a proper functioning of the system, they intervene in concert to smooth out fluctuations in exchange rates, the intervention currencies being each other’s, the ECU, and the U.S. dollar. Buying and selling rates for 21 currencies are quoted daily on the basis of market rates.2 On December 31, 1991, the buying and selling rates were F 5.1740 per US$1 and F 5.1860 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Fixed conversion rates in terms of the franc apply to the CFP franc, which is the currency of the Overseas Territories of French Polynesia, New Caledonia, and Wallis and Futuna Islands, and to the CFA franc, which is the currency of countries that are linked to the French Treasury through an Operations Account.3 These fixed parities are CFPF 1 per F 0.055 and CFAF 1 per F 0.02, respectively.

Registered banks in France and in Monaco, which may also act on behalf of banks established abroad or in Operations Account countries, are permitted to deal spot or forward in the exchange market in France. Registered banks may also deal spot and forward with their correspondents in foreign markets in all currencies. Nonbank residents may purchase foreign exchange forward in respect of specified transactions. All residents including non-enterprise individuals may purchase or sell foreign exchange forward without restriction. Forward sales of foreign currency are not restricted, whether or not they are for hedging purposes.

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 apply in all territories of the French Republic, that is, France, the overseas departments (Guadeloupe, Martinique, French Guiana, and Réunion), Mayotte, St. Pierre and Miquelon, and the three overseas territories (New Caledonia, French Polynesia, and Wallis and Futuna Islands). No exchange control is applied in relation to Monaco or the Operations Account countries (see footnote 3); all payments between France and these countries or territories are free of restriction on the part of France and take place at fixed exchange rates. All other countries or territories are considered foreign countries for exchange control purposes.

The exchange control regulations include controls over inward direct investment on the basis of Decree No. 89–938 of December 29, 1989 and Decree No. 9058 of January 15, 1991. These decrees apply to financial relations with all countries except those belonging to the Operations Account.

Administration of Control

The Directorate of the Treasury of the Ministry of Economy and Finance is the coordinating agency for financial relations with foreign countries. It is responsible for exchange control and all matters relating to inward and outward direct investment and to borrowing abroad unless they relate to real estate companies, in which case the Bank of France screens applications. The Directorate of the Treasury also evaluates the balance of payments, together with the Bank of France, which collects the data for its compilation.

The Directorate of Treasury of the Ministry of Economy and Finance has certain powers in respect of matters relating to insurance, reinsurance, annuities, etc. The execution of all transfers has been delegated to registered 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 (DREE); the Directorate-General also issues import and export licenses and is responsible for any litigation relating to the exchange regulations. Technical visas required for certain imports and exports are issued by the appropriate ministry or by the Directorate-General of Customs and Indirect Taxes. The Ministry of Industry has certain responsibilities in respect of licensing contracts and contracts relating to technical assistance.

Prescription of Currency

Settlements with the Operations Account countries may be made in francs or the currency issued by any institute of issue that maintains an Operations Account with the French Treasury.4 Settlements with all other countries may be made in any of the currencies of those countries or through nonresident foreign accounts in francs. Importers and exporters are free to invoice in any currency.

Resident and Nonresident Accounts

Resident enterprises engaged in international trade are authorized to hold foreign currency accounts in France or abroad. Such enterprises are also authorized to hold accounts in francs abroad. All residents, including individuals and enterprises not engaged in international trade, are permitted to hold ECU-denominated accounts in France, to hold foreign currency-denominated accounts in France or abroad, and to hold French franc-denominated accounts abroad.

Nonresident accounts in francs may be freely opened by registered banks for nonresidents, including French nationals (other than officials) who are residing abroad. Since March 1989, all overdrafts and advances on nonresident-held franc accounts have been unrestricted. Nonresident accounts may be operated freely.

Emigrants of foreign or French nationality may take out all of their assets upon departure. In addition, nonresidents may hold foreign currency accounts with French and foreign-owned banks.

Imports and Import Payments

Goods originating in and shipped from other countries that are accorded privileged treatment in respect of exchange control regulations (see section on Exchange Control Territory, above) are generally admitted free of quantitative restrictions and individual licenses. Imports of goods that originate in other countries and that are subject to quantitative restrictions require individual licenses. Some imports from non-EC countries are subject to minimum prices; these require an administrative visa and sometimes, exceptionally, an import license. Certain imports require certificates of origin.

For import control purposes, countries other than those that are accorded privileged treatment are divided into three groups according to the extent of import liberalization: (1) the former Organization for European Economic Cooperation (OEEC) countries, their dependent territories, and certain former dependent territories, Canada, Egypt, Ethiopia, Fiji, Finland, Israel, Jordan, Lebanon, Liberia, Sudan, Syrian Arab Republic, United States, Western Samoa, and Yugoslavia; (2) some specified countries;5 and (3) China, Democratic People’s Republic of Korea, and Mongolia. 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 restrictions are applied to a number of agricultural and electronic products; there is relatively little difference between the lists of goods that may be imported freely from different countries in this group. 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, global quotas are allocated annually (petroleum and petroleum products) or semiannually and apply to all countries (other than those that have bilaterally negotiated quotas or receive privileged treatment). Imports from all countries of certain agricultural items and certain raw materials are free of quantitative restrictions.

Imports from non-EC countries of most products covered by the Common Agricultural Policy (CAP) of the EC are subject to variable import levies that have replaced all previous barriers to imports; common EC regulations are also applied to imports from non-EC countries of most other agricultural and livestock products.

Liberalized imports are not subject to trade controls but do require a customs document, which constitutes the customs declaration. For some liberalized imports, an administrative visa issued by the Central Customs Administration or by the appropriate ministry is required on an import declaration. Imports of the products of the European Coal and Steel Community (ECSC) require such administrative visas 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 apply to specified countries or areas in accordance with trade agreements or an import plan drawn up for a definite period. Imports of some products must pass through designated customs offices. Documents accompanying goods passing through customs must be written in or translated into French.

Quantitative import restrictions consist of EC-wide restrictions and national restrictions. The former include bilaterally agreed restrictions on textile imports under the Multifiber Arrangement (MFA) and voluntary export restraints on a number of agricultural and industrial products negotiated at the EC level. EC-wide restrictions are enforced through import licensing subject to prior authorization. National restrictions on imports from third countries that are in free circulation within the EC are enforced through temporary import restrictions authorized by the EC Commission under Article 115 of the EEC Treaty. In cases where the restrictions are not officially recognized by the EC (for example, industry-to-industry understandings that do not directly involve member governments), import restrictions are enforced through national import licensing or standards and certification procedures. Automatic licensing is granted for imports that are under surveillance at either the EC or the national level.

Payments for imports from foreign countries may be made by credit to a foreign account in francs, with foreign currency purchased in the French exchange market, or by debiting a foreign currency account in France or abroad. All residents and international trading houses may freely open accounts in foreign currencies in France with registered banks or abroad (also in French francs) without limit on the credit balance. Payments may be made by transfer through a registered bank, by credit card, by check, by compensation of debts or claims, or by bank notes. The amounts that may be transferred through postal channels are not subject to limitation, but, in practice, the Postal Administration does not make import payments valued at over F 250,000. Registered banks may, without special authorization, permit advance payments to be made that are provided for in the commercial contract. There is no restriction on the use of suppliers’ credits.

Payments for Invisibles

Payments to foreign countries by residents for current invisibles have to be reported but are not restricted as to amount. Registered banks are permitted to approve applications for payments for all categories of current invisibles without limitation. Transfers of amounts exceeding the equivalent of F 50,000 are required to be declared. Outward remittances for family support abroad and transfers of donations to nonresidents are freely permitted.

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.

There are no limits on expenditures for travel abroad. There is no restriction on the amount of foreign or domestic bank notes resident and nonresident travelers may take out, but amounts exceeding F 50,000 or its equivalent must be declared to customs upon departure.

Exports and Export Proceeds

Certain goods on a prohibited export list may be exported only under a special license. Some other exports also require individual licenses, but if the total value does not exceed F 10,000 (F 100,000 for art objects or collectors’ items), these exports may be permitted without any formality, subject to certain exceptions.

Exports to foreign countries are not subject to exchange control, except when they are made by an occasional exporter, in which case payment must be received through the exchange market. Exporters are allowed to cover forward for an unlimited period, and may hold foreign currency accounts at home and abroad without limit on the credit balance. Registered banks may freely extend foreign currency advances to exporters; such advances and their repayment may be settled by the receipts of the corresponding exports.

Certain goods purchased in France by persons not normally residing in France are considered exports, even when paid for in francs, and are exempt from taxes.

Proceeds from Invisibles

Proceeds from transactions in invisibles with Monaco and the Operations Account countries may be retained. With minor exceptions for certain types of transaction, services performed for nonresidents do not require licenses.

Resident and nonresident travelers may bring in any amount of bank notes and coins (except gold coins) in francs, CFA francs, CFP francs, or any foreign currency; amounts of F 50,000 or larger, however, must be declared to customs upon arrival. The exchange of bank notes issued by Algeria, Morocco, and Tunisia is prohibited at the request of those countries.

Capital

Capital movements between France and Monaco and the Operations Account countries are free of exchange control; purchases of French and foreign securities abroad and the corresponding outward transfers of resident-owned capital are free; capital receipts from foreign countries are permitted freely. Capital assets abroad of residents are not subject to repatriation. The transfer abroad of nonresident-owned funds, including the sales proceeds of capital assets, is not restricted.

French and foreign securities held in France by nonresidents may be exported, provided that they have been deposited with a registered bank in a foreign dossier (dossier étranger de valeurs mobileères); French 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 nonresidents must be deposited with a registered bank; French securities held in France by nonresidents need not be deposited but cannot be dealt with or exported unless they have been deposited. Foreign securities held in France by residents must be deposited with a qualified bank or broker. Residents may hold French and foreign securities abroad under the control of a French registered bank or broker.

Subject to compliance with the special regulations concerning inward and outward direct investment, residents may purchase abroad French and foreign securities on stock exchanges and securities that are not quoted on a recognized stock exchange through registered banks. French and foreign securities may be held or sold abroad, but they may also be imported and then either held or sold on a French stock exchange. Correspondingly, nonresidents holding French or foreign securities abroad (whether acquired before November 24, 1968 or later) may import them into France through a registered bank and hold them in a foreign dossier or sell them on a French stock exchange.

The exchange control regulations include control over inward direct investments in existing French firms. The basis for control over foreign direct investments is Decree No. 89-938 of December 29, 1989, which applies to financial relations with all countries except those belonging to the Operations Account and Monaco.

Direct investments are defined as investments leading to control of a company or enterprise. Any participation leading foreign investors to hold more than one third of the capital is considered direct investment. In the case of firms whose shares are quoted on the stock exchange, the threshold is reduced to 20 percent of the capital, but it applies only to each individual foreign participation and not to the total of foreign participations. To determine whether a company is foreign controlled, the Ministry of Economy and Finance may also take into account any special relationships resulting from stock options, loans, patents and licenses, and commercial contracts.

Foreign direct investments in existing French firms generally require prior declaration to the Ministry of Economy and Finance. Investments in real estate (except development companies and vineyards) and, when they do not exceed F 10 million, in hotels, restaurants, and retail trade and services are exempt from prior declaration. It is also the case for increases of equity capital in a company already controlled by a foreign investor and for complementary participations in a company in which an investor already holds more than two thirds of the capital share. The period during which the Ministry of Economy and Finance may suspend the acquisition by non-EC investors of a participation in an existing French firm is 30 days. Any non-EC investment can take place freely after this period if the Minister of Economy and Finance has not formally notified the investor of his decision to suspend the acquisition.

Foreign companies controlled by EC residents are free to take over any participation in the capital of a French company, and they are subject only to prior notification to the Treasury. Unless the Ministry of Economy and Finance formally communicates to the investor, within 15 days of the receipt of the notification, that he cannot be considered controlled by EC residents, the investor can proceed with his acquisition.

EC-controlled companies can request that they receive the full benefit of the EC status on a permanent basis if their total turnover exceeds F 1 billion a year and if they have completed at least three fiscal years of operations. The permanent acquisition of the EC status eliminates all prior notification requirements of an investor.

Regardless of the nationality of a nonresident investor, the Minister of Economy and Finance is entitled to issue a finding within one month to prohibit a participation if public health, order, security, or defense is considered to be in danger.

Foreign direct investments, whether or not they have been subject to prior notification, must be reported to the Ministry of Economy and Finance within 20 days of their fulfillment.

The liquidation proceeds of foreign direct investment in France may be freely transferred abroad; the liquidation must be reported to the Ministry within 20 days of its occurrence. Foreign direct investments by residents are not restricted but must be reported to the Ministry of Economy and Finance within 20 days if they exceed F 5 million. The liquidation of direct investments abroad is free from any prior application, provided that the corresponding funds are reported to the Ministry of Economy and Finance if they exceed F 5 million.

Foreign issues on the French capital market, except issues originating in EC countries, are subject to prior authorization from the Ministry of Economy and Finance. 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 are already officially quoted on a stock exchange in France.

Borrowing abroad in French francs or foreign currencies by natural 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, is unrestricted. The application of the controls over direct investment and borrowing is delegated to the Bank of France insofar as these activities relate to French firms that are mainly engaged in real estate business. All restrictions on lending in French francs to nonresidents were abolished, effective March 9, 1989. Limitations for the purposes of exchange control on the foreign exchange positions of commercial banks were also abolished as of June 1, 1989. Registered banks are free to lend foreign currency to residents. Nonresidents may freely purchase French short-term securities, including treasury bills, bons de caisse, and private drafts.

Gold

Residents are free to hold, acquire regularly, and dispose of gold in any form in France. They may continue to hold abroad any gold they held there before November 25, 1968. There is a free gold market for bars and coins in Paris, to which residents and nonresidents have free access and in which normally no official intervention takes place.

Imports and exports of “monetary” gold (defined as gold having a fineness or a weight that is recognized in the gold market) into or from the territory of continental France are now governed by the regulations applying to ordinary goods. Movements of industrial gold are subject to a simple declaration, as are imports and exports of manufactured articles containing a minor quantity of gold, such as gold-filled and gold-plated articles. Collectors’ items of gold and gold antiques are subject to specific regulations.

Most gold coins are traded on the Paris stock exchange. In domestic trading, purchases of bars and coins are not subject to value-added tax. Imports of monetary gold, except gold imported by the Bank of France, are subject to customs duty and value-added tax. Domestic transactions in gold and gold coins are subject to capital gains tax.

Changes During 1991

Imports and Import Payments

(See Appendix for a summary of trade measures introduced and eliminated on an EC-wide basis during 1991, page 557.)

Capital

March 13. Decree 91–270 abolished the requirement to obtain prior authorization to make direct investments in South Africa.

Gabon

(Position on December 31, 1991)

Exchange Arrangement

The currency of Gabon is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the same rate. Buying and selling rates for certain foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rate for the currency concerned in the Paris exchange market, and include a commission. Commissions are levied at the rate of 0.25 percent on transfers made by the banks for their own accounts and on all private capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury, national accounting offices, national and international public agencies, and private entities granted exemption by the Ministry of Finance, Budget, and Participations because of the nature of their activities. There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

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) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries.

Administration of Control

The Directorate of Financial Institutions in the Ministry of Finance, Budget, and Participations supervises borrowing and lending abroad. Exchange control is administered by the Minister of Finance, Budget, and Participations, who has partly delegated his approval authority for current payments to the authorized banks and that with respect to the external position of the banks to the BEAC. All exchange transactions relating to foreign countries must be effected through authorized intermediaries—that is, the Postal Administration and authorized banks. Import and export authorizations, where necessary, are issued by the Directorate of External Trade of the Ministry of Commerce and Industry.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since Gabon is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through foreign accounts in francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC bank notes may be credited to foreign accounts in francs when they have been mailed to the BEAC agency in Libreville by an authorized bank’s foreign correspondent. Otherwise, the crediting to nonresident account of BEAC bank notes, French bank notes, or bank notes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited.

Imports and Import Payments

In general, imports from member countries of the Central African Customs and Economic Union (UDEAC) are free of formalities; however, imports of refined vegetable oil from these countries require prior approval. All imports from countries outside the UDEAC valued at more than CFAF 500,000 are subject to an authorization to import. Quantitative restrictions are maintained only on imports of sugar, vegetable oil, soap, mineral water, and cement. For perishables and spare parts, an anticipatory authorization is given to simplify administrative procedures. Imports from countries outside the UDEAC that are similar to, and compete with, domestic products are subject to licensing, but, with a few exceptions2 that are established by ministerial order, import authorizations are granted liberally. Some imports are prohibited for security and health reasons. Imports of refined vegetable oil are suspended except when they originate from UDEAC member countries. All imports of commercial goods must be insured through authorized insurance companies in Gabon.

All import transactions relating to foreign countries must be domiciled with an authorized bank. Authorizations duly endorsed by the Ministry of Foreign Trade and the Ministry of Finance, Budget, and Participations (Directorate of Financial Institutions) entitle importers to purchase the necessary foreign exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

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

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation equivalent to CFAF 200,000 a person a trip (CFAF 100,000 for children under 10 years) for any number of trips a year; any foreign exchange remaining after return to Gabon must be surrendered. For business travel to foreign countries, there is a special allocation equivalent to CFAF 25,000 a day, subject to a maximum of CFAF 500,000 a trip. Tourist and business travel allocations may not be combined. Travelers to foreign countries may take out up to a maximum of CFAF 25,000 in BEAC bank notes; the amount taken out is not deducted from the travel allocation. Travelers to France (as defined above), Monaco, and the other Operations Account countries may not export CFA or French bank notes in excess of an amount equivalent to CFAF 200,000 (CFAF 100,000 for children under 10 years) for tourist travel; for business travel, the amount of such bank notes that may be carried out is the equivalent of CFAF 25,000 a day and CFAF 500,000 a trip. Transfers may be effected without limit through the banking or postal system.

Exports and Export Proceeds

Exports require authorization, irrespective of destination. 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 150 days of the arrival of the commodities at their destination. The proceeds must be collected and, if received in a foreign currency, surrendered within one month of the due date.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), 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 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 bank notes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area.

Capital

Capital movements between Gabon and France (as defined above), Monaco, and the Operations Account countries are free of exchange control; capital transfers to all other countries require the approval of the Directorate of Financial Institutions 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 controls over the sale or introduction of foreign securities in Gabon, the control measures do not apply to France (as defined above), Monaco, and the Operations Account countries.

Direct investments abroad3 must be declared to the Ministry of Finance, Budget, and Participations, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments must also be declared to the Ministry unless the operation involves the relinquishing of a shareholding that had previously been approved as constituting a direct investment abroad. Foreign direct investments in Gabon4 must be declared to the Ministry unless they take the form of a capital increase resulting from reinvestment of undistributed profits; within two months of receipt of the declaration, the Ministry may request the postponement of the project. 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 shareholding that had previously been approved as constituting 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 Ministry within 20 days of each operation. Direct investments are defined as investments implying control of a company or enterprise.

The issuing, advertising, or offering for sale of foreign securities in Gabon requires prior authorization from the Ministry of Budget and Participations. 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 natural or juridical persons, whether public or private, 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 from the Ministry of Finance, Budget, and Participations. 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 does not exceed CFAF 50 million for any one borrower. However, the contracting of loans referred to under (4) that are free of authorization, and each repayment thereon, must be declared to the Directorate of Financial Institutions 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 natural or juridical persons, whether public or private, 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 from the Ministry of Finance, Budget, and Participations. The following are, however, exempt from this authorization: (1) loans granted by registered banks; and (2) other loans, when the total amount outstanding does not exceed CFAF 50 million for any one lender. However, making loans that are free of authorization, and each repayment thereon, must be declared to the Directorate of Financial Institutions 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 July 6, 1989, any enterprise to be established in Gabon, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified income. In addition to fiscal privileges, the code provides for four categories of preferential treatment. Eligible companies may receive protection against foreign competition and may be given priority in the allocation of imports, public credit, and government contracts. Foreign companies investing in Gabon must offer shares for purchase by Gabonese nations for an amount equivalent to at least 10 percent of the companies’ capital. 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 the authorization of the Ministry of Finance, Budget, and Participations. 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). The exportation of gold is the monopoly of the Société gabonaise de recherches et d’exploitation minières. However, imports of gold exempted from licensing and authorization requirements are subject to customs declaration.

Changes During 1991

No significant changes occurred in the exchange and trade system.

The Gambia

(Position on December 31, 1991)

Exchange Arrangement

The currency of The Gambia is the Gambian Dalasi. Commercial banks and foreign exchange bureaus are free to transact among themselves, with the Central Bank of The Gambia (CBG), or with customers at exchange rates agreed on by the parties to these transactions. The CBG conducts a fixing session on the last working day of each week with the participation of the commercial banks and foreign exchange bureaus during which the exchange rate is derived from the actual transaction rates with the interbank market for customs valuation purposes for the following week. On December 31, 1991, the midpoint exchange rate of the dalasi in the interbank market was D 8.74 per US$1, and the exchange rate for customs valuation purposes was D 8.74 per US$1. Foreign exchange bureaus have been allowed to operate since April 1990. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

Exchange control policy is formulated by the Ministry of Finance and Economic Affairs, with the CBG carrying out the day-to-day administration of exchange control. However, with the suspension of the Foreign Exchange Control Act, controls are not in force.

Prescription of Currency

Settlements with other countries may be made and received in dalasis or in any convertible currency from nonresident sources. Settlements with the Central Bank of West African States (BCEAO) (Benin, Burkina Faso, Côte d’Ivoire, Niger, Senegal, and Togo), and also with Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Nigeria, and Sierra Leone are normally made through the West African Clearing House.

External Accounts

Accounts denominated in dalasis held by residents of other countries are designated external accounts. Such accounts may be opened without reference to the CBG when commercial banks are satisfied that the account holders’ source of funds is from abroad in convertible foreign currency. Designated external accounts may be credited with payments from residents of other countries, with transfers from other external accounts, and with the proceeds of sales through the banking system of other convertible currencies. They may be debited for any payment to residents of other countries, for transfers to other external accounts, and for the purchase of other convertible currencies.

Imports and Import Payments

The importation of certain specified goods is prohibited from all sources for social, health, or security reasons. All other imports are freely permitted under open general licenses.

All merchandise imports are subject to a national sales tax of 10 percent of the c.i.f. value; imports by the Government, diplomatic missions, and charitable organizations are exempted from this tax.

Payments for Invisibles

There are no restrictions on payments for invisibles. Visitors to The Gambia are not required to declare foreign currency in their possession.

Exports and Export Proceeds

The exportation of forestry products is subject to prior authorization from the Forestry Department. The exportation of all other goods can generally be made without individual licenses if settlement is made in accordance with procedures laid down by the CBG. Export proceeds must be received through a commercial bank within six months of the date of exportation in a convertible foreign currency and sold to commercial banks or through transfers from a designated external account.

Proceeds from Invisibles

There is no restriction on the importation of foreign currency notes or Gambian bank notes.

Capital

Inward transfers for the purpose of direct equity investment are not restricted but must be reported to the CBG. Prior approval from the CBG is required in order for residents to accept loans in foreign currency from any source.

Overdraft facilities may be provided by the banks to members of diplomatic and international missions in The Gambia up to reasonable amounts. Loans and advances by commercial banks to nonresident companies are subject to the authorization of the CBG. Foreign exchange working balances held by the commercial banks are subject to limits set by the CBG; amounts held in excess of these limits must be offered for sale in the interbank market or offered to the CBG. These limits must be observed on a daily basis, and the amount held must be reported weekly to the CBG. In addition, two parastatals (The Gambia Produce Marketing Board (GPMB) and The Gambia Telecommunication Company (GamTel)) are permitted temporarily to maintain limited working balances in foreign exchange. The limits must be observed on a weekly basis, and the amounts held must be reported monthly to the CBG. Any amount in excess of the limit must be surrendered, by the GPMB to the CBG and by GamTel to a commercial bank in The Gambia.

Gold

The importation of gold coins and bullion requires the approval of the CBG.

Changes During 1991

No significant changes occurred in the exchange and trade system.

Germany

(Position on December 31, 1991)

Exchange Arrangement

The currency of Germany is the Deutsche Mark. Germany participates with Belgium, Denmark, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom in the exchange rate and intervention mechanism (ERM) of the European Monetary System (EMS).1 In accordance with this agreement, Germany maintains the spot exchange rates between the deutsche mark and the currencies of the other participants within margins of 2.25 percent (in the case of the Portuguese escudo, the Spanish peseta, and the pound sterling, 6 percent) above or below the cross rates based on the central rates expressed in European Currency Units (ECUs).

The agreement implies that the Deutsche Bundesbank (the central bank) stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1991, these rates were as follows:

Specified Intervention

Rates per:
Deutsche Mark
Upper limitLower limit
100Belgian or Luxembourg

francs
4.9594.740
100Danish kroner26.81025.630
100French francs30.49529.150
1Irish pound2.7402.619
1,000Italian lire1.36701.3065
100Netherlands guilders90.77086.780
1,000Portuguese escudos112.21010.830
1pound sterling3.1322.778
100Spanish pesetas1.6331.449

Effective April 6, 1992.

Effective April 6, 1992.

In principle, interventions within the EMS are made in participating currencies but they may also take place in third currencies, such as the U.S. dollar. The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits, but they intervene periodically to smooth out erratic fluctuations in exchange rates.

Official middle, buying, and selling rates are quoted for 17 foreign currencies on the foreign exchange market of Frankfurt am Main.2 On December 31, 1991, the official middle rate for the U.S. dollar was DM 1.5160 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange. Forward exchange contracts involving both commercial and financial transactions may be negotiated freely by residents and nonresidents in all leading convertible currencies in the domestic exchange market and at major international foreign exchange markets. There are no officially fixed rates in the forward exchange market, and all transactions are negotiated at free market rates.

An exchange rate insurance scheme is in operation in respect of receipts in U.S. dollars by Deutsche Airbus from sales of aircraft components and supplies to Airbus Industries.

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 respect of imports and exports of goods and services is operated by the Federal Ministry of Economics, the Federal Ministry of Finance, the Federal Ministry of Transportation, the Federal Office for Economics, the Federal Ministry for Food, Agriculture, and Forestry, the Federal Office for Food and Forestry, the Federal Office for Agricultural Marketing Organization, and the Ministries of Economics of the Laender. All banks in Germany are permitted to carry out foreign exchange transactions.

Imports and Import Payments

The Import List comprises 10,370 statistical positions. Their treatment is as follows: commodities corresponding to 115 positions are subject to import licensing when being imported from countries in Country List C.3 The importation of 1,363 textile items (under the arrangements regarding international trade in textiles) and of certain steel items is governed by bilateral agreements of the European Community (EC) with various supplier countries. Imports of coal from countries that are not members of the European Coal and Steel Community (ECSC) and from Austria, Finland, Iceland, Norway, Sweden, and Switzerland are permitted within the framework of an annual global quota. The Common Agricultural Policy (CAP) of the EC covers 2,054 statistical items; most of these are subject to variable import levies, which in most cases have replaced previous barriers to imports.

Payments for imports are unrestricted. Commodity futures may be dealt in freely. Most transit trade transactions may also be carried out freely.

Payments for Invisibles

All payments for invisibles may be made freely without individual license. 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 and the conclusion of related sea freight contracts; the use of foreign boats in certain inland waterway traffic; and transactions with specified countries (which do not grant reciprocal treatment) for hull and marine liability insurance and aviation insurance, except passenger accident insurance.

Exports and Export Proceeds

With few exceptions, export transactions may be carried out freely. For statistical purposes, an export notification is required for all goods. Certain exports (mostly strategic goods) are subject to individual licensing. The customs authorities exercise control over export declarations. Foreign exchange proceeds from exports do not have to be declared or surrendered and may be used for all payments.

Proceeds from Invisibles

With few exceptions, services performed for nonresidents do not require a license. However, licenses are required for transactions related to specific sea services and for technical assistance through the delivery of constructional drawings, materials, and instructions for manufacture to residents of List C countries (see footnote 3) if such assistance is for the production of goods whose exportation requires a license.

There are no restrictions on the receipt of payments for services rendered to nonresidents. German and foreign notes and coins and other means of payment may be imported freely.

Capital

Residents and nonresidents may export capital freely without a license. Foreign and international bond issues on the German capital market do not require official approval. All resident banks, including legally independent foreign-owned banks, may lead-manage issues of foreign bonds denominated in deutsche mark; if a foreign deutsche mark bond is to be lead-managed by a foreign-owned German bank, the same option should be available to German-owned banks in the home country or bank in question. Domestic and foreign securities of all types may be imported and exported freely.

Following the changes in regulations beginning March 12, 1981, no restrictions are applied on the sale of German money market papers and fixed-interest securities by residents to nonresidents. Nonresidents’ direct investments in Germany, purchases of real estate in Germany for investment or personal use, and purchases of German or foreign equities do not require approval. 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. Residents are not required to repatriate or surrender their foreign exchange earnings or holdings.

Banks are subject to minimum reserve requirements on the level of their foreign liabilities with maturities of less than four years; the minimum reserve ratios at the end of 1991 were, in principle, the same as those applicable to domestic liabilities, that is, 12.1 percent, 4.95 percent, and 4.15 percent on demand, time, and savings deposits, respectively. Exempted from reserve requirements are liabilities to nonresidents in foreign currency to the extent of the book claims on nonresidents in foreign currency with maturities of less than four years. Banks are free to pay interest on domestic or foreign currency balances held by nonresidents.

Gold

Residents may freely hold gold in any form at home or abroad and may negotiate gold in any form with residents or nonresidents, at home or abroad. There is a free gold market in Frankfurt. Imports and exports of gold in any form by residents and nonresidents are unrestricted and free of license; a customs declaration, however, is required.

Imports of gold bullion and coins, unworked gold, and gold alloys are free of customs duty but are subject to value-added tax at the rate of 14 percent. In the case of imports of gold coins on which the assessment basis exceeds 250 percent of the fine gold value, the value-added tax is levied at a rate of 7 percent. Imports of monetary gold by the Bundesbank are exempt from value-added tax and from customs duty. Domestic transactions in gold are subject to value-added tax at the same rate as imports, but under certain conditions no value-added tax is levied on transactions in gold bullion effected on gold exchanges between brokers who are admitted to these exchanges. Commercial imports and exports of articles containing gold are subject to the general foreign trade regulations and in all cases are liberalized.

Changes During 1991

No significant changes occurred in the exchange and trade system.

(See Appendix for a summary of trade measures introduced and eliminated on an EC-wide basis during 1991, page 557.)

Ghana

(Position on December 31, 1991)

Exchange Arrangement

The currency of Ghana is the Ghanaian Cedi. The exchange rate of the cedi is determined in an interbank market supported by weekly wholesale auctions conducted by the Bank of Ghana. Effective July 8, 1991, the surrender of foreign exchange earnings from exports of goods and services other than cocoa and gold has been shifted from the Bank of Ghana to the authorized foreign exchange dealers. The exchange rate determined at the auction is being used for official valuation purposes but does not necessarily apply to transactions among authorized dealers, or between authorized dealers and their customers. At the auction, authorized dealers may bid either on behalf of their customers or for their own accounts. To be eligible for the auction, bids must be above $500. Rates are quoted for certain other currencies,1 with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad. Rates for certain nonconvertible currencies of the West African region, including the Nigerian naira, are also quoted daily but are only applied to transactions under the West African Clearing House arrangement. The other quoted nonconvertible currencies are the Gambian dalasi, the Guinean franc, the Sierra Leonean leone, the Guinea-Bissau peso, and the Mauritanian ouguiya. The authorized banks may exchange Ghanaian currency for any foreign currency. On December 31, 1991, the exchange rate in the auction market was ₵ 390 per US$1.

With effect from February 1, 1988, foreign exchange bureaus were allowed to be opened by any person, bank, or institution licensed by the Bank of Ghana. According to the regulations, foreign exchange bureaus may purchase traveler’s checks only in pounds sterling and U.S. dollars, and may purchase and sell currency notes only in Canadian dollars, deutsche mark, French (and CFA) francs, Japanese yen, pounds sterling, Swiss francs, and U.S. dollars. In practice, however, traveler’s checks in other foreign currencies and other foreign currency notes are also transacted in this market. Sellers of foreign exchange to the bureaus are not required to identify their sources of foreign exchange. Each foreign exchange bureau is free to quote buying and selling rates. All bona fide imports and approved services are allowed to be funded through the bureaus. With effect from May 17, 1991, all authorized foreign exchange dealers (which include some nonbank foreign exchange bureaus) have been subject to limits on their net open positions in foreign exchange; holdings of foreign exchange in excess of these limits are required to be sold to other dealers or to the Bank of Ghana.

International organizations, embassies, and similar institutions are not permitted to transfer funds into Ghana through any foreign exchange bureau or to carry out foreign exchange transactions under the foreign exchange bureau scheme.

A processing fee of 5 percent is levied on purchases and repurchases of foreign exchange related to travel, and on exchange purchases for education, medical treatment abroad, and private outward transfers. There are no arrangements for forward exchange market, currency swaps, or guaranteed exchange rates for external debt-service payments.

Administration of Control

The Controller of Imports and Exports in the Ministry of Trade is empowered to prohibit or regulate all imports. The Exchange Control Department of the Bank of Ghana administers the allocation of exchange for payments for invisibles and capital. All approved foreign exchange transactions must be effected through authorized foreign exchange dealers.

Prescription of Currency

Settlements between residents of Ghana and residents of other countries may be made in permitted currencies. However, settlements related to transactions covered by bilateral payments agreements are made through clearing accounts maintained by the Bank of Ghana and the central or state banks of the countries concerned.2 Furthermore, proceeds from exports to countries with which Ghana does not have bilateral payments agreements must be received in the currency of the importing country (if that currency is among the currencies quoted by the Bank of Ghana) or 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.

Funds not placed at the free disposal of nonresidents—for example, certain types of capital proceeds—may be deposited in blocked accounts, which may be debited for authorized payments, including the purchase of approved securities.

Nonresident Accounts

Nonresident account status is granted to embassies, legations, consulates, and offices of high commissioners in Ghana and to the non-Ghanaian members of their staffs. This facility is also available to international institutions and foreign-registered companies operating in Ghana, as well as to nonresident Ghanaians. The opening of these accounts must be approved by the Bank of Ghana. The accounts may be credited with authorized outward payments, with transfers from other foreign accounts, and with the proceeds from sales of convertible currency. They may be debited for inward payments, for transfers to other foreign accounts, and for purchases of external currencies.

Nonresident accounts maintained under the provisions of bilateral payments agreements are called official accounts or territorial accounts. They may be credited with authorized outward payments by residents, 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 external currencies, other than restricted currencies. 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.

Funds not placed at the free disposal of nonresidents—for example, certain types of capital proceeds—may be deposited in blocked accounts, which may be debited for authorized payments, including the purchase of approved securities.

Imports and Import Payments

Imports from South Africa are prohibited. All imports, except for four categories (beer and stout, cigarettes, cement pipes, and roofing sheets of asbestos and fiber) and those prohibited for nontrade reasons, are allowed. Effective January 14, 1989, all import-licensing requirements were abolished; importers are now required to file an import declaration form through the authorized banks for statistical purposes only and without being subject to approval. Certain imports are channeled through a bulk purchasing agent, the Ghana National Procurement Agency, or, for public sector imports, the Ghana Supply Commission.

Most imports are effected with confirmed letters of credit established through authorized Ghanaian banks, and normally on a sight basis. For imports valued at more than $5,000 (f.o.b.), authorized banks are not allowed to make payments against letters of credit or bank drafts unless the import documents include a clean report of findings issued by international agencies with respect to the goods and unless they verify the price, quality, and quantity in the country of origin or shipment.

Payments for Invisibles

All payments for invisibles require the specific approval of the Exchange Control Department of the Bank of Ghana, and documentary evidence must support all applications. Payments for invisibles related to authorized imports are not restricted. Most foreign exchange purchases for invisible payments are subject to a processing fee of 5 percent ad valorem, with the exception of invisible payments relating to imports.

Transfers of normal bank charges payable to overseas bankers for import payments are generally authorized. Commission payments on imports are permitted up to a limit of 3 percent of f.o.b. value. Freight charges may be paid to the local shipping agents; the transfer of funds to cover such charges is normally permitted, provided that the application is properly documented. With the exception of companies financed with locally raised capital, nonresident companies are, in principle, permitted to transfer abroad freely their net profits after tax; until February 1, 1989, however, transfers of profits were being authorized only on a limited basis. Since February 1, 1989, all bona fide requests for transfers of profits and dividends have been eligible for funding through the foreign exchange auction market. The transfer of profits by companies that have been financed with locally raised capital is not permitted.

Nonresident travelers may take out any unused foreign currency that they brought in and declared upon entry.

Exports and Export Proceeds

Exports to South Africa are prohibited, as are exports of iron and steel scrap. Cocoa and certain other agricultural products are exported through the Cocoa Board, and diamonds are exported through the Precious Metal Marketing Corporation. Exports of cocoa are subject to an export tax that is calculated as the difference between export proceeds, on the one hand, and payments to farmers together with the Cocoa Board’s operational costs, on the other, if the proceeds exceed the payments.

With the exceptions noted below, exporters are required to collect and repatriate in full the proceeds from their exports within 60 days of shipment; proceeds from exports of nontraditional products may be sold in a foreign exchange bureau upon receipt. Exporters are generally allowed to retain up to 35 percent of their export proceeds. However, the retention ratio is 45 percent for the Ashanti Gold Mining Company, 20 percent for log exporters, and 2 percent for the Cocoa Board. The retention scheme does not apply to exports of residual oil and electricity. However, receipts from the exportation of electricity are not required to be surrendered to the Bank of Ghana. Retained earnings were traditionally held in accounts abroad for financing essential imports. On April 28, 1989, a new procedure for the repatriation of retained earnings to Ghana was introduced. Under the new procedure, foreign exchange retention entitlements are credited to the exporters’ foreign exchange accounts with banks located in Ghana. Provided that payments from the foreign exchange accounts of exporters are supported by relevant documents, retained export earnings may be sold at the foreign exchange bureaus or be used to import goods through a bank, to purchase airline tickets, or for foreign travel, for medical services or educational expenses abroad, and for any other approved invisible payments.

Proceeds from Invisibles

All receipts from invisibles must be sold to authorized dealers. Foreign currency notes may be imported freely. Repurchases of foreign exchange acquired for the purpose of foreign travel are subject to a processing fee of 5 percent.

Capital

Foreign investments in Ghana require the prior approval of the Ghana Investment Center if they are to benefit from the facilities available under the Investment Code of 1981, under which approved investments are guaranteed, in principle, the right to transfer profits and, in the event of sale or liquidation, capital proceeds; tax holidays and initial capital allowances are also available for such investments. The code stipulates that the assets of foreign investors may not be expropriated. Disputes over the amount of compensation are settled in accordance with the established procedure for conciliation—for example, through arbitration by the International Center for Settlements of Investment Disputes or the United Nations Commission on International Trade and Law. Certain areas of economic activity are not open to foreigners. The proceeds of the sales of foreign ownership to Ghanaian nationals are held in blocked, non-interest-bearing accounts with the Bank of Ghana; these accounts carry an exchange rate guarantee. Transfers of such funds are being effected gradually.

Under a supplementary Investment Code issued in July 1985, incentives are provided to promote foreign investments that promise to be net foreign exchange earners. The main features of the 1981 and 1985 codes, which offer incentives and guarantees to encourage foreign investments in areas other than petroleum and mining (already covered by a Minerals Code), are as follows: (1) exemption from customs duties in respect of the importation of plant, machinery, and equipment; (2) more favorable depreciation or capital allowances; (3) permission to operate an external account in which at least 25 percent of the investing company’s foreign exchange earnings may be retained for procuring machinery and equipment, spare parts, and raw materials, for servicing of debt, and for transfers of dividends and profits; (4) guarantee for the remittance of foreign capital in the event of sale or liquidation; and (5) protection against expropriation. The minimum requirement of investment capital to qualify under the codes is $60,000 for joint ventures with a Ghanaian partner and $100,000 for enterprises that are wholly foreign owned.

All outgoing capital movements must be approved by the Bank of Ghana; 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 settled. 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 the real assets of foreign nationals leaving Ghana may be approved for transfer in one lump sum or may be spread over a period of time, depending on the amount.

Loan and overdraft facilities to resident companies controlled by nonresidents require the individual approval of the Bank of Ghana. Residents who are private persons are not normally granted foreign exchange for the acquisition of securities or personal real estate abroad. Transactions in securities are controlled to ensure that capital is not transferred abroad. In respect of portfolio investments, residents must obtain approval for any switch in their holdings of securities issued by nonresidents. Private sector and commercial bank borrowing require the approval of the Bank of Ghana, as do private import credits for machinery and equipment valued at $100,000 or more; foreign borrowing by Ghanaian nationals is subject to certain government guidelines. Lending to nonresidents is prohibited, except for export credits; these require exchange control approval and are normally limited to 60 days.

Under a system of external accounts for debt-service payments introduced in 1980 to enable export-oriented industries to receive external aid, such industries are allowed to operate foreign exchange accounts (in addition to their regular retention accounts) with funds earmarked from export earnings for the purpose of debt-service payments. The opening of such accounts requires the approval of the Committee on Suppliers’ Credits and the Exchange Control Department of the Bank of Ghana; the latter also monitors receipts and payments out of these accounts. Such accounts have been established for the diamond sector as well as for the fishing and timber companies financed with suppliers’ credits.

Gold

Domestic transactions in gold, as well as imports and exports, may be authorized by the State Gold Mining Corporation 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, Ghanaian residents may not 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 those by or on behalf of the monetary authorities are not normally licensed. The import duty on bullion, partly worked gold, and other gold is levied at a uniform rate of 30 percent. The gold mines export their output in semirefined form.

Changes During 1991

Exchange Arrangement

May 17. The net open foreign exchange positions of all authorized foreign exchange dealers (which included some nonbank foreign exchange bureaus) were subject to limits, and holdings of foreign exchange in excess of these limits were required to be sold to other dealers or to the Bank of Ghana.

July 8. The surrender of all foreign exchange earnings from exports of goods and services, other than cocoa and gold, was shifted from the Bank of Ghana to the interbank market.

Greece

(Position on December 31, 1991)

Exchange Arrangement

The currency of Greece is the Greek Drachma. The Greek authorities operate a managed float for the drachma. Exchange rates for the U.S. dollar, the main intervention currency, and other currencies1 are determined during the daily fixing session, in which the Bank of Greece and the authorized commercial banks participate. In the domestic spot exchange market, the commercial banks quote their own rates. On December 31, 1991, buying and selling rates in the interbank market were Dr 174.748 and Dr 175.800, respectively, per US$1. The commercial banks may levy a commission on all foreign exchange transactions on the domestic forward exchange market. Forward cover is extended only to commercial transactions carried out by residents for a maturity period of up to 3 months for imports and 12 months for exports; the exchange rates applied by the commercial banks in these cases are based on those determined daily by the Bank of Greece. Forward rates are also quoted to nonresident banks, provided that relevant contracts involve ECU-related transactions for a maturity period of up to three months. Exchange risk is undertaken by the Bank of Greece.

Greece is a member of the European Monetary System (EMS). The drachma is included in the ECU basket, but Greece does not participate in the exchange rate mechanism of the EMS.

Administration of Control

Foreign exchange regulations are administered by the Bank of Greece. Commercial banks are authorized to carry out all the necessary formalities for the settlement of imports and exports. In almost all cases, they automatically grant approval for imports and prepare the documentation for exports according to exchange regulations. The commercial banks are also authorized to undertake transactions in foreign exchange for invisibles and capital.

Prescription of Currency

Settlements with all countries may be made in any convertible foreign currency or through deposit accounts in convertible drachmas.

Accounts in Foreign Currency and Convertible Drachmas

Accounts in Foreign Currency. These accounts may be maintained by nonresident persons and entities, foreigners of Greek origin residing abroad, Greek nationals residing and working abroad (including seamen), Greek residents, and nonprofit private legal entities with a head office in Greece. These accounts may be credited with foreign exchange brought into Greece and with foreign bank notes brought into Greece and declared upon entry. Principal and interest on these accounts are freely transferable abroad. Savings and time deposits may be opened for up to 12 months. The Bank of Greece sets an upper limit on interest on these accounts, with the exception of the rate on residents’ deposits, which is fixed by the Bank of Greece, and of the rate on nonresidents’ deposits, which is negotiable.

Accounts in Convertible Drachmas. Nonresidents may open sight and time deposits in convertible drachmas. The interest rate on time deposits for a period of up to six months is negotiable. The commercial banks operating in Greece are allowed to lend to credit institutions abroad in convertible drachmas in amounts not exceeding their total deposits in convertible drachmas. The maturity of such loans can be up to six months, and the interest rate is negotiable.

Blocked Accounts. Claims of non-European Community (EC) residents denominated in drachmas that are not derived from imported foreign currency must be deposited in blocked accounts. The withdrawal of funds from these accounts is permitted only with the approval of the Bank of Greece. Payments abroad from these accounts are allowed with the approval of the Bank of Greece.

Imports and Import Payments

Approval for imports is granted automatically, before or after shipment of goods, by the commercial banks, and it implies that the required amount of foreign exchange will be made available. Special import licenses are required for textiles and iron and steel products that come from low-cost countries; these products are under surveillance according to EC quotas. Special regulations govern imports of certain items, such as medicines, narcotics, and motion picture films. Settlement of the value of imported goods must take place within 60 days of the date of arrival at the first Greek port; this provision, however, is not enforced.

Import payments are not subject to official regulations; in almost all cases, they are effected on the basis of agreements between the contracting parties.

Payments for Invisibles

Payments for invisibles are granted automatically for expenses incidental to authorized transactions.

Residents traveling abroad for family reasons or tourism are entitled to the equivalent of ECU 1,400 for each trip to EC countries and Cyprus and to the equivalent of $700 for each trip to all other countries. International credit cards may be used to pay for expenses incurred abroad up to the equivalent of ECU 300 a year. In addition to this allowance, travelers participating in group tours are granted an amount based on a cost declaration submitted by the travel agency. Travelers may also take with them a maximum of Dr 10,000 in Greek bank notes.

Foreign exchange for business travel is allowed up to the equivalent of $2,000 a trip without restriction on the number of trips that may be taken in a year. International business credit cards may also be used to pay for tourist expenses incurred abroad, such as hotels, tickets, car hire, and conference and seminar fees, without limit. For medical treatment abroad, the required foreign exchange is made available. For studies abroad, the amount covering living expenses is granted; in addition, foreign exchange is granted to cover tuition fees, books, etc.

Payments of interest, profits, and dividends are governed by the regulations that are applied to capital transfers to Greece (see section on Capital below). Remittances for family maintenance and earnings by foreign workers are permitted, subject to documentary requirements regarding proof of need and source of income. Foreign banks operating in Greece are permitted to repatriate their profits, irrespective of the nature of their operations.

Nonresidents leaving Greece may take out foreign bank notes up to the equivalent of $1,000 within a year of their arrival in Greece, as well as traveler’s checks and other means of payment in their name irrespective of amount; they may also take out Dr 20,000 in Greek bank notes. Larger amounts in foreign bank notes can be taken out no later than December 31 of the calendar year following the year in which the nonresident entered Greece, provided that they were declared upon entry into Greece.

Exports and Export Proceeds

Export proceeds must be surrendered within 180 days of the date of shipment of the goods. In special cases, the authorities may extend this time limit by approving time settlement of the value of exports. Export goods are not subject to the value-added tax. Exporters are allowed to maintain 10 percent of their proceeds in foreign currency accounts with banks operating in Greece, provided that their earned export proceeds in the previous calendar year exceed $100,000.

Proceeds from Invisibles

Foreign exchange earnings representing payments for services must be surrendered within 45 days of the date of receipt. Earnings from oceangoing shipping are exempted from the surrender requirements, but shipowners must cover their disbursements and expenses in Greece by converting foreign exchange into drachmas.

Greek residents may bring in any amount of foreign exchange, but must declare it upon entry if they wish to take it out on their next departure and not later than December 31 of the calendar year following the year in which they entered Greece; they may also bring in a maximum of Dr 10,000 in bank notes.

Nonresident travelers may import any amount of foreign currency and need not declare it, provided they do not intend to take out amounts in excess of the equivalent of $1,000. Traveler’s checks and other means of payment in a traveler’s name are not subject to a limit. Travelers may also bring in a maximum of Dr 100,000 in Greek bank notes.

Capital

Direct investments in Greece undertaken by non-EC residents in accordance with the Act of the Governor of the Bank of Greece 825/1986 are subject to verification, and the repatriation of the liquidation proceeds and the exportation of the profits, dividends, interest, and amortization of funds are free. Investments in real estate in Greece by non-EC residents are permitted, and the proceeds of liquidation can be repatriated after five years following the conversion of the foreign currency into drachmas.

Direct investments by residents of Greece in EC countries are permitted. Investment in securities and real estate in other EC countries is freely permitted.

Direct investments and investments in real estate or in securities by residents of Greece in non-EC countries require prior approval.

Greek firms in manufacturing, mining, and hotels and those in the services sector are allowed to borrow in foreign exchange from banks, foreign legal persons, and individuals residing abroad without prior approval, provided that the maturity of the loans is at least 12 months. For exporting firms, the maturity of the loans can be less than 12 months, provided that the firms service their loans with their export earnings. Bank and nonbank loans from abroad, which do not fall into the above categories and do not qualify as direct investments, are subject to prior approval.

Transfers abroad of the liquidation proceeds of listed and unlisted securities, as well as treasury bills and long-term government bonds and bonds of public sector entities, are permitted, provided that foreign currency was used to purchase them. The transfer abroad of the liquidation proceeds of unlisted securities by non-EC residents is subject to prior approval.

Legislative Decree 2687/1953, Presidential Decree 207/1987, and Act of the Governor of the Bank of Greece 825/1986 govern direct investments.

Gold

Residents may freely purchase new gold sovereigns from the Bank of Greece through licensed stockbrokers at a price set by the Bank of Greece. These gold coins may be resold only to the Bank of Greece or to the Athens Stock Exchange. Holders of gold coins acquired in the free market that existed before December 22, 1965 may sell them without any formality to the Bank of Greece or to an authorized bank at the official price. Imports of gold against payment in foreign exchange require a special license; licenses are normally issued to importers for distribution to jewelers and dentists. Gold bars and gold coins may be imported for other than commercial purposes when no payment in foreign exchange is involved. Exports of gold other than by the Bank of Greece are not approved except when gold bars or coins are brought in by travelers and declared upon entry, in which case they may be re-exported after being approved by the Bank of Greece.

Changes During 1991

Imports and Import Payments

(See Appendix for a summary of trade measures introduced and eliminated on an EC-wide basis during 1991, page 557.)

Payments for Invisibles

May 1. Travel allowances for travel to EC countries were raised to ECU 1,400 from ECU 1,200.

Capital

May 1. Greek residents were permitted to invest freely in securities and real estate in other EC markets.

Grenada

(Position on December 31, 1991)

Exchange Arrangement

The currency of Grenada is the Eastern Caribbean Dollar,1 which is issued by the Eastern Caribbean Central Bank (ECCB). The Eastern Caribbean dollar is pegged to the U.S. dollar, the intervention currency, at EC$2.70 per US$1. On December 31, 1991, the buying and selling rates for the U.S. dollar quoted by the ECCB in its transactions with commercial banks were EC$2.69 and EC$2.71, respectively, per US$1. The ECCB also quotes daily rates for the Canadian dollar and the pound sterling. An exchange tax of 5 percent is levied on all sales of foreign exchange by commercial banks, except for payments for imports of inputs by local manufacturers certified by the Industrial Development Corporation, payments for imports of some basic foods and drugs, remittances to cover the expenses of university education abroad and those related to medical services, transactions of the Grenada Development Bank with the European Investment Bank, and transactions by any person or corporate body approved under the Hotels Ordinance. As of July 15, 1991, sales of foreign exchange repatriated by Grenadians living abroad have been exempted from the foreign exchange tax. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Exchange control, which is administered by the Ministry of Finance, applies to all countries. The Ministry delegates to authorized dealers the authority to approve some import payments and certain other outward payments. The exchange control directives do not apply to transactions with South Africa. The Trade Division of the Ministry of Finance administers trade control. Arrears are maintained with respect to external payments.

Prescription of Currency

Settlements with residents of member countries of the Caribbean Common Market (Caricom)2 must be made either through external accounts (in Eastern Caribbean dollars) or in the currency of the Caricom country concerned. Settlements with residents of the former Sterling Area countries, other than Caricom countries, may be made in pounds sterling, in any other former Sterling Area currency, or in Eastern Caribbean dollars to and from external accounts. Settlements with residents of countries outside the former Sterling Area other than South Africa may be made in any foreign currency3 or through an external account in Eastern Caribbean dollars.

Nonresident Accounts

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

Foreign Currency Accounts

Residents and nonresidents are permitted to open foreign currency accounts without referring to the Ministry of Finance. Such accounts may be freely debited but can be credited only with foreign exchange earned or received from outside the ECCB area.

Imports and Import Payments

On May 1, 1991, Grenada implemented the Common External Tariff of the Caribbean Common Market. All imports from South Africa are prohibited. Most goods may be freely imported, but imports of the following products are prohibited: industrial gas; cigarettes; processed pork products; curry powder; war toys; mops; children’s garments; diothene plastic sheets and corrugated cardboard for the banana industry; solar water heaters; electric accumulators for automobiles; and aluminum windows, doors, and associated items. Certain other commodities are subject to quantitative restrictions and require an import license. On September 1, 1991, the import license requirement for goods originating from the member countries of the Organization of Eastern Caribbean States (OECS) was eliminated.

Payments for documented imports are free of restrictions. Payments for other authorized imports are permitted upon application and submission of documentary evidence (invoices and customs warrants) to the Ministry of Finance. Advance payments for imports also require prior approval from this Ministry.

Imports of equipment and spare parts are exempt from import duties. Also exempt are imports by the commodity associations that are intended for quality improvements in the growing or packaging of bananas, cocoa, and nutmeg. Imports not exempt from customs duty are subject to a value-added tax of 20 percent of c.i.f. value, with the exception of imports of raw materials for use in local manufacturing of finished products, which are subject to an 8 percent value-added tax. Imports of certain basic consumer items, brewery products, and cigarettes from countries outside the Caricom are subject to special surcharges of 10 percent, 25 percent, and 35 percent, respectively.

Payments for Invisibles

With the exception of outward remittances for education, medical treatment, gifts, family maintenance, profits, dividends, insurance premiums, proceeds from sales of local property, royalties, and management fees, payments for invisibles require exchange control approval. Authority has been delegated to authorized dealers to provide basic allocations of foreign exchange for a few types of payments. These include foreign travel (for which up to EC$5,000 a person a calendar year may be allocated for private travel and up to EC$10,000 a person for business travel), subscriptions to magazines and periodicals, and life insurance premiums on policies contracted before June 1975. With the exception of tourism, applications for additional amounts or for purposes for which there is no basic allocation normally are approved by the Ministry of Finance, provided that no unauthorized transfer of capital is involved. Applications in respect of tourism in excess of EC$5,000 a person are considered on their merits. The cost of transportation to any destination may be settled in domestic currency and is not deducted from the travel allocation. Nonresident travelers may export any foreign currency they previously brought in, with the approval of the Ministry of Finance.

Exports and Export Proceeds

Exports to South Africa are prohibited, and specific licenses are required for the exportation of certain goods to any destination. There are no formal regulations to ensure that export proceeds in foreign currencies are surrendered within a certain period after the date of shipment, but the collection of export proceeds is mandatory.

Proceeds from Invisibles

The collection of the foreign currency proceeds from invisibles is mandatory. Travelers may freely bring in notes and coins in Eastern Caribbean currency or in any foreign currency.

Capital

All outward capital transfers require exchange control approval. The purchase by residents of foreign currency securities and of real estate abroad for private purposes is not normally permitted. Certificates of title to foreign currency securities held by residents must be lodged with an authorized depository in Grenada, and earnings on these securities must be repatriated.

Personal capital transfers, such as inheritances to nonresidents, require exchange control approval, which is normally granted subject to the payment of estate and succession duties. There are certain allowances for cash gifts (EC$500 a person a year) and for emigration purposes. The Ministry of Finance will also consider transfer applications from foreign nationals who have resided in Grenada and are proceeding to take up permanent residence abroad.

Nonresidents may make direct investment in Grenada with exchange control approval. The remittance of earnings on, and liquidation proceeds from, such investment is permitted, provided that all liabilities related to the investment have been discharged and that the original investment was registered with the Ministry of Finance. Nonresidents may acquire real estate in Grenada for private purposes with funds in foreign currency; local currency financing is not ordinarily permitted. The repatriation of the proceeds from the realization of such investments requires the approval of the Ministry of Finance.

The approval of the Ministry of Finance is required for residents to borrow abroad or for nonresidents to borrow in Grenada. Authorized dealers may freely assume short-term liability positions in foreign currencies for the financing of approved transfers in respect of both trade and nontrade transactions. They may also freely accept deposits from nonresidents. Any borrowing abroad by authorized dealers to finance their domestic operations requires the approval of the Ministry of Finance. Effective March 15, 1991, all restrictions on transfers of Eastern Caribbean dollars from Grenada to countries served by the Eastern Caribbean Central Bank were eliminated.

Gold

Residents other than the monetary authorities, authorized dealers, and industrial users are not permitted to hold or acquire gold in any form other than jewelry or coins for numismatic purposes. Imports of gold are permitted for industrial purposes only and are subject to customs duties and charges. The Ministry of Finance issues licenses to import gold. The exportation of gold is not normally permitted.

Changes During 1991

Exchange Arrangement

July 15. Sales of foreign exchange repatriated by Grenadians living abroad were exempted from the foreign exchange tax.

Imports and Import Payments

May 1. Grenada implemented the Common External Tariff of the Caribbean Common Market.

August 16. Mops and children’s garments were placed on the negative list of imports.

September 1. The import license requirement for goods originating from OECS countries was eliminated.

Capital

March 15. All restrictions on transfers of Eastern Caribbean dollars from Grenada to countries served by the Eastern Caribbean Central Bank were eliminated.

Guatemala

(Position on December 31, 1991)

Exchange Arrangement

The currency of Guatemala is the Guatemalan Quetzal. Guatemala maintains a unified exchange system under which the Bank of Guatemala auctions foreign exchange but fixes both the buying rate and a base auction rate. Bidding is restricted to a range of Q 0.05 on each side of the base auction rate, which is, in turn, adjusted once every three weeks on the basis of the movement of the exchange rate during the preceding three weeks. The buying rate is determined by the base rate minus Q 0.05. On December 31, 1991, the buying and selling rates of the Bank of Guatemala in terms of the U.S. dollar were Q 5.01505 per US$1 and Q 5.06520 per US$1, respectively.

Certain foreign exchange operations of the Bank of Guatemala (for example, servicing of its external debt disbursed before June 6, 1986) that have no economic effect are conducted at an accounting exchange rate of Q 1 per US$1. Buying and selling rates for certain currencies other than the U.S. dollar1 are officially quoted, mainly on the basis of their rates in the New York market. The Bank of Guatemala does not issue new exchange rate guarantees, but it honors guarantees granted before the end of October 1989. There are no other arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

On January 27, 1947, Guatemala formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Administration of Control

The Foreign Exchange Department of the Bank of Guatemala is in charge of administering the Transitional Law on the Foreign Exchange Regime. Foreign exchange transactions of the public sector are carried out exclusively through the Bank of Guatemala; those of the private sector are made through banks authorized by the Monetary Board. Exports of goods must be registered in the Foreign Exchange Department to guarantee repatriation of the corresponding foreign exchange proceeds.

Arrears are maintained with respect to certain external payments.

Prescription of Currency

In practice, most transactions in foreign exchange are denominated in U.S. dollars. Transactions with other Central American countries are settled in U.S. dollars or in domestic currency in accordance with special payments agreements.

Imports and Import Payments

Imports of most goods are unrestricted and require neither registration nor a license. Import licenses issued by the Ministry of Economy are required for imports of coffee beans and coffee plants, explosives, lead, poultry, milk, eggs, sugar, wheat flour, basic food grains, cottonseed, tallow, and a few other goods. Foreign exchange for import payments may be purchased at the interbank exchange market rate in effect at the public sale of foreign exchange. The fund for public sale of foreign exchange is established by the Bank of Guatemala and consists of 75 percent of the total amount of foreign exchange by banks authorized to trade in foreign exchange.

Exports and Export Proceeds

Certain exports are subject to licenses issued by the Ministry of Economy. Exports of a few other items are prohibited, including the exportation of gold (unless the Bank of Guatemala issues a special export license) and silver in any form.

Exporters must obtain an export permit issued by the Foreign Exchange Department before the Guatemalan customs can authorize shipment of the merchandise; the granting of export permits is contingent on agreement to sell export proceeds to the Bank of Guatemala or an authorized bank within 45 days of the date of issuance (this period may be extended to 90 days).

In the case of exports to Central America, there are clearing arrangements among the central banks to settle payments in their own national currencies, U.S. dollars, or barter.

Payments for and Proceeds from Invisibles

Invisible transactions relating to travel outside the country, school fees, study expenses, international credit card payments, and others are permitted without restriction.

Capital

All capital transactions take place without limitation. Investment in the petroleum sector is governed by special legislation.

Gold

The Bank of Guatemala may buy and sell gold coins and bullion either directly or through the banks and is entitled to require the surrender, directly or through authorized banks, of the gold holdings of any resident. The Bank sells gold to domestic artistic or industrial users, in accordance with the directives of the Monetary Board. The exportation of gold is prohibited except when the Bank of Guatemala issues a special export license. Gold is imported only by the Bank of Guatemala.

Changes During 1991

Imports and Import Payments

June 19. A preferential exchange rate that was applied to petroleum in the form of an exchange rate guarantee was eliminated.

Guinea

(Position on December 31, 1991)

Exchange Arrangement

The currency of Guinea is the Guinean Franc. Guinea maintains a floating exchange rate system, under which the exchange rate against the SDR is set in weekly fixing sessions and is quoted in terms of the SDR. The private sector and public enterprises, through the intermediation of commercial banks, may sell and purchase foreign exchange for all import and invisible payments, except for limitations placed on purchases for tourist travel and the transfer abroad of salaries by nonresident workers. All other public sector transactions take place at the latest fixing rate. The rates for other currencies are determined on the basis of the rates of these currencies against the SDR, as published by the IMF. The exchange rate for the CFA franc results from the relationship between this currency and the French franc. Settlements under the bilateral payments agreement with China are effected in renminbi at the rate resulting from the current GF/SDR and SDR/yuan rates. On December 31, 1991, the official exchange rate for the SDR was GF 1,150 per SDR 1. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Exchange control authority is vested in the Central Bank, which has delegated its authority to the commercial banks with respect to (1) the approval of import forms (descriptifs d’importation) and import application forms (demandes descriptives d’importation) for amounts below $200,000; (2) allocation of foreign exchange to travelers holding foreign airline tickets (travelers holding tickets issued by Compagnie nationale air guinée must apply to the Central Bank for their travel allowances); and (3) management of foreign currency accounts opened in the name of nonresidents. All settlements with foreign countries, including payments for imports, require approval from the Exchange Department of the Central Bank. Arrears are maintained with respect to external payments.

Prescription of Currency

Settlements on account of transactions covered by bilateral payments agreements are made in currencies prescribed by, and through accounts established under, the provisions of the agreements.1 Settlements with the Central Bank of West African States (for Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal, and Togo) and The Gambia, Ghana, Guinea-Bissau, Liberia, Mauritania, Nigeria, and Sierra Leone are normally made through the West African Clearing House. Settlements with other countries are made in designated convertible currencies quoted by the Central Bank. All current transactions effected in Guinea must be settled in Guinean francs.

Resident Foreign Currency Accounts

The opening of deposit accounts in foreign currency by residents at the domestic commercial banks is subject to the prior approval of the Central Bank.

Nonresident Accounts

There are two types of nonresident accounts: nonresident transferable accounts in foreign currencies, and nonresident accounts in Guinean francs. The opening of a nonresident account is subject to the prior approval of the Central Bank.

Convertible Accounts

Accounts in convertible Guinean francs may be opened by residents and nonresidents. Such accounts are to be credited with deposits in foreign exchange, irrespective of its origin. Exporters may hold up to 25 percent of their foreign exchange proceeds in convertible Guinean francs. Such accounts may be debited freely and converted by commercial banks into foreign currencies without prior authorization from the Central Bank. These accounts carry an interest premium of 2 percentage points over deposit accounts in Guinean francs.

Imports and Import Payments

Almost all products may be freely imported into Guinea (except armaments, ammunition, and narcotics). Petroleum products may be imported only by the public sector. Mining companies may, however, import crude oil directly.

All imports of less than $200,000 require authorization, which is granted by the commercial banks on behalf of the Central Bank. Two types of authorization are given: (1) imports with access to foreign exchange provided at rates determined during weekly fixing sessions; and (2) imports financed with importers’ own foreign exchange resources (autorisation sans achat de devises).

To obtain authorization, importers are required to fill out either an import form (for imports valued at less than $5,000) or an import application request form (for imports valued between $5,000 and $200,000), on which they must provide information on products to be imported, including prices, quantity, quality, and financing terms.

For imports with access to the auction market, authorization is given only after prices, quality, and terms of financing (for import credits) are verified. Requests for foreign exchange must be submitted through commercial banks at the weekly fixing sessions.

Certain imports are effected outside the auction system. This category comprises goods for which foreign exchange is derived from sources other than the official foreign exchange resources of Guinea and mainly covers imports by four “mixed-economy companies” (the Friguia Company; the Guinea Bauxite Company; Aredor, the diamond company; and AUG, the gold company) and foreign embassies.

All products are subject to a 10 percent turnover tax, custom duties (DFE) of 8 percent, and custom charges (DDE) of 7 percent, with the following exceptions: animals, flour, sugar, pharmaceutical products, and fertilizers are subject to a 6 percent DFE and 2 percent DDE; and imports for the food industry, cement, and agriculture machinery are subject to an 8 percent DFE and a 2 percent DDE. In addition, a surtax of 20 percent or 30 percent is imposed on all luxury goods, and a surtax of 30-60 percent is levied on nonalcoholic beverages and certain wines and spirits. Importers of consumer goods are required to provide 25 percent of the value of imports (c.i.f.) in domestic currency as advance payment of customs duties upon filing the import request. The import tariff payable by the four mixed enterprises in the mining sector is subject to special agreements.

Payments for Invisibles

All payments for invisibles through the official foreign exchange market require central bank authorization. Payments for freight and insurance in connection with imports are authorized as part of the import operation. No official exchange is granted for other types of insurance with companies abroad. Allocations for tourism, other than for the purchase of airline tickets, are limited to $800 a person a trip, with a maximum of four trips a calendar year; each application is considered individually. Government officials on official missions are permitted an allowance of $140 a day. In cases of serious illness, when a doctor’s certificate is submitted, residents may be granted foreign exchange for medical care abroad or may be permitted to transfer exchange for the care of relatives receiving medical treatment abroad.

Payments for family support through the official market may be made up to monthly amounts determined on the merits of the case; for officially recognized study abroad, the exchange allocation is made on a case-by-case basis.

The Investment Law of 1985 (as amended in 1987) guarantees that profits earned from approved foreign investments may be transferred abroad, and that certified dividends and royalties may be transferred in full. It also provides for certain tax incentives. The transfer abroad of salaries by expatriate workers is authorized up to a limit of 50 percent of base earnings, and only for those contracts approved by the Ministry of Labor. The exportation of Guinean currency is limited to GF 5,000 a person a trip.

Exports and Export Proceeds

All private sector exports require domiciliation with a commercial bank and submission of an export description for purposes of (1) preventing shortages of goods needed for domestic consumption; and (2) identifying capital outflows. Exports of the mining sector are exempted from this requirement.

For the following commodities, special authorization from designated agencies is required: wild animals (dead or alive), edible animals, articles of historic or ethnographic interest, jewelry, articles made of precious metals, and plants and seeds.

Foreign planters may be granted special transfer privileges related to the quantity of pineapples, bananas, or citrus fruits exported, and private traders may also be permitted to retain a part of their export proceeds in order to finance authorized imports. The mixed-economy companies are allowed to retain their export proceeds abroad, to pay for their imports and operating requirements, and to service their external debt.

Proceeds from Invisibles

In principle, exchange proceeds accruing to residents in respect of invisibles must be surrendered. The importation of foreign bank notes and traveler’s checks is permitted freely, subject to declaration on entry; residents, however, must surrender both to commercial banks within 15 days of return. Certain residents, by virtue of their occupation, are authorized to deposit foreign exchange proceeds in their foreign currency accounts. The importation of Guinean currency is limited to GF 5,000 a traveler a trip.

Capital

All capital transfers through the official exchange market require authorization. Outward capital transfers by Guinean nationals through the official market are prohibited.

The Investment Law of 1985 provides guarantees against the nationalization of foreign investments in the industrial and mining sectors. It also provides for preferential tax and customs treatment applicable to foreign investments and for the transfer of profits, interest, amortization, and liquidation proceeds of such investments. Small and medium-size enterprises in which at least GF 50 million is invested over a three-year period may receive import tax reductions and exemptions from other taxes for a period of eight to ten years. Exemptions for up to 15 years may be granted on long-term investments of particular importance to the economy. The minimum foreign investment in Guinean enterprises is GF 10 million. Guinean nationals must have controlling interests in enterprises requiring foreign investment of GF 10 million to GF 50 million.

Gold

Since June 1990, the Central Bank has purchased gold in Guinean francs only. Since the monetary reform of 1986, Guinea has issued fine silver commemorative coins of GF 10,000, which are legal tender. Transactions in nonmonetary gold are not subject to restriction. Only the exportation of gold is subject to prior authorization by the Central Bank.

Changes During 1991

Exchange Arrangement

January 2. The commercial banks were required to surrender 20 percent of foreign exchange they have purchased from the public to the Central Bank.

February 1. The exchange arrangement was changed from the U.S. dollar peg to the SDR peg. The rates for other currencies against the Guinean franc would be determined on the basis of the rates of these currencies against the SDR, as published by the IMF. During the year, the exchange rate of the Guinean franc was adjusted gradually from GF 967.44 per SDR 1 on January 1 to GF 1,150 per SDR on December 31.

Payments for Invisibles

February 28. The daily foreign allowance for government officials traveling abroad on official business was raised to $140.

Guinea-Bissau

(Position on December 31, 1991)

Exchange Arrangement

The currency of Guinea-Bissau is the Guinea-Bissau Peso. There are two exchange markets: the official and free (parallel) exchange market. Until January 14, 1991, the external value of the official rate was adjusted in terms of the SDR at relatively short intervals on the basis of estimated domestic price developments. On January 14, 1991, Guinea-Bissau adopted a crawling peg policy in the context of a monetary arrangement with Portugal. Following an initial adjustment of the official rate against the Portuguese escudo, the intervention currency, to the free market exchange rate, the official rate has been adjusted at regular intervals at a predetermined monthly average rate based on the expected inflation differential between Guinea-Bissau and Portugal. When the actual inflation differential was larger than anticipated, the official rate was adjusted discretely on two occasions during 1991 in order to reduce the gap between the official and the free market rates.

On December 31, 1991, the official selling rate for the Portuguese escudo (Esc) was PG 37.9 per Esc 1, and the official selling rate for the U.S. dollar was PG 5,118.90 per US$1. On the same date, the spread between the official and free market rates was less than 1 percent for the Portuguese escudo and 13.3 percent for the U.S. dollar. The free exchange market is estimated to have a significant quantitative role in the Guinea-Bissau economy.

There are no taxes or subsidies on purchases or sales of foreign currency in Guinea-Bissau. There are no arrangements for forward cover against exchange risk in the official or the commercial banking sector.

Administration of Control

The Central Bank of Guinea-Bissau exercises control over foreign exchange transactions involving the use of foreign exchange belonging to or administered by it. Foreign exchange transactions effected by commercial banks with resources derived from sources other than those of the Central Bank are in general not controlled by the Central Bank. Residents are permitted to sell foreign exchange in their possession without revealing its sources. Arrears are maintained with respect to external payments.

Prescription of Currency

Settlements with foreign countries are normally made in foreign currency, although certain external obligations have been settled with goods on a very few occasions in the past. Guinea-Bissau is a participant in the West African Clearing House, which includes the member countries of the Central Bank of West African States (Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal, and Togo) and The Gambia, Ghana, Guinea, Liberia, Mauritania, Nigeria, and Sierra Leone.

Nonresident Foreign Currency Accounts

Nonresidents may open demand and time accounts in foreign currency with commercial banks and may use balances on these accounts without restriction, except that prior notice for withdrawals above certain pre-established limits is required. Residents may also maintain these accounts: (1) if they are authorized to engage in foreign currency transactions; or (2) if they receive income in foreign currency under contracts with nonresidents. Banks may pay interest of up to 4 percent a year on demand accounts in foreign currency, whereas interest rates on time deposits may be negotiated freely (at the end of 1991, these rates ranged from 6 percent to 8 percent).

Imports and Import Payments

All imports, regardless of whether they involve use of official or free market foreign exchange, require a prior import license (Boletim de Registo Prévio de Importaçao) issued by the Ministry of Commerce and Tourism. Since official availability of foreign exchange in the country is not considered when licenses are issued, import licenses are not a foreign exchange allocation instrument, and their possession does not guarantee the importers’ access to the official exchange market. Except for a short negative list, licenses are issued automatically after verification of invoice prices for goods to be imported.

Importers are free to arrange for payment through the banking system with their own foreign exchange or foreign exchange purchased on the parallel market. However, payments for imports with foreign exchange purchased from the Central Bank or administered by the Central Bank require authorization from the Central Bank, and authorization is granted on the basis of priority of products involved and availability of foreign exchange.

On December 31, 1991, the state monopoly over imports of petroleum and petroleum products was abolished.

Payments for Invisibles

Payments for invisibles by the public sector at the official exchange rate are effected through the Central Bank.

As in the case of imports, payments for invisibles by the private sector at the official exchange rate are authorized in accordance with the availability of foreign exchange, up to an overall weekly ceiling of $30,000.

The limits for the various categories of invisible payments are as follows: (1) business travel by exporters, up to 1 percent of the preceding year’s total exports, and by others, up to the equivalent of Esc 62,500 a trip; (2) medical treatment, up to the equivalent of Esc 110,000 a trip; and (3) education expenses, up to the equivalent of Esc 23,000 a month, depending on the level of studies.

Foreign travelers may take out on departure any unspent foreign exchange that they declared upon entry.

Exports and Export Proceeds

All exports require a prior export license (Boletim de Registo Prévio de Exportaçao). Only exporters registered with the Ministry of Commerce and Tourism may obtain these licenses, which are granted automatically in most cases. As in the case of imports, prior licenses are intended primarily for statistical purposes, although they are also used to check the prices of exports. There are no products whose exportation is reserved solely for the public sector.

In general, all exports are subject to a “customs services” tax of 5 percent. In addition, exports of cashew nuts are subject to a special tax, the rate of which has been reduced over the years. The tax rate was 25 percent in 1991 and is planned to be reduced to 20 percent in 1992. Other exports are also subject to a “rural property tax” (Contribuiçao Predial Rústica), at the rate of 2 percent on “processed” products and at the rate of 1 percent on “unprocessed” products.

Special arrangements apply to exports to the member countries of the Economic Community of West African States (Ecowas), to which Guinea-Bissau belongs; for example, exports to these countries are exempted from the 5 percent customs services tax. (At the end of 1991, the arrangements had not come into effect.)

Exporters are required to surrender proceeds in full to the Central Bank but may obtain up to 50 percent of the surrendered foreign currency to pay for their own imports.

Proceeds from Invisibles

Under the foreign exchange regulations that came into effect in 1991, neither residents nor nonresidents are required to sell to the Central Bank foreign exchange they receive from abroad, and they are free to sell foreign exchange in their possession on the free