The government has adopted policies to promote the free flow of financial resources and foreign investment in Albania. The Law on “Strategic Investments” is based on the principles of equal treatment, non-discrimination, and protection of foreign investments. Foreign investors have the right to expatriate all funds and contributions of their investment.  In accordance with IMF Article VIII, the government and Central Bank do not impose any restrictions on payments and transfers for international transactions. Despite Albania’s shallow foreign exchange market, banks enjoy enough liquidity to support sizeable positions.  Portfolio investments continue to be a challenge because they remain limited mostly to company shares, government bonds, and real estate as the Tirana stock market remains non-operational

In recent years, the constant reduction of non-performing loans has allowed commercial banks to loosen lending standards and increase overall lending especially as the economy has recovering from the severe COVID-19 economic disruption in 2020. Non-performing loans (NPL) at the end of 2021 dropped to 5.65 percent compared to 8.1 percent one year ago. Overall lending has steadily increased since 2019 and at the end of 2021 reached about USD 6 billion marking a 10 percent increase compared to 2020. The credit market is competitive, but interest rates in domestic currency can be high. Most mortgage and commercial loans are denominated in euros because rate differentials between local and foreign currency average 1.5 percent. Commercial banks operating in Albania have improved the quality and quantity of services they provide, including a large variety of credit instruments, traditional lines of credit, and bank drafts, etc.

In the absence of an effective stock market, the country’s banking sector is the main channel for business financing.  The sector is sound, profitable, and well capitalized. The Bank of Albania, the country’s Central Bank, is responsible for the licensing and supervision of the banking sector in Albania. The banking sector is 100 percent privately owned and its total assets have steadily increased over the years reaching USD 17 billion at the end of 2021 mostly based on customers deposits.  The banking sector has continued the consolidation process as the number of banks decreased from 16 in 2018 to 11 at the end of 2021 when the Greek Alpha Bank was purchased by OTP Bank. As of December 2021, the Turkish National Commercial Bank (BKT) was the largest bank in the market with 26 percent market share, followed by Albanian Credins Bank with 15.8 percent, and Austrian Raiffeisen Bank third with 15.3 percent.  The American Investment Bank is the only bank with U.S. shareholders and ranks sixth with 5.5 percent percent of the banking sector’s total assets.

The number of bank outlets has also decreased over the recent years also due to the consolidation. In December 2021, Albania had 417 bank outlets, down from 446 from 2019 and the peak of 552 in 2016. Capital adequacy, at 18 percent in December 2021, remains above Basel requirements and indicates sufficient assets.  At the end of 2021, the return on assets increased to 1.42 percent compared to 1.2 percent one year ago. As part of its strategy to stimulate business activity, the Bank of Albania has adopted a plan to ease monetary policy by continuing to persistently keep low interest rates. However, due to the recent inflationary pressure in March 2021, Bank of Albania increased the base interest rate to 1 percent, up from a historical low rate of 0.5 percent which was in place since June 2018.

Many of the banks operating in Albania are subsidiaries of foreign banks. Only three banks have an ownership structure whose majority shareholders are Albanian. However, the share of total assets of the banks with majority Albanian shareholders has increased because of the sector’s ongoing consolidation. There are no restrictions for foreigners who wish to establish a bank account. They are not required to prove residency status. However, U.S. citizens must complete a form allowing for the disclosure of their banking data to the IRS as required under the U.S. Foreign Account Tax Compliance Act.

Parliament approved a law in October 2019 to establish the Albanian Investment Corporation (AIC). The law entered in force in January 2020. The AIC would develop, manage, and administer state-owned property and assets, invest across all sectors by mobilizing state owned and private domestic and foreign capital, and promote economic and social development by investing in line with government-approved development policies.

The GoA plans to transfer state-owned assets, including state-owned land, to the AIC and provide initial capital to launch the corporation. In December 2021, the GoA transferred to the AIC close to USD 20 million. There is no publicly available information about the activities of the AIC for 2020 or 2021.

The IMF https://www.imf.org/en/News/Articles/2019/11/26/mcs11262019-albania-staff-concluding-statement-of-the-2019-article-iv-mission Staff Concluding Statement  of November 26, 2019, warned that the law would allow the government to direct individual investment decisions, which could make the AIC an off-budget spending tool that risks eroding fiscal discipline and circumventing public investment management processes.

State-owned enterprises (SOEs) are defined as legal entities that are entirely state-owned or state-controlled and operate as commercial companies in compliance with the Law on Entrepreneurs and Commercial Companies. SOEs operate mostly in the generation, distribution, and transmission of electricity, oil and gas, railways, postal services, ports, and water supply. There is no published list of SOEs.

The law does not discriminate between public and private companies operating in the same sector. The government requires SOEs to submit annual reports and undergo independent audits. SOEs are subject to the same tax levels and procedures and the same domestic accounting and international financial reporting standards as other commercial companies. The High State Audit audits SOE activities. SOEs are also subject to public procurement law.

Albania is yet to become party to the Government Procurement Agreement (GPA) of the WTO but has obtained observer status and is negotiating full accession (see  https://www.wto.org/english/tratop_e/gproc_e/memobs_e.htm  ).  Private companies can compete openly and under the same terms and conditions with respect to market share, products and services, and incentives.

SOE operation in Albania is regulated by the Law on Entrepreneurs and Commercial Companies, the Law on State Owned Enterprises, and the Law on the Transformation of State-Owned Enterprises into Commercial Companies. The Ministry of Economy and Finance and other relevant ministries, depending on the sector, represent the state as the owner of the SOEs. SOEs are not obligated by law to adhere to Organization for Economic Cooperation and Development (OECD) guidelines explicitly. However, basic principles of corporate governance are stipulated in the relevant laws and generally accord with OECD guidelines. The corporate governance structure of SOEs includes the supervisory board and the general director (administrator) in the case of joint stock companies. The supervisory board comprises three to nine members, who are not employed by the SOE. Two-thirds of board members are appointed by the representative of the Ministry of Economy and Finance, and one-third by the line ministry, local government unit, or institution to which the company reports. The Supervisory Board is the highest decision-making authority and appoints and dismisses the administrator of the SOE through a two-thirds vote.

The privatization process in Albania is nearing conclusion, with just a few major privatizations remaining. Entities to be privatized include OSHEE, the state-run electricity distributor; 16 percent of ALBtelecom, the fixed-line telephone and mobile company; and state-owned oil company Albpetrol. Other sectors might provide opportunities for privatization in the future.

The bidding process for privatizations is public, and relevant information is published by the Public Procurement Agency at   www.app.gov.al  . Foreign investors may participate in the privatization program. The Agency has not published timelines for future privatizations.

The Algiers Stock Exchange has five stocks listed – each at no more than 35 percent equity. There is a small and medium enterprise exchange with one listed company. The exchange has a total market capitalization representing less than 0.1 percent of Algeria’s GDP. Daily trading volume on the exchange averages around USD 2,000. Despite the lack of tangible activity, the market is regulated by an independent oversight commission that enforces compliance requirements on listed companies and traders.

Government officials have previously expressed their desire to reach a capitalization of USD 7.8 billion and enlist up to 50 new companies. Attempts to list additional companies have been stymied by a lack both of public awareness and appetite for portfolio investment, as well as by private and public companies’ unpreparedness to satisfy due diligence requirements that would attract investors. Proposed privatizations of state-owned companies have also been opposed by the public. Algerian society generally prefers material investment vehicles for savings, namely cash. Public banks, which dominate the banking sector (see below), are required to purchase government securities when offered, meaning they have little leftover liquidity to make other investments. Foreign portfolio investment is prohibited – the purchase of any investment product in Algeria, whether a government or corporate bond or equity stock, is limited to Algerian residents only.

The banking sector is roughly 85 percent public and 15 percent private as measured by value of assets held and is regulated by an independent central bank. Publicly available data from private institutions and U.S. Federal Reserve Economic Data show estimated total assets in the commercial banking sector in 2017 were roughly 13.9 trillion dinars (USD 116.7 billion) against 9.2 trillion dinars (USD 77.2 billion) in liabilities. In response to liquidity concerns caused by the oil price decline and COVID-19 crisis, the bank progressively decreased the reserve requirement from 12 percent to 3 percent between March and September 2020.

The IMF and Bank of Algeria have noted moderate growth in non-performing assets since 2015, currently estimated between 12 and 13 percent of total assets. The quality of service in public banks is generally considered low as generations of public banking executives and workers trained to operate in a statist economy lack familiarity with modern banking practices. Most transactions are materialized (non-electronic). Many areas of the country suffer from a dearth of branches, leaving large amounts of the population without access to banking services. ATMs are not widespread, especially outside the major cities, and few accept foreign bankcards. Outside of major hotels with international clientele, hardly any retail establishments accept credit cards. Algerian banks do issue debit cards, but the system is distinct from any international payment system. The Minister of Commerce has announced multiple plans to require businesses to use electronic payments for all commercial and service transactions, though the most recent government deadline for all stores to deploy electronic payment terminals by the end of 2021 was indefinitely delayed. In addition, analysts estimate that between one-third and one-half  of the money supply circulates in the informal economy.

Foreigners can open foreign currency accounts without restriction, but proof of a work permit or residency is required to open an account in Algerian dinars. Foreign banks are permitted to establish operations in the country, but they must be legally distinct entities from their overseas home offices.

In 2015, the Financial Action Task Force (FATF) removed Algeria from its Public Statement, and in 2016 it removed Algeria from the “gray list.” The FATF recognized Algeria’s significant progress and the improvement in its anti-money laundering/counter terrorist financing (AML/CFT) regime. The FATF also indicated Algeria has substantially addressed its action plan since strategic deficiencies were identified in 2011.

Algeria’s sovereign wealth fund (SWF) is the “Fonds de Regulation des Recettes (FRR).” The Finance Ministry’s website shows the fund decreased from 4408.2 billion dinars (USD 37.36 billion) in 2014 to 784.5 billion dinars (USD 6.65 billion) in 2016. The data has not been updated since 2016. Algerian media reported the FRR was spent down to zero as of February 2017. Algeria is not known to have participated in the IMF-hosted International Working Group on SWFs.

State-owned enterprises (SOEs) comprise more than half of the formal Algerian economy. SOEs are amalgamated into a single line of the state budget and are listed in the official business registry. To be defined as an SOE, a company must be at least 51 percent owned by the state.

Algerian SOEs are bureaucratic and may be subject to political influence. There are competing lines of authority at the mid-levels, and contacts report mid- and upper-level managers are reluctant to make decisions because internal accusations of favoritism or corruption are often used to settle political and personal scores. Senior management teams at SOEs report to their relevant ministry; CEOs of the larger companies such as national hydrocarbons company Sonatrach, national electric utility Sonelgaz, and airline Air Algerie report directly to ministers. Boards of directors are appointed by the state, and the allocation of these seats is considered political. SOEs are not known to adhere to the OECD Guidelines on Corporate Governance.

Legally, public and private companies compete under the same terms with respect to market share, products and services, and incentives. In reality, private enterprises assert that public companies sometimes receive more favorable treatment. Private enterprises have the same access to financing as SOEs, but they work with private banks, and they are less bureaucratic than their public counterparts. Public companies generally refrain from doing business with private banks and a 2008 government directive ordered public companies to work only with public banks. The directive was later officially rescinded, but public companies continued the practice. However, the heads of Algeria’s two largest state enterprises, Sonatrach and Sonelgaz, both indicated in 2020 that given current budget pressures they are investigating recourse to foreign financing, including from private banks. SOEs are subject to the same tax burden and tax rebate policies as their private sector competitors, but business contacts report that the government favors SOEs over private sector companies in terms of access to land.

SOEs are subject to budget constraints. Audits of public companies can be conducted by the Court of Auditors, a financially autonomous institution. The constitution explicitly charges it with “ex post inspection of the finances of the state, collectivities, public services, and commercial capital of the state,” as well as preparing and submitting an annual report to the President, heads of both chambers of Parliament, and Prime Minister. The Court makes its audits public on its website, for free, but with a time delay, which does not conform to international norms.

The Court conducts audits simultaneously but independently from the Ministry of Finance’s year-end reports. The Court makes its reports available online once finalized and delivered to the Parliament, whereas the Ministry withholds publishing year-end reports until after the Parliament and President have approved them. The Court’s audit reports cover the entire implemented national budget by fiscal year and examine each annual planning budget that is passed by Parliament.

The General Inspectorate of Finance (IGF), the public auditing body under the supervision of the Ministry of Finance, can conduct “no-notice” audits of public companies. The results of these audits are sent directly to the Minister of Finance, and the offices of the President and Prime Minister. They are not made available publicly. The Court of Auditors and IGF previously had joint responsibility for auditing certain accounts, but they are in the process of eliminating this redundancy. Further legislation clarifying whether the delineation of responsibility for particular accounts which could rest with the Court of Auditors or the Ministry of Finance’s General Inspection of Finance (IGF) unit has yet to be issued.

There has been limited privatization of certain projects previously managed by SOEs, and so far restricted to the water sector and possibly a few other sectors. However, the privatization of SOEs remains publicly sensitive and has been largely halted.

The Andorran financial sector is efficient and is one of the main pillars of the Andorran economy, representing 20 percent of the country’s GDP and over 5 percent of the workforce.

Created in 1989, and redefined with more responsibilities in 2003, the Andorran Financial Authority (AFA; www.afa.ad ) is the supervisory and regulatory body of the Andorran

financial system and the insurance sector. The AFA is a public entity with its own legal status, functionally independent from the Government. AFA has the power to carry out all necessary actions to ensure the correct development of its supervision and control functions, disciplinary and punitive powers, treasury and public debt management services, financial agency, international relations, advice, and studies.

The Andorran Financial Intelligence Unit (UIFAND) was created in 2000 as an independent organ to deal with the tasks of promoting and coordinating measures to combat money laundering, terror financing, and the proliferation of weapons ( www.uifand.ad ).

The State Agency for the Resolution of Banking Institutions (AREB) is a public-legal institution created by Law 8/2015 to take urgent measures to introduce mechanisms for the recovery and resolution of banking institutions ( www.areb.ad ).

Andorra adopted the use of the Euro in 2002 and in 2011 signed a Monetary Agreement with the EU making the Euro the official currency. Since July 1, 2013, Andorra has had the right to mint Euro coins.

The Andorra banking system is sound and considered the most important part of the financial sector. It represents 20 percent of the country’s GDP. The Andorran banks offer a variety of services at market rates. The main lines of business in the banking sector are retail banking, private banking, and asset management and insurance. The country also has a sizeable and growing market for portfolio investments. The country does not have a central bank. The sector is regulated and supervised by the Andorran Financial Authority (AFA).

The U.S. Internal Revenue Service has certified all the Andorran banks as qualified intermediaries.

Founded in 1960, the Association of Andorran Banks (ABA; https://www.andorranba nking.ad/) represents Andorran banks. Among its tasks are representing and defending interests of its members, watching over the development and competitiveness of Andorran banking at national and international levels, improving sector technical standards, cooperation with public administrations, and promoting professional training, particularly dealing with money laundering prevention. At present, all five Andorran banking groups are ABA members, totaling an estimated 51.7 billion Euros in combined assets for 2021.

Foreign Exchange

Andorra adopted the Euro in 2002 and in 2011 signed a Monetary Agreement with the EU making the Euro the official currency. Since 2013, Andorra has the authority to mint Euro coins.

Remittance Policies

There are no limits or restrictions on remittances provided that they correspond to a company’s official earning records.

Andorra has no Sovereign Wealth Fund (SWF).

Foreign portfolio investment is still new in Angola, but the government is seeking to increase it. The National Bank of Angola (BNA) abolished the licensing previously required to import capital from foreign investors allocated to the private sector and export income associated with such investments. This measure compliments the need to improve the capture of FDI and portfolio investment and it is in line with the privatization program for public companies (PROPRIV) announced through Presidential Decree No. 250/19 of August 5, 2019, which encourages foreign companies to purchase state-owned assets the government is liquidating. BNA has also stopped requiring a license to export capital resulting from the sale of investments in securities traded on a regulated market and the sale of any investment, in which the buyer is also not – foreign exchange resident, pursuant to Notice No. 15/2019. The BNA is increasingly removing restrictions on payments and transfers for current international transactions.

Angola’s Debt and Securities Stock Exchange (BODIVA), planned to be privatized by 2022, trades an equivalent in local currency (kwanzas) of USD 2 billion a year. In view of policies adopted by the institution, BODIVA predicts an increase in the volume of trades. The stock exchange has 23 commercial banks and two brokerages as members, which operate mainly in government denominated Treasury Bonds. BODIVA allows the trading of different types of financial instruments through an electronic auction platform to investors with rules (self-regulation), systems (platforms), and procedures that assure market fairness and integrity to facilitate portfolio investment. The Capital Markets Commission, the regulator, is updating its own supervisory framework while looking to provide new services and attract more individual investors to the capital markets. Presently, only local commercial banks can list on the nascent stock exchange. According to the Capital Markets Commissioner, portfolio investment by individuals only represents 16 percent of BODIVA’s equity.

Through the ongoing privatization program, the government announced in February its intent to sell 30 percent of the stocks it has invested in BODIVA by the end of 2022, with plans to sell the rest in phases in 2023 and 2024.

Credit is partially allocated on market terms. Since the revision of the PIL in 2021, domestic credit is accessible to foreign investors and companies that are majority foreign held (this was previously only possible after implementation of the investment project). For Angolan investors, credit access remains limited. In 2020, however the BNA directed commercial banks to increase the minimum amount of subsidized credit that they must make available to borrowers 2 percent of their assets to 2.5 percent by the end of 2020 to accelerate the diversification of domestic production. The private sector has access to a variety of conventional credit instruments provided by commercial banks.

Forty-seven percent of Angola’s income-earners utilize banking services, with 80 percent being from the urban areas. Angola is over-banked for the size of its economy. Although four banks have been closed since 2018, 26 banks still operate in Angola. The banking market remains marked by concentration and limited financial inclusion. The top six banks control nearly 80 percent of sector assets, loans and deposits, but the rest of the sector includes many banks with minimal scale and weak franchises. The total number of customers in the six largest banks is 9.9 million. Angola’s largest bank Banco Angolano de Investimentos has an asset value of approximately USD 5.5 billion.

Angola has a central banking system. The banking sector largely depends on monetary policies established by Angola’s central bank, the National Bank of Angola (BNA). Thanks to the ongoing IMF economic and financial reform agenda, the BNA is adopting international best practices and slowly becoming more autonomous. On February 13, 2021, President Joao Lourenco issued a decree granting autonomy to the BNA in line with IMF recommendations. Since that time, the bank has made decision on monetary, financial, credit, and foreign exchange policies without political influence, while also maintaining its oversight, regulatory, and supervisory role of the institutions in the financial system. The reforms taken under the Lourenco administration have lessened the political influence over the BNA and allowed it to more freely adopt strategies to build resilience from external shocks on the economy. As Angola’s economy depends heavily on oil to fuel its economy, so does the banking sector. The BNA periodically monitors minimum capital requirements for all banks and orders the closure of non-compliant banks.

Credit availability is limited and often supports government-supported programs. The GRA obliges banks to grant credit more liberally in the economy, notably by implementing a Credit Support Program (PAC). For instance, the BNA first issued a notice obliging Angolan commercial banks to grant credit to national production equivalent at a minimum to 2.5 percent of their net assets in 2020 and extended the notice through the end of 2022. Although the RECREDIT Agency purchased non-performing loans (NPLs) of the state’s parastatal BPC bank, NPLs remain high at 23 percent, a decrease of 9 percent since 2017.

The country has not lost any additional correspondent banking relationships since 2015. At the time of issuing this report no correspondent banking relationships were in jeopardy. The Eastern and Southern Africa Anti-Money Laundering Group is evaluating Angola’s anti-money laundering regime. A positive result could lead private foreign banking institutions to reestablish correspondent banking relationships. Most transactions go via third party correspondent banking services in Portugal banks, a costly option for all commercial banks.

Foreign banking institutions are allowed to operate in Angola and are subject to BNA oversight.

The Angolan Sovereign Wealth Fund (FSDEA) was established in 2012 with $5 billion USD in support from the petroleum sector. The fund was established in accordance with international governance standards and best practices as outlined in the Santiago Principles. As of March 2021, the FSDEA reported $2.97 billion USD. Angola is a full member  of the International Forum of Sovereign Wealth Funds

There are currently 81 public enterprises listed on the State Institute of Asset and Shares Management website; 70 are wholly owned by the state, 8 with majority-ownership for the state and 3 with minority stakes for the government. A list of all of Angola’s SOEs can be found at the following link: https://igape.minfin.gov.ao/PortalIGAPE/#!/sector-empresarial-publico/universo-do-sep . Based on the IMF definition of government owning at least 50 percent equity and revenue being greater than 1 percent of GDP, SONANGOL, the state oil company, and Sodiam, the state diamond company qualify as SOEs.

There is no law mandating preferential treatment to SOEs, but in practice they have access to inside information and credit. Currently, SOEs are not subject to budgetary constraints and quite often exceed their capital limits. All SOEs in Angola are required to have boards of directors, and most board members are affiliated with the government.

Other public enterprises operate in the agribusiness, oil and gas, financial services, and construction sectors as well as others.

The GRA considers SOE debt as indirect public debt, and only accounts in its state budget for direct government debt, thus effectively not reflecting some substantial obligations in fact owed by the government. President Lourenço has launched various reforms to improve financial sector transparency, enhance efficiency in the country’s SOEs as part of the National Development plan 2018-2022 and Macroeconomic Stability Plan

Angola is not a party to the WTO’s Government Procurement Agreement (GPA). Angola does not adhere to the OECD guidelines on corporate governance for SOEs.

Angola began its privatization program (PROPRIV) in 2019, with an aim to privatize 195 assets by 2022. By January, the government had privatized 73 assets and raised $1.7 billion in revenue through the program despite COVID-19 pandemic-imposed hurdles. The program is supervised by State Institute of Asset and Shares Management (IGAPE) and will implemented through the Angolan Debt and Securities Exchange Market (BODIVA). The government plans to partially privatize the state-owned telecommunications company and the national oil company Sonangol, as well as the national airline TAAG, and companies in the extractives sector, health, manufacturing, and agriculture.

The privatization process is open to interested foreign investors and the government has improved the transparency of the bidding process. The government has an “electronic auction” site where investors can submit their bids for the various tenders: https://leilaoigape.minfin.gov.ao/ .

As a member of the ECCU, Antigua and Barbuda is also a member of the Eastern Caribbean Stock Exchange (ECSE) and the Regional Government Securities Market. The ECSE is a regional securities market established by the ECCB and licensed under the Securities Act of 2001, a uniform regional body of legislation governing securities market activities. As of March 2021, there were 164 securities listed on the ECSE, comprising 140 sovereign debt instruments, 13 equities, and 11 corporate debt securities. Market capitalization stood at $703 million (1.9 billion Eastern Caribbean dollars), representing a 6.9 percent increase from 2020. Antigua and Barbuda is open to portfolio investment.

Antigua and Barbuda accepted the obligations of Article VIII of the International Monetary Fund Agreement Sections 2, 3, and 4, and maintains an exchange system free of restrictions on making international payments and transfers. The government normally does not grant foreign tax credits except in cases where taxes are paid in a Commonwealth country that grants similar relief for Antigua and Barbuda taxes, or where an applicable tax treaty provides a credit. The private sector has access to credit on the local market through loans, purchases of non-equity services, and trade credits, as well as other accounts receivable that establish a claim for repayment.

Antigua and Barbuda is a signatory to the 1983 agreement establishing the ECCB. The ECCB controls Antigua and Barbuda’s currency and regulates its domestic banks.

The Banking Act (2015) is a harmonized piece of legislation across the ECCU member states. The ECCB and the Ministers of Finance of member states jointly carry out banking supervision under the act. The Minsters of Finance usually act in consultation with the ECCB with respect to those areas of responsibility within the Minister of Finance’s portfolio.

Domestic and foreign banks can establish operations in Antigua and Barbuda. The Banking Act requires all commercial banks and other institutions to be licensed. The ECCB regulates financial institutions. As part of supervision, licensed financial institutions are required to submit monthly, quarterly, and annual performance reports to the ECCB. In its latest annual report, the ECCB listed the commercial banking sector as stable. Assessments including effects of the pandemic are not yet available. Assets of commercial banks totaled $2.07 billion (5.6 billion Eastern Caribbean dollars) at the end of December 2019 and remained relatively consistent during the previous year. The reserve requirement for commercial banks was 6 percent of deposit liabilities.

Antigua and Barbuda is well-served by bank and non-bank financial institutions. There are minimal alternative financial services offered. Some people still participate in informal community group lending, but the practice is declining.

The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S., Canadian, and European banks due to risk management concerns. CARICOM remains committed to engaging with key stakeholders on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to continue to monitor the issue.

Antigua and Barbuda’s Digital Assets Business Bill 2020 created a comprehensive regulatory framework for digital asset businesses, clients, and customers. The bill states that all digital asset businesses in the country must obtain a license for issuing, selling, or redeeming virtual coins, operating as a payment service or electronic exchange, providing custodial wallet services, among other activities. The government aspires to develop Antigua and Barbuda into a regional center for blockchain and cryptocurrency. At the end of 2020, over 40 major businesses accepted bitcoin cash.

Bitt, a Barbadian company, developed digital currency DCash in partnership with the ECCB. The first successful DCash retail central bank digital currency (CDBC) consumer-to-merchant transaction took place in Grenada in February 2021 following a multi-year development process. The CBB and the FSC established a regulatory sandbox in 2018 where financial technology entities can do live testing of their products and services. This allowed regulators to gain a better understanding of the product or service and to determine what, if any, regulation is necessary to protect consumers. Bitt completed its participation and formally exited the sandbox in 2019. Bitt launched DCash in Antigua and Barbuda in March 2021. In January 2022, the platform experienced a system interruption, and its operation was suspended. The platform regained full functionality at the end of March 2022 following system upgrades.

Neither the government of Antigua and Barbuda nor the ECCB, of which Antigua and Barbuda is a member, maintains a sovereign wealth fund.

State-owned enterprises (SOEs) in Antigua and Barbuda are governed by their respective legislation and do not generally pose a threat to investors, as they are not designed for competition. The government established many SOEs to create economic activity in areas where the private sector is perceived to have little interest.

SOEs are headed by boards of directors to which senior managers report. In 2016, Parliament passed the Statutory Corporations (General Provisions) Act, which specifies ministerial responsibilities in the appointment and termination of board members, decisions of the board, and employment in these SOEs. To promote diversity and independence on SOE boards, professional associations, non-governmental organizations (NGOs), and civil society may nominate directors for boards.

Antigua and Barbuda does not have a targeted privatization program.

The Argentine Constitution sets as a general principle that foreign investors have the same status and the same rights as local investors. Foreign investors have free access to domestic and international financing.

After a three-year recession (2018-2020), the economy rebounded with 10.3 percent growth in 2021. However, the government did not ease the capital controls introduced in September 2019 to slow the outflow of dollars. Central Bank capital controls prohibiting transfers and payments are likely in conflict with IMF Article VIII. The government has maintained trade restrictions, price controls, distortive taxes, and high spending. Unable to access international capital markets (despite restructuring private debt in 2020) and with a shallow domestic market, the government relied on Central Bank money printing to finance the deficit. The excessive liquidity resulted in high inflation (50.9 percent in 2021) and deteriorating social conditions, with the poverty rate exceeding 40 percent.

In August 2020, the government of Argentina formally notified the International Monetary Fund (IMF) of its intent to renegotiate $45 billion due to the Fund from the 2018 Stand-By Arrangement. On March 3, 2022, IMF Staff and Argentine authorities reached a staff-level agreement on the economic and financial policies required for an Extended Fund Facility (EFF) Arrangement. In broad terms, the key objectives of the new EFF include a reduction in the fiscal deficit and monetary financing, tackling inflation, and the accumulation of foreign reserves. The IMF Executive Board approved the EFF on March 25, after the Argentine National Congress approved the measure.

The Argentine Securities and Exchange Commission (CNV or Comisión Nacional de Valores) is the federal agency that regulates securities markets offerings. Securities and accounting standards are transparent and consistent with international norms. Foreign investors have access to a variety of options on the local market to obtain credit. Nevertheless, the domestic credit market is small – credit is 11 percent of GDP. Private sector credit gained some momentum in 2021, driven by the reopening of the economy after the pandemic and government support measures such as subsidized credit lines for businesses. Nevertheless, the stock of credit shrank in real terms as the nominal credit growth increased by 41 percent in 2021, below the inflation rate of 50.7 percent. The Buenos Aires Stock Exchange is the organization responsible for the operation of Argentina’s primary stock exchange, located in Buenos Aires city. The most important index of the Buenos Aires Stock Exchange is the MERVAL (Mercado de Valores).

U.S. banks, securities firms, and investment funds are well-represented in Argentina and are dynamic players in local capital markets. In 2003, the government began requiring foreign banks to disclose to the public the nature and extent to which their foreign parent banks guarantee their branches or subsidiaries in Argentina.

Argentina has a relatively sound banking sector based on diversified revenues, well-contained operating costs, and a high liquidity level. Argentina’s banking sector has been resilient in the face of a multi-year economic recession (2018-2020). Limited financial intermediation combined with high inflation and interventionist interest rate regulations (mainly for small businesses) dented bank profitability in 2021. Banks compensated for this by controlling expenses and increasing digitalization of the sector. Non-performing private sector loans constitute 4.4 percent of banks’ portfolios. During 2021, financial entities maintained adequate solvency indicators. The banking sector is well positioned due to macro and micro-prudential policies introduced since 2002 that have helped to reduce asset-liability mismatches. The sector is highly liquid and its exposure to the public sector is modest, while its provisions for bad debts are adequate.

Private banks have total assets of approximately ARS 8.4 trillion (USD $83.3 billion). Total financial system assets are approximately ARS 13.7 trillion (USD $135.7 billion). The Central Bank of Argentina acts as the country’s financial agent and is the main regulatory body for the banking system.

Foreign banks and branches can establish operations in Argentina. They are subject to the same regulation as local banks. Argentina’s Central Bank has many correspondent banking relationships, none of which are known to have been lost in the past three years.

In November 2020, the Central Bank launched a new payment system, “Transfers 3.0,” seeking to reduce the use of cash. This system will boost digital payments and further financial inclusion in Argentina, expanding the reach of instant transfers to build an open and universal digital payment ecosystem. The government has expressed support for the process of digitization of payments to improve efficiency, reduce costs, and safeguard financial stability.

The Central Bank has enacted a resolution recognizing cryptocurrencies and requiring that they comply with local banking and tax laws. No implementing regulations have been adopted. Block chain developers report that several companies in the financial services sector are exploring or considering using block chain-based programs externally and are using some such programs internally.

Foreign Exchange

Beginning in September 2019, the Argentine government and Central Bank issued a series of decrees and norms to extend or amend the government’s ability to regulate and restrict access to foreign exchange markets.

As of October 2019, the Central Bank (Notice A6815) limits cash withdrawals made abroad with local debit cards to foreign currency bank accounts owned by the client in Argentina. Pursuant to Notice A6823, cash advances made abroad using local credit cards are limited to a maximum of USD $50 per transaction.

As of September 2020, and pursuant to Notice A7106, Argentine individuals must limit purchases of foreign currency (or of goods and services denominated in foreign currency) to no more than USD $200 per month on a rolling monthly basis. Individuals must receive Central Bank approval to purchase foreign currency in excess of the $200 quota. Purchases of goods and services abroad with credit and debit cards issued by Argentine banks count against the USD $200 per month quota. Although no limit on credit or debit card purchases is imposed, if monthly expenditures surpass the USD $200 limit, the card owner will be prevented from purchasing foreign currency in Argentina for the number of months needed to cover the amount of excess spending. Also, the regulation prohibits individuals who receive government assistance and high-ranking federal government officials from purchasing foreign exchange.

Pursuant to Public Emergency Law 27,541, issued December 23, 2019, all dollar purchases and individual expenses incurred abroad, in person or online, including international online purchases from Argentina, paid with credit or with debit cards will be subject to a 30 percent tax. Pursuant to AFIP Resolution 4815 a 35 percent withholding tax in advance of the payment of income and/or wealth tax is also applied.

Non-Argentine residents are required to obtain prior Central Bank approval to purchase more than USD $100 per month, except for certain bilateral or international organizations, institutions and agencies, diplomatic representation, and foreign tribunals.

Companies and individuals need to obtain prior clearance from the Central Bank before transferring funds abroad. In the case of individuals, if transfers are made from their own foreign currency accounts in Argentina to their own accounts abroad, they do not need to obtain Central Bank approval.

Per Notice A6869 issued by the Central Bank in January 2020, companies will be able to repatriate dividends without Central Bank authorization equivalent to a maximum of 30 percent of new foreign direct investment made by the company in the country. To promote foreign direct investment the Central Bank announced in October 2020 (Notice A7123) that it will allow free access to the official foreign exchange market to repatriate investments as long as the capital contribution was transferred and sold in Argentine Pesos through the foreign exchange market as of October 2, 2020, and the repatriation takes place at least two years after the transfer and settlement of those funds.

Exporters of goods are required to transfer the proceeds from exports to Argentina and settle in pesos in the foreign currency market. Exporters must settle according to the following terms: exporters with affiliates (irrespective of the type of good exported) and exporters of certain goods (including cereals, seeds, minerals, and precious metals, among others) must convert their foreign currency proceeds to pesos within 15 days (or 30 days for some products) after the issuance of the permit for shipment; other exporters have 180 days to settle in pesos. Despite these deadlines, exporters must transfer the funds to Argentina and settle in pesos within five business days from the actual collection of funds. Argentine residents are required to transfer to Argentina and settle in pesos the proceeds from services exports rendered to non-Argentine residents that are paid in foreign currency either in Argentina or abroad, within five business days from collection of funds.

Payment of imports of goods and services from third parties and affiliates require Central Bank approval if the company needs to purchase foreign currency. Since May 2020, the Central Bank requires importers to submit an affidavit stating that the total amount of payments associated with the import of goods made during the year (including the payment that is being requested). The total amount of payments for importation of goods should also include the payments for amortizations of lines of credit and/or commercial guarantees.

In September 2020, the Central Bank limited companies’ ability to purchase foreign currency to cancel any external financial debt (including other intercompany debt) and dollar denominated local securities offerings. Companies were granted access to foreign currency for up to 40 percent of the principal amount coming due from October 15, 2020, to December 31, 2020. For the remaining 60 percent of the debt, companies had to file a refinancing plan with the Central Bank. In February 2021, the Central Bank extended the regulation through 2021, and in March 2022 extended it again to include maturities through December 31, 2022. Indebtedness with international organizations or their associated agencies or guaranteed by them and indebtedness granted by official credit agencies or guaranteed by them are exempted from this restriction.

The Central Bank (Notice A7001) prohibited access to the foreign exchange market to pay for external indebtedness, imports of goods and services, and saving purposes for individuals and companies that have made sales of securities with settlement in foreign currency or transfers of these to foreign depositary entities within the last 90 days. They also should not make any of these transactions for the following 90 days.

Pre-cancellation of debt coming due abroad in more than three business days requires Central Bank approval to purchase dollars.

Per Resolution 36,162 of October 2011, locally registered insurance companies are mandated to maintain all investments and cash equivalents in the country. The Central Bank limits banks’ dollar-denominated asset holdings to 5 percent of their net worth.

In December 2021, the Central Bank presented its monetary, financial, lending, and foreign exchange program. On monetary policy, the Central Bank committed to I) manage liquidity to prevent any imbalances that may directly or indirectly affect the disinflation process; II) set the path of the policy interest rate to obtain positive real returns on investments in domestic currency and preserve monetary and foreign exchange stability; and III) contribute to the development of the capital market and adjust minimum reserve requirements to strengthen the channel of monetary policy transmission. On foreign exchange, the Central Bank will maintain the gradual crawling peg of the exchange rate consistent with the pace of inflation. With the goal of strengthening international reserves, the Central Bank will manage capital control regulations to ensure monetary and foreign exchange stability. The credit policy objectives include encouraging financial intermediation and promoting the growth of the peso credit market to boost lending to micro, small- and medium-sized enterprises (MSMEs) and to the sectors most affected by the pandemic.

Remittance Policies

In response to the economic crisis in Argentina, the government introduced capital controls in September 2019 and tightened them in 2020.  Under these restrictions, companies in Argentina (including local affiliates of foreign parent companies) must obtain prior approval from the Central Bank to access the foreign exchange market to purchase foreign currency and to transfer funds abroad for the payment of dividends and profits.  In January 2020, the Central Bank amended the regime for the payment of dividends abroad to non-residents. The new regime allows companies to access the foreign exchange market to transfer profits and dividends abroad without prior authorization of the Central Bank, provided the following conditions are met:

(1) Profits and dividends are to be declared in closed and audited financial statements.

(2) The dividends in foreign currency should not exceed the dividends determined by the shareholders’ meeting in local currency.

(3) The total amount of dividends to be transferred cannot exceed 30 percent of the amount of new capital contributions made by non-residents into local companies since January 2020.

(4) The resident entity must be in compliance with filing the Central Bank Survey of External Assets and Liabilities.

The Argentine government does not maintain a Sovereign Wealth Fund.

The banking system in Armenia is sound and well-regulated, but the financial sector is not highly developed, according to investors. Banking sector assets account for over 80 percent of total financial sector assets. Financial intermediation tends to be poor. Nearly all banks require collateral located in Armenia, and large collateral requirements often prevent potential borrowers from entering the market. U.S. businesses have noted that this creates a significant barrier for small- and medium-sized enterprises and start-up companies.

The Armenian government welcomes foreign portfolio investment and there is a supporting system and legal framework in place. Armenia’s securities market is not well developed and has only minimal trading activity through the Armenia Securities Exchange, though efforts to grow capital markets are underway. Liquidity sufficient for the entry and exit of sizeable positions is often difficult to achieve due to the small size of the Armenian market. The Armenian government hopes that as a result of pension reforms in 2014, which brought two international asset managers to Armenia, capital markets will play a more prominent role in the country’s financial sector. Armenia adheres to its IMF Article VIII commitments by refraining from restrictions on payments and transfers for current international transactions. Credit is allocated on market terms and foreign investors are able to access credit locally.

Since 2020, the banking sector has withstood the twin shocks created by COVID-19 and the Nagorno-Karabakh conflict. Indicators of financial soundness, including capital adequacy and non-performing loan ratios, have remained broadly strong. The sector is well capitalized and liquid. Non-performing loans have ticked upward slightly from rates of around five percent of all loans. Dollarization, historically high for deposits and lending, has been falling in recent years. Seventeen commercial banks operate in Armenia.  In 2021, all commercial banks in Armenia generated net profits and all had a positive return on average equity (the financial ratio that measures the performance of a bank based on its average shareholders’ equity outstanding).  Total bank assets in Armenia at the end of 2021 were $14 billion; Armenia’s 2021 GDP was approximately $13.6 billion.  As such, the ratio of banks’ total assets to GDP – approximately one-to-one – is average compared to peer countries.  Concentration of banks’ assets is considered to be very low, with the three largest banks holding less than fifty percent of total banking sector assets.  Market share of the largest five banks was 56 percent in 2021.  Overall, Armenia’s banking sector is viewed by international financial institutions (IFIs) as relatively healthy. 

The minimum capital requirement for banks is 30 billion AMD (around $59 million). There are no restrictions on foreigners to open bank accounts. Residents and foreign nationals can hold foreign currency accounts and import, export, and exchange foreign currency relatively freely in accordance with the Law on Currency Regulation and Currency Control. Foreign banks may establish a subsidiary, branch, or representative office, and subsidiaries of foreign banks are allowed to provide the same types of services as domestically owned banks.

The CBA is responsible for the regulation and supervision of the financial sector. The authority and responsibilities of the CBA are established under the Law on the Central Bank of Armenia. Numerous other articles of legislation and supporting regulations provide for financial sector oversight and supervision.

Armenia does not have a sovereign wealth fund.

Most of Armenia’s state-owned enterprises (SOEs) were privatized in the 1990s and early 2000s, but SOEs are still active in a number of sectors. SOEs in Armenia operate as state-owned closed joint stock companies that are managed by the Department of State Property Management and state non-commercial organizations. There are no laws or rules that ensure a primary or leading role for SOEs in any specific industry. Armenia is party to the WTO Government Procurement Agreement, and SOEs are covered under that agreement. SOEs in Armenia are subject to the same tax regime as their private competitors, and private enterprises in Armenia can compete with SOEs under the same terms and conditions. The Department of State Property Management maintains a public list of state-owned closed joint stock companies on its website.

Most of Armenia’s SOEs were privatized in the 1990s and early 2000s. Many of the privatization processes for Armenia’s large assets were reported to be neither competitive nor transparent, and political considerations in some instances prevailed over fair tender processes. The most recent law on privatization, the fifth, is the Law on the 2017-2020 Program for State Property Privatization, which lists 48 entities for privatization. The Department of State Property Management oversees the management of the state’s shares in entities slated for privatization. Details of the privatization program are available on the Department of State Property Management website.

The Australian Government takes a favorable stance towards foreign portfolio investment with no restrictions on inward flows of debt or equity. Indeed, access to foreign capital markets is crucial to the Australian economy given its relatively small domestic savings. Australian capital markets are generally efficient and able to provide financing options to businesses. While the Australian equity market is one of the largest and most liquid in the world, non-financial firms face a number of barriers in accessing the corporate bond market. Large firms are more likely to use public equity, and smaller firms are more likely to use retained earnings and debt from banks and intermediaries. Australia’s corporate bond market is relatively small, driving many Australian companies to issue debt instruments in the U.S. market. Foreign investors are able to obtain credit from domestic institutions on market terms. Australia’s stock market is the Australian Securities Exchange (ASX).

Australia’s banking system is robust, highly evolved, and international in focus. Bank profitability is strong and has been supported by further improvements in asset performance. Total assets of Australian banks at the end of 2020 was USD4.2 trillion and the sector has delivered an annual average return on equity of around 10 percent (only falling to six percent in 2020 during the COVID-19 pandemic, before rebounding to 11 percent in 2021).

According to Australia’s central bank, the Reserve Bank of Australia (RBA), the ratio of non-performing assets to total loans was approximately one percent at the end of 2021, having remained at around that level for the last five years after falling from highs of nearly two percent following the Global Financial Crisis. The RBA is responsible for monitoring and reporting on the stability of the financial sector, while the Australian Prudential Regulatory Authority (APRA) monitors individual institutions. The RBA is also responsible for monitoring and regulating payments systems in Australia.

Further details on the size and performance of Australia’s banking sector are available on the websites of the Australian Prudential Regulatory Authority (APRA) and the RBA:
https://www.apra.gov.au/statistics 
https://www.rba.gov.au/chart-pack/banking-indicators.html 

Foreign banks are allowed to operate as a branch or a subsidiary in Australia. Australia has generally taken an open approach to allowing foreign companies to operate in the financial sector, largely to ensure sufficient competition in an otherwise small domestic market.

Australia’s main sovereign wealth fund, the Future Fund, is a financial asset investment fund owned by the Australian Government. The Fund’s objective is to enhance the ability of future Australian Governments to discharge unfunded superannuation (pension) liabilities. As a founding member of the International Forum of Sovereign Wealth Funds (IFSWF), the Future Fund’s structure, governance, and investment approach is in full alignment with the Generally Accepted Principles and Practices for Sovereign Wealth Funds (the “Santiago principles”).

The Future Fund’s investment mandate is to achieve a long-term return of at least inflation plus 4-5 percent per annum. As of December 2021, the Fund’s portfolio consists of: 23 percent global equities, 8 percent Australian equities, 25 percent private equity (including 8 percent in infrastructure and 7 percent in property), and the remaining 37 percent in debt, cash, and alternative investments.

In addition to the Future Fund, the Australian Government manages five other specific-purpose funds: the DisabilityCare Australia Fund; the Medical Research Future Fund; the Emergency Response Fund; the Future Drought Fund; and the Aboriginal and Torres Strait Islander Land and Sea Future Fund. In total, these five funds have assets of AUD 50 billion (USD 37 billion), while the main Future Fund has assets of AUD 204 billion (USD 150 billion) as of December 31, 2021.

Further details of these funds are available at: https://www.futurefund.gov.au/ 

In Australia, the term used for a Commonwealth Government State-Owned Enterprise (SOE) is “government business enterprise” (GBE). According to the Department of Finance, there are nine GBEs: two corporate Commonwealth entities and seven Commonwealth companies. (See: https://www.finance.gov.au/resource-management/governance/gbe/ ) Private enterprises are generally allowed to compete with public enterprises under the same terms and conditions with respect to markets, credit, and other business operations, such as licenses and supplies. Public enterprises are not generally accorded material advantages in Australia. Remaining GBEs do not exercise power in a manner that discriminates against or unfairly burdens foreign investors or foreign-owned enterprises.

Australia does not have a formal and explicit national privatization program. Individual state and territory governments may have their own privatization programs. Foreign investors are welcome to participate in any privatization programs subject to the rules and approvals governing foreign investment.

Austria has sophisticated financial markets that allow foreign investors access without restrictions. The government welcomes foreign portfolio investment. The Austrian National Bank (OeNB) regulates portfolio investments effectively.

Austria has a national stock exchange that currently includes 64 companies on its regulated market and several others on its multilateral trading facility (MTF). The Austrian Traded Index (ATX) is a price index consisting of the 20 largest stocks on the market and forms the most important index of Austria’s stock market. The size of the companies listed on the ATX is roughly equivalent to those listed on the MDAX in Germany. The market capitalization of Austrian listed companies is small compared to the country’s western European counterparts, accounting for 31 percent of Austria’s GDP, compared to 59 percent in Germany or 194 percent in the United States.

Unlike the other market segments in the stock exchange, the Direct Market and Direct Market Plus segments, targeted at SMEs and young, developing companies, are subject only to the Vienna Stock Exchange’s general terms of business, not more stringent EU regulations. These segments have lower reporting requirements but also greater risk for investors, as prices are more likely to fluctuate, due to the respective companies’ low level of market capitalization and lower trading volumes.

Austria has robust financing for product markets, but the free flow of resources into factor markets (capital, raw materials) could be improved. Overall, financing is primarily available through banks and government-sponsored funding organizations with very little private venture capital available. The Austrian government is aware of this issue but has taken few tangible steps to improve the availability of private venture capital.

Austria is fully compliant with IMF Article VIII, all financial instruments are available, and there are no restrictions on payments. Credit is available to foreign investors at market-determined rates.

Austria has one of the most fragmented banking networks in Europe with more than 3,800 branch offices registered in 2021. The banking system is highly developed, with worldwide correspondent banks and representative offices and branches in the United States and other major financial centers. Large Austrian banks also have extensive networks in Central and Southeast European (CESEE) countries and the countries of the former Soviet Union. Total assets of the banking sector amounted to EUR 1.0 trillion (USD 1.2 trillion) in 2020 (approximately 2.5 times the country’s GDP). Approximately EUR 460 billion (USD 543 billion) of banking sector assets are held by Austria’s two largest banks, Erste Group and Raiffeisen Bank International (RBI). The Austrian banking sector is considered one of the most stable in the world. Austria’s banking sector is managed and overseen by the Austrian National Bank (OeNB) and the Financial Market Authority (FMA). Four Austrian banks with assets in excess of EUR 30 billion (USD 34 billion) are subject to the Eurozone’s Single Supervisory Mechanism (SSM), as is Sberbank Europe AG, a Russian bank subsidiary headquartered in Austria (which was declared insolvent in March 2022, and its operations are now being wound down in a bankruptcy proceeding), and Addiko Bank AG due to their significant cross-border assets, as well as Volksbank Wien AG, due to its importance for the economy. All other Austrian banks continue to be subject to the country’s dual-oversight banking supervisory system with roles for the OeNB and the FMA, both of which are also responsible for policing irregularities on the stock exchange and for supervising insurance companies, securities markets, and pension funds. Foreign banks are allowed to establish operations in the country with no legal restrictions that place them at a disadvantage compared to local banks.

Due to U.S. government financial reporting requirements, Austrian banks are very cautious in committing the time and expense required to accept U.S. clients and U.S. investors without established U.S. corporate headquarters.

Austria has no sovereign wealth funds.

Austria has two major wholly state-owned enterprises (SOEs): The OeBB (Austrian Federal Railways) and Asfinag (highway financing, building, maintenance, and administration). Other government industry holding companies are bundled in the government holding company OeBAG (http://www.oebag.gv.at)

The government has direct representation in the supervisory boards of its companies (commensurate with its ownership stake), and OeBAG has the authority to buy and sell company shares, as well as purchase minority stakes in strategically relevant companies. Such purchases are subject to approval from an audit committee consisting of government-nominated independent economic experts.

OeBAG holds a 53 percent stake in the Post Office, 51 percent in energy company Verbund, 33 percent in the gambling group Casinos Austria, 31.5 percent in the energy company OMV, 28 percent in the Telekom Austria Group, as well as a handful of smaller ventures. Local governments own most utilities, the Vienna International Airport, and more than half of Austria’s 270 hospitals and clinics.

Private enterprises in Austria can generally compete with public enterprises under the same terms and conditions with respect to market access, credit, and other such business operations as licenses and supplies. While most SOEs must finance themselves under terms similar to private enterprises, some large SOEs (such as OeBB) benefit from state-subsidized pension systems. As a member of the EU, Austria is also a party to the Government Procurement Agreement (GPA) of the WTO, which indirectly also covers the SOEs (since they are entities monitored by the Austrian Court of Auditors).

The five major OeBAG-controlled companies (Postal Service, Verbund AG, Casinos Austria, OMV, Telekom Austria), are listed on the Vienna Stock Exchange. Senior managers in these companies do not directly report to a minister, but to an oversight board. However, the government often appoints management and board members, who usually have strong political affiliations.

The government has not privatized any public enterprises since 2007. Austrian public opinion is skeptical regarding further privatization, and there are no indications of any government privatizations on the horizon. In prior privatizations, foreign and domestic investors received equal treatment. Despite a historical government preference for maintaining blocking minority rights for domestic shareholders, foreign investors have successfully gained full control of enterprises in several strategic sectors of the Austrian economy, including in telecommunications, banking, steel, and infrastructure.

Access to capital is a critical impediment to business development in Azerbaijan.  An effective regulatory system that encourages and facilitates portfolio investment, foreign or domestic, is not fully in place.  Though the Baku Stock Exchange opened in 2000, there is insufficient liquidity in the market to enter or exit sizeable positions.  The Central Bank assumed control over all financial regulation in January 2020, following disbandment of a formerly independent regulator.  Non-bank financial sector staples such as capital markets, insurance, and private equity are in the early stages of development.  The Capital Market Modernization Project is an attempt by the government to build the foundation for a modern financial capital market, including developing market infrastructure and automation systems, and strengthening the legal and market frameworks for capital transactions.  One major hindrance to the stock market’s growth is the difficulty in encouraging established Azerbaijani businesses to adapt to standard investor-friendly disclosure practices, which are generally required for publicly listed companies.

Azerbaijan’s government and Central Bank do not restrict payments and transfers for international transactions.  Foreign investors are permitted to obtain credit on the local market, but smaller companies and firms without an established credit history often struggle to obtain loans on reasonable commercial terms.  Limited access to capital remains a barrier to development, particularly for small and medium enterprises.

The country’s financial services sector – of which banking comprises more than 90 percent – is underdeveloped, which constrains economic growth and diversification.  The drop in world oil prices in 2014-2015 and the resulting strain on Azerbaijan’s foreign currency earnings and the state budget exacerbated existing problems in the country’s banking sector and led to rising non-performing loans (NPLs) and high dollarization.  Subsequent reforms have improved overall sector stability.  President Aliyev signed a decree in February 2019 to provide partial relief to retail borrowers on foreign-currency denominated loans that meet certain criteria.

As of January 1, 2022, 26 banks were registered in Azerbaijan, including 12 banks with foreign capital and two state-owned banks.  These banks employ 20,601 people and have a combined 480 branches and 2,920 ATMs nationwide.  Total banking sector assets stood at approximately USD 22.3 billion as of January 2022, with the top five banks holding almost 60 percent of this amount.

In December 2019, Azerbaijan carried out a banking management reform that gave the Central Bank of Azerbaijan control over banks and credit institutions, closing the Chamber for Control over Financial Markets, which had held regulatory powers following Azerbaijan’s 2014/2015 economic crisis and resulting currency devaluations.  Concurrently, the Central Bank announced “recovery of the banking sector” would be one of the main challenges it would tackle in 2020.  The Central Bank closed four insolvent banks (Atabank, AGBank, NBCBank, and Amrah Bank) in April/May 2020, bringing the number of banks in the country down from 30 to 26.  Only six banks are able to conduct correspondent banking transactions with the United States.

Foreign banks are permitted in Azerbaijan and may take the form of representative offices, branches, joint ventures, and wholly owned subsidiaries.  These banks are subject to the same regulations as domestic banks, with certain additional restrictions.  Foreign individuals and entities are also permitted to open accounts with domestic or foreign banks in Azerbaijan.

Azerbaijan’s sovereign wealth fund is the State Oil Fund of Azerbaijan (SOFAZ).  Its mission is to transform hydrocarbon reserves into financial assets generating perpetual income for current and future generations and to finance strategically important infrastructure and social projects of national scale.  While its main statutory focus is investing in assets outside of the country, since it was established in 1999 SOFAZ has financed several socially beneficial projects in Azerbaijan related to infrastructure, housing, energy, and education.  The government’s newly adopted fiscal rule places limits on pro-cyclical spending, with the aim of increasing hydrocarbon revenue savings.  SOFAZ publishes an annual report which it submits for independent audit.  The fund’s assets totaled USD 45 billion as of January 1, 2022. 

In Azerbaijan, state-owned enterprises (SOEs) are active in the oil and gas, power generation, communications, water supply, railway, and air passenger and cargo sectors, among others.  There is no published list of SOEs.  While there are no SOEs that officially have been delegated governmental powers, companies such as the SOCAR, Azerenerji (the national electricity utility), and Azersu (the national water utility) – all of which are closed joint-stock companies with majority state ownership and limited private investment – enjoy quasi-governmental or near-monopoly status in their respective sectors.

SOCAR is wholly owned by the government of Azerbaijan and takes part in all oil and gas activities in the country.  It publishes regular reports on production volumes, the value of its exports, estimates of investments in exploration and development, production costs, the names of foreign companies operating in the country, production data by company, quasi-fiscal activities, and the government’s portion of production-sharing contracts.  SOCAR is also responsible for negotiating PSAs with all foreign partners for hydrocarbon development.  SOCAR’s annual financial reports are audited by an independent external auditor and include the consolidated accounts of all SOCAR’s subsidiaries, although revenue data is incomplete.

There have been instances where state-owned enterprises have used their regulatory authority to block new entrants into the market.  SOEs are, in principle, subject to the same tax burden and tax rebate policies as their private sector competitors.  However, in sectors that are open to both private and foreign competition, SOEs generally receive a larger percentage of government contracts or business than their private sector competitors.  While SOEs regularly purchase or supply goods or services from private sector firms, domestic and foreign private enterprises have reported problems competing with SOEs under the same terms and conditions with respect to market share, information, products and services, and incentives.  Private enterprises do not have the same access (including terms) to financing as SOEs.  SOEs are also afforded material advantages such as preferential access to land and raw materials – advantages that are not available to private enterprises.  There is little information available on Azerbaijani SOEs’ budget constraints, due to the limited transparency in their financial accounts.

A renewed privatization process started with the May 2016 presidential decree implementing additional measures to improve the process of state property privatization and the July 2016 decree on measures to accelerate privatization and improve the management efficiency of state property.  The State Committee on Property Issues launched a portal to provide privatization information in July 2016.  The portal contains information about the properties, their addresses, location, and initial costs with the aim of facilitating privatization.  Azerbaijan’s current privatization efforts focus on smaller state-owned properties.  While there are no immediate plans to privatize large SOEs, Azerbaijan is moving 21 major government-owned companies to a new state holding company tasked to improve efficiency and corporate governance as well as prepare them for possible privatization.  However, the government has no plans to sell stakes in state companies in 2022, including in state oil company SOCAR.

Consistent with the GOB’s liberal approach to foreign investment, government policies facilitate the free flow of financial transactions and portfolio investments. Expatriates and Bahraini nationals have ready access to credit on market terms. Generally, credit terms are variable, but often are limited to 10 years for loans under $50 million. For major infrastructure investments, banks often offer to assume a part of the risk, and Bahrain’s wholesale and retail banks have shown extensive cooperation in syndicating loans for larger risks. Commercial credit is available to private organizations in Bahrain but has been increasingly crowded out by the government’s local bond issuances.

In 2016, the GOB launched a new fund designed to inject greater liquidity in the Bahrain Bourse, worth $100 million. The Bahrain Liquidity Fund is supported by several market participants and acts as a market maker, providing two-way quotes on most of the listed stocks with a reasonable spread to allow investors to actively trade their stocks. Despite these efforts, the market remains small in comparison to others in the region.

In October 2019, the GOB established a BD 130 million ($344 million) Liquidity Fund to assist distressed companies in restructuring financial obligations, which was expanded in March 2020 to BD 200 million ($530 million) in response to the Covid-19 pandemic.

The GOB and the CBB are members of the IMF and fully compliant with Article VIII.

The CBB is the single regulator of the entire financial sector, with an integrated regulatory framework covering all financial services provided by conventional and Islamic financial institutions. Bahrain’s banking sector remained healthy despite sustained lower global oil prices. Bahrain’s banks are well capitalized, and there is sufficient liquidity to ensure a healthy rate of investment. Bahrain remains a financial center for the GCC region, though many financial firms moved their regional headquarters to Dubai over the last decade. The GOB continues to drive innovation and expansion in the Islamic finance sector. In 2021, Bahrain ranked as the second in the MENA Islamic finance market and placed fourth globally, according to the ICD-Thomson Reuters Islamic Finance Development Indicator (IFDI).

Bahrain has an effective regulatory system that encourages portfolio investment. The CBB has fully implemented Basel II standards and is attempting to bring Bahraini banks into compliance with Basel III standards. Bahrain’s banking sector includes 89 banks, of which 30 are retail banks, 59 are wholesale banks, 17 are branches of foreign banks, and 13 are locally incorporated. Of these, nine are representative offices, and 16 are Islamic banks.

There are no restrictions on foreigners opening bank accounts or corporate accounts. Bahrain is home to many prominent financial institutions, among them Citibank, American Express, and JP Morgan Chase. Ahli United Bank is Bahrain’s largest bank with total assets estimated at $41.9 billion as of December 2021.

Bahrain implemented the Real-Time Gross Settlement (RTGS) System and the Scripless Securities Settlement (SSS) System in 2007 to enable banks to carry out their payment and securities-related transactions securely on a real time basis.

In 2017, Bahrain became the first in the GCC to introduce fintech “sandbox” regulations that enabled the launch of cryptocurrency and blockchain startups. The same year, the CBB released additional regulations for conventional and Sharia-compliant financing-based crowdfunding businesses.  Any firm operating electronic financing/lending platforms must be licensed in Bahrain under the CBB Rulebook Volume 5 – Financing Based Crowdfunding Platform Operator.  In February 2019, the CBB issued cryptocurrency regulations.

Foreign Exchange

Bahrain has no restrictions on the repatriation of profits or capital and no exchange controls. Bahrain’s currency, the Bahraini Dinar (BD), is fully and freely convertible at the fixed rate of USD 1.00 = BD 0.377 (1 BD = USD 2.659). There is no black market or parallel exchange rate. There are no restrictions on converting or transferring funds, regardless of whether they are associated with an investment.

Remittance Policies

The CBB is responsible for regulating remittances, and its regulations are based on the Central Bank Law ratified in 2006. Foreign workers comprise most of the labor force in Bahrain and many remit significant quantities of funds to their countries of origin. Commercial banks and currency exchange houses are licensed to provide remittances services.

Commercial banks and currency exchange houses require two forms of identification before processing a routine remittance request, and any transaction exceeding $10,000 must include a documented source of the income. Bahrain enables foreign investors to remit funds through a legal parallel market, with no limitations on the inflow or outflow of funds for remittances of profits or revenue. The GOB does not engage in currency manipulation tactics.

The GCC is a member of the Financial Action Task Force (FATF). Bahrain is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF) which is headquartered in Bahrain. Participating countries commit to combat the financing of terrorist groups and activities in all its forms and to implement FATF recommendations.

Bahrain established a sovereign wealth fund, Mumtalakat, in 2006. Mumtalakat, which maintains an investment portfolio valued at roughly BD 6.6 billion ($17.6 billion) as of 2020, issues an annual report online. The annual report follows international financial reporting standards and is audited by external auditing firms. By law, subsidiaries of Mumtalakat are audited and monitored by the National Audit Office. In 2020, Mumtalakat received the highest-possible ranking in the Linaburg-Maduell Transparency Index for the seventh consecutive year, which specializes in ranking the transparency of sovereign wealth funds. However, Bahrain’s sovereign wealth fund does not follow the Santiago Principles.

Mumtalakat holds majority stakes in several firms. Mumtalakat invests 62 percent of its funds in the Middle East, 30 percent in Europe, and eight percent in the United States. The fund is diversified across a variety of business sectors including real estate and tourism, financial services, food and agriculture, and industrial manufacturing.

Mumtalakat acts more like an active asset management company than a sovereign wealth fund, including by taking an active role in managing SOEs. Most notably, Mumtalakat has been instrumental in helping Gulf Air, Bahrain’s state-owned airline, restructure and contain losses. A significant portion of Mumtalakat’s portfolio is invested in 29 Bahrain-based SOEs.

Mumtalakat did not directly contribute to the State Budget through 2016. However, beginning in September 2017, Mumtalakat annually contributed $53 million to the State Budget, which was increased to $106 million in the 2021-2022 State Budget.

Capital markets in Bangladesh are still developing, and the financial sector remains highly dependent on bank lending. Current regulatory infrastructure inhibits the development of a tradeable bond market.

Bangladesh is home to the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE), both of which are regulated by the Bangladesh Securities and Exchange Commission (BSEC), a statutory body formed in 1993 and attached to the Ministry of Finance. The DSE market capitalization stood at $64.8 billion at the end of January 2022, rising 16.3 percent year-over-year as stock prices rose amid speculative behavior and increased liquidity due to relaxed monetary policy.

Although the Bangladeshi government has a positive attitude toward foreign portfolio investors, participation in the exchanges remains low due to what is still limited liquidity for shares and the lack of publicly available and reliable company information. The DSE has attracted some foreign portfolio investors to the country’s capital market. However, the volume of foreign investment in Bangladesh remains a small fraction of total market capitalization. As a result, foreign portfolio investment has had limited influence on market trends and Bangladesh’s capital markets have been largely insulated from the volatility of international financial markets. Bangladeshi markets continue to rely primarily on domestic investors.

In 2019, BSEC undertook a number of initiatives to launch derivatives products, allow short selling, and invigorate the bond market. To this end, BSEC introduced three rules: Exchange Traded Derivatives Rules 2019, Short-Sale Rules 2019, and Investment Sukuk Rules 2019. Other recent, notable BSEC initiatives include forming a central clearing and settlement company – the Central Counterparty Bangladesh Limited (CCBL) – and promoting private equity and venture capital firms under the 2015 Alternative Investment Rules. In 2013, BSEC became a full signatory of the International Organization of Securities Commissions (IOSCO) Memorandum of Understanding.

BSEC has taken steps to improve regulatory oversight, including installing a modern surveillance system, the “Instant Market Watch,” providing real time connectivity with exchanges and depository institutions. As a result, the market abuse detection capabilities of BSEC have improved significantly. A mandatory Corporate Governance Code for listed companies was introduced in 2012 but the overall quality of corporate governance remains substandard. Demutualization of both the DSE and CSE was completed in 2013 to separate ownership of the exchanges from trading rights. A majority of the members of the Demutualization Board, including the Chairman, are independent directors. Apart from this, a separate tribunal has been established to resolve capital market-related criminal cases expeditiously. However, both domestic and foreign investor confidence on the stock exchanges’ governance standards remains low.

The Demutualization Act 2013 also directed DSE to pursue a strategic investor who would acquire a 25 percent stake in the bourse. Through a bidding process DSE selected a consortium of the Shenzhen and Shanghai stock exchanges in China as its strategic partner, with the consortium buying the 25 percent share of DSE for taka 9.47 billion ($112.7 million).

According to the International Monetary Fund (IMF), Bangladesh is an Article VIII member and maintains restrictions on the unapproved exchange, conversion, and/or transfer of proceeds of international transactions into non-resident taka-denominated accounts. Since 2015, authorities have relaxed restrictions by allowing some debits of balances in such accounts for outward remittances, but there is currently no established timetable for the complete removal of the restrictions.

The Bangladesh Bank (BB) acts as the central bank of Bangladesh. It was established through the enactment of the Bangladesh Bank Order of 1972. General supervision and strategic direction of the BB has been entrusted to a nine-member Board of Directors, which is headed by the BB Governor. A list of the bank’s departments and branches is on its website: https://www.bb.org.bd/aboutus/dept/depts.php .

According to the BB, four types of banks operate in the formal financial system: State Owned Commercial Banks (SOCBs), Specialized Banks, Private Commercial Banks (PCBs), and Foreign Commercial Banks (FCBs). Some 61 “scheduled” banks in Bangladesh operate under the control and supervision of the central bank as per the Bangladesh Bank Order of 1972. The scheduled banks, include six SOCBs, three specialized government banks established for specific objectives such as agricultural or industrial development or expatriates’ welfare, 43 PCBs, and nine FCBs as of February 2021. The scheduled banks are licensed to operate under the Bank Company Act of 1991 (Amended 2013). There are also five non-scheduled banks in Bangladesh, including Nobel Prize recipient Grameen Bank, established for special and definite objectives and operating under legislation enacted to meet those objectives.

Currently, 34 non-bank financial institutions (FIs) are operating in Bangladesh. They are regulated under the Financial Institution Act, 1993 and controlled by the BB. Of these, two are fully government-owned, one is a subsidiary of a state-owned commercial bank, and the rest are private financial institutions. Major sources of funds for these financial institutions are term deposits (at least three months’ tenure), credit facilities from banks and other financial institutions, and call money, as well as bonds and securitization.

Unlike banks, FIs are prohibited from:

• Issuing checks, pay-orders, or demand drafts.
• Receiving demand deposits.
• Involvement in foreign exchange financing.

Microfinance institutions (MFIs) remain the dominant players in rural financial markets. The Microcredit Regulatory Authority (MRA), the primary regulator of this sector, oversees 746 licensed microfinance institutions as of October 2021, excluding Grameen Bank which is governed under a separate law. In 2020, the MRA-listed microfinance institutions had 33.3 million members while Grameen Bank had an additional 9.3 million members.

The banking sector has had a mixed record of performance over the past several years. Industry experts have reported a rise in risky assets because of poor governance as well as the economic fallout of the COVID-19 pandemic. Total domestic credit stood at 50.4 percent of gross domestic product at end of November 2021. The state-owned Sonali Bank is the largest bank in the country while Islami Bank Bangladesh and Standard Chartered Bangladesh are the largest local private and foreign banks respectively. The gross non-performing loan (NPL) ratio was 8.1 percent at the end of September 2021, down from 8.9 percent in September 2020. However, the decline in the NPLs was primarily caused by regulatory forbearance rather than actual reduction of stressed loans. At 20.1 percent SCBs had the highest NPL ratio, followed by 11.4 percent of Specialized Banks, 5.5 percent of PCBs, and4.1 percent of FCBs as of September 2021.

In 2017, the BB issued a circular warning citizens and financial institutions about the risks associated with cryptocurrencies. The circular noted that using cryptocurrencies may violate existing money laundering and terrorist financing regulations and cautioned users may incur financial losses. The BB issued similar warnings against cryptocurrencies in 2014.

Foreign investors may open temporary bank accounts called Non-Resident Taka Accounts (NRTA) in the proposed company name without prior approval from the BB to receive incoming capital remittances and encashment certificates. Once the proposed company is registered, it can open a new account to transfer capital from the NRTA account. Branch, representative, or liaison offices of foreign companies can open bank accounts to receive initial suspense payments from headquarters without opening NRTA accounts. In 2019, the BB relaxed regulations on the types of bank branches foreigners could use to open NRTAs, removing a previous requirement limiting use of NRTA’s solely to Authorized Dealers (ADs).

In 2015, the Bangladesh Finance Ministry announced it was exploring establishing a sovereign wealth fund in which to invest a portion of Bangladesh’s foreign currency reserves. In 2017, the Cabinet initially approved a $10 billion “Bangladesh Sovereign Wealth Fund,” (BSWF) to be created with funds from excess foreign exchange reserves but the plan was subsequently scrapped by the Finance Ministry.

Barbados has a small stock exchange, an active banking sector, and opportunities for portfolio investment. Local policies seek to facilitate the free flow of financial resources, although some restrictions may be imposed during exceptional periods of low liquidity. The CBB independently raises or lowers interest rates without government intervention. There are a variety of credit instruments in the commercial and public sectors that local and foreign investors may access.

Barbados continues to review legislation in the financial sector to strengthen and improve the regulatory regime and attract and facilitate retention of foreign portfolio investments. The government continues to improve its legal, regulatory, and supervisory frameworks to strengthen the banking system. The Anti-Money Laundering Authority and its operating arm, the government’s Financial Intelligence Unit, review anti-money laundering policy documents and analyze prudential returns.

The Securities Exchange Act of 1982 established the Securities Exchange of Barbados, which was reincorporated as the Barbados Stock Exchange (BSE) in 2001. The BSE operates a two-tier electronic trading system comprised of a regular market and an innovation and growth market (formerly the junior market). Companies applying for listing on the regular market must observe and comply with certain requirements. Specifically, they must have assets of at least $500,000 (1 million Barbados dollars) and adequate working capital based on the last three years of their financial performance, as well as three-year performance projections. Companies must also demonstrate competent management and be incorporated under the laws of Barbados or another regulated jurisdiction approved by the Financial Services Commission. Applications for listing on the innovation and growth market are less onerous, requiring minimum equity of one million shares at a stated minimum value of $100,000 (200,000 Barbados dollars). Reporting and disclosure requirements for all listed companies include interim financial statements and an annual report and questionnaire. Non-nationals must obtain exchange control approval from the CBB to trade securities on the BSE.

The BSE has computerized clearance and settlement of share certificates through the Barbados Central Securities Depository Inc., a wholly owned subsidiary of the BSE. Under the Property Transfer Tax Act, the FSC can accommodate investors requiring a traditional certificate for a small fee. The FSC also regulates mutual funds in accordance with the Mutual Funds Act.

The BSE adheres to rules in accordance with International Organization of Securities Commissions guidelines designed to protect investors; ensure a fair, efficient, and transparent market; and reduce systemic risk. Public companies must file audited financial statements with the BSE no later than 90 days after the close of their financial year. The authorities may impose a fine not exceeding $5,000 (10,000 Barbados dollars) for any person under the jurisdiction of the BSE who contravenes or is not in compliance with any regulatory requirements.

The BSE launched the International Securities Market (ISM) in 2016. It is designed to operate as a separate market, allowing issuers from Barbados and other international markets. To date, the ISM has four listing sponsors.

The BSE collaborates with its regional partners, the Jamaica Stock Exchange and the Trinidad and Tobago Stock Exchange, through shared trading software. The capacity for this inter-exchange connectivity provides a wealth of potential investment opportunities for local and regional investors. The BSE obtained designated recognized stock exchange status from the UK in 2019. It is also a member of the World Federation of Exchanges.

Barbados has accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement and maintains an exchange system free of restrictions on current account transactions.

The government established the CBB in 1972. The CBB manages Barbados’ currency and regulates its domestic banks.

The Barbados Deposit Insurance Corporation (BDIC) provides protection for depositors. Oversight of the entire financial system is conducted by the Financial Oversight Management Committee, which consists of the CBB, the BDIC, and the FSC. The private sector has access to financing on the local market through short-term borrowing and credit, asset financing, project financing, and mortgage financing.

Commercial banks and other deposit-taking institutions set their own interest rates. The CBB requires banks to hold 17.5 percent of their domestic deposits in stipulated securities.

Bitt, a Barbadian company, developed digital currency DCash in partnership with the Eastern Caribbean Central Bank. The first successful DCash retail central bank digital currency consumer-to-merchant transaction took place in Grenada in 2021 following a multi-year development process. The CBB and the FSC established a regulatory sandbox in 2018 where financial technology entities could do live testing of their products and services. This allowed regulators to gain a better understanding of the product or service and to determine what, if any, regulation is necessary to protect consumers. Bitt completed its participation and formally exited the sandbox in 2019. According to Bitt, it has no immediate plans to launch DCash in Barbados and focused first on Barbados’ Eastern Caribbean neighbors. Bitt also offers a digital access exchange, remittance channel, and merchant-processing gateway available via mMoney, a mobile application. In early 2022, the DCash platform crashed for almost two months, raising questions about the initiative’s long-term prospects.

The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S., Canadian, and European banks in recent years due to concerns that the region is high-risk.

Currently, the CBB does not maintain a sovereign wealth fund. In the past, the government announced plans to create a sovereign wealth fund to ensure national wealth is available for present and future generations of Barbados. Barbadians 18 years and older are expected to gain a stake in the fund after it is established. It is envisioned that the fund will hold governmental assets, including on- and offshore real property, revenues from oil and gas products, and non-tangible assets such as trademarks, patents, and intellectual property.

State-owned enterprises (SOEs) in Barbados work in partnership with ministries, or under their remit, and carry out certain ministerial responsibilities. There are 33 SOEs in Barbados operating in areas such as travel and tourism, investment services, broadcasting and media, sanitation services, sports, and culture. Pre-pandemic total net income was estimated at $60 million (120 million Barbados dollars).

SOEs in Barbados are not found in the key areas earmarked for investment. They are all wholly owned government entities. They are headed by boards of directors to which their senior management reports.

As part of the ongoing IMF BERT program, the Government of Barbados is addressing the expenditure position of the SOEs by defining clear objectives for SOE reforms, reducing the wage bill of these entities, and implementing other necessary reform measures.

Barbados does not currently have a targeted privatization program. The government has announced plans for public-private partnerships in airport management and broadcasting services, which will still see the government retaining ownership of these entities. The process remains open to foreign investors and is transparent. More information can be obtained at  http://www.gisbarbados.gov.bb  .

The Belarusian government officially claims to welcome portfolio investment. There have been no reports in 2021 on any impediments to such investment. In 2019 and 2020, Belarus received $500 million and $1.34 billion worth of portfolio investments, respectively. The Belarusian Currency and Stock Exchange is open to foreign investors, but it is still largely undeveloped because the government only allows companies to trade stocks if they meet certain and often burdensome criteria. Private companies must be profitable and have net assets of at least EUR 1 million. In addition, any income from resulting operations is taxed at 24 percent. Finally, the state owns more than 70 percent of all stocks in the country, and the government appears hesitant and unwilling to trade in them freely. Bonds are the predominant financial instrument on Belarus’ corporate securities market.

In 2001, Belarus joined Article VIII of the IMF’s Articles of Agreement, undertaking to refrain from restrictions on payments and transfers under current international transactions. Loans are allocated on market terms and are available to foreign investors. However, the discount rate of 12 percent established in March, 2022 makes credit too expensive for many private businesses, which, unlike many SOEs, do not receive subsidized or reduced-interest loans. Belarus’ National Bank had predicted a rate of 9-10 percent in 2022 but the war in Ukraine, which prompted the fall of the Belarusian ruble against major foreign currencies, combined with a year-on-year inflation rate of 10 percent in January-February forced the National Bank to revise its outlook.

Businesses buy and sell foreign exchange at the Belarusian Currency and Stock Exchange through their banks. Belarus used to require businesses to sell 10-20 percent of foreign currency revenues through the Belarusian Currency and Stock Exchange; however, in late 2018 the National Bank abolished the mandatory sale rule.

The Belarus Affairs Unit at U.S. Embassy Vilnius
Economic Section
telephone: +370 (5) 266-5500;
e-mail:   usembassyminsk@state.gov  

Sanctions imposed by the United States have prohibited any commercial activity with some Belarusian banks, including Dabrabyt Bank and Belinvestbank. Belarusian subsidiaries of sanctioned Russian banks are also under sanctions and include Bel/VEB, VTB Bank Belarus, and Sberbank Belarus. Potential investors should review the Department of Treasury website at https://home.treasury.gov/  for updates as trade restrictions on Belarusian banks continue to develop.

Sanctions introduced by the EU prohibit contact with the National Bank of Belarus and have blocked access to the SWIFT secure messaging system for a number of banks, including Dabrabyt Bank, the Development Bank of Belarus, and Belagroprombank. Potential investors should review the website of the European Commission for updates and further details at https://ec.europa.eu/info/index_en .

Belarus has a central banking system led by the National Bank of the Republic of Belarus, which represents the interest of the state and is the main regulator of the country’s banking system. The president of Belarus appoints the chair and members of the Board of the National Bank, designates auditing organizations to examine its activities, and approves its annual report. Although the National Bank officially operates independently from the government, there is a history of government interference in monetary and exchange rate policies.

In February 2021, the banking system of Belarus included 23 commercial banks and three non-banking credit and finance organizations. According to the National Bank, the share of non-performing loans in the banking sector was 5.3 percent as of January 1, 2022. At the beginning of 2022, the country’s six largest commercial banks of systemic importance, all of which have some government share, accounted for 85 percent of the approximately 92.3 billion Belarusian rubles in total assets across the country’s banking sector. There are five representative offices of foreign banks in Belarus, with China’s Development Bank opening most recently in 2018. Regular banking services are widely available to customers regardless of national origin.

Belarusian law does not allow foreign banks to establish branches in Belarus. Subsidiaries of foreign banks are allowed to operate in Belarus and are subject to prudential measures and other regulations like any Belarusian bank. The U.S. Embassy is not aware of Belarus losing any correspondent banking relationships in the past three years. Foreign nationals are allowed to establish a bank account in Belarus without establishing residency status.

According to the IMF, Belarus’ state-dominated financial sector faces deep domestic structural problems and external sector challenges. Domestic structural problems include heavy state involvement in the banking and corporate sector, the lack of hard budget constraints for SOEs given state support, and high dollarization. Externally, Belarus’ economy remains exposed to spillovers from the Russian economy and Belarus’ foreign currency reserves offer a limited buffer to potential external shocks. The banking sector remains vulnerable to external shocks, given the high level of dollarization and the exposure to government and SOE debt. In March 2022, S&P, Fitch, and Moody’s ratings services all downgraded Belarus’ debt rating to CCC or Ca “highly vulnerable to defaults.”

Belarus does not have a Sovereign Wealth Fund. The GOB manages the State Budget Fund of National Development, which supports major economic and social projects in the country.

Although SOEs are outnumbered by private businesses, SOEs dominate the economy in terms of value. According to the Belarusian ministry of taxes and duties, the share of small and medium-sized private enterprises in the revenues of the country’s consolidated budget was 35 percent in 2021, the same as in 2020. Belarus does not consider joint stock companies, even those with 100 percent government ownership of the stocks, to be state-owned and generally refers to them as part of the non-state sector, rendering official government statistics regarding the role of SOEs in the economy misleading. According to media reports, SOEs receive preferential access to government contracts, subsidized credits, and debt forgiveness. While SOEs are generally subject to the same tax burden and tax rebate policies as their private sector competitors, private enterprises do not have the same preferential access to land and raw materials. Since Belarus is not a WTO member, it is not a party to the Government Procurement Agreement (GPA).

The GOB officially claims to welcome “strategic investors,” including foreign investors, and says that any state-owned or state-controlled enterprise can be privatized. However, Belarus’ privatization program is extremely limited in practice as the government only sells enterprises which operate at a loss and in which the state holds a minority share of less than 25 percent. Lukashenka has expressed skepticism of privatization and during the All-Belarusian People’s Assembly in February 2021 claimed privatization in Belarus was only in the interests of his political opposition.

Notably, in April 2020, the government sold its controlling share in Belarus’ fifteenth-largest bank, Paritetbank. Otherwise, there was no privatization of state-controlled companies from 2018 to 2020.

The State Property Committee occasionally organizes and holds privatization auctions. Many of the auctions organized by the State Property Committee have low demand as the government often places strict requirements on privitizations, including preserving or creating jobs, continuing in the same line of work or production, or launching a successful business project within a limited timeframe.

In 2016, Belarusian joint stocks were allowed trans-border placement via issuing depositary receipts, but to date this instrument of attracting investments has not been used in Belarus.

Belgium has policies in place to facilitate the free flow of financial resources. Credit is allocated at market rates and is available to foreign and domestic investors without discrimination. Belgium is fully served by the international banking community and is implementing all relevant EU financial directives.

Bruges established the world’s first stock market almost 600 years ago, and the Belgian stock exchange is well-established today. On Euronext, a company may increase its capital either by capitalizing reserves or by issuing new shares. An increase in capital requires a legal registration procedure, and new shares may be offered either to the public or to existing shareholders. A public notice is not required if the offer is to existing shareholders, who may subscribe to the new shares directly. An issue of bonds to the public is subject to the same requirements as a public issue of shares: the company’s capital must be entirely paid up, and existing shareholders must be given preferential subscription rights.

In 2016, the Belgian government passed legislation to improve entrepreneurial financing through crowdfunding and more flexible capital venture rules.

Because the Belgian economy is directed toward international trade, more than half of its banking activities involve foreign countries. Belgium’s major banks are represented in the financial and commercial centers of dozens of countries by subsidiaries, branch offices, and representative offices. The country does have a central bank, the National Bank of Belgium (NBB), whose governor is also a member of the Governing Council of the European Central Bank (ECB).  Being a Eurozone member state, the NBB is part of the Euro system, meaning that it has transferred the sovereignty over monetary policy to the ECB.

Since 2017, the supervision of systemically important Belgian banks lies with the ECB. The country has not lost any correspondent banking relationships in the past three years, nor are there any correspondent banking relationships currently in jeopardy. The Belgian non-performing Loan Ratio stood at 0.7% in 2021. Total bank assets amount to about 90% of GDP.

Opening a bank account in the country is linked to residency status.  The U.S. FATCA (Foreign Account Tax Compliance Act) requires Belgian banks to report information on U.S. account holders directly to the Belgian tax authorities, who then release the information to the IRS.  Belgium implemented a basic banking service law in 2021 which aims to give entrepreneurs otherwise unable to open a bank account the right to do so. For example, companies that have been refused the ability to open a bank account by three credit institutions are entitled to a basic banking service. According to the law, a basic banking service room – administered by the government – will confirm evidence of three refusals, and designate a credit institution in Belgium that must offer the basic banking service to the company.  Even though the law is still not fully implemented, authorities anticipate nationwide implementation in 2022.

Belgium has a sovereign wealth fund (SWF) in the form of the Federal Holding and Investment Company (FPIM-SFPI), a quasi-independent entity created in 2006 and now mainly used as a vehicle to manage the banking assets which were taken on board during the 2008 banking crisis. The SWF has a board whose members reflect the composition of the governing coalition and are regularly audited by the “Cour des Comptes” or national auditor. At the end of 2020, its total assets amounted to €1.96 billion. Most of the funds are invested domestically. Its role is to allow public entities to recoup their investments and support Belgian banks. The SWF is required by law to publish an annual report and is subject to the same domestic and international accounting standards and rules. The SWF routinely fulfills all legal obligations. However, it is not a member of the International Forum of Sovereign Wealth Funds.

Belgium has around 80,000 employees working in SOEs, mainly in the railways, telecoms and general utility sectors. There are also several regional-owned enterprises where the regions often have a controlling majority.  Private enterprises are allowed to compete with SOEs under the same terms and conditions, but since the EU started to liberalize network industries such as electricity, gas, water, telecoms and railways, there have been regular complaints in Belgium about unfair competition from the former state monopolists. Complaints have ranged from lower salaries (railways) to lower VAT rates (gas and electricity) to regulators with a conflict of interest (telecom). Although these complaints have now largely subsided, many of these former monopolies are now market leaders in their sector, due mainly to their ability to charge high access costs to legacy networks that were fully amortized years ago.

Belgium currently has no scheduled privatizations. There are no indications that foreign investors would be excluded from eventual privatizations.

Belize’s financial system is small with little to no foreign portfolio investment transactions.  It does not have a stock exchange and capital market operations are rudimentary.  In 2021, Belize passed the Securities Industry Act for the modernization of the laws on securities and capital markets. The Central Bank of Belize must approve capital transactions, such as the purchase and sale of land, company shares, financial assets, and other investments that the transfer of assets between foreign and local entities. The Central Bank advised that, effective April 2022, it would only accept electronic applications for the approval of portfolio and capital investments and land transfers.

Belize accepted the obligations of Article VIII, and the exchange regime is free of restrictions or multiple currency practices.

Credit is made available on market terms with interest rates largely set by prevailing local market conditions within the commercial banks.  The credit instruments accessible to the private sector include loans, overdrafts, lines of credit, credit cards, and bank guarantees.  Foreign investors can access credit on the local market.  Under the International Banking Act, foreign investors/nonresidents may access credit from international banks registered and licensed in Belize. However, permission to access credit from the domestic banks requires Central Bank approval. The Belize Development Finance Corporation (DFC), a state-owned development bank, offers loan financing services in various sectors.  To qualify for a loan from DFC, an individual must be a Belizean resident or citizen, while a company must be majority 51 percent Belizean owned.  The National Bank of Belize is a state-owned bank that provides concessionary credit primarily to public officers, teachers, and low-income Belizeans.

A financial inclusion survey undertaken by the Central Bank of Belize in 2019 showed that approximately 65.5 percent of adult Belizeans had access to a financial account. In response, the banking sector has begun introducing digital wallet solutions to reach “unbanked” segments of the population.

Belize’s financial system remains underdeveloped with a banking sector that may be characterized as stable but fragile. International reserves increased from US $348 million (3.8 months of imports) in 2020 to US $420 million (3.9 months of imports) in 2021, partly due to the IMF’s Special Drawing Rights (SDR) 25.6 million allocation, which Belizean authorities are keeping as reserve.

Regulatory capital is still well above minimum requirements, while the gross non-performing loan (NPL) ratio at the end of February 2022 stood at 5.58 percent of loans. However, the Central Bank is reviewing domestic banks and credit unions self-assessments as the expired forbearance measures from 2020 could represent a risk as a fraction of their loan portfolio could turn into NPLs.

The Central Bank of Belize (CBB) ( https://www.centralbank.org.bz ) is responsible for formulating and implementing monetary policy focusing on the stability of the exchange rate and economic growth.

Generally, there are no restrictions on foreigners opening bank accounts in Belize. Regulations differ based on residency status and whether the individual is seeking to establish a local bank account or a foreign currency account.   Foreign banks and branches are allowed to operate in the country with all banks subject to Central Bank measures and regulations.

Since January 2020 to present, a domestic bank and an international bank each lost a correspondent bank. Belize’s financial system comprises five domestic banks, three international banks, and ten credit unions. Correspondent banks discontinued offered correspondent banking relationships (CBR) to Scotiabank (Belize) Limited following the acquisition of the Scotiabank (Belize) Limited by the Caribbean International Holdings Limited. As of February 2022, the estimated total assets of the country’s largest bank were US $1.09 billion.

In the last few years, Belize continues reforms to strengthen the anti-money laundering and counterterrorism-financing regime, including conducting an interagency national money laundering and terrorist financing (ML/TF) risk assessment.

Belize does not have a sovereign wealth fund.

State Owned Enterprises (SOEs) exist largely in the utilities sectors, generally as a result of nationalization.  The government is the majority shareholder in the Belize Water Services Limited, the country’s sole provider of water services, the Belize Electricity Limited, the sole distributor of electricity, and the Belize Telemedia Limited, the largest telecommunications provider in the country. The Public Utilities Commission regulates all utilities.

SOEs usually select senior government officials, members of local business bureaus and chambers of commerce, labor organizations, and quasi-governmental agencies to staff these companies’ boards of directors.  The board serves to direct policy and shape business decisions of the ostensibly independent SOE.  Current and previous administrations have been accused of nepotism and cronyism and criticized for having conflicts of interest when board members or directors are also represented in organizations that do business with the SOEs.

There is no published list of SOEs.  The following are the major SOEs operating in the country.  Information relating to their operations is available on their websites:  Belize Electricity Limited http://www.bel.com.bz ; Belize Telemedia Limited at https://www.livedigi.com ;  Belize Water Services Limited http://www.bws.bz 

There is no public third-party market analysis that evaluate whether SOEs receive non-market advantages by the government.  The Belize Electricity Limited and the Belize Water Services Limited are the only service providers in their respective sectors.  The Belize Telemedia Limited, on the other hand, competes with one other provider for mobile connectivity and there are multiple players that provide internet and data services.  U.S. firms have identified challenges in participating and competing in areas related to the bidding, procurement and dispute settlement processes, particular to SOEs.

The Government of Belize does not currently have a privatization program.

Government policy supports free financial markets, subject to oversight by the Ministry of Economy and Finance and the Central Bank of West African States (BCEAO). Foreign investors may seek credit from Benin’s private financial institutions and the WAEMU Regional Stock Exchange (Bureau Regional des Valeurs Mobilieres – BRVM) headquartered in Abidjan, Cote d’Ivoire, with local branches in each WAEMU member country. There are no restrictions for foreign investors to establish a bank account in Benin and obtain loans on the local market. However, proof of residency or evidence of company registration is required to open a bank account.

The banking sector is generally reliable. Twelve private commercial banks operate in Benin in addition to the BCEAO; planning is under way to open a subsidiary of the African Development Bank. Taking into account microfinance institutions, roughly 31.2 percent of the population had access to banking services in 2020, the latest year for which data is available. In recent years, non-performing loans have been growing; 15 percent of total banking sector assets are estimated to be non-performing. The BCEAO regulates Beninese banks. Foreign banks are required to obtain a banking license before operating branches in Benin. They are subject to the same prudential regulations as local or regional banks. Benin has lost no correspondent banking relationships during the last three years. There is no known current correspondent banking relationship in jeopardy. Foreigners are required to present proof of residency to open bank accounts.

Benin does not maintain a sovereign wealth fund.

The government’s general attitude toward foreign portfolio investment is neutral.  Established Bolivian firms may issue short or medium-term debt in local capital markets, which act primarily as secondary markets for fixed-return securities.  Bolivian capital markets have sought to expand their handling of local corporate bond issues and equity instruments.  Over the last few years, several Bolivian companies and some foreign firms have been able to raise funds through local capital markets.  However, the stock exchange is small and is highly concentrated in bonds and debt instruments (more than 95 percent of transactions).  The number of total transactions in 2021 was around 28 percent of GDP.

From 2008-2019, the financial markets experienced high liquidity, which led to historically low interest rates.  However, liquidity has been more limited in recent years, and there are some pressures to increase interest rates.  The Bolivian financial system is not well integrated with the international system and there is only one foreign bank among the top ten banks of Bolivia.

In October 2012, Bolivia returned to global credit markets for the first time in nearly a century.  In 2017, Bolivia sold USD 1 billion at 4.5 percent for ten years, with U.S. financial institutions managing the deal.  The resources gained from the sales were largely used to finance infrastructure projects. A sovereign bond issuance of up to $2 billion was approved by the National Assembly for 2022 but had not yet occurred as of April 2022. The Bolivian government’s attempt to refinance $2 billion in sovereign debt in February 2022 fell short, with only $850 million sold. The government had also hoped the new issuance would be for a 10-year term but had to settle for eight years (a 2030 maturity) for all the resold bonds. The interest rate for the new bonds is 7.5%, compared to interest rates of approximately 5% for the original bonds.

The government and central bank respect their obligations under IMF Article VIII, as the exchange system is free of restrictions on payments and transfers for international transactions.

Foreign investors legally established in Bolivia can get credits on the local market.  However, due to the size of the market, large credits are rare and may require operations involving several banks.  Credit access through other financial instruments is limited to bond issuances in the capital market.  The 2013 Financial Services Law directs credit towards the productive sectors and caps interest rates.

The Bolivian banking system is small, composed of 16 consumer banks, six banks specialized in mortgage lending, three private financial funds, 30 savings and credit cooperatives, and eight institutions specialized in microcredit.  Of the total number of personal deposits made in Bolivia through December 2021 (USD 30 billion), the banking sector accounted for 80 percent of the total financial system.  Similarly, of the total loans and credits made to private individuals (USD 29 billion) through December 2021, 80 percent were made by the banking sector, while private financial funds and the savings and credit cooperatives accounted for the other 20 percent.

Bolivian banks have developed the capacity to adjudicate credit risk and evaluate expected rates of return in line with international norms.  The banking sector was stable and healthy with delinquency rates at 1.6 percent in 2021. In 2021, delinquency rates rose after the government permitted clients to defer bank loan payments until June 2021 and to reprogram their debt through 2022 without penalty as a mitigating measure for the COVID-19 pandemic. While delinquency rates remain relatively low, there are concerns this measure could potentially harm the banking sector’s stability.

In 2013, a new Financial Services Law entered into force.  This new law enacted major changes to the banking sector, including deposit rate floors and lending rate ceilings, mandatory lending allocations to certain sectors of the economy and an upgrade of banks’ solvency requirements in line with the international Basel standards.  The law also requires banks to spend more on improving consumer protection, as well as providing increased access to financing in rural parts of the country.

Credit is now allocated on government-established rates for productive activities, but foreign investors may find it difficult to qualify for loans from local banks due to the requirement that domestic loans be issued exclusively against domestic collateral.  Since commercial credit is generally extended on a short-term basis, most foreign investors prefer to obtain credit abroad.  Most Bolivian borrowers are small- and medium-sized enterprises (SMEs).

In 2007, the government created a Productive Development Bank to boost the production of small, medium-sized, and family-run businesses.  The bank was created to provide loans to credit institutions which meet specific development conditions and goals, for example by giving out loans to farmers, small businesses, and other development focused investors.  The loans are long term and have lower interest rates than private banks can offer to allow for growth of investments and poverty reduction.

In September 2010, the Bolivian government bought the local private bank Banco Union as part of a plan to gain partial control of the financial sector.  Banco Union is one of the largest banks, with a share of 10.8 percent of total national credits and 12.7 percent of the total deposits; one of its principal activities is managing public sector accounts.  Bolivian government ownership of Banco Union was illegal until December 2012, when the government enacted the State Bank Law, allowing for state participation in the banking sector.

There is no strong evidence of “cross-shareholding” and “stable-shareholding” arrangements used by private firms to restrict foreign investment, and the 2009 Constitution forbids monopolies and supports antitrust measures.  In addition, there is no evidence of hostile takeovers (other than government nationalizations that took place from 2006-14).

The financial sector is regulated by ASFI (Supervising Authority of Financial Institutions), a decentralized institution that is under the Ministry of Economy.  The Central Bank of Bolivia (BCB) oversees all financial institutions, provides liquidity when necessary, and acts as lender of last resort.  The BCB is the only monetary authority and oversees managing the payment system, international reserves, and the exchange rate.

Foreigners can establish bank accounts only with residency status in Bolivia.

Blockchain technologies in Bolivia are still in the early stages.  Currently, the banking sector is analyzing blockchain technologies and the sector intends to propose a regulatory framework in coordination with ASFI in the future.

Three different settlement mechanisms are available in Bolivia: (1) the high-value payment system administered by the Central Bank for inter-bank operations; (2) a system of low value payments utilizing checks and credit and debit cards administered by the local association of private banks (ASOBAN); and (3) the deferred settlement payment system designed for small financial institutions such as credit cooperatives.  This mechanism is also administered by the Central Bank.

Neither the Bolivian government nor any government-affiliated entity maintains a sovereign wealth fund.

The Bolivian government has set up companies in sectors it considers strategic to the national interest and social well-being. It has also stated that it plans to do so in every sector it considers strategic or where there is either a monopoly or oligopoly.

The Bolivian government owns and operates more than 60 businesses, including energy and mining companies, a telecommunications company, a satellite company, a bank, a sugar factory, an airline, a packaging plant, paper and cardboard factories, and milk and Brazil nut processing factories, among others.  In 2005, income from SOEs in Bolivia other than gas exports represented only a fraction of a percent of GDP.  As of 2019, public sector contribution to GDP (including SOEs, investments, and consumption of goods and services) has risen to over 40 percent of GDP.

The largest SOEs can acquire credit from the Central Bank at very low interest rates and convenient terms.  Some private companies complain that it is impossible for them to compete with this financial subsidy.  Moreover, SOEs appear to benefit from easier access to licenses, supplies, materials, and land; however, there is no law specifically providing SOEs with preferential treatment in this regard.  In many cases, government entities are directed to do business with SOEs, placing other private companies and investors at a competitive disadvantage.

The government registered budget surpluses from 2006 until 2013 but began experiencing budget deficits in 2014. The 2009 Constitution requires all SOEs to publish an annual report and makes them subject to financial audits.  Additionally, SOEs are required to present an annual testimony in front of civil society and social movements, a practice known as social control.

There are currently no privatization programs in Bolivia.

Capital markets remain underdeveloped in BiH. Both entities have created their own modern stock market infrastructure with separate stock exchanges in Sarajevo (SASE) and Banja Luka (BLSE), both of which started trading in 2002. The small size of the markets, lack of privatization, weak shareholder protection, and public mistrust of previous privatization programs has impeded the development of the capital market.

Both the RS and Federation issued government securities for the first time during 2011, as part of their plans to raise capital in support of their budget deficits during this period of economic stress. Both entity governments continue to issue government securities in order to fill budget gaps. These securities are also available for secondary market trading on the stock exchanges.

In February 2022, the international rating agency Standard and Poor’s (S&P) affirmed the credit rating of Bosnia and Herzegovina as “B” with a stable outlook. The agency stated that “the stable outlook balances the risks stemming from BiH’s complex and confrontational political dynamics over the next 12 months against some comparatively strong economic fundamentals, such as contained net general government debt, an improving external position, and a resilient banking sector. The outlook is based on the expectation that the ongoing political crisis between RS on one side and the Federation of Bosnia and Herzegovina (FBiH) and the central government on the other will ultimately deescalate, with RS remaining in BiH on largely the same terms as previously. The ratings on BiH are supported by the modest level and favorable structure of public debt.”

The banking and financial system has been stable with the most significant investments coming from Austria.  As of March 2022, there are 20 commercial banks operating in BiH: 13 with headquarters in the Federation and 7 in the Republika Srpska.  Twenty-one commercial banks are members of a deposit insurance program, which provides for deposit insurance of KM 50,000 (USD 28,000). The banking sector is divided between the two entities, with entity banking agencies responsible for banking supervision. The BiH Central Bank maintains monetary stability through its currency board arrangement and supports and maintains payment and settlement systems. It also coordinates the activities of the entity Banking Agencies, which are in charge of bank licensing and supervision. Reforms of the banking sector, mandated by the IMF and performed in conjunction with the IMF and World Bank, are in progress.

BiH passed a state-level framework law in 2010 mandating the use of international accounting standards, and both entities passed legislation that eliminated differences in standards between the entities and Brčko District.  All governments have implemented accounting practices that are fully in line with international norms.

BiH does not have a government-affiliated Sovereign Wealth Fund.

In BiH, subnational governments (the two entities and ten cantons) own the vast majority of government-owned companies. Private enterprises can compete with state-owned enterprises (SOEs) under the same terms and conditions with respect to market share, products/services, and incentives. In practice, however, SOEs have the advantage over private enterprises, especially in sectors such as telecommunications and electricity, where government-owned enterprises have traditionally held near-monopolies and are able to influence regulators and courts in their favor. Generally, government-owned companies are controlled by political parties, increasing the possibilities for corruption and inefficient company management. With the exception of SOEs in the telecom, electricity, and defense sectors, many of the remaining public companies are bankrupt or on the verge of insolvency, and represent a growing liability to the government.

The country is not party to the Government Procurement Agreement within the framework of the WTO.

There have been no significant privatizations in the past few years. Privatization offerings are scarce and often require unfavorable terms. Some formerly successful state-owned enterprises have accrued significant debts from unpaid health and pension contributions, and potential investors are required to assume these debts and maintain the existing workforce. Under the state-level FDI Law, foreign investors may bid on privatization tenders. International financial organizations, such as the European Bank for Reconstruction and Development (EBRD), are seeking to be engaged on privatization and restructuring efforts across the remaining portfolio of state owned enterprises. Historically, the privatization process in BiH has resulted in economic loss due to corruption. Since 1999 more than 1,000 companies have been fully privatized, while around 100 have been partially privatized. Some privatizations led to the loss of value of state property and many of the privatized companies were weakened or ruined in the privatization process. The history of corrupt privatizations has raised concerns that further privatization would only lead to additional unemployment and the enrichment of a few politically-connected individuals. Successful privatizations and restructurings that improve service delivery, business productivity, and employment would be very beneficial for the BiH economy, could help the image of privatization, and would build support for a long overdue shift away from a government-led economy.

The Federation government is focused on privatizing or restructuring some SOEs based on the Federation Agency for Privatization’s 2019 privatization plan. The privatization plan includes the fuel retailer Energopetrol dd. Sarajevo, the engineering company Energoinvest, and the insurer Sarajevo-Osiguranje. The remaining companies listed in the privatization plan have posted losses and suffered significant declines in their value, while others have only a small amount of government ownership. The Federation government rejected media speculation that it plans to privatize the two majority entity government-owned telecom companies, BH Telecom (90 percent stake) and HT Mostar (50.1 percent stake). At the same time, it has completed due diligence on the two telecom companies as part of its arrangement with the IMF.

The privatization process in the RS is carried out by the RS Investment Development Bank (IRBRS). Many prospective companies have been already privatized, and out of 163 not yet privatized companies, many are being liquidated or undergoing bankruptcy. In 2016, the RS government announced plans to sell its capital in 22 companies but the plan has not been implemented. The plan envisions the privatizations to take place via the sale of government shares on the stock exchange. Although the RS National Assembly passed a decision that the entity has no plans to privatize the energy sector, the RS government maintains the possibility of joint ventures in the energy sector.

The government encourages foreign portfolio investment, although there are limits on foreign ownership in certain sectors.  It also embraces the establishment of new and diverse financial institutions to support increased foreign and domestic investment and to fill existing gaps where finance is not commercially available.  There are nine commercial banks, one merchant bank, one offshore bank, three statutory deposit-taking institutions, and one credit union operating in Botswana.  All have corresponding relationships with U.S. banks.  Additional financial institutions include various pension funds, insurance companies, microfinance institutions, stock brokerage companies, asset management companies, statutory finance institutions, collective investment undertakings, and statutory funds.  Historically, commercial banks have accounted for 93.7 percent of total deposits and 93.5 percent of total loans in Botswana.  Access to banking services measured by the number of depositors on adult population improved from 72 percent in 2019 to 76.6 percent in 2020.  Additionally, banks introduced new products and services that included enhancement of transactional accounts, introduction of cross border payment services, collaborative arrangements with money-transfer service providers to widen the financial inclusion efforts for the unbanked population.

The central bank, the Bank of Botswana, acts as banker and financial advisor to the GoB and is responsible for the management of the country’s foreign exchange reserves, the administration of monetary and exchange rate policies, and the regulation and supervision of financial institutions in the country.  Monetary policy in Botswana is widely regarded as prudent, and the GoB has historically managed to maintain a sensible exchange rate and a stable inflation rate, generally within the target of three to six percent.  But the COVID-19 pandemic pushed inflation to new heights, reaching 10.6 percent in January and February 2022, the highest level on record in over a decade.

Banks may lend to non-resident-controlled companies without seeking approval from the Bank of Botswana.  Foreign investors usually enjoy better access to credit than local firms do.  In July 2014, USAID’s Development Credit Authority (now DFC – U.S. International Development Finance Corporation), in collaboration with ABSA (formerly Barclays Bank of Botswana), implemented a seven-year program to allow small and medium-sized enterprises (SME) to access up to US$ 15 million in loans in an effort to diversify the economy.  So far, the program that was initially scheduled to come to an end in June 2021 is at 83 percent utilization and has been extended to July 2024. To date ABSA has disbursed US$ 12.5 million and has up to June 2023 to disburse the remaining US$ 2.5 million.

At the end of 2020, there were 24 companies on the Domestic Board and eight companies on the Foreign Equities Board of the Botswana Stock Exchange (BSE).  In addition, there were 46 listed bonds and three exchange traded funds listed on the Exchange.  The Domestic Company Index (DCI) declined by 8.2 percent in 2020, while it declined by 4.6 percent in 2019, reflecting how the pandemic affected the economy.  According to the BSE 2020 Annual Report, all sectors in the domestic equity board experienced a decline which contributed a negative 8.4 percent points to the DCI’s depreciation of 8.2 percent except for one sector, Retail & Wholesale.  The total market capitalization for listed companies at year-end 2020 was US$ 33.5 billion, with domestic companies’ capitalization standing at US$ 3 billion while foreign companies’ capitalization stood at US$ 30.5 billion.  The Mining and Minerals sector continued to dominate the foreign equity board as it contributed 94.7 percent of the foreign companies’ market capitalization in 2020 and contributed 0.97 percentage points to the Foreign Company Index (FCI) depreciation of 1 percent.  The BSE is still highly illiquid compared to larger African markets and is dominated by mining companies which adds to index volatility.  Laws prohibiting insider trading and securities fraud are clearly stipulated under Section 35 – 37 of the Securities Act, 2014 and charges for contravening these laws are listed under Section 54 of the same Act.

The government has legitimized offshore capital investments and allows foreign investors, individuals and corporate bodies, and companies incorporated in Botswana, to open foreign currency accounts in specified currencies.  The designated currencies are U.S. Dollar, British Pound sterling, Euro, and the South African Rand.  There are no known practices by private firms to restrict foreign investment participation or control in domestic enterprises.  Private firms are not permitted to adopt articles of incorporation or association which limit or prohibit foreign investment, participation, or control.

In general, Botswana exercises careful control over credit expansion, the pula exchange rate, interest rates, and foreign and domestic borrowing.  Banking legislation is largely in line with industry norms for regulation, supervision, and payments.  However, Botswana failed to meet the compliance requirements of the Financial Action Task Force (FATF), resulting in a grey listing in October 2018.  Botswana worked to implement the necessary regulatory legislations to address the identified technical compliance deficiencies and was subsequently removed from the FATF grey list in October 2021, and then in February 2022, removed from the EU blacklist of high risk third countries with regard to AML/CFT.  The government continues to work on its regulatory environment to avoid falling back into the grey list.   The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) was established in 2008 and provides regulatory oversight for the non-banking sector.  It extends know-your-customer practices to non-banking financial institutions to help deter money laundering and terrorist financing. NBFIRA is also responsible for regulating the International Financial Services Centre, a hub charged with promoting the financial services industry in Botswana.

The Bank of Botswana maintains a long-term sovereign wealth fund, known as the Pula Fund, in addition to a regular foreign reserve account providing basic import cover.  The Pula Fund was established under the Bank of Botswana Act and forms part of the country’s foreign exchange reserves, which are primarily funded by diamond revenues.  The Pula Fund is wholly invested in foreign currency-denominated assets and is managed by the Bank of Botswana Board with input from recognized international financial management and investment firms.  All realized market and currency gains, or losses are reported in the Bank of Botswana’s income statement.  The Fund has been affected severely by the COVID-19 pandemic, with the GoB making withdrawals to address significant COVID-19-related revenue shortfalls.  As a result, the Pula Fund, which provides long fiscal cushion against economic shocks, is significantly depleted from 20 percent of GDP in 2011 to seven percent of GDP as of mid-2020 – from $1.69 billion to $510 million – a decline of more than 70 percent.  Botswana is a founding member of the International Forum of Sovereign Wealth Fund and was one of the architects of the Santiago Principles in 2008.  More information is available at: https://www.bankofbotswana.bw/sites/default/files/BOTSWANA-PULA-FUND-SANTIAGO-PRINCIPLES.pdf

State-owned enterprises (SOEs), known as “parastatals,” are majority or 100 percent owned by the GoB.  There is a published list of SOEs at the GoB portal ( www.gov.bw ), with profiles of financial and development SOEs.  Some SOEs are state-sanctioned monopolies, including the Botswana Meat Commission, the Water Utilities Corporation, Botswana Railways, and the Botswana Power Corporation.

The same business registration and licensing laws govern private and government-owned enterprises.  No law or regulation prohibits or restricts private enterprises from competing with SOEs.  Botswana law requires SOEs to publish annual reports, and private sector accountants or the Auditor General audits SOEs depending on how they are constituted.  GoB ministries together with their respective SOEs are compelled on an annual basis to appear before the Parliamentary Public Accounts Committee to provide reports and answer questions regarding their performance.  Some SOEs are not performing well and have been embroiled in scandals involving alleged fraud and mismanagement. Botswana is not party to the Government Procurement Agreement within the framework of the WTO.

The GOB has committed to privatization on paper.  It established a task force in 1997 to privatize all its state-owned companies and formed a Public Enterprises Evaluation and Privatization Agency (PEEPA) to oversee this process.  Implementation of its privatization commitments has been limited to the January 2016 sale offer of 49 percent of the stock of the state-owned Botswana Telecommunications Corporation to Botswana citizens only.  In February 2017, the GoB issued an Expressions of Interest for the privatization of its national airline, but progress stopped due to the decision to re-fleet the airline before privatization.  In 2019, President Masisi announced the Botswana Meat Commission would be placed in the hands of a private management company prior to privatization, but this has yet to occur.  Conversely, the GoB has created new SOEs such as the Okavango Diamond Company, the Mineral Development Company, and Botswana Oil Limited in recent years.   A Rationalization Strategy covering all parastatals has been developed and its implementation will address issues such as duplication of activities, overlapping mandates and issues of corporate governance.  This may finally result in some SOEs being privatized or merged while some may be closed.

The Brazil Central Bank (BCB) in October 2016 implemented a sustained monetary easing cycle, lowering the Special Settlement and Custody System (Selic) baseline reference rate from a high of 14 percent in October 2016 to a record-low 2 percent by the end of 2020. The downward trend was reversed by an increase to 2.75 percent in March 2021 and reached 10.75 percent in February 2022. Brazil’s banking sector projects that the Selic will reach 12.25 percent by the end of 2022. Inflation for 2021 ended at an annualized 10.06 percent, above the target of 4 percent plus/minus 1.5 percent. The BCB’s Monetary Policy Committee (COPOM) set the BCB’s inflation target at 3.5 percent for 2022 and .25 percent in 2023 (plus/minus 1.5 percent), but as of February 2022 the BCB estimates that inflation will reach 5.4 percent in 2022, above the target again. As of mid-March 2022, Brazil’s annual inflation rate is at 10.75 percent. Brazil’s muddled fiscal policy and heavy public debt burden factor into most analysts’ forecasts that the “neutral” policy rate will remain higher than target rates among Brazil’s emerging-market peers (around five percent) over the reporting period.

According to the BCB, in 2021 the ratio of public debt to GDP reached 81.1 percent, compared to a record 89.4 percent in 2020. Analysts project that the debt/GDP ratio may rise to around 85 percent by the end of 2023.

The role of the state in credit markets grew steadily beginning in 2008, but showed a reduction in 2020 due to the pandemic. As of January 2022, public banks accounted for about 50 percent of total loans to the private sector (compared to 48.9 percent in 2018). Directed lending (that is, to meet mandated sectoral targets) also rose, and accounts for almost half of total lending. Brazil is paring back public bank lending and trying to expand a market for long-term private capital.

While local private sector banks are beginning to offer longer credit terms, state-owned development bank BNDES is a traditional source of long-term credit in Brazil. BNDES also offers export financing. Approvals of new financing by BNDES decreased 4 percent in 2021 from 2020, with the infrastructure sector receiving the majority of new capital.

The sole stock market in Brazil is B3 (Brasil, Bolsa, Balcão), created through the 2008 merger of the São Paulo Stock Exchange (Bovespa) with the Brazilian Mercantile & Futures Exchange (BM&F), forming the fourth-largest exchange in the Western hemisphere, after the NYSE, NASDAQ, and Canadian TSX Group exchanges. In 2020, there were 463 companies traded on the B3 exchange. The B3’s broadest index, the Ibovespa, decreased 11.93 percent in valuation during 2021, due to economic uncertainties related to rising and persistent inflation, particularly in the second half of the year. Foreign investors, both institutional and individuals, can directly invest in equities, securities, and derivatives; however, they are limited to trading those investments only on established markets.

Wholly-owned subsidiaries of multinational accounting firms, including the major U.S. firms, are present in Brazil. Auditors are personally liable for the accuracy of accounting statements prepared for banks.

The Brazilian financial sector is large and sophisticated. Banks lend at market rates that remain relatively high compared to other emerging economies. Reasons cited by industry observers include high taxation, repayment risk, concern over inconsistent judicial enforcement of contracts, high mandatory reserve requirements, and administrative overhead, as well as persistently high real (net of inflation) interest rates. According to BCB data collected for 2020, the average rate offered by Brazilian banks to non-financial corporations was 11.7 percent.

The banking sector in Brazil is highly concentrated, with BCB data indicating that the five largest commercial banks (excluding brokerages) account for approximately 82 percent of the commercial banking credit market totaling $800 billion by the end of 2020. Three of the five largest banks by assets in the country, Banco do Brasil, Caixa Econômica Federal, and BNDES, are partially or completely federally-owned. Large private banking institutions focus their lending on Brazil’s largest firms, while small- and medium-sized banks primarily serve small- and medium-sized companies. Citibank sold its consumer business to Itaú Bank in 2016, but maintains its commercial banking interests in Brazil. It is currently the only U.S. bank operating in the country. Increasing competitiveness in the financial sector, including in the emerging fintech space, is a vital part of the Brazilian government’s strategy to improve access to and the affordability of financial services in Brazil.

On November 16, 2020, the BCB launched its instant payment system called “PIX”. PIX is a 24/7 system that offers transfers of any value for people-people (P2P), people-business (P2B), business-people (B2P), business-business (B2B), and government-government (G2G). Brazilian customers in 2021 overwhelmingly embraced PIX, particularly for P2P transfers (which are free), replacing both cash payments and legacy bank electronic transfers which charged relatively high fees and could only take place during business hours.

In February 2021, the BCB implemented the first two of four phases of its Open Banking Initiative in an effort to open Brazil’s insulated banking system dominated by relatively few players. The first phase required Brazilian financial institutions to facilitate digitized access to their customer service channels, products, and services related to demand deposit or savings accounts, payment accounts, and credit operations. The second phase of the initiative expanded sharing customer data across a widening scope of bank products including loans. The other two phases, which are scheduled to go into effect in 2022, seek to include sharing customer data on foreign exchange, investments, and pension funds. The BCB expects that increased access to customer information will allow other financial institutions, including competitor banks and fintechs, to offer better and cheaper banking services to incumbent banks’ clients, thereby breaking up the dominance of the six large, incumbent banking institutions.

In recent years, the BCB has strengthened bank audits, implemented more stringent internal control requirements, and tightened capital adequacy rules to reflect risk more accurately. It also established loan classification and provisioning requirements. These measures apply to private and publicly owned banks alike. In December 2020, Moody’s upgraded a collection of 28 Brazilian banks and their affiliates to stable from negative after the agency had lowered the outlook on the Brazilian system in April 2020 due to economic difficulties. As of March 2021, the rating remained as stable. The Brazilian Securities Commission (CVM) independently regulates the stock exchanges, brokers, distributors, pension funds, mutual funds, and leasing companies, assessing penalties in instances of insider trading.

To open an account with a Brazilian bank, foreign account holders must present a permanent or temporary resident visa, a national tax identification number (CPF) issued by the Brazilian government, either a valid passport or identity card for foreigners (CIE), proof of domicile, and proof of income. On average, this process from application to account opening can take more than three months.

Foreign Exchange

Brazil’s foreign exchange market remains small. The latest Triennial Survey by the Bank for International Settlements conducted in December 2019 showed that the net daily turnover on Brazil’s market for OTC foreign exchange transactions (spot transactions, outright forwards, foreign-exchange swaps, currency swaps, and currency options) was $18.8 billion, down from $19.7 billion in 2016. This was equivalent to around 0.22 percent of the global market in 2019, down from 0.3 percent in 2016.

On December 29, 2021, Brazil approved a new Foreign Exchange Regulatory framework, to go into effect in December 2022, which replaces more than 40 separate regulations with a single law and eases foreign investments in the Brazilian market incentivizing increased foreign investment and assisting Brazilian businesses in integrating into global value chains. The new law aims to streamline currency exchange operations and authorizes more enterprises, including fintechs and small businesses, to conduct operations in foreign currencies bypassing retail banks and increasing their competitiveness. In addition, the law expands the list of qualifying activities transacted in foreign-currency denominated accounts (previously restricted only to import/export firms and for loans in which the debtor or creditor was based outside Brazil).

Brazil’s banking system has adequate capitalization and has traditionally been highly profitable, reflecting high interest rate spreads and fees. According to an October 2021 Central Bank Financial Stability Report, the banking system remains solid, with growing capitalization indices, and continues to rebuild its capital base. All institutions are able to meet the minimum prudential requirements, and solvency does not pose a risk to financial stability. Stress testing demonstrated that the banking system has adequate loss-absorption capacity in all simulated scenarios.

There are few restrictions on converting or transferring funds associated with a foreign investment in Brazil. Foreign investors may freely convert Brazilian currency in the unified foreign exchange market, where buy-sell rates are determined by market forces. All foreign exchange transactions, including identifying data, must be reported to the BCB. Foreign exchange transactions on the current account are fully liberalized.

The BCB must approve all incoming foreign loans. In most cases, loans are automatically approved unless loan costs are determined to be “incompatible with normal market conditions and practices.” In such cases, the BCB may request additional information regarding the transaction. Loans obtained abroad do not require advance approval by the BCB, provided the Brazilian recipient is not a government entity. Loans to government entities require prior approval from the Brazilian senate as well as from the Economic Ministry’s Treasury Secretariat, and must be registered with the BCB.

Interest and amortization payments specified in a loan contract can be made without additional approval from the BCB. Early payments can also be made without additional approvals if the contract includes a provision for them. Otherwise, early payment requires notification to the BCB to ensure accurate records of Brazil’s stock of debt.

Remittance Policies

Brazilian Federal Revenue Service regulates withholding taxes (IRRF) applicable to earnings and capital gains realized by individuals and legal entities residing or domiciled outside Brazil. Upon registering investments with the BCB, foreign investors are able to remit dividends, capital (including capital gains), and, if applicable, royalties. Investors must register remittances with the BCB. Dividends cannot exceed corporate profits. Investors may carry out remittance transactions at any bank by documenting the source of the transaction (evidence of profit or sale of assets) and showing payment of applicable taxes.

Under Law 13.259/2016 passed in March 2016, capital gain remittances are subject to a 15 to 22.5 percent income withholding tax, with the exception of capital gains and interest payments on tax-exempt domestically issued Brazilian bonds. The capital gains marginal tax rates are 15 percent for up to $1,000,000 in gains; 17.5 percent for $1,000,000 to $10,000,000 in gains; 20 percent for $10,000,000 to $60,000,000 in gains; and 22.5 percent for more than $60,000,000 in gains.

Repatriation of a foreign investor’s initial investment is also exempt from income tax under Law 4131/1962. Lease payments are assessed a 15 percent withholding tax. Remittances related to technology transfers are not subject to the tax on credit, foreign exchange, and insurance, although they are subject to a 15 percent withholding tax and an extra 10 percent Contribution for Intervening in Economic Domain (CIDE) tax.

Brazil had a sovereign fund from 2008 – 2018, when it was abolished, and the money was used to repay foreign debt.

In March 2021, the Minister of Finance and Economy II renewed its annual budget of USD292 million to fund infrastructure, technology, and socio-economic studies related to the implementation of Brunei’s own stock exchange, which is expected to launch in the next few years.

In 2013, Brunei signed a Memorandum of Understanding (MOU) with the Securities

Commission Malaysia (SCM) designed to strengthen collaboration in the development of fair and efficient capital markets in the two countries. It also provided a framework to facilitate greater cross-border capital market activities and cooperation in the areas of regulation as well as capacity building and human capital development, particularly in Islamic capital markets.

The capital market industry in Brunei is primarily governed by the Securities Markets Order, 2013 and the Securities Markets Regulations, 2015 which are both administered by Brunei Darussalam Central Bank. In addition, securities with any Shariah or Islamic component would be additionally governed by the Syariah Financial Supervisory Board Order, 2006.

Brunei has accepted the obligations under IMF Article VIII, Sections 2(a), 3 and 4, and maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions and multiple currency practices.

Brunei has a small banking sector which includes both conventional and Islamic banking. The Brunei Darussalam Central Bank (BDCB) is the sole central authority for the banking sector, in addition to its role as the country’s central bank. Banks have high levels of liquidity, good capital adequacy ratios, and well-managed levels of non-performing loans. Several foreign banks such as Standard Chartered Bank and Bank of China (Hong Kong) have established operations in Brunei. In March 2018, HSBC officially ended its operations in Brunei after announcing its planned departure from Brunei in late 2016. All banks fall under the supervision of BDCB, which has also established a credit bureau that centralizes information on applicants’ credit worthiness.

The Brunei dollar (BND) is pegged to the Singapore dollar, and each currency is accepted in both countries.

The Brunei Investment Agency (BIA) manages Brunei’s General Reserve Fund and their external assets. Established in 1983, BIA’s assets are estimated to be USD60-75 billion. BIA’s activities are not publicly disclosed and are ranked the lowest in transparency ratings by the Sovereign Wealth Fund Institute.

Brunei’s state-owned enterprises (SOEs), managed by Darussalam Assets under the Ministry of Finance and Economy, lead key sectors of the economy including oil and gas, telecommunications, transport, and energy generation and distribution. These enterprises also receive preferential treatment when responding to government tenders. Some of the largest SOEs include the following:

The telecommunications industry is dominated by government-linked companies. The service providers are Datastream Digital, Imagine, and Progresif. In 2019, the government consolidated the infrastructure of all three companies under a state-owned wholesale network operator called Unified National Networks (UNN).

Royal Brunei Technical Services (RBTS), established in 1988 as a government owned corporation, is responsible for managing the acquisition of a wide range of systems and equipment.

Brunei Energy Services and Trading (BEST) is the national oil company owned by the Brunei government. The company was granted all mineral rights in eight prime onshore and offshore petroleum blocks totaling 20,552 sq. km. PB manages contracts with Shell and Petronas, which are exploring Brunei’s onshore and deep-water offshore blocks. The government continues to modify BEST’s role in the oil and gas industry. In 2019, the government established Petroleum Authority as the oil and gas sector’s regulatory body, a function which had been filled by BEST.

Royal Brunei Airlines started operations in 1974 and is the country’s national carrier. The airline flies a combination of Boeing and Airbus aircraft.

Brunei’s Ministry of Transportation and Info-Communication has made corporatization and privatization part of its strategic plan, which calls for the Ministry to shift its role from a service provider to a regulatory body with policy-setting responsibilities. The Ministry is studying initiatives to privatize a few state-owned agencies, including the Postal Services Department and public transportation services. These services are not yet completely privatized and there is no timeline for privatization. Guidelines regarding the role of foreign investors and the bidding process are not yet available.

The Bulgarian Stock Exchange (BSE), the only securities-trading venue in Bulgaria, operates under license from the Financial Supervision Commission and is majority owned by the Ministry of Finance. The 1999 Law on Public Offering of Securities regulates the issuance of securities, securities transactions, stock exchanges, and investment intermediaries.  The law is aimed at providing investor protection and at developing a transparent local capital market. In 2004 BSE performed its first IPO transaction. In 2018 BSE acquired 100 percent of the Independent Bulgarian Energy Exchange (IBEX), Bulgaria’s first independent electricity platform trader.

Since its 2007 entry into the EU, Bulgaria has aligned its regulation of securities markets with EU standards under the Markets in Financial Instruments Directive (MiFID).  The BSE is a full member of the Federation of European Stock Exchanges (FESE) and operates under the Deutsche Boerse’s trading platform Xetra.  The BSE’s total market capitalization comprised 23 percent of Bulgaria’s GDP in 2021, down slightly from 2020.

Bulgarian companies strongly prefer to obtain financing from local banks instead of drawing from the local financial markets. At the end of 2018, the Financial Supervision Commission approved the ‘SME beam market,’ a special market that provides small and medium-sized businesses the opportunity to raise new capital more easily.

Bulgaria’s first “unicorn” company Payhawk, a technological start-up, raised USD 1 billion of capital in 2022.

Foreign investors can access credit on the local market.

The Bulgarian bank system is well capitalized and liquid. As of the end of September 2021, the total capital adequacy ratio was 22.4 percent, above the EU average and adequately shielding domestic banks against potential macroeconomic risks. In 2020 the Bulgarian National Bank imposed a temporary payment deferral of existing loans as an anti-COVID-19 measure. As of September 2021, there were 25 banks (including 7 branches), with total assets of BGN 132.7 billion (USD 76 billion), equivalent to 100 percent of GDP. The market share of the five significant banks (directly supervised by the ECB) was 66.1 percent, the share of less significant banks was 30.6 percent, and the share of foreign bank branches was 3.3 percent.  Non-performing loans were equal to 5.01 percent of the total loan portfolio of the banking system.

The Bulgarian government has raised funds by issuing both Euro-denominated and Leva- denominated bonds.  Commercial banks and private pension funds and insurance companies are the primary purchasers of these instruments. EU-based banks are eligible to be primary dealers of Bulgarian government bonds.

Bulgaria does not have a sovereign wealth fund. The government maintains a multiannual fiscal savings reserve, a farmer subsidy fund, and an electricity price premium fund. Their annual budgeting is compliant with the government’s budget plans.

Upon EU accession, Bulgaria was recognized as a market economy, in which the majority of the companies are private. Significant state-owned enterprises (SOEs) remain, however, such as railways and the postal service. SOEs also predominate in the healthcare, infrastructure, and energy sectors; many of these are collectively managed by holding companies, which are also SOEs. Some of the SOEs receive annual government subsidies for current and capital expenditures, regardless of their actual performance. SOEs’ budgets and audit reports are posted on the website of the Agency for Public Enterprises and Control. The list of all SOEs can be found here: reports.appk.government.bg/public/pubic/organizations . According to the Bulgarian National Statistical Institute (NSI), there is a sizeable state-owned sector consisting of approximately 350 SOEs held by the central government and 580 by subnational governments. In 2020, SOEs accounted for 10.6 percent of the overall economy.

Cross-subsidization is common within some government holding companies. In the energy sector, for example, the debts of some energy producers are covered by more lucrative entities within the holding structure.

In 2019 Parliament approved the State Enterprise Act, introducing updated corporate standards and management practices. The law lists timeline and criteria for SOE senior management approval. SOEs are typically run by government elected boards. Public and private sector companies are in theory equally treated vis-à-vis bidding on concessions, taxation, or other government-controlled processes.  Bulgaria became party to the WTO’s Government Procurement Agreement (GPA) upon its entry into the EU in 2007.

No major privatizations are currently planned in Bulgaria. Parliament must approve government proposals to privatize any company with over 50 percent government ownership. All majority or minority state-owned properties are eligible for privatization, with the exception of those included in a specific list, including water management companies, state hospitals, and state sports facilities. The sale of specific parts of such companies follows a Council of Ministers decision or a decision of the Agency for Public Enterprises and Control, after a proposal made by the government-owned majority holder of the company. State-owned military manufacturers can be privatized with Parliamentary approval.

Municipally owned property can be privatized upon decision by a municipal council or authorized body, and upon publication of the municipal privatization list in the national gazette.

The 2010 Privatization and Post-Privatization Act created a single Privatization and Post-Privatization Agency responsible for privatization oversight. The new State Enterprise Act in 2019 reshuffled and renamed the agency into the Agency for Public Enterprises and Control ( www.appk.government.bg/bg/17 ).

Foreign investors can participate in privatization programs.

The government of Burkina Faso is more focused on attracting FDI and concessionary lending for development than it is on developing its capital markets. Net portfolio inflows were estimated at US$ 148.6 million ( 0.83 percent of GDP) in 2020, per the World Bank. While the government does issue some sovereign bonds to raise capital in the WAEMU regional bond market, in general the availability of different kinds of investment instruments is extremely limited. As part of its mechanism to fund its fiscal budget, the Burkina Faso government regularly issues 182-day maturity treasury bills (BAT) on the regional financial market of the West African Economic and Monetary Union (WAEMU, or UEMOA in French).

The banking system is sound, relatively profitable, and well capitalized, but credit is highly concentrated to a small number of clients and a few sectors of the economy, according to the IMF. Only an estimated 15 percent of the population are believed to have checking accounts. Like all member states of WAEMU, Burkina Faso is a member of the Central Bank of West African States. Many foreign banks have branches in the country. The traditional banking sector is composed of twelve commercial banks and five specialized credit institutions called “établissements financiers.” In Burkina, the national strategy for inclusive finance was adopted on April 23, 2019. The use of mobile money is becoming more prevalent. In addition to two of the three main mobile carriers offering mobile money services, in 2021 other companies, both foreign and local have launched mobile money service operations and are conquering an important client base. This trend has forced traditional banks to install own mobile transfer planforms.

Burkina Faso does not have a sovereign wealth fund. However, in 2017, the government created the Deposit and Consignment Fund (CDC-BF), an autonomous legal and financial entity whose mandate is to receive and manage assets of various funds and entities, in particular funds from dormant accounts transferred to the Public Treasury (National Social Security Fund, Autonomous Retirement Fund for Civil Servants, National Post Office). Its mandate is to invest the funds locally. The CDC-BF is not yet fully rolled out.

GoBF announcements for privatization bids are widely distributed, targeting both local and foreign investors. Bids are published in local papers, international magazines, mailed to different diplomatic missions, e-mailed to interested foreign investors, and published on the Internet on sites such as http://www.dgmarket.com .

The military regime’s attitude towards foreign portfolio investment is unknown. Previously, the Burmese government had gradually opened to foreign portfolio investment, but both the stock and bond markets are small and lack sufficient liquidity to enter and exit sizeable positions.

Burma has a small stock market with infrequent trading. In July 2019, the Securities and Exchange Commission announced that foreign individuals and entities are permitted to hold up to 35 percent of the equity in Burmese companies listed on the Yangon Stock Exchange.

Burma also has a very small publicly traded debt market. Banks have been the primary buyers of government bonds issued by the CBM, which has established a nascent bond market auction system. The Central Bank issues government treasury bonds with maturities of two, three, and five years.

The CBM sets commercial loan interest rates and saving deposit rates that banks can offer, so banks cannot conduct risk-based pricing for credit. Consequently, credit is not strictly allocated on market terms. Foreign investors generally seek financing outside of Burma because of the lack of sophisticated credit instruments offered by Burmese financial institutions and lack of risk-based pricing.

There is limited penetration of banking services in the country, but the usage of mobile payments had grown rapidly prior to the coup. A government 2020 census found 14 percent of the population has access to a savings account through a traditional bank. The banking system is fragile with a high volume of non-performing loans (NPLs). Financial analysts estimate that NPLs at some local banks account for 40 to 50 percent of outstanding credit but accurate calculations are hard because of accounting inconsistencies about what constitutes a non-performing loan.

According to Central Bank of Myanmar’s report for FY 2020-2021, total assets in Burma’s banking system were 75 trillion kyat (USD 40.5 billion).

The CBM is responsible for the country’s monetary and exchange rate policies as well as regulating and supervising the banking sector.

Prior to the coup, the government had gradually opened the banking sector to foreign investors. The government began awarding limited banking licenses to foreign banks in October 2014. In November 2018, the CBM published guidelines that permit foreign banks with local licenses to offer “any financing services and other banking services” to local corporations. Previously, foreign banks were only allowed to offer export financing and related banking services to foreign corporations.

No U.S. banks have a correspondent relationship with Burmese banks. Following the military coup and the imposition of U.S. sanctions on Burma, including on two large military holding companies, some non-U.S. international banks are considering whether to terminate their correspondent banking relationship with Burmese banks.

Foreigners are allowed to open a bank account in Burma in either U.S. dollars or Burmese kyat. In April 2022, the CBM issued rules requiring most accounts with foreign currency holdings to be converted into Myanmar kyat at a fixed rate within one business day excluding foreign investment businesses, diplomatic missions, UN missions and international development partners. To open a bank account, foreigners must provide proof of a valid visa along with proof of income or a letter from their employer.

The Germany development agency GIZ published the fifth edition the GIZ Banking Report in January 2021.

According to Chapter 15 of the Myanmar Investment Law, foreign investors can convert, transfer, and repatriate profits, dividends, royalties, patent fees, license fees, technical assistance and management fees, shares and other current income resulting from any investment made under this law. Nevertheless, in practice, the transfer of money in or out of Burma has been difficult, as many international banks have internal prohibitions on conducting business in Burma given the long history of sanctions and significant money-laundering risks. The intermittent closure of banks following the coup, shortage of U.S. dollars, and low cash withdrawal limits, and CBM restrictions on holding foreign currency have further limited investors’ ability to conduct foreign exchange transactions and other necessary business operations.

Under the Foreign Exchange Management Law, transfer of funds can be made only through licensed foreign exchange dealers, using freely usable currencies. The CBM grants final approval on any new loans or loan transfers by foreign investors. According to a new regulation in the Foreign Exchange Management Law, foreign investors applying for an offshore loan must get approval from the CBM. Applications are submitted through the MIC by providing a company profile, audited financial statements, draft loan agreement, and a recent bank credit statement.

In April 2022, the Central Bank fixed the exchange rate at 1850 kyat/1 USD. In April 2022, the black-market exchange rate was roughly 2010 kyat/1 USD.

According to the Myanmar Investment Law, foreign investors can remit foreign currency through authorized banks. Nevertheless, in practice, the transfer of money in or out of Burma has been difficult, as many international banks have internal prohibitions on conducting business in Burma given the long history of sanctions and significant money-laundering risks. The military coup and the regime’s economic policies, including restrictions placed on holding and transferring foreign currencies, has further exacerbated these investment remittance challenges.

The challenge of repatriating remittances through the formal banking system are also reflected in the continued use of informal remittance services (such as the “hundi system”) by both the public and businesses. On November 15, 2019, the CBM adopted the Remittance Business Regulation in order to bring these informal networks into the official financial system. The regulations require remittance business licenses to conduct inward and outward remittance businesses from the Central Bank. It is unclear how the military regime will proceed with this regulation and the training of businesses to grant them a license to conduct remittances.

Burma does not have a sovereign wealth fund.

State-owned enterprises (SOEs) in Burma are active in various sectors, including natural resource extraction, print news, energy production and distribution, banking, mobile telecommunications, and transportation. SOEs employ approximately 145,000 people, according to a 2018 report by the Natural Resource Governance Institute. The 1989 State-Owned Economic Enterprises Law does not establish a system of monitoring enterprise operations, hence detailed information on Burmese SOEs is difficult to obtain. However, according to commercial statements, the total net income of all SOEs during fiscal year 2020`21 was approximately USD 828 million. The top profit-making SOEs are found in the natural resource sector, namely the Myanma Oil and Gas Enterprise, Myanma Gems Enterprise, and Myanma Timber Enterprise. Within Burma, there are 32 SOEs managed directly by six ministries without independent boards.

SOEs enjoy several advantages including serving in some cases as the market regulator, preferential land access, and access to low-interest credit. According to the State-Owned Economic Enterprises Law, SOEs wield regulatory powers that provide SOEs a significant market advantage, including through an ability to recommend specific tax exemptions to the MIC on behalf of private sector joint-venture partners and to monitor private sector companies’ compliance with contracts. In addition, the law stipulates that SOE managers have sole discretion in awarding contracts and licenses to private sector partners with limited oversight. SOEs can secure loans at low interest rates from state-owned banks, with approval from the cabinet. Private enterprises, unlike SOEs, are forced to provide land or other real estate as collateral in order to be considered for a loan. SOEs have historically had an advantage over private entities in land access because under the Constitution the State owns all the land.

In April 2021, the U.S. Department of Treasury sanctioned three Burmese SOEs for their roles in financing the military regime: the Myanma Gems Enterprise, the Myanma Timber Enterprise; and the Myanmar Pearl Enterprise. In March 2021, the U.S. Department of Treasury also sanctioned two Myanmar military holding companies: Myanmar Economic Corporation and Myanmar Economic Holdings Limited, and those sanctions also apply to entities that are owned, directly or indirectly, 50 percent or more by one or more blocked entities or persons. Investors should conduct careful due diligence, including by consulting the Special Designated National list, to identify which entities are subject to U.S. sanctions given the broad scope of these firms and their privileged position in the economy.

The military regime has not publicly announced any plans or timeline for privatization and in the past has preferred nationalization and supporting state-owned enterprises. Prior to the coup, the civilian government had been implementing a privatization plan, which permitted foreign investment.

Although there are no regulatory restrictions on foreign portfolio investment, Burundi does not have capital markets that would enable it.  Capital allocation within Burundi is entirely dependent on commercial banks.

The country does not have its own stock market.  There is no regulatory system to encourage and facilitate portfolio investment.  Existing policies do not actively facilitate nor impede the free flow of financial resources into product and factor markets.

There is no regulation restricting international transactions.  In practice, however, the government restricts payments and transfers for international transactions due to a shortage of foreign currency, which impedes doing business in a number of ways.

In theory, foreign investors have access to all existing credit instruments and on market terms.  In practice, available credit is extremely limited.

The financial sector includes 15 credit institutions, 40 microfinance institutions, 16 insurance companies, three social security institutions and three payment institutions.  All these institutions aim at reducing unemployment by creating job opportunities, particularly small and medium-scale entrepreneurship.  The banking market is dominated by the three largest and systemically important banks: Credit Bank of Bujumbura (BCB), Burundi Commercial Bank (BANCOBU), and Interbank Burundi (IBB).

Burundi’s population has very limited access to banking services, according to the most recent national survey on financial inclusion conducted by the central bank.  In this 2016 survey, the Bank of the Republic of Burundi (BRB) found a penetration level of approximately 22 percent, although the government opened two banks, one for youth entrepreneurs and one for women, over the last 1.5 years in an effort to address this challenge.

The government is a minority shareholder in six banks, including the country’s three largest banks and is the main shareholders in the two new banks BIJE (Banque d’Investissement des Jeunes/Youth Investment Bank) and BIDF (Banque d’Investissement et de Développement pour les Femmes/Investment and Development Bank for Women).  Several local commercial banks have branches in urban centers and micro-finance institutions mostly serve rural areas.

Foreign banks can establish operations in the country.  Foreign banks operating in the country include ECOBANK (Pan African Bank-West Africa), CRDB (Tanzanian Bank), DTB and KCB (both Kenyan Banks).  The central bank directs banking regulatory policy, including prudential measures for the banking system.  Foreigners and locals are subject to the same conditions when opening a bank account; the only requirement is the presentation of identification.

Burundi does not have a sovereign wealth fund.

There are five SOEs in Burundi with 100 percent government ownership: REGIDESO (public utility company), ONATEL (telecom), SOSUMO (sugar), OTB (tea), COGERCO (cotton) and ODECA (Coffee).  No statistics on assets are available for these companies as their reports are not available to the public.  Board members for SOEs are appointed by the GoB and report to its ministries.  The GoB also has a minority (40 percent) share in Brarudi brewing company, a branch of the Heineken Group, the country’s largest taxpayer.

There is no published list of SOEs.

SOEs have no market-based advantages and compete with other investors under the same terms and conditions; however, Burundi does not adhere to the OECD guidelines on corporate governance for SOEs.

In 2002, Burundi entered an active phase of political stabilization, national reconciliation, and economic reform.  In 2004, it received an emergency post-conflict program from the IMF and the World Bank, paving the way for the development of the Strategic Framework for Growth and Poverty Alleviation (PRSP).  After the 2005 elections, the GoB made the decision to open several state-owned enterprises in different sectors of the economy to private investment, including foreign investment.  The Burundian government, considering coffee a strategic sector of its economy, decided to opt for the privatization of the coffee sector first in an effort to modernize it.  However, following the crisis of 2015, the GoB decided to suspend the privatization program.  At that time, it had not yet privatized other sectors such as tea or sugar.  In late 2019, the GoB regained control of the coffee sector, citing as its rationale perceived mismanagement on the part of the privatized companies during 2015-2019.  It is unclear if or when the privatization program will continue.

Limited capital market and portfolio investment opportunities exist in Cabo Verde. The Cabo Verdean stock market, Bolsa de Valores de Cabo Verde (BVC), is fully operational. It has been most active in the issuance of bonds. Foreign investors must open an account with a bank in Cabo Verde before buying stocks or bonds from BVC.

Foreign interests may access credit under the same market conditions as Cabo Verdeans.

The IMF’s April 2021 country report on Cabo Verde noted that “the government did not impose or intensify restrictions on payments and transfers for current international transactions nor introduce multiple currency practices. Similarly, it did not conclude bilateral payment agreements inconsistent with Article VIII nor impose or intensify import restrictions for balance of payments purposes.”

Cabo Verde has a small financial sector supervised and regulated by the Central Bank of Cabo Verde (BCV). According to 2020 data from BCV, 82.8 percent of Cabo Verde’s adult population has a bank account. Internet-based tools and services in the banking sector continue to grow in Cabo Verde, particularly since the COVID-19 pandemic, changing the model of the client-bank relationship. New information and communications technology products allow customers online alternatives to in-person support.

Banking represents more than 80 percent of the assets of the entire Cabo Verdean financial system. Two banks – Banco Comercial do Atlantico (BCA) and Caixa Economica de Cabo Verde (CECV) – together held 57.7 percent of market share in 2020, according to BCV data.

Legislation approved in January 2020 terminated the issuance of restricted licenses for offshore banking operations, calling for generic licenses and operations with resident clients. BCV subsequently announced that banks with a restricted license (offshore) serving non-residents would have to adjust to the new requirements or face revocation of their license and enforced administrative liquidation. Offshore banks operating in Cabo Verde had until December 2021 to complete the transition. One did, two opted for liquidation, and BCV revoked the license of a fourth. Currently there are no offshore banks operating in Cabo Verde.

To establish a bank account, clients must provide proper identification and obtain a taxpayer number from the Commercial Registry Department (Casa do Cidadao), a process that takes approximately 10 minutes. Bank credit is available to foreign investors under the same conditions as for domestic investors. The private sector has access to credit instruments such as loans, letters of credit, and lines of credit.

To address the need for capital markets in Cambodia, the Cambodia Securities Exchange (CSX) was founded in 2011 and started trading in 2012. Though the CSX is one of the world’s smallest securities markets, with nine listed companies, it has taken steps to increase the number of listed companies, including attracting SMEs. In 2021, market capitalization stood at $2.4 billion, and the daily trading value averaged $246,000.

In September 2017, the National Bank of Cambodia (NBC) adopted a regulation on the Conditions for Banking and Financial Institutions to be listed on CSX. The regulation sets additional requirements for banks and financial institutions that intend to issue securities to the public. This includes prior approval from the NBC and minimum equity of KHR 60 billion (approximately $15 million).

Cambodia’s bond market is at the beginning stages of development. The regulatory framework for corporate bonds was bolstered in 2017 through the publication of several regulations covering public offering of debt securities, the accreditation of bondholders’ representatives, and the accreditation of credit rating agencies. The country’s first corporate bond was issued in 2018, and there are currently eight corporate bonds listed on the CSX.  There is currently no sovereign bond market, but the government has stated its intention of making government securities available to investors in 2022.

The NBC regulates the operations of Cambodia’s banks. Foreign banks and branches are freely allowed to register and operate in the country. There are 54 commercial banks, 10 specialized banks (set up to finance specific turn-key projects such as real estate development), 79 licensed microfinance institutions (MFIs), and five licensed microfinance deposit taking institutions in Cambodia. The NBC has also granted licenses to 17 financial leasing companies and one credit bureau company to improve transparency and credit risk management and encourage lending to small- and medium-sized enterprise customers.

The banking sector’s assets, including those of MFIs, rose 16 percent year-over-year in 2020 to KHR 241 trillion ($59.4 billion) and customer loans increased 15 percent to KHR 151 trillion ($37.3 billion). In 2020, the number of deposit accounts reached 8.9 million (out of a population of roughly 17 million), while credit accounts reached 3.2 million.

The government does not use the regulation of capital markets to restrict foreign investment. Banks have been free to set their own interest rates since 1995, and increased competition

between local institutions has led to a gradual lowering of interest rates from year to year.  However, in April 2017, at the direction of Prime Minister Hun Sen, the NBC capped interest rates on loans offered by MFIs at 18 percent per annum. The move was designed to protect borrowers, many of whom are poor and uneducated, from excessive interest rates.

In March 2016, the NBC doubled the minimum capital reserve requirement for banks to $75 million for commercial banks and $15 million for specialized banks. Based on the new regulations, deposit-taking microfinance institutions now have a $30 million reserve requirement, while traditional microfinance institutions have a $1.5 million reserve requirement.

In response to the COVID-19 pandemic, the NBC adopted measures to maintain financial stability and ensure liquidity in the banking system. These measures included allowing banks to maintain their capital conservation buffer at 50 percent, reducing the reserve requirement rate, and allowing banks to restructure loans for clients impacted by COVID.

Financial technology (Fintech) in Cambodia is developing rapidly. Available technologies include mobile payments, QR codes, and e-wallet accounts for domestic and cross-border payments and transfers. In 2012, the NBC launched retail payments for checks and credit remittances. A “Fast and Secure Transfer” (FAST) payment system was introduced in 2016 to facilitate instant fund transfers. The Cambodian Shared Switch (CSS) system was launched in October 2017 to facilitate the access to network automated teller machines (ATMs) and point of sale (POS) machines.

In February 2019, the Financial Action Task Force (FATF) cited Cambodia for being “deficient” with regard to its anti-money laundering and countering financing of terrorism (AML/CFT) controls and policies and included Cambodia on its “grey list.”  The RGC committed to working with FATF to address these deficiencies through a joint action plan, although Cambodia remains on the grey list as of 2022. Should Cambodia not take appropriate action, FATF could move it to the “black list,” which could negatively impact the cost of capital as well as the banking sector’s ability to access international capital markets.

In addition to Cambodia’s weak AML/CFT regime, vulnerabilities include a largely cash-based, dollarized economy and porous borders. Both legal and illicit transactions, regardless of size, are frequently conducted outside of regulated financial institutions. Cash proceeds from crime are readily channeled into land, housing, luxury goods and vehicles, and other forms of property, without passing through the banking sector. Moreover, a lack of judicial independence and transparency constrains effective enforcement of laws against financial crimes. The judicial branch lacks efficiency and cannot assure impartiality, and judicial officials, up to and including the chief of the Supreme Court, have simultaneously held positions in the political ruling party. Refer to Section II: “Illicit Finance and Corrupt Activities in Cambodia” of the U.S. government’s Cambodia Business Advisory on High-Risk Investments and Interactions released on November 10, 2021, for more information.

Cambodia does not have a sovereign wealth fund.

The Cameroonian government is open to portfolio investment. With the encouragement of the IMF and BEAC, Cameroon and other members of the CEMAC region have designed policies that facilitate the free flow of financial resources into the product and factor markets.

The Financial Markets Commission of Cameroon merged operations with the Libreville-based Central African Financial Market Supervisory Board in February 2019.  The merger has led to the establishment of a unique regional stock exchange called the Central African Stock Exchange (CASE). Cameroon’s financial sector is underdeveloped, and government policies have limited bearing on the free flow of financial resources into the product and factor markets. Foreign investors can get credit on the local market and the private sector has access to a variety of credit instruments. In 2016, Cameroon sought to encourage the development of capital markets through Law No 2016/010 of July 12, 2016, governing undertakings for collective investment in transferable securities in Cameroon.

Cameroon is connected to the international banking payment system. The country is a CEMAC member, which maintains a central bank, BEAC.  CEMAC’s central bank works with the IMF on monetary policies and public finance reform.  BEAC respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.  Despite generally respecting Article VIII, BEAC has instituted several restrictions on payments to boost foreign exchange reserves. Financial institutions and importers complain of a backlog of requests for foreign exchange. BEAC is currently negotiating with several international oil companies on repatriation of revenues before external payments. Investors should be aware that timely repatriation of profits may be a stumbling block.

In 2020, with the support of the IMF, BEAC took steps to address the economic impact of COVID-19 in the region. The central bank eased monetary policy and introduced accommodative measures to ensure adequate liquidity in the banking system to supporting internal and external stability. Concomitantly, the regional banking sector controller (Commission Bancaire de l’Afrique Centrale or COBAC) eased prudential regulations to help banks delay pandemic-related losses.

Less than 20 percent of Cameroonians have access to formal banking services. The Cameroonian government has often spoken of increasing access, but no coherent policy or action has been taken to alleviate the problem. Mobile money, introduced by local and international telecom providers, is the closest tool to banking services that most Cameroonians can access. In its 2022 finance law, the government introduced a tax on electronic payment transfers, including the ubiquitously used “Mobile Money.”

The banking sector is generally healthy.  Large, international commercial banks do most of the lending.  One local bank, Afriland, operates in Cameroon and multiple other countries. Most smaller banks deal in small loans of short duration. Retail banking is not common. According to the World Bank, non-performing loans were 10.31 percent of total bank loans in 2016. The Cameroonian government does not keep statistics on non-performing assets. According to Cameroon’s National Credit Council, Afriland First Bank, Societe General Cameroun (SGC), Banque Internationale du Cameroun pour l’Epargne et le Credit (BICEC), and Societe Commerciale de Banque Cameroun (SCB) are the most important banks in the national banking system, accounting for 52 percent of the banking system’s total consolidated balance sheet, 54 percent of total loans, and 54 percent of customer deposits in 2020.

Foreign banks can establish operations in Cameroon.  Most notably, Citibank and Standard Chartered Bank have operated in Cameroon for more than 20 years. They are subject to the same regulations as local banks. U.S. Embassy Yaoundé officials are unaware of any lost correspondent banking relationships within the past three years. There are no restrictions on foreigners establishing bank accounts, credit instruments, business financing, or other such transactions.

The country has 412 registered microfinance institutions, 19 insurance companies, four electronic money institutions, and one Post Office bank. Two major money transfer operators are also present, essentially offering over-the-counter services. The Cameroon market is at the startup stage for its digital financial system. This emerging market segment is currently provided by banks in partnership with telecom operators. According to a 2021 BEAC report on the state of electronic payments in the CEMAC zone, electronic money payments in the CEMAC region increased 21.8 percent from 2019 to 2020, totaling approximately $51 million in 2020 compared to $42 million in 2019.  Cameroon represented the largest amount of electronic payment transfers, accounting for 73 percent of all CEMAC transactions and totaling over $20 million in 2020.

Financial inclusion is low despite some progress brought about by mobile telephony. The World Bank estimates there were 25 million mobile cellular subscriptions in Cameroon in 2020. Putting aside the multi-SIM effect, the penetration rate in terms of unique subscribers was about 50 percent at the end of 2019, which puts Cameroon in the lower end in the Central African region.

Cameroon does not have a sovereign wealth fund.

Canada’s capital markets are open, accessible, and regulated. Credit is allocated on market terms, the private sector has access to a variety of credit instruments, and foreign investors can get credit on the local market. Canada has several securities markets, the largest of which is the Toronto Stock Exchange, and there is sufficient liquidity in the markets to enter and exit sizeable positions. The Canadian government and Bank of Canada do not place restrictions on payments and transfers for current international transactions.

The Canadian banking system is composed of 35 domestic banks and 16 foreign bank subsidiaries. Six major domestic banks are dominant players in the market and manage close to USD 5.4 trillion in assets. Many large international banks have a presence in Canada through a subsidiary, representative office, or branch. Ninety-nine percent of Canadians have an account with a financial institution. The Canadian banking system is viewed as very stable due to high capitalization rates that are well above the norms set by the Bank for International Settlements. The OSFI, Canada’s primary banking regulator, announced in January 2022 revised capital, leverage, liquidity, and disclosure rules that incorporate the final Basel III banking reforms with additional adjustments to make them suitable for federally regulated deposit-taking institutions. Most of the revised rules will take effect in the second fiscal quarter of 2023, with those related to market risk and credit valuation adjustment risk taking effect in early 2024.

Foreign financial firms interested in investing submit their applications to the OSFI for approval by the Minister of Finance. U.S. and other foreign banks can establish banking subsidiaries in Canada. Several U.S. financial institutions maintain commercially focused operations, principally in the areas of lending, investment banking, and credit card issuance. Foreigners can open bank accounts in Canada with proper identification and residency information.

The Bank of Canada is the nation’s central bank. Its principal role is “to promote the economic and financial welfare of Canada,” as defined in the Bank of Canada Act. The Bank’s four main areas of responsibility are: monetary policy; promoting a safe, sound, and efficient financial system; issuing and distributing currency; and being the fiscal agent for Canada.

Canada does not have a federal sovereign wealth fund. The province of Alberta maintains the Heritage Savings Trust Fund to manage the province’s share of non-renewable resource revenue. The fund’s net financial assets were valued at USD 14 billion as of December 31, 2021. The Fund invests in a globally diversified portfolio of public and private equity, fixed income, and real assets. The Fund follows the voluntary code of good practices known as the “Santiago Principles” and participates in the IMF-hosted International Working Group of SWFs. The Heritage Fund holds approximately 50 percent of its value in equity investments, seventeen percent of which are domestic.

Chad’s financial system is underdeveloped. There are no capital markets or money markets in Chad. A limited number of financial instruments are available to the private sector, including letters of credit, short- and medium-term loans, foreign exchange services, and long-term savings instruments. Chad maintains an exchange system that is free from restrictions and multiple currency practices on payments and transfers for current international transactions. This includes due to any actions delegated to BEAC.

Commercial banks offer credit on market terms, often at rates of 12 to 25 percent for short-term loans. Access to credit is available but is prohibitively expensive for most Chadians in the private sector. Medium-term loans are difficult to obtain, as lending criteria are rigid. Most large businesses maintain accounts with foreign banks and borrow money outside of Chad. There are ATMs in some major hotels, most neighborhoods of N’Djamena, the N’Djamena airport, and in major cities.

Chad does not have a stock market and has no effective regulatory system to encourage or facilitate portfolio investments. A small regional stock exchange, known as the Central African Stock Exchange, in Libreville, Gabon, was established by CEMAC countries in 2006. Cameroon, a CEMAC member, launched its own market in 2005. Both exchanges are poorly capitalized.

Chad’s banking sector is small and continues to streamline lending practices and reduce the volume of bad debt accumulated before and during the 2016-2017 economic crisis. While Chad’s banking rate remains low due to low aggregate savings and limited trust in and exposure to banks, according to the World Bank it increased from nine to 22 percent between 2009 and 2017.

Chad’s four largest banks have been privatized. The former Banque Internationale pour l’Afrique au Tchad (BIAT) became a part of Togo-based Ecobank; the former Banque Tchadienne de Credit et de Depôt was re-organized as the Societe Generale Tchad; the former Financial Bank became part of Togo-based Orabank; and the former Banque de Developpement du Tchad (BDT) was reorganized as Commercial Bank Tchad (CBT), in partnership with Cameroon-based Commercial Bank of Cameroon. There are two Libyan banks in Chad, BCC (formerly Banque Libyenne) and BSCIC (Banque Sahelo-Saharienne pour l’Investissement et le Commerce), along with one Nigerian bank — United Bank for Africa (UBA). In 2018, the GOC funded a new bank Banque de l’Habitat du Tchad (BHT) with the GOC as majority shareholder with 50 percent of the shares and two public companies, the National Social Insurance Fund (Caisse Nationale de Prevoyance Sociale, CNPS) and the Chadian Petroleum Company (Societe des Hydrocarbures du Tchad, SHT), each holding 25 percent.

Chad, as a CEMAC member, shares a central bank with Cameroon, Central African Republic, Republic of Congo, Equatorial Guinea, and Gabon — the Central African Economic Bank (BEAC, Banque des Etats de l’Afrique Centrale), headquartered in Yaounde, Cameroon.

Foreigners must establish legal residency in order to establish a bank account.

The GOC does not maintain a Sovereign Wealth Fund.

All Chadian SOEs operate under the umbrella of government ministries. SOE senior management reports to the minister responsible for the relevant sector, as well as a board of directors and an executive board. Historically, the president appointed members of SOE boards of directors, executive boards, and CEOs though no new appointments have happened since the April 2021 establishment of the Transitional Military Council. The boards of directors give general directives over the year, while the executive boards manage general guidelines set by the boards of directors. Some executive directors consult with their respective ministries before making business decisions.

The GOC operates SOEs in several sectors, including Energy and Environmental Industries; Agribusiness; Construction, Building and Heavy Equipment; and Information and Communication. The percentage of their annual budget that SOEs allocate to research and development (R&D) is unpublished.

There were no reports of discriminatory action taken by SOEs against the interests of foreign investors in 2021. Some foreign companies operated in direct competition with SOEs. Chad’s Public Tender Code (PTC) provides preferential treatment for domestic competitors, including SOEs.

SOEs are not subject to the same tax burden and tax rebate policies as their private sector competitors and are often afforded material advantages such as preferential access to land and raw materials. SOEs receive government subsidies under the national budget, which the government does not publish. SOEs often comingle government and SOE funds, which complicates their financial picture.

Chad is not a party to the Agreement on Government Procurement within the framework of the WTO. Chadian practices are not consistent with the OECD Guidelines on Corporate Governance for SOEs.

(Please use DOC key words for industries in this section; list available at https://www.export.gov/industries ).

Foreign investors are permitted and encouraged to participate in the privatization process. There is a public, non-discriminatory bidding process. Having a local contact in Chad to assist with the bidding process is important. To combat corruption, the GOC has recently hired private international companies to oversee the bidding process for government tenders. The Chamber of Commerce submitted a ‘white paper’ (livre blanc) in 2018 with recommendations for the GOC to facilitate and simplify private sector operations, including establishing a Business Observatory and a Presidential Council, which would implement over 70 recommendations to improve the investment climate in Chad. The Presidential Council became operational in January 2021.

The GOC has expressed general willingness to privatize its generally unprofitable SOEs, including to foreign investors. As an example, in 2018, it sold a majority stake in cotton export company CotonTchad Société Nouvelle (CotonTchad SN) to the Singaporean Olam International. Qatari investors recently purchased a slaughterhouse in Moundou as well. Investors from the UAE are under talks to purchase a slaughterhouse in Farcha, though their progress has stalled.

Chad is considering privatization in the following industries:

• Information & Communication (SOTEL Tchad)
• Food Processing & Packaging (the Société Tchadienne de Jus de Fruit (STJF), which produces fruit juice in Doba
• Agricultural Products (Société Moderne de Abbatoires (SMA), a slaughterhouse and meat packaging company in Farcha)

In addition, a 2019 law opened the market for power generation to private companies, though involvement in transmission remains under the control of the state-owned Societe Nationale d’Electricite du Tchad (SNE), which is reportedly unprofitable.

Chile’s authorities are committed to developing capital markets and keeping them open to foreign portfolio investors. Foreign firms offer services in Chile in areas such as financial information, data processing, financial advisory services, portfolio management, voluntary saving plans and pension funds. Under the U.S.-Chile FTA, Chile opened up significantly its insurance sector, with very limited exceptions. The Santiago Stock Exchange is Chile’s dominant stock exchange, and the third largest in Latin America. However, when compared to other OECD countries, it has lower market liquidity.

Existing policies facilitate the free flow of financial resources into Chile’s product and factor markets and adjustment to external shocks in a commodity export-dependent economy. Chile accepted the obligations of Article VIII (sections 2, 3 and 4) and maintains a free-floating exchange rate system, free of restrictions on payments and transfers for current international transactions. Credit is allocated on market terms and its various instruments are available to foreigners. The Central Bank reserves the right to restrict foreign investors’ access to internal credit if a credit shortage exists. To date, this authority has not been exercised.

Nearly one fourth of Chileans have a credit card from a bank and nearly one third have a non-bank credit card, but less than 20 percent have a checking account. However, financial inclusion is higher than banking penetration: a large number of lower-income Chilean residents have a CuentaRut, which is a commission-free card with an electronic account available for all, launched by the state-owned Banco Estado, also the largest provider of microcredit in Chile.

The Chilean banking system is healthy and competitive, and many Chilean banks already meet Basel III standards. The new General Banking Act (LGB), published in January 2019, defined general guidelines for establishing a capital adequacy system in line with Basel standards, and gave the CMF the authority to establish the capital framework. All Basel III regulations were published in December 2020, and the CMF started the implementation process of Basel III requirements to last to December 1, 2025. The system’s liquidity position (Liquidity Coverage Ratio) remains above regulatory limits (70%). Capital adequacy ratio of the system equaled 14.9 percent as of December 2021 and remains robust even when including discounts due to market and/or operational risks. Non-performing loans decreased after August 2020 due to government relief measures for households, including legislation authorizing two rounds of withdrawals from pension accounts. As of January 2022, non-performing loans equaled 1.26 percent compared to 1.54 percent as of January 2021) when measured by the standard 90 days past due criterion.

As of November 2021, the total assets of the Chilean banking system amounted to US$ 428.6 billion, according to the Superintendence of Banks and Financial Institutions. The largest six banks (Banco de Crédito e Inversiones, Banco Santander-Chile, Banco Estado, Banco de Chile, Scotiabank Chile and Itaú-Corpbanca) accounted for 88 percent of the system’s assets. Chile’s Central Bank conducts the country’s monetary policy, is constitutionally autonomous from the government, and is not subject to regulation by the Superintendence of Banks.

Foreign banks have an important presence in Chile, comprising three out of the six largest banks of the system. Out of 17 banks currently in Chile, five are foreign-owned but legally established banks in Chile and four are branches of foreign banks. Both categories are subject to the requirements set out under the Chilean banking law. There are also 21 representative offices of foreign banks in Chile. There are no reports of correspondent banking relationships withdrawal in Chile.

In order to open a bank account in Chile, a foreigner must present his/her Chilean ID Card or passport, Chilean tax ID number, proof of address, proof of income/solvency, photo, and fingerprints.

The Government of Chile maintains two sovereign wealth funds (SWFs) built with savings from years with fiscal surpluses. The Economic and Social Stabilization Fund (FEES) was established in 2007 and was valued at US$ 6.4 billion as of January 2022. The purpose of the FEES is to fund public debt payments and temporary deficit spending, in order to keep a countercyclical fiscal policy. The Pensions Reserve Fund (FRP) was built up in 2006 and amounted to US$ 7.2 billion as of January 2022. The purpose of the FRP is to anticipate future needs of payments to those eligible to receive pensions, but whose contributions to the private pension system fall below a minimum threshold.

Chile is a member of the International Working Group of Sovereign Wealth Funds (IWG) and adheres to the Santiago Principles.

Chile’s government policy is to invest SWFs entirely abroad into instruments denominated in foreign currencies, including sovereign bonds and related instruments, corporate and high-yield bonds, mortgage-backed securities from U.S. agencies, and stocks.

Chile had 28 state-owned enterprises (SOEs) in operation as of 2020. Twenty-seven SOEs are commercial companies and the newest one (FOINSA) is an infrastructure fund that was created to facilitate public-private partnership projects. 25 SOEs are not listed and are fully owned by the government, while the remaining three are majority government owned. Ten Chilean SOEs operate in the port management sector, six in the services sector, three in the defense sector, three in the mining sector (including CODELCO, the world’s largest copper producer, and ENAP, an oil and gas company), two in transportation, one in the water sector, one is a TV station, and one is a state-owned bank (Banco Estado). The state holds a minority stake in four water companies as a result of a privatization process. In 2020, total assets of Chilean SOEs amounted to US$ 89.3 billion, while their total net income was US$ 833.7 million. SOEs employed 47,225 people in 2020.

Twenty SOEs in Chile fall under the supervision of the Public Enterprises System (SEP), a state holding in charge of overseeing SOE governance. The rest – including the largest SOEs such as CODELCO, ENAP and Banco Estado – have their own governance and report to government ministries. Allocation of seats on the boards of Chilean SOEs is determined by the SEP, as described above, or outlined by the laws that regulate them. In CODELCO’s corporate governance, there is a mix between seats appointed by recommendation from an independent high-level civil service committee, and seats allocated by political authorities in the government.

A list of SOEs made by the Budget Directorate, including their financial management information, is available in the following link: http://www.dipres.gob.cl/599/w3-propertyvalue-20890.html.

In general, Chilean SOEs work under hard budget constraints and compete under the same regulatory and tax frameworks as private firms. The exception is ENAP, which is the only company allowed to refine oil in Chile. As an OECD member, Chile adheres to the OECD Guidelines on Corporate Governance for SOEs.

Chile does not have a privatization program.

China’s leadership has stated that it seeks to build a modern, highly developed, and multi-tiered capital market. Since their founding over three decades ago, the Shanghai and Shenzhen Exchanges, combined, are ranked the third largest stock market in the world with over USD 12.2 trillion in assets. China’s bond market has similarly expanded significantly to become the second largest worldwide, totaling approximately USD 18.6 trillion. In 2021, China took steps to open certain financial sectors such as mutual funds, securities, and asset management, but multinational companies still report barriers to entering the PRC insurance markets. As an example, in September, Black Rock was the first firm given approval to sell mutual funds to PRC nationals as the first wholly foreign owned mutual fund. Direct investment by private equity and venture capital firms increased but also faced setbacks due to China’s capital controls, which obfuscate the repatriation of returns. Though the PRC is taking steps to liberalize its capital markets, PRC companies that seek overseas investment have historically tended to list in the United States or Hong Kong; PRC and U.S. regulations on exchanges and geopolitics may begin to impact this trend. As of 2021, 24 sovereign entities and private sector firms, including the Asian Development Bank, Hungary, and BMW, have since issued RMB 106.5 billion yuan, roughly USD 16.7 billion, in 72 “Panda Bonds,” Chinese renminbi (RMB)-denominated debt issued by foreign entities in China. China’s private sector can also access credit via bank loans, bond issuance, trust products, and wealth management products. However, most bank credit flows to state-owned firms, largely due to distortions in China’s banking sector that have incentivized lending to state-affiliated entities over their private sector counterparts.  China has been an IMF Article VIII member since 1996 and generally refrains from restrictions on payments and transfers for current international transactions. However, the government has used administrative and preferential policies to encourage credit allocation towards national priorities, such as infrastructure investments and industrial policy.

The PRC’s monetary policy is run by the PBOC, the PRC’s central bank. The PBOC has traditionally deployed various policy tools, such as open market operations, reserve requirement ratios, benchmark rates and medium-term lending facilities, to control credit growth. The PBOC had previously also set quotas on how much banks could lend but ended the practice in 1998. As part of its efforts to shift towards a more market-based system, the PBOC announced in 2019 that it will reform its one-year loan prime rate (LPR), which would serve as an anchor reference for other loans. The one-year LPR is based on the interest rate that 18 banks offer to their best customers and serves as the benchmark for rates provided for other loans. In 2020, the PBOC requested financial institutions to shift towards use of the one-year LPR for their outstanding floating-rate loan contracts from March to August. Despite these measures to move towards more market-based lending, the PRC’s financial regulators still influence the volume and destination of PRC bank loans through “window guidance” – unofficial directives delivered verbally – as well as through mandated lending targets for key economic groups, such as small and medium sized enterprises. In 2020, the China Banking and Insurance Regulatory Commission (CBIRC) also began issuing laws to regulate online lending by banks including internet companies such as Ant Financial and Tencent, which had previously not been subject to banking regulations. In 2021, PBOC and CBIRC issued circulars emphasizing the need to emphasize and encourage financial stability among real estate developers.

The CBIRC oversees the PRC’s 4,607 lending institutions, about USD 54 trillion in total assets. China’s “Big Five” – Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, and Industrial and Commercial Bank of China – dominate the sector and are largely stable, but has experienced regional banking stress, especially among smaller lenders. Reflecting the level of weakness among these banks, in September 2021, the PBOC announced in “China Financial Stability Report 2020” that 422 or 9.6 percent of the 4,400 banking financial institutions received a “fail” rating (high risk) following an industry-wide review in in the second quarter of 2021. The assessment deemed 393 firms, all small and medium sized rural financial institutions, “extremely risky.” The official rate of non-performing loans among China’s banks is relatively low: 1.7 percent as of the end of 2021. However, analysts believed the actual figure may be significantly higher. Bank loans continue to provide most credit options (reportedly around 63.6 percent in 2021) for Chinese companies, although other sources of capital, such as corporate bonds, equity financing, and private equity are quickly expanding in scope, reach, and sophistication in China.

As part of a broad campaign to reduce debt and financial risk, Chinese regulators have implemented measures to rein in the rapid growth of China’s “shadow banking” sector, which includes wealth management and trust products. These measures have achieved positive results. In December 2020, CBIRC published the first “Shadow Banking Report,” and claimed that the size of China’s shadow banking had shrunk sharply since 2017 when China started tightening the sector. By the end of 2019, the size of China’s shadow banking by broad measurement dropped to 84.8 trillion yuan from the peak of 100.4 trillion yuan in early 2017. PBOC estimated in January 2021 that the outstanding balance of China’s shadow banking was around RMB 32 trillion yuan at the end of 2020. Alternatively, Moody’s estimated that China’s shadow banking by broad measurement dropped to RMB 57.8 trillion yuan in the first half of 2021 and shadow banking to GDP ratio dropped to 52.9 percent from 58.3 percent at the end of 2020. Foreign owned banks can now establish wholly owned banks and branches in China, however, onerous licensing requirements and an industry dominated by local players, have limited foreign banks market penetration. Foreigners are eligible to open a bank account in China but are required to present a passport and/or Chinese government issued identification.

China officially has only one sovereign wealth fund (SWF), the China Investment Corporation (CIC), which was launched in 2007 to help diversify China’s foreign exchange reserves. Overall, information and updates on CIC and other funds that function like SWFs was difficult to procure. CIC is ranked the second largest SWF by total assets by Sovereign Wealth Fund Institute (SWFI). With USD 200 billion in initial registered capital, CIC manages over USD 1.2 trillion in assets as of 2021 and invests on a 10-year time horizon. In 2021, CIC reported that during the 2020 period it increased its information technology-related holdings while cutting holdings of overseas equities and bonds. CIC has two overseas branches, CIC International (Hong Kong) Co., Ltd. and CIC Representative Office in New York. CIC has since evolved into three subsidiaries:

• CIC International was established in September 2011 with a mandate to invest in and manage overseas assets.  It conducts public market equity and bond investments, hedge fund, real estate, private equity, and minority investments as a financial investor.
• CIC Capital was incorporated in January 2015 with a mandate to specialize in making direct investments to enhance CIC’s investments in long-term assets.
• Central Huijin makes equity investments in China’s state-owned financial institutions.

China also operates other funds that function in part like sovereign wealth funds, including: China’s National Social Security Fund, with an estimated USD 450 billion in assets in 2021; the China-Africa Development Fund (solely funded by the China Development Bank), with an estimated USD 10 billion in assets (2020); the SAFE Investment Company, with an estimated USD 417.8 billion in assets; and China’s state-owned Silk Road Fund, established in December 2014 with USD 40 billion in assets to foster investment in BRI countries. China’s state-run funds do not report the percentage of assets invested domestically. However, China’s state-run funds follow the voluntary code of good practices known as the Santiago Principles and participate in the IMF-hosted International Working Group on SWFs. While CIC affirms they do not have formal government guidance to invest funds consistent with industrial policies or designated projects, CIC is expected to pursue government objectives.

China has approximately 150,000 wholly-owned SOEs, of which 50,000 are owned by the central government, and the remainder by local or provincial governments.  SOEs account for 30 to 40 percent of total gross domestic product (GDP) and about 20 percent of China’s total employment. Non-financial SOE assets totaled roughly USD 30 trillion. SOEs can be found in all sectors of the economy, from tourism to heavy industries.  State funds are spread throughout the economy and the state may also be the majority or controlling shareholder in an ostensibly private enterprise. China’s leading SOEs benefit from preferential government policies aimed at developing bigger and stronger “national champions.” SOEs enjoy preferential access to essential economic inputs (land, hydrocarbons, finance, telecoms, and electricity) and exercise considerable power in markets like steel and minerals.  SOEs also have long enjoyed preferential access to credit and the ability to issue publicly traded equity and debt.  A comprehensive, published list of all PRC SOEs does not exist.

PRC officials have indicated China intends to utilize OECD guidelines to improve the SOEs independence and professionalism, including relying on Boards of Directors that are free from political influence.  However, analysts believe minor reforms will be ineffective if SOE administration and government policy remain intertwined, and PRC officials make minimal progress in primarily changing the regulation and business conduct of SOEs.  SOEs continue to hold dominant shares in their respective industries, regardless of whether they are strategic, which may further restrain private investment in the economy.  Among central SOEs managed by the State-owned Assets Supervision and Administration Commission (SASAC), senior management positions are mainly filled by senior party members who report directly to the CCP, and double as the company’s party secretary.  SOE executives often outrank regulators in the CCP rank structure, which minimizes the effectiveness of regulators in implementing reforms.  While SOEs typically pursue commercial objectives, the lack of management independence and the controlling ownership interest of the state make SOEs de facto arms of the government, subject to government direction and interference.  SOEs are rarely the defendant in legal disputes, and when they are, they almost always prevail.  U.S. companies often complain about the lack of transparency and objectivity in commercial disputes with SOEs.

Since 2013, the PRC government has periodically announced reforms to SOEs that included selling SOE shares to outside investors or a mixed ownership model, in which private companies invest in SOEs and outside managers are hired.  The government has tried these approaches to improve SOE management structures, emphasize the use of financial benchmarks, and gradually infuse private capital into some sectors traditionally monopolized by SOEs like energy, finance, and telecommunications. For instance, during an August 25 press conference, State-owned Assets Supervision and Administration Commission (SASAC) officials announced that in the second half of the year central SOE reform would focus on the advanced manufacturing and technology innovation sectors. As part of these efforts, they claimed SASAC would ensure mergers and acquisitions removed redundancies, stabilize industrial supply chains, withdraw from non-competitive businesses, and streamline management structures. In practice, however, reforms have been gradual, as the PRC government has struggled to implement its SOE reform vision and often preferred to utilize a SOE consolidation approach.  Recently, Xi and other senior leaders have increasingly focused reform efforts on strengthening the role of the state as an investor or owner of capital, instead of the old SOE model in which the state was more directly involved in managing operations.

SASAC issued a circular on November 20, 2020, directing tighter control over central SOEs overseas properties held by individuals on behalf of SOEs. The circular aims to prevent leakage of SOE assets held by individuals and SOE overseas variable interest entities (VIEs). According to the circular, properties held by individuals should be approved by central SOEs and filed with SASAC.

In Northeast China, privatization efforts at provincial and municipal SEOs remains low, as private capital makes cautious decisions in making investment to local debt-ridden and inefficient SOEs. On the other hand, local SOEs prefer to pursue mergers and acquisitions with central SOEs to avoid being accused of losing state assets. There is no available information on whether foreign investors could participate in privatization programs.

The Colombian Securities Exchange (BVC after its acronym in Spanish) is the main forum for trading and securities transactions in Colombia. The BVC is a private company listed on the stock market. The BVC, as a multi-product and multi-market exchange, offers trading platforms for the stock market, along with fixed income and standard derivatives. The BVC also provides listing services for issuers.

Foreign investors can participate in capital markets by negotiating and acquiring shares, bonds, and other securities listed by the Foreign Investment Statute. These activities must be conducted by a local administrator, such as trust companies or Financial Superintendence-authorized stock brokerage firms. Direct and portfolio foreign investments must be registered with the Central Bank. Foreigners can establish a bank account in Colombia as long as they have a valid visa and Colombian government identification.

The market has sufficient liquidity for investors to enter and exit sizeable positions. The central bank respects IMF Article VIII and does not restrict payments and transfers for current international transactions. The financial sector in Colombia offers credit to nationals and foreigners that comply with the requisite legal requirements.

In 2005, Colombia consolidated supervision of all aspects of the banking, financial, securities, and insurance sectors under the Financial Superintendence. Colombia has an effective regulatory system that encourages portfolio investment, and the country’s financial system is strong by regional standards. Commercial banks are the principal source of long-term corporate and project finance in Colombia. Loans rarely have a maturity in excess of five years. Unofficial private lenders play a major role in meeting the working capital needs of small and medium-sized companies. Only the largest of Colombia’s companies participate in the local stock or bond markets, with the majority meeting their financing needs either through the banking system, by reinvesting their profits, or through credit from suppliers.

Colombia’s central bank is charged with managing inflation and unemployment through monetary policy. Foreign banks are allowed to establish operations in the country and must set up a Colombian subsidiary in order to do so. The Colombian central bank has a variety of correspondent banks abroad.

In 2012, Colombia began operating a sovereign wealth fund called the Savings and Stabilization Fund (FAE), which is administered by the central bank with the objective of promoting savings and economic stability in the country. Colombia is not a member of the International Forum of Sovereign Wealth Funds. The fund can administer up to 30 percent of annual royalties from the extractives industry. Its primary investments are in fixed securities, sovereign and quasi-sovereign debt (both domestic and international), and corporate securities, with just eight percent invested in stocks. The government transfers royalties not dedicated to the fund to other internal funds to boost national economic productivity through strategic projects, technological investments, and innovation. In 2020, the government authorized up to 80 percent of the FAE’s USD 3.9 billion in assets to be lent to the Fund for the Mitigation of Emergencies (FOME) created in response to the pandemic.

Since 2015, the Government of Colombia has concentrated its industrial and commercial enterprises under the supervision of the Ministry of Finance. According to Ministry’s 2019 annual report, there are 105 state-owned companies, with a combined value of USD 20 billion. The government is the majority shareholder of 39 companies and a minority shareholder in the remaining 66. Among the most notable companies with a government stake are Ecopetrol (Colombia’s majority state-owned and privately-run oil company), ISA (electricity distribution), Banco Agrario de Colombia, Bancoldex, and Satena (regional airline). SOEs competing in the Colombian market do not receive non-market-based advantages from the government. The Ministry of Finance normally updates their annual report on SOEs every June. Decree 2111 of 2019, formalized the creation of financial holding company Grupo Bicenterario. The holding company seeks to optimize the administration of Colombia’s state-owned enterprises, centralize property rights, and incorporate recommendations from the OECD regarding the composition of their boards of directors.

Colombia has privatized state-owned enterprises under article 60 of the Constitution and Law Number 226 of 1995. This law stipulates that the sale of government holdings in an enterprise should be offered to two groups: first to cooperatives and workers’ associations of the enterprise, then to the general public. During the first phase, special terms and credits must be granted, and in the second phase, foreign investors may participate along with the general public. A series of privatizations planned for 2020 were postponed to 2021 due to the pandemic. The government views stimulating private-sector investment in roads, ports, electricity, and gas infrastructure as a high priority. The government is increasingly turning to concessions and using public-private partnerships (PPPs) to secure and incentivize infrastructure development.

In order to attract investment and promote PPPs, Colombian modified infrastructure regulations to clarify provisions for frequently-cited obstacles to participation, including environmental licensing, land acquisition, and the displacement of public utilities. The law puts in place a civil procedure that facilitates land expropriation during court cases, allows for expedited environmental licensing, and clarifies that the cost to move or replace public utilities affected by infrastructure projects falls on private companies. However, infrastructure development companies considering bidding on tenders have raised concerns about unacceptable levels of risk that result from a law (Ley 80) establishing the framework for public works projects. They interpret Ley 80 as not establishing liability caps on potential judgments, and that it views company officials equivalent to those with fiscal oversight authority when it comes to criminal liability for misfeasance.

Municipal enterprises operate many public utilities and infrastructure services. These municipal enterprises have engaged private sector investment through concessions. There are several successful concessions involving roads. These partnerships have helped promote reforms and create a more attractive environment for private, national, and foreign investment.

The Costa Rican government’s general attitude towards foreign portfolio investment is prudently welcoming, seeking to facilitate the free flow of financial resources into the economy while minimizing the instability that might be caused by the sudden entry or exit of funds. The securities exchange (Bolsa Nacional de Valores) is small and is dominated by trading in bonds. Stock trading is of limited significance and involves less than 10 of the country’s larger companies, resulting in an illiquid secondary market. There is a small secondary market in commercial paper and repurchase agreements. The Costa Rican government has in recent years explicitly welcomed foreign institutional investors purchasing significant volumes of Costa Rican dollar-denominated government debt in the local market. The securities exchange regulator (SUGEVAL) is generally perceived to be effective.

Costa Rica accepted the obligations of IMF Article VIII, agreeing not to impose restrictions on payments and transfers for current international transactions or engage in discriminatory currency arrangements, except with IMF approval. There are no controls on capital flows in or out of Costa Rica or on portfolio investment in publicly traded companies. Some capital flows are subject to a withholding tax (see section on Foreign Exchange and Remittances). Within Costa Rica, credit is largely allocated on market terms, although long-term capital is scarce. Favorable lending terms for USD-denominated loans compared to colon-denominated loans have made USD-denominated mortgage financing popular and common. Foreign investors are able to borrow in the local market; they are also free to borrow from abroad, although a 15% withholding tax on interest paid will apply when the creditor is a non-tax resident in the country, under the reasoning that the interest payment constitutes income from a Costa Rican source. Potential overseas borrowers must also consider Costa Rica’s limitation on the deductibility of financial expenses by the debtor when the creditor is not an entity regulated in its country of origin by a body like the Costa Rican financial supervisory authority (SUGEF). In such cases, deductible interest for the current fiscal year is around 30% of EBITDA -Earnings Before Interest Taxes Depreciation and Amortization.

Costa Rica’s financial system boasts a relatively high financial inclusion rate, estimated by the Central Bank through August 2020 at 81.5 percent (the percentage of adults over the age of 15 holding a bank account). Non-resident foreigners may open what are termed “simplified accounts” in Costa Rican financial institutions, while resident foreigners have full access to all banking services.

The banking sector is healthy and well-regulated, although the 2020 non-performing loan ratio of 2.4 percent of active loans as of December 2021 (2.8 percent in state-owned banks) would be significantly higher if not for Covid-19 temporary regulatory measures allowing banks to readjust loans. The country hosts a large number of smaller private banks, credit unions, and factoring houses, although the four state-owned banks (two commercial, one mortgage and one workers’) are still dominant, accounting for 46 percent of the country’s financial system assets. Consolidated total assets of those state-owned banks were USD 29.6 billion, while combined assets of the regulated financial sector (public banks, private banks, savings-and-loans and others) were almost USD 64 billion as of December 2021.

Costa Rica’s Central Bank performs the functions of a central bank while also providing support to the four autonomous financial superintendencies (Banking, Securities, Pensions and Insurance) under the supervision of the national council for the supervision of the financial system (CONASSIF). The Central Bank developed and operates the financial system’s transaction settlement and direct transfer mechanism “SINPE” through which clients transfer money to and from accounts with any other account in the financial system. The Central Bank’s governance structure is strong, with a significant degree of autonomy from the Executive Branch.

Foreign banks may establish both full operations and branch operations in the country under the supervision of the banking regulator SUGEF. The Central Bank has a good reputation and has had no problem maintaining sufficient correspondent relationships. Costa Rica is steadily improving its ability to ensure the efficacy of anti-money laundering and anti-terrorism finance. The Costa Rican financial sector in broad terms appears to be satisfied to date with the available correspondent banking services.

The OECD 2020 report “review of the financial system” for Costa Rica is an excellent resource for those seeking more detail on the current state of Costa Rica’s financial system: https://www.oecd.org/countries/costarica/Costa-Rica-Review-of-Financial-System-2020.pdf .

Costa Rica does not have a Sovereign Wealth Fund.

Costa Rica’s total of 28 state-owned enterprises (SOEs) are commonly known by their abbreviated names. They include monopolies in petroleum-derived fuels (RECOPE), lottery (JPS), railroads (INCOFER), local production of ethanol (CNP/FANAL), water distribution (AyA), and electrical distribution (ICE, CNFL, JASEC, ESPH). SOEs have market dominance in insurance (INS), telecommunications (ICE, RACSA, JASEC, ESPH) and finance (BNCR, BCR, Banco Popular, BANHVI, INVU, INFOCOOP). They have significant market participation in parcel and mail delivery (Correos) and ports operation (INCOP and JAPDEVA). Six of those SOEs hold significant economic power with revenues exceeding 1 percent of GDP: ICE, RECOPE, INS, BNCR, BCR and Banco Popular. The 2020 OECD report “Corporate Governance in Costa Rica” reports that Costa Rican SOE employment is 1.9% of total employment, somewhat below the OECD average of 2.5%. Audited returns for each SOE may be found on each company’s website, while basic revenue and costs for each SOE are available on the General Controller’s Office (CGR) “Sistema de Planes y Presupuestos” https://www.cgr.go.cr/02-consultas/consulta-pp.html . The Costa Rican government does not currently hold minority stakes in commercial enterprises.

Costa Rican state-owned enterprises have not in recent decades required continuous and substantial state subsidy to survive. Several (notably ICE, AyA and RECOPE) registered major losses in pandemic year 2020, while others (INS, BCR, BNCR) registered substantial profits, which are allocated as dictated by law and boards of directors. Financial allocations to and earnings from SOEs may be found in the CGR “Sistema de Informacion de Planes y Presupuestos (SIPP)”.

U.S. investors and their advocates cite some of the following ways in which Costa Rican SOEs competing in the domestic market receive non-market-based advantages because of their status as state-owned entities.

• According to Law 7200, electricity generated privately must be purchased by public entities and the installed capacity of the private sector is limited to 30 percent of total electrical installed capacity in the country: 15 percent to small privately-owned renewable energy plants and 15 percent to larger “buildoperatetransfer” (BOT) operations.
• Telecoms and technology sector companies have called attention to the fact that government agencies often choose SOEs as their telecom services providers despite a full assortment of private-sector telecom companies. The Information and Telecommunications Business Chamber (CAMTIC) has long protested against what its members feel to be unfair use by government entities of a provision (Article 2) in the public contracting law that allows noncompetitive award of contracts to public entities (also termed “direct purchase”) when functionaries of the awarding entity certify the award to be an efficient use of public funds. CAMTIC has compiled detailed statistics showing that while the yearly total dollar value of Costa Rican government direct purchases in the IT sector under Article 2 has dropped considerably from USD 226 million in 2017, to USD 72.5 million in 2018, USD 27.5 million in 2019, USD 54 million in 2020, and USD 5 million in 2021, the number of purchases has actually increased from 56 purchases in both 2017 and 2018 to 86 in 2019, 104 in 2020, and 115 in 2021.
• The state-owned insurance provider National Insurance Institute (INS) has been adjusting to private sector competition since 2009 but in 2021 still registered 66 percent of total insurance premiums paid; 13 insurers are now registered with insurance regulator SUGESE: ( https://www.sugese.fi.cr/SitePages/index.aspx ). Competitors point to unfair advantages enjoyed by the stateowned insurer INS, including a strong tendency among SOE’s to contract their insurance with INS.

Costa Rica is not a party to the WTO Government Procurement Agreement (GPA) although it is registered as an observer. Costa Rica is working to adhere to the OECD Guidelines on Corporate Governance for SOEs ( www.oecd.org/daf/ca/oecdguidelinesoncorporategovernanceofstate-ownedenterprises.htm ). For more information on Costa Rica’s SOE’s, see the OECD Accession report “Corporate Governance in Costa Rica”, dated October 2020: https://www.oecd.org/countries/costarica/corporate-governance-in-costa-rica-b313ec37-en.htm  .

Costa Rica does not have a privatization program and the markets that have been opened to competition in recent decades – banking, telecommunications, insurance and Atlantic Coast container port operations – were opened without privatizing the corresponding state-owned enterprises (SOs). Two relatively minor SOEs, the state liquor company (Fanal) and the International Bank of Costa Rica (Bicsa), are the most likely targets for privatization if such political sentiment grows.

Government policies generally encourage foreign portfolio investment.

The Regional Stock Exchange (BRVM) is in Abidjan and the BRVM lists companies from the eight countries of the WAEMU.  The existing regulatory system effectively facilitates portfolio investment through the West African Central Bank (BCEAO).  The Regional Council for Savings Investments (CREPMF) sets the rules and regulations regarding the market participants and market structure.  There is sufficient liquidity in the markets to enter and exit sizeable positions. However, the market follows a limit-order mechanism.  Besides traditional foreign trade risk management tools offered by commercial banks (i.e., export credits, trade bills), the stock exchange does not provide markets for forwards, futures, or options derivative instruments.  Market volatility is low.  The market benchmark BRVM Composite rose to 6.63 percent in 2021.

Government policies allow the free flow of financial resources into investing in financial assets.

The BCEAO respects IMF Article VIII on payment and transfers for current international transactions.

Credit allocation is based on market terms and has increased to support the private sector and economic growth, specifically for large businesses.  The Central Bank monitors inflation, money supply, and business cycles to ensure efficient monetary policy.  The average interbank interest rate was 2.61 percent compared to 3.01 percent in 2021, demonstrating the will of WAEMU nations to boost commercial banks’ liquidity and support private sector investment.  Foreign investors can acquire credit on the local market. This year the government facilitated access to capital, lowering borrowing interest rates for real estate companies.

As of December 2021, there were 29 commercial banks and two credit institutions in Côte d’Ivoire.  Banks are expanding their national networks, especially in the secondary cities outside Abidjan, as domestic investment has increased up-country.  The total number of bank branches has more than doubled from 324 in 2010 to 725 branches in 2019 (latest data available).  According to the World Bank, in 2017 (latest data available) 41 percent of the population over the age of 15 have a bank account.  Alternative financial services available include mobile money and microfinance for bill payments and transfers.  Many Ivoirians prefer mobile money over banking, but mobile money does not yet offer the same breadth of financial services as banks.

Most Ivoirian banks are compliant with the BCEAO’s minimum capital requirements. The government facilitated mortgages for foreign investors in housing in Côte d’Ivoire.

Foreign banks are allowed to operate in Côte d’Ivoire; at least one has been in Côte d’Ivoire for decades.  They are subject to the WAEMU Banking Commission’s prudential measures and regulations.  There have been no reports of Côte d’Ivoire losing any correspondent banking relationships in the past three years.  No correspondent banking relationships are known to be in jeopardy.

Côte d’Ivoire does not have a sovereign wealth fund.  Rothschild Bank was reported in the press to have been awarded the contract to create one.

Companies owned or controlled by the state are subject to national laws and the tax code.  The Ivoirian government still holds substantial interests in many firms, including the refinery SIR (49 percent), the public transport firm (60 percent), the national television station RTI (98 percent), the national lottery (80 percent), the national airline Air Côte d’Ivoire (58 percent), and the land management agency Agence de Gestion Foncière AGEF (35 percent).  Total assets of state-owned enterprises (SOEs) were $796 million and total net income of SOEs was $116 million in 2018 (latest figures).  Of the 82 SOEs, 28 are wholly government-owned and 12 are majority government-owned, the government owns a blocking minority in seven and holds minority shares in 35.  Each SOE has an independent board.  The government has begun the process of divestiture for some SOEs (see next section).  There are active SOEs in the banking, agri-business, mining, and telecom industries.

The published list of SOEs is available at https://dgpe.gouv.ci/ind ex.php?p=portefeuille_etat

SOEs competing in the domestic market do not receive non-market-based advantages from the government.  They are subject to the same tax burdens and policies as private companies.

Côte d’Ivoire does not adhere to OECD guidelines for SOE corporate governance (it is not a member of OECD).

In 2021, audits of several SOEs highlighted serious irregularities (alleged embezzlement estimated at several tens or even hundreds of billions of FCFA, i.e. up to hundreds of millions of dollars.  The SOEs include FER, FDFP, ARTCI, and ANSUT, whose leaders have been removed and replaced.

The government has been pursuing SOE privatization for decades the most recent of which was in 2018.  That year, the government sold 51 percent of the Housing Bank of Côte d’Ivoire (BHCI – Banque d’Habitat de Côte d’Ivoire).  See previous Investment Climate Statements for past privatization efforts.

Contracts for participation in SOE privatization are competed through a French-language public tendering process, for which foreign investors are encouraged to submit bids.  The Privatization Committee, which reports to the Prime Minister, maintains a website.  The 2019 (latest) report is available at: http://privatisation.gouv.ci.

Croatia’s securities and financial markets are open equally to domestic and foreign investment. Foreign residents may open non-resident accounts and may do business both domestically and abroad.  Specifically, Article 24 of the Foreign Currency Act states that non-residents may subscribe, pay in, purchase, or sell securities in Croatia in accordance with regulations governing securities transactions.  Non-residents and residents are afforded the same treatment in spending and borrowing.  These and other non-resident financial activities regarding securities are covered by the Foreign Currency Act, available on the central bank website (www.hnb.hr).

Securities are traded on the Zagreb Stock Exchange (ZSE).  Regulations that govern activity and participation in the ZSE can be found (in English) at: https://zse.hr/en/legal-regulations/234 .  There are three tiers of securities traded on the ZSE.  The Capital Markets Act regulates all aspects of securities and investment services and defines the responsibilities of the Croatian Financial Services Supervisory Agency (HANFA). More information can be found (in English) at:  http://www.hanfa.hr/regulations/capital-market/ .

There is sufficient liquidity in the markets to enter and exit sizeable positions.  There are no policies that hinder the free flow of financial resources.  There are no restrictions on international payments or transfers, in accordance with IMF Article VIII.  The private sector, both domestic and foreign-owned, enjoys open access to credit and a variety of credit instruments on the local market, available on market terms.

The banking sector is mostly privatized and is highly developed, competitive, resilient, and increasingly offering a diversity of products to businesses (foreign and domestic) and consumers.  According to conclusions from an IMF Virtual Visit with Croatia in November 2020, the banking sector is one of the strongest sectors of the Croatian economy.  French, German, Italian, and Austrian companies own over 90 percent of Croatia’s banks. As of December 31, 2021, there were 20 commercial banks and three savings banks, with assets totaling $78.75 billion.  The largest bank in Croatia is Italian-owned Zagrebacka Banka, with assets of $20.82 billion and a market share of 26.5 percent. The second largest bank is Italian-owned Privredna Banka Zagreb, with assets totaling $16.46 billion and 20.9 percent market share.  The third largest is Austrian Erste Bank, with assets totaling $13.01 billion and a 16.52 percent market share.  According to Croatian National Bank statistics, the non-performing loans (NPL) rate for Croatia was 4.3 in 2021, down from 5.4 percent in 2020. The country has a central bank system and all information regarding the Croatian National Bank can be found at  https://www.hnb.hr/en/ .

In an extraordinary move facilitated by the Croatian National Bank, state-owned Croatian Postal Bank (HPB) bought Sberbank Croatia, a subsidiary of Sberbank Europe, on March 1, reportedly paying $11 million for Sberbank’s assets. The sale saved Sberbank Croatia from bankruptcy following the collapse of Sberbank Europe after Russia’s invasion of Ukraine. Prior to the sale, Sberbank Croatia had roughly 60,000 clients and represented 2.21 percent of total bank assets in Croatia.

Non-residents are able to open bank accounts without restrictions or delays.  The Croatian government has not introduced or announced any intention to introduce block chain technologies in banking transactions.

The Croatian Constitution guarantees the free transfer, conversion, and repatriation of profits and invested capital for foreign investments. Article VI of the U.S.-Croatia Bilateral Investment Treaty (BIT) establishes protection for American investors from government exchange controls. The BIT obliges both countries to permit all transfers relating to a covered investment to be made freely and without delay into and out of each other’s territory.  Transfers of currency are additionally protected by Article VII of the International Monetary Fund (IMF) Articles of Agreement (http://www.imf.org/External/Pubs/FT/AA/index.htm#art7 ).

The Croatian Foreign Exchange Act permits foreigners to maintain foreign currency accounts and to make external payments.  The Foreign Exchange Act also defines foreign direct investment (FDI) in a manner that includes use of retained earnings for new investments/acquisitions, but excludes financial investments made by institutional investors such as insurance, pension, and investment funds.  The law also allows Croatian entities and individuals to invest abroad.  Funds associated with any form of investment can be freely converted into any world currency.

On July 10, 2020 the European Central Bank and European Commission announced that Croatia had fulfilled its commitments and the Croatian kuna (HRK) was admitted into the Banking Union and European Exchange Rate Mechanism (ERM II), with the exchange rate between the kuna and the euro (EUR) pegged at EUR 1 to 7.5345 HRK. Any risk of currency devaluation or significant depreciation is generally low. The Croatian government intends to adopt the euro on January 1, 2023.

Remittance Policies

No limitations exist, either temporal or by volume, on remittances.  The U.S. Embassy in Zagreb has not received any complaints from American companies regarding transfers and remittances.

Croatia does not own any sovereign wealth funds.

REPUBLIC OF CYPRUS

The Cyprus Stock Exchange (CSE), launched in 1996, is one of the EU’s smallest stock exchanges, with a capitalization of USD 3.7 billion (EUR 3.4 billion) as of March 2022. The CSE and the Athens Stock Exchange (ASE) have operated from a joint trading platform since 2006, allowing capital to move more freely from one exchange to the other, even though both exchanges retain their autonomy and independence. The joint platform has increased capital available to Cypriot firms and improved the CSE’s liquidity, although its small size remains a constraint. The private sector has access to a variety of credit instruments, which has been enhanced through the operation of private venture capital firms. Credit is allocated on market terms to foreign and local investors alike. Foreign investors may acquire up to 100 percent of the share capital of Cypriot companies listed on the CSE with the notable exception of companies in the banking sector.

AREA ADMINISTERED BY TURKISH CYPRIOTS

There is no stock exchange in the area administrated by Turkish Cypriots and no foreign portfolio investment. Foreign investors are able to get credit from the local market, provided they have established domestic legal presence, majority-owned (at least 51 percent) by domestic companies or persons.

REPUBLIC OF CYPRUS

At the end of November 2021, the value of total deposits in ROC banks was USD 56.3 billion (EUR 51.2 billion), and the value of total loans was USD 32.6 billion (EUR 29.6 billion). Currently, there are seven local banks in Cyprus offering a full range of retail and corporate banking services – the largest two of which are the Bank of Cyprus and Hellenic Bank – plus another two dozen or so subsidiaries or branches of foreign banks offering more specialized services. The full list of authorized credit institutions in Cyprus is available on the Central bank of Cyprus website: https://www.centralbank.cy/en/licensing-supervision/banks/register-of-credit-institutions-operating-in-cyprus .

The banking sector has made significant progress since the 2013 financial crisis resulted in a “haircut” of uninsured deposits, followed by numerous bankruptcies and consolidation. The island’s two largest banks – Bank of Cyprus and Hellenic – are now adequately capitalized and have returned to profitability. However, the profitability of the banking sector as a whole is challenged by low interest margins, a high level of liquidity, and a still-elevated volume of NPLs. NPLs in Cyprus are the second-highest in the EU at 15.1 percent of total loans at the end of November 2021, compared to 19.1 percent a year earlier, albeit considerably lower than in 2014, when they reached 47.8 percent. Banks continue striving to reduce NPLs further, either by selling off portfolios of NPLs or using recently amended insolvency and foreclosure frameworks. The economic impacts of the COVID-19 pandemic and political pressure to protect citizens under the current extraordinary circumstances makes reducing NPLs difficult. Aggregate banking sector data is available here: https://www.centralbank.cy/en/licensing-supervision/banks/aggregate-cyprus-banking-sector-data .

Cyprus has a central bank – the Central Bank of Cyprus – which forms part of the European Central Bank. Foreign banks or branches are allowed to establish operations in Cyprus. They are subject to Central Bank of Cyprus supervision, just like domestic banks. JPMorgan, Citibank, Bank of New York Mellon, and HSBC currently provide U.S. dollar correspondent banking services to ROC banks.

Opening a personal or corporate bank account in Cyprus is straightforward, requiring routine documents. But because of a history of money-laundering concerns, banks now carefully scrutinize these documents and can conduct extensive due diligence checks on sources of wealth and income. A local bank account is not necessary for personal household expenses. Opening a corporate bank account is mandatory when registering a company in Cyprus.

Since 2018, Cyprus has taken steps to address recognized regulatory shortcomings in combatting illicit finance in its international banking and financial services sector, tightening controls over non-resident shell companies and bank accounts. Cyprus’ first National Risk Assessment (NRA) of money laundering and terrorist financing, released in November 2018, is available at: http://mof.gov.cy/en/press-office/announcements/national-risk-assessment-of-money-laundering-and-terrorist-financing-risks-cyprus . Cyprus is a member of the Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a FATF-style regional body. Its most recent mutual evaluation report of the Cypriot banking sector, released December 2021, can be found at: https://www.coe.int/en/web/moneyval/jurisdictions/cyprus .

AREA ADMINISTERED BY TURKISH CYPRIOTS

The “Central Bank” oversees and regulates local, foreign, and private banks. In addition to the “Central Bank” and the “Development Bank”, there are 21 banks in the area administrated by Turkish Cypriots, of which 16 are Turkish Cypriot-owned banks, and five are branch banks from Turkey. Banks are required to follow “know-your-customer” (KYC) and AML “laws,” which are regulated by the “Ministry of Economy and Energy,” and supervised by the “Central Bank,” but AML practices do not meet international standards. Due to non-recognition issues, Turkish Cypriot banks do not qualify for a SWIFT number to facilitate international transactions. All international transfers depend on routing through Turkish banks.

In the third quarter of 2021, total deposits, which have the largest share in the sector’s total liabilities, reached 48,8 billion TL (USD 3.3 billion).

As of the end of the third quarter of 2021 , NPLs reached 1.5 Billion Turkish Lira (USD 10 million).

REPUBLIC OF CYPRUS

The Parliament passed legislation in March 2019 providing for the establishment of a National Investment Fund (NIF) to manage future offshore hydrocarbons and other natural resources revenue. Section 29 of the NIF Law specifies that the Corporation to be set up shall invest the Fund in a diversified manner with a view to maximizing risk-adjusted financial returns and in a manner consistent with the portfolio management by a prudent institutional investor. The Fund is precluded from investing in securities issued by a Cypriot issuer (including the state) or in real estate located in Cyprus. This provision safeguards against the possibility of speculative development catering to the Fund and political interference favoring domestic investments for purposes other than the best interests of the Fund and the Cypriot people as a whole. Additionally, Section 30 of the law provides that the fund cannot invest, directly or indirectly, to acquire more than five percent of any one company or legal entity. The fund is not yet operational. Regulations for the NIF are being drafted and will require legislative approval, and it will be several years before there are any revenues generated from the ROC’s hydrocarbon assets.

AREA ADMINISTERED BY TURKISH CYPRIOTS

There is no established sovereign wealth fund.

REPUBLIC OF CYPRUS

The ROC maintains exclusive or majority-owned stakes in more than 40 SOEs and is making slow progress towards privatizing some of them (see sections on Privatization and OECD Guidelines on Corporate Governance of SOEs). There is no comprehensive list of all SOEs available but the most significant are the following:

• Electricity Authority of Cyprus (EAC);
• Cyprus Telecommunications Authority (CyTA);
• Cyprus Sports Organization;
• Cyprus Ports Authority;
• Cyprus Broadcasting Corporation (CyBC);
• Cyprus Theatrical Organization; and
• Cyprus Agricultural Payments Organization.

These SOEs operate in a competitive environment (domestically and internationally) and are increasingly responsive to market conditions. The state-owned EAC monopoly on electricity generation and distribution ended in 2014, although competition remains difficult given the small market size and delays in implementing new market rules. As an EU Member State, Cyprus is a party to the WTO Government Procurement Agreement (GPA).

OECD Guidelines on Corporate Governance are not mandatory for ROC SOEs, although some of the larger SOEs have started adopting elements of corporate governance best practices in their operating procedures. Each of the SOEs is subject to dedicated legislation. Most are governed by a board of directors, typically appointed by the government at the start of its term, and for the duration of its term in office. SOE board chairs are typically technocrats, affiliated with the ruling party. Representatives of labor unions and minority shareholders contribute to decision making. Although they enjoy a fair amount of independence, they report to the relevant minister. SOEs are required by law to publish annual reports and submit their books to the Auditor General.

AREA ADMINISTERED BY TURKISH CYPRIOTS

In the area administrated by Turkish Cypriots, there are several “state-owned enterprises” and “semi-state-owned enterprises,” usually common utilities and essential services.

In the Turkish Cypriot administered area, the below-listed institutions are known as “public economic enterprises” (POEs), “semi-public enterprises” and “public institutions,” which aim to provide common utilities and essential services.

Some of these organizations include:

• Turkish Cypriot Electricity Board (KIBTEK);
• BRTK – State Television and Radio Broadcasting Corporation;
• Cyprus Turkish News Agency;
• Turkish Cypriot Milk Industry;
• Cypruvex Ltd. – Citrus Facility;
• EMU – Eastern Mediterranean Foundation Board;
• Agricultural Products Corporation;
• Turkish Cypriot Tobacco Products Corporation;
• Turkish Cypriot Alcoholic Products LTD;
• Coastal Safety and Salvage Services LTD; and
• Turkish Cypriot Development Bank.

REPUBLIC OF CYPRUS

The ROC has made limited progress towards privatizations, despite earlier commitments to international creditors in 2013 to raise USD 1.6 billion (EUR 1.4 billion) from privatizations by 2018. In 2017, opposition parties passed legislation abolishing the Privatizations Unit, an independent body established March 2014. A bill providing the transfer of Cyprus Telecommunications Authority (CyTA) commercial activities to a private legal entity, with the government retaining majority ownership, has been pending since March 2018. In December 2015, under the threat of strikes, the government reversed earlier plans to privatize the Electricity Authority of Cyprus (EAC). However, in recent years, the EAC has been forced to unbundle its operations in line with Cyprus Energy Regulatory Authority (CERA) recommendations and EU regulations. The EAC has created independent units for its core regulated activities, namely Transmission, Distribution, Generation, and Supply. Private firms have been offering renewable energy generation since 2003 and electricity supply since January 1, 2021.

Despite slow progress in electricity and telecommunications, the current administration continues pursuing privatizations in other areas. In August 2020, the government assigned the Larnaca marina and port privatization project to a Cyprus-Israeli consortium, based on a 40-year lease agreement. The project, starting in April 2022, will be completed in four phases by 2037. It provides for port infrastructure, a marina, land redevelopment, a road network, green areas, parks and pedestrian areas as well as residential units and catering and recreation establishments. At a cost of about EUR1.2 billion, this project will be the biggest investment in Cyprus so far.

The government also continues efforts to sell the state lottery, find long-term investors to lease state-owned properties in the Troodos area, and forge a strategic plan on how to handle the Cyprus Stock Exchange.

AREA ADMINISTERED BY TURKISH CYPRIOTS

The airport at Ercan and K-Pet Petroleum Corporation have been converted into public-private partnerships. The concept of privatization continues to be controversial in the Turkish Cypriot community.

In March 2015, Turkish Cypriot authorities signed a public-private partnership agreement with Turkey regarding the management and operation of the water obtained from an underwater pipeline funded by Turkey. Within the area administrated by Turkish Cypriots, there has also been discussion about privatizing the electricity authority “KIBTEK”, Turkish Cypriot telecommunications operations, and the seaports.

The Czech Republic is open to portfolio investment.  There are 54 companies listed on the Prague Stock Exchange (PSE).  The overall trade volume of stocks increased from CZK108.78 billion (USD4.7 billion) in 2019 to CZK125.31 (USD5.4 billion) in 2020, with an average daily trading volume of CZK501.23 million (USD21.7 million).

In March 2007, the PSE created the Prague Energy Exchange (PXE), which was later re-named to Power Exchange Central Europe, to trade electricity in the Czech Republic and Slovakia and, later, Hungary, Poland, and Romania.  PXE’s goal is to increase liquidity in the electricity market and create a standardized platform for trading energy.  In 2016, the German power exchange EEX acquired two thirds of PXE shares.  Following the acquisition, the PXE benefited from both an increased number of traders and increased trade volume.

The Czech National Bank, as the financial market supervisory authority, sets rules to safeguard the stability of the banking sector, capital markets, and insurance and pension scheme industries, and systematically regulates, supervises and, where appropriate, issues penalties for non-compliance with these rules.

The Central Credit Register (CCR) is an information system that pools information on the credit commitments of individual entrepreneurs and legal entities, facilitating the efficient exchange of information between CCR participants.  CCR participants consist of all banks and branches of foreign banks operating in the Czech Republic, as well as other individuals included in a special law.

As an EU member country, the local market provides credits and credit instruments on market terms that are available to foreign investors.

The Czech Republic respects IMF Article VIII.

Large domestic banks belong to European banking groups.  Most operate conservatively and concentrate almost exclusively on the domestic Czech market.  Despite the COVID-19 crisis, Czech banks remain healthy.  Results of regular banking sector stress tests, as conducted by the Czech National Bank, repeatedly confirm the strong state of the Czech banking sector which is deemed resistant to potential shocks.  Results of the most recent stress test conducted by the Czech National Bank are available at: https://www.cnb.cz/en/financial-stability/stress-testing/banking-sector/.  As of January 31, 2022, the total assets of commercial banks stood at CZK9,405 billion (approximately USD409 billion).  Foreign investors have access to bank credit on the local market, and credit is generally allocated on market terms.

The Czech National Bank has 10 correspondent banking relationships, including JP Morgan Chase Bank in New York and the Royal Bank of Canada in Toronto.  The Czech Republic has not lost any correspondent banking relationships in the past three years, and there are no relationships in jeopardy.

The Czech Republic does not currently regulate cryptocurrencies.

The Czech government does not operate a sovereign wealth fund.

The Ministry of Finance administers state ownership policies.  State-owned enterprises (SOEs) are structured as joint-stock companies, state enterprises, national enterprises, limited liability companies, and limited partnerships.  SOEs are owned by the individual ministries but are managed according to their business organizational structure as defined by law and are required to publish an annual report, disclose their accounting books, and submit to an independent audit.  Potential conflicts of interest are covered by existing Act No. 159/2006 on Conflicts of Interest, and Act No. 14/2017 on Amendments to the Act on Conflict of Interest.  Legislation on the civil service, which took effect January 1, 2015, established measures to prevent political influence over public administration, including operation of SOEs.

Private enterprises are generally allowed to compete with public enterprises under the same terms and conditions with respect to access to markets, credit, government contracts and other business operations.  SOEs purchase or supply goods and services from private sector and foreign firms.  SOEs are subject to the same domestic accounting standards, rules, and taxation policies as their private competitors, and are not given any material advantages compared to private entities.  State-owned or majority state-owned companies are present in several (strategic) sectors, including the energy, postal service, information and communication, and transport sectors.

The Czech Republic has 52 wholly owned SOEs and three majority owned SOEs (excluding those in liquidation).  Wholly owned SOEs employ roughly 78,000 people and own more than CZK487 billion (approximately USD21.1 billion) in assets.  A list of all companies with a percentage of state ownership is available in Czech at:  https://www.komora.cz/legislation/167-19-strategie-vlastnicke-politiky-statu-t-20-12-2019/.

As an OECD member, the Czech Republic promotes the OECD Principles of Corporate Governance and the affiliated Guidelines on Corporate Governance for SOEs.  SOEs are subject to the same legislation as private enterprises regarding their commercial activities.

As a result of several waves of privatization, the vast majority of the Czech economy is now in private hands.  Privatizations have generally been open to foreign investors.  In fact, most major SOEs were privatized with foreign participation.  The government evaluates all investment offers for SOEs.  Many competitors have alleged non-transparent or unfair practices in connection with past privatizations.

The government welcomes investment including by foreign portfolio investors. A small number of private equity firms are actively investing in the mining industry. The institutional investor base is not well developed, with only an insurance company and a state pension fund as participants. There is no market for derivatives in the country. Cross-shareholding and stable shareholding arrangements are also not common. Credit is allocated on market terms, but there are occasional complaints about unfair privileges extended to certain investors in profitable sectors such as mining and telecommunications.

There is no domestic stock market. Although reforms have been initiated, the Congolese financial system remains small, heavily dollarized, characterized by fragile balance sheets, and difficult to use. Further reforms are needed to strengthen the financial system, sustain its expansion, and stimulate economic growth. Inadequate risk-based controls, weak regulatory enforcement, low profitability, and over-reliance on demand deposits undermine the resilience of the financial system. The DRC’s capital market remains underdeveloped and consists primarily of the issuance of Treasury bonds.

The Central Bank refrains from making restrictions on payments and transfers for current international transactions.

It is possible for foreign companies to borrow from local banks, but their options are limited. Loan terms are generally limited to 3-6 months, and interest rates are typically 16-21 percent. The inconsistent legal system, the often-burdensome business climate, and the difficulty of obtaining interbank financing discourage banks from making long-term loans. Opportunities for financing large projects in the national currency, the Congolese franc (CDF), are limited.

The Congolese financial system is comprised of 15 licensed banks, a national insurance company (SONAS), the National Social Security Institute (INSS), one development bank, SOFIDE (Société Financière de Development), a savings fund (CADECO), roughly 21 microfinance institutions and 72 cooperatives, 81 money transfer institutions which are concentrated in Kinshasa, Kongo Central, former Bandundu, North and South Kivu and the former Katanga provinces, 4 electronic money institutions, and 48 foreign exchange offices.

While the financial system is improving, it is fragmented and dominated by so-called “local” banks. With very different profiles (international, local, pan-African, networked, corporate, etc.) and approaches that diverge fundamentally in terms of management, governance, and terms of management and risk appetite, the so-called “local” commercial banks continue to dominate the banking sector. Pan-African banks are increasing their share, especially with the recent acquisition of the Banque Commerciale du Congo by the Kenyan Equity Group.

The Central Bank controls monetary policy and regulates the banking system. Banks are mainly concentrated in the provinces of Kinshasa, Kongo Central, North and South Kivu, and Haut Katanga. The banking penetration rate is about 7.6 percent, or about 5.3 million accounts, which places the country among the least banked nations in the world.

Mobile banking has the potential to significantly increase the banking customer base, as an estimated 35 million Congolese use cell phones. In the last five years, there has been an evolution and consolidation of prudential ratios or risk indicators of the banking sector and the introduction of alternative channels for financial service delivery and inclusion, such as Agency Banking and Mobile Banking. Mobile money continues to play an increasingly important role in financial inclusion in the DRC, as mobile money is a lever for economic and social inclusion. Over the past ten years, mobile money subscriptions in the DRC have increased by 20 percent per year.

There is no debt market. The financial health of DRC banks is fragile, reflecting high operating costs and exchange rates. In 2021 asset quality measures taken by the Central Bank allowed banks to absorb the economic impact of the COVID-19 pandemic. Fees charged by banks are a major source of revenue.

Statistics on non-performing loans are not available because many banks only record the balance due and not the total amount of their non-performing loans.

The financial system is primarily based on the banking sector, with total assets estimated at US$ 5.2 billion. Of the five largest banks, four are local and one is controlled by foreign holding companies. The five largest banks hold nearly 65 percent of bank deposits and more than 60 percent of total bank assets, or about $ 3.1 billion.

The country has an operating central banking system with Citigroup as the only correspondent bank.

All foreign banks or branches need to be accredited by the Central Bank, are considered Congolese banks with foreign capital, and fall under the provisions and regulations covering the credit institutions’ activities in the DRC.

There are no restrictions on a foreigner’s ability to establish a bank account in the DRC.

The DRC has no declared Sovereign Wealth Fund (SWF), although the 2018 Mining Code refers to creating a future fund “FOMIN” that will be capitalized by a percentage of mining revenues. In October 2021, the Extractive Industries Transparency Initiative Technical Secretariat organized a workshop to develop the FOMIN decree as well as tools for managing the shares of mining royalties accruing to the provinces and local entities.

Denmark has fully liberalized foreign exchange flows, including those for direct and portfolio investment purposes. Credit is allocated on market terms and is freely available. Denmark adheres to its IMF Article VIII obligations. The Danish banking system is under the regulatory oversight of the Financial Supervisory Authority. Differentiated voting rights – A and B stocks – are used to some extent, and several Danish companies are controlled by foundations, which can restrict potential hostile takeovers, including foreign takeovers.

The Danish stock market functions efficiently. In 2005, the Copenhagen Stock Exchange became part of the integrated Nordic and Baltic marketplace, OMX Exchanges, which is headquartered in Stockholm. Besides Stockholm and Copenhagen, OMX also includes the stock exchanges in Helsinki, Tallinn, Riga, and Vilnius. To increase the access to capital for primarily small companies, the OMX in December 2005 opened a Nordic alternative marketplace – “First North” – in Denmark. In February 2008, the NASDAQ-OMX Group acquired the exchanges. In the World Economic Forum 2019 report, Denmark ranked 11th out of 141 on the metric “Financial System.”

The Danish stock market is divided into four different branches/indexes. The C25 index contains the 25 most valuable companies in Denmark. Other large companies with a market value exceeding $1.05 billion (EUR 1 billion) are in the group of “Large Cap,” companies with a market value between $158 million (EU 150 million) and $1.05 billion (EUR 1 billion) belong to the “Mid Cap” segment, while companies with a market value smaller than $158 million (EU 150 million) belong to the “Small Cap” group.

The major Danish banks are rated by international agencies, and their creditworthiness is rated as high by international standards. The European Central Bank and the Danish National Bank reported that Denmark’s major banks have passed stress tests by considerable margins.

Denmark’s banking sector is relatively large; based on the ratio of consolidated banking assets to GDP, the sector is three times bigger than the national economy. By January 2022, the total of Danish shares valued $673.4 billion (DKK 4.24 trillion) and were owned 55.1 percent by foreign owners and 44.9 percent by Danish owners, including 13.5 percent held by households and 3.9 percent by the government. The three largest Danish banks – Danske Bank, Nordea Bank Danmark, and Jyske Bank – hold approximately 75 percent of the total assets in the Danish banking sector.

The primary goal of the Central Bank (Nationalbanken) is to maintain the peg of the Danish currency to the Euro – with allowed fluctuations of 2.25 percent. It also functions as the general lender to Danish commercial banks and controls the money supply in the economy.

As occurred in many countries, Danish banks experienced significant turbulence in 2008 – 2009. The Danish parliament subsequently passed a series of measures to establish a “safety net” program, provide government lending to financial institutions in need of capital to uphold their solvency requirements, and ensure the orderly winding down of failed banks. The parliament passed an additional measure, named Bank Package 4, in August 2011, which sought to identify systemically important financial institutions, ensure the liquidity of banks that assume control of a troubled bank, support banks acquiring troubled banks by allowing them to write off obligations of the troubled bank to the government, and change the funding mechanism for the sector-funded guarantee fund to a premiums-based, pay-as-you-go system. According to the Danish government, Bank Package 4 provides mechanisms for a sector solution to troubled banks without senior debt holder losses but does not supersede earlier legislation. As such, senior debt holder losses are still a possibility in the event of a bank failure.

On October 10, 2013, the Danish Minister for Business and Growth concluded a political agreement with broad political support which, based on the most recent financial statements, identified specific financial institutions as “systemically important” (SIFI). The SIFIs in Denmark as of June 2021, the most recent designation, are Danske Bank A/S, Nykredit Realkredit A/S, Nordea Kredit Realkreditaktieselskab, Jyske Bank A/S, Sydbank A/S, DLR Kredit A/S, Spar Nord Bank A/S and A/S Arbejdernes Landsbank. The government identified these institutions based on three quantitative measures: 1) a balance sheet to GDP ratio above 6.5 percent; 2) market share of lending in Denmark above 5 percent; or 3) market share of deposits in Denmark above 3 percent. If an institution is above the requirement of any one of the three measures, it will be considered systemically important and must adhere to the stricter requirements on capitalization, liquidity, and resolution. The Faroese SIFIs are P/F BankNordik, and Betri Banki P/F, while Grønlandsbanken is the only SIFI in Greenland.

The Danish government projected in May 2022 that Denmark’s debt to GDP ratio will decrease from approximately 42 percent at the end of 2020 to 33 percent by the end of 2023. The Ministry of Finance announced in May 2022 that Denmark ran a 2.3 percent budget surplus in 2021, and projects budget surpluses of 0.6 percent and 0.2 percent in 2022 and 2023, respectively.

Denmark maintains no sovereign wealth funds.

Denmark is party to the Government Procurement Agreement (GPA) within the framework of the WTO. State-owned enterprises (SOEs) hold dominant positions in rail, energy, utilities, and broadcast media in Denmark. Large-scale public procurement must go through public tender in accordance with EU legislation. Competition from SOEs is not considered a barrier to foreign investment in Denmark. As an OECD member, Denmark promotes and upholds the OECD Corporate Governance Principles and subsidiary SOE Guidelines.

Denmark has no current plans to privatize its SOEs.

Djibouti is open to and receptive of foreign investors. Djibouti does not have its own stock market, but some multinational companies with investments in Djibouti are publicly traded. Portfolio investment in Djibouti is primarily done through private equity investments in a given sector, rather than through purchase of securities. Investments in Djibouti are inherently illiquid for that reason, and the purchase or sale of any sizeable investment in Djibouti affects the market accordingly. Existing policies respect IMF Article VIII and allow the free flow of funds for international transactions.

Credit is allocated on market terms, and foreign companies do not face discrimination in obtaining it. Generally, however, only well-established businesses obtain bank credit, as the cost of credit is high. Credit is available to the private sector, whether foreign or domestic. Where credit is not available, it is primarily due to the associated risk and not structural factors.

Three large banks, Bank of Africa, Bank for Commerce and Industry – Mer Rouge, and CAC bank dominate Djibouti’s banking sector. While these three banks account for the majority share of deposits in-country, there are 13 total banks, all established in the last 14 years. The 2011 banking law fixed the minimum capital requirement for financial institutions at DJF 1 billion (USD 5,651,250) and also covers financial auxiliaries, such as money transfer agencies and Islamic financial institutions. In addition to the three names banks above, foreign banks include Silkroad Bank, Bank of China, and the Burkina Faso-based International Business Bank.

The banking sector suffers from a lack of consistent supervision, but it has been improving. Non-performing loans decreased from 16.26% in 2019 to 13.31% in 2020 and to 9.8% in 2021. The total assets of all the banks were estimated to be USD 3.1 billion in 2020, of which 80% were held by the four largest banks. The country has a Central Bank, which is in charge of delivering licenses to banks and supervising them. Foreign banks or branches are allowed to establish operations in the country. They are subject to the same regulations as local banks. Djibouti has not announced that it intends to implement or allow the implementation of blockchain technologies in its banking transactions. Some banks have begun to provide mobile and e-banking services. In June 2020, Djibouti Telecom launched D-Money, a Digital Mobile Money service which allows users to make digital money transfers and payments directly from mobile phones.

Foreign Exchange

Djibouti has no foreign exchange restrictions. Businesses are free to repatriate profits. There are no limitations on converting or transferring funds, or on the inflow and outflow of cash. The Djiboutian franc, which has been pegged to the U.S. dollar since 1949, is stable. The fixed exchange rate is 177.71 Djiboutian francs to the U.S. dollar. Funds can be transferred by using banks or international money transfer companies such as Western Union, all monitored by the Central Bank.

Remittance Policies

There are no recent changes or plans to change investment remittance policies. There are no time limitations on remittances. The government does not issue bonds on the open market, and cash-like instruments are not in common use in Djibouti, so direct currency transfers are the only practical method of remitting profits.

In mid-2020 the Djiboutian government announced the creation of a Sovereign Wealth Fund. According to a government statement, the state-owned fund targets investments locally and in neighboring countries in the Horn of Africa. It focuses on industries including telecommunications, technology, energy, and logistics. The fund acts as a long-term investor and is required to reinvest the entire net profits of its activity. The government aims to fund it to $1.5 billion within ten years. Article 12 of Law N° 75/AN/20/8th L, creating the Sovereign Fund of Djibouti, states the fund will adopt and implement best practice in terms of transparency and performance reporting in accordance with the Santiago Principles. As of late 2021, the fund was ramping up operations.

Law No. 75/AN/20/8th L establishing the Sovereign Fund of Djibouti – https://www.presidence.dj/texte/75-an-20-8eme-l-10332 

Decree No. 2020-127/PRE approving the statutes and determining certain initial resources of the Sovereign Fund of Djibouti – https://www.presidence.dj/texte/2020-127-pre-10361 

Decree No. 2020-111/PRE appointing the members of the Board of Directors and the Director General of the Sovereign Fund of Djibouti – https://www.presidence.dj/texte/2020-111-pre-10360 

Dominica is a member of the ECCU.  As such, it is a member of the Eastern Caribbean Securities Exchange (ECSE) and the Regional Government Securities Market.  The ECSE is a regional securities market established by the ECCB and licensed under the Securities Act of 2001, a uniform regional body of legislation governing the buying and selling of financial products for the eight member territories.  In 2021, the ECSE listed 164 securities, comprising 140 sovereign debt instruments, 13 equities, and 11 corporate debt securities.  Market capitalization stood at $1.9 billion. Dominica is open to portfolio investment.

Dominica has accepted the obligations of Article VIII of the IMF Agreement, Sections 2, 3, and 4 and maintains an exchange system free of restrictions on making payments and transfers for current international transactions.  Dominica does not normally grant foreign tax credits except in the case of taxes paid in a British Commonwealth country that grants similar relief for Dominica taxes or where an applicable tax treaty provides a credit.  The private sector has access to credit on the local market through loans, purchases of non-equity securities, trade credits, and other accounts receivable that establish a claim for repayment.

The eight participating governments of the ECCU have passed the Eastern Caribbean Central Bank Agreement Act.  The act provides for the establishment of the ECCB, its management and administration, its currency, relations with financial institutions, relations with the participating governments, foreign exchange operations, external reserves, and other related matters. Dominica is a signatory to this agreement and the ECCB controls Dominica’s currency and regulates its domestic banks.

The Banking Act is a harmonized piece of legislation across the ECCU.  The Minister of Finance usually acts in consultation with, and on the recommendation of, the ECCB with respect to those areas of responsibility within the Minister of Finance’s portfolio.

Domestic and foreign banks can establish operations in Dominica.  The Banking Act requires all commercial banks and other institutions to be licensed in order to conduct any banking business.  The ECCB regulates financial institutions.  As part of ongoing supervision, licensed financial institutions are required to submit monthly, quarterly, and annual performance reports to the ECCB.  In its latest annual report, the ECCB listed the commercial banking sector in Dominica as stable.  Assets of commercial banks totaled $781.8 million (2.1 billion Eastern Caribbean dollars) at the end of 2019. Dominica is well served by bank and non-financial institutions.  There are minimal alternative financial services.

The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S. and European banks.  CARICOM remains committed to engaging with key stakeholders on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to monitor the issue.

In 2019, the ECCB launched an 18-month financial technology pilot to launch a Digital Eastern Caribbean dollar (DXCD) with its partner, Barbados-based Bitt Inc.  An accompanying mobile application, DCash was officially launched in March 2021 in four pilot countries, adding Dominica to the pilot in December 2021. In January 2022, the platform experienced a system interruption, and its operation was suspended. The platform regained full functionality at the end of March 2022 following system upgrades. The digital Eastern Caribbean currency operates alongside physical Eastern Caribbean currency.  Dominica does not have any specific legislation to regulate cryptocurrencies.

Neither the Government of Dominica, nor the ECCB, of which Dominica is a member, maintains a sovereign wealth fund.

State-owned enterprises (SOEs) in Dominica work in partnership with ministries, or under their remit to carry out certain specific ministerial responsibilities.  The U.S. Embassy in Bridgetown is aware of 20 SOEs currently operating in areas such as tourism, investment services, broadcasting and media, solid waste management, and agriculture.  There is no published list of these SOEs.  They are all wholly owned government entities.  Each is headed by a board of directors to which senior management reports.  The SOE sector is affected by financial sustainability challenges, with resources insufficient to cover capital replacement.

Dominica does not currently have a targeted privatization program.

Dominica is a member of the ECCU.  As such, it is a member of the Eastern Caribbean Securities Exchange (ECSE) and the Regional Government Securities Market.  The ECSE is a regional securities market established by the ECCB and licensed under the Securities Act of 2001, a uniform regional body of legislation governing the buying and selling of financial products for the eight member territories.  In 2021, the ECSE listed 164 securities, comprising 140 sovereign debt instruments, 13 equities, and 11 corporate debt securities.  Market capitalization stood at $1.9 billion. Dominica is open to portfolio investment.

Dominica has accepted the obligations of Article VIII of the IMF Agreement, Sections 2, 3, and 4 and maintains an exchange system free of restrictions on making payments and transfers for current international transactions.  Dominica does not normally grant foreign tax credits except in the case of taxes paid in a British Commonwealth country that grants similar relief for Dominica taxes or where an applicable tax treaty provides a credit.  The private sector has access to credit on the local market through loans, purchases of non-equity securities, trade credits, and other accounts receivable that establish a claim for repayment.

The eight participating governments of the ECCU have passed the Eastern Caribbean Central Bank Agreement Act.  The act provides for the establishment of the ECCB, its management and administration, its currency, relations with financial institutions, relations with the participating governments, foreign exchange operations, external reserves, and other related matters. Dominica is a signatory to this agreement and the ECCB controls Dominica’s currency and regulates its domestic banks.

The Banking Act is a harmonized piece of legislation across the ECCU.  The Minister of Finance usually acts in consultation with, and on the recommendation of, the ECCB with respect to those areas of responsibility within the Minister of Finance’s portfolio.

Domestic and foreign banks can establish operations in Dominica.  The Banking Act requires all commercial banks and other institutions to be licensed in order to conduct any banking business.  The ECCB regulates financial institutions.  As part of ongoing supervision, licensed financial institutions are required to submit monthly, quarterly, and annual performance reports to the ECCB.  In its latest annual report, the ECCB listed the commercial banking sector in Dominica as stable.  Assets of commercial banks totaled $781.8 million (2.1 billion Eastern Caribbean dollars) at the end of 2019. Dominica is well served by bank and non-financial institutions.  There are minimal alternative financial services.

The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S. and European banks.  CARICOM remains committed to engaging with key stakeholders on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to monitor the issue.

In 2019, the ECCB launched an 18-month financial technology pilot to launch a Digital Eastern Caribbean dollar (DXCD) with its partner, Barbados-based Bitt Inc.  An accompanying mobile application, DCash was officially launched in March 2021 in four pilot countries, adding Dominica to the pilot in December 2021. In January 2022, the platform experienced a system interruption, and its operation was suspended. The platform regained full functionality at the end of March 2022 following system upgrades. The digital Eastern Caribbean currency operates alongside physical Eastern Caribbean currency.  Dominica does not have any specific legislation to regulate cryptocurrencies.

Neither the Government of Dominica, nor the ECCB, of which Dominica is a member, maintains a sovereign wealth fund.

State-owned enterprises (SOEs) in Dominica work in partnership with ministries, or under their remit to carry out certain specific ministerial responsibilities.  The U.S. Embassy in Bridgetown is aware of 20 SOEs currently operating in areas such as tourism, investment services, broadcasting and media, solid waste management, and agriculture.  There is no published list of these SOEs.  They are all wholly owned government entities.  Each is headed by a board of directors to which senior management reports.  The SOE sector is affected by financial sustainability challenges, with resources insufficient to cover capital replacement.

Dominica does not currently have a targeted privatization program.

The Dominican Stock Market (BVRD by its Spanish acronym) is the only stock exchange in the Dominican Republic. It began operations in 1991 and is viewed as a cornerstone of the country’s integration into the global economy and domestic development. It is regulated by the Securities Market Law No. 249-17 and supervised by the Superintendency of Securities, which approves all public securities offerings.

The private sector has access to a variety of credit instruments. Foreign investors are able to obtain credit on the local market but tend to prefer less expensive offshore sources. The Central Bank regularly issues certificates of deposit using an auction process to determine interest rates and maturities.

In recent years, the local stock market has continued to expand, in terms of the securities traded on the BVRD. There are very few publicly traded companies on the exchange, as credit from financial institutions is widely available and many of the large Dominican companies are family-owned enterprises. Most of the securities traded in the BVRD are fixed-income securities issued by the Dominican State.

On August 6, 2021, the Law 163-21 for the Promotion of the Placement and Marketing of Publicly Offered Securities in the Stock Market of the Dominican Republic was enacted as a complement to Law 249-17, to promote the issuance of shares by private and public companies. This law declares of national interest the promotion and development of the public offering of securities as a financing mechanism for the revitalization of the national economy, with special emphasis on the issuance of shares of private and public companies in the stock market of the Dominican Republic. Among the incentives proposed by Law 163-21, is the exemption of listed companies from the 1% tax for capital increase when they issue new shares during their first three years of validity. Likewise, during that same 3-year period, the Law reduces to 15% the rate of Income Tax applicable to Capital gains generated by the seller of a share listed on the stock exchange.

Dominican Republic’s financial sector is relatively stable, and the IMF declared the financial system satisfactory during 2021 Article IV consultations, however, directors agreed that while financial system remains resilient and well monitored, it would benefit from moving closer to international standards for supervision and regulation and enhancing the macroprudential and crisis management toolkit.

According to the first National Financial Inclusion Survey from the Central Bank, published on March 22, 2020, only 46.3 percent of Dominicans have a bank account. Financial depth is relatively constrained. Private lending to GDP (around 30.5 percent, according to the IMF) is low by international and regional standards, representing around half the average for Latin America. Real interest rates, driven in part by large interest rate spreads, are also relatively high. The country’s relatively shallow financial markets can be attributed to a number of factors, including high fiscal deficits crowding out private investment; complicated and lengthy regulatory procedures for issuing securities in primary markets; and high levels of consolidation in the banking sector.

Dominican banking consists of 112 entities, as follows: 47 financial intermediation entities (including large commercial banks, savings and loans associations, financial intermediation public entities, credit corporations), 41 foreign exchange and remittance agents (specifically, 35 exchange brokers and 6 remittances and foreign exchange agents), and 24 trustees. According to the latest available information (January 2022), total bank assets were $47.7 billion. The three largest banks hold 69.7 percent of the total assets – Banreservas 32.6 percent, Banco Popular 21.9 percent, and BHD Leon 16.4 percent. While full-service bank branches tend to be in urban areas, several banks employ sub-agents to extend services in more rural areas. Technology has also helped extend banking services throughout the country.

The Monetary and Banking system is regulated by the Monetary and Financial Law No. 183-02, and is overseen by the Monetary Board, the Central Bank, and the Superintendency of Banks. The mission of the Central Bank is to maintain the stability of prices, promote the strength and stability of the financial system, and ensure the proper functioning of payment systems. The Superintendency of Banks carries out the supervision of financial intermediation entities, in order to verify compliance by said entities with the provisions of the law.

Foreign banks may establish operations in the Dominican Republic, although it may require a special decree for the foreign financial institution to establish domicile in the country. Foreign banks not domiciled in the Dominican Republic may establish representative offices in accordance with current regulations. To operate, both local and foreign banks must obtain the prior authorization of the Monetary Board and the Superintendency of Banks. Major U.S. banks have a commercial presence in the country, but most focus on corporate banking services as opposed to retail banking. Some other foreign banks offer retail banking. There are no restrictions on foreigners opening bank accounts, although identification requirements do apply.

The Dominican government does not maintain a sovereign wealth fund.

The legacy of autocratic rule in the mid-twentieth century and the practice of distributing social services as political patronage have resulted in a relatively larger role for state-actors in the Dominican economy when compared with the United States. Since 1997, by means of the approval of the General Law of Reform of Public Companies No. 141-97, State-Owned Enterprises (SOEs) have been on the decline and do not have as significant a presence in the economy as they once did, with most functions now performed by privately held firms. Notable exceptions are in the electricity, banking, mining, and refining sectors.

The Dominican Corporation of State Enterprises (CORDE) was established by Law No. 289 of June 30, 1966, with the purpose of managing, directing, and developing all the productive and commercial companies, goods, and rights ceded by the Dominican State as a result of the death of the dictator Rafael Leónidas Trujillo. Among the state-owned companies that came to be managed by CORDE are the salt, gypsum, marble, and pozzolana mines. In 2017, the dissolution of CORDE was entrusted to a Commission chaired by the Legal Consultancy of the Executive Power, which assumed the operational, administrative, and financial management of this entity until the dissolution process was definitively completed. Within the framework of the dissolution process of CORDE, the ownership of the mining concessions of the Dominican State was transferred to the Patrimonial Fund of Reformed Companies (FONPER) through the Mining Concessions Transfer Agreement between CORDE and FONPER dated July 2, 2020.

Shortly after being sworn into office, in August 2020, President Abinader issued Decree 422-20 forming the Commission for the Liquidation of State Organs (CLOE) under the charge of the Ministry of the Presidency. Since then, the CLOE has been in the process of dissolution and liquidation of CORDE, and on December 8, 2020, CLOE requested the FONPER Board of Directors revoke the Concessions Transfer Agreement. FONPER’s Board of Directors approved the revocation through Minutes No. 02-2021 of March 11, 2021, authorizing the president of FONPER to sign an agreement with CLOE that revokes and nullifies the Transfer Agreement. It is not clear whether this revocation has been completed.

In 2021, the Office of the President proposed a bill to regulate government business assets, government participation in public trusts, and to create the National Center for Companies and Public Trusts (CENEFIP). The bill’s intent is to reform the management of state assets and replace the disgraced Patrimonial Fund of Reformed State Enterprises (FONPER), which is being investigated for alleged irregularities that may have personally benefited politically affiliated persons. The CENEFIP bill is under review in the legislature.

Also in 2021, the executive branch transferred the functions and properties of the State Sugar Council [Consejo Estatal del Azúcar] to the Directorate General of National Assests [Dirección General de Bienes Nacionales]. The State Sugar Council maintains one remaining sugar mill, Porvenir.

In the partially privatized electricity sector, private companies mainly provide electricity generation, while the government handles the transmission and distribution phases via the Dominican Electric Transmission Company (ETED) and the Dominican Corporation of State Electrical Companies (CDEEE). This sector is undergoing additional reforms, including the dissolution of the CDEEE and privatization of the management and operation of the distribution companies. The CDEEE and the distribution companies have traditionally been the largest SOEs in terms of government expenditures. The government also participates in the generation phase, too (most notably in hydroelectric power), and one of the distribution companies is partially privatized.

The Dominican financial sector consists of 112 entities, as follows: 47 financial intermediation entities (including large commercial banks, savings and loans associations, financial intermediation public entities, credit corporations), 41 foreign exchange and remittance agents (specifically, 35 exchange brokers and 6 remittances and foreign exchange agents), and 24 trustees. According to the latest available information (January 2022), total bank assets were $47.7 billion. The three largest banks hold 69.7 percent of the total assets – Banreservas 32.6 percent, Banco Popular 21.9 percent, and BHD Leon 16.4 percent. The state-owned, but autonomously operated BanReservas is the largest bank in the country and is a market leader in lending and deposits. Part of this success is due to a requirement for government employees to open accounts with BanReservas in order to receive salary payments. BanReservas was also utilized to distribute government social support payments during the pandemic. Roughly a third of the bank’s lending portfolio is to government institutions.

In the refining sector, the government is now the exclusive shareholder of the country’s only oil refinery; Refinery Dominicana (Refidomsa), after having extricated Petroleos de Venezuela, S.A. (PDVSA) in August 2021. Refidomsa operates and manages the refinery, is the only importer of crude oil in the country, and is also the largest importer of refined fuels, with a 60 percent market share. The price for fuel products is set by the Ministry of Industry, Commerce, and SMEs. Fuel prices are heavily subsidized.

Law No. 10-04 requires the Chamber of Accounts to audit SOEs. Audits should be published at https://www.camaradecuentas.gob.do/index.php/auditorias-publicadas . While audits have not always been publicly available, the new President of the Chamber is making a concerted effort to conduct and publish all audits required by law.

Partial privatization of state-owned enterprises (SOEs) in the late 1990s and early 2000s resulted in foreign investors obtaining management control of former SOEs engaged in activities such as electricity generation, airport management, and sugarcane processing. In the electricity sector, these reforms were reversed between 2003 and 2009, but have largely remained in place for other sectors.

Major reforms for the electricity sector, as outlined in the National Pact for Energy Reform signed February 2021, are ongoing. Plans for dissolving the CDEEE are in process, with the organization functional in name only, and the Ministry of Energy and Mines having assumed many of the authorities conferred to the CDEEE upon its founding in 2001 and across its 20-year life span. Complete dissolution and final distribution of authorities remains a legal question, which is currently being reviewed by the President’s legal advisor and the Ministry of Energy and Mines.

The DGAPP has taken the first step to improve the governance and performance of electricity distribution companies through the introduction of private sector participation. On November 29, 2021, the DGAPP publicly accepted for detailed evaluation an application submitted by the Board of the Electricity Distribution Companies (Consejo Unificado de las Empresas Distribuidoras de Electricidad) for a Public Private Partnership (PPP) covering the three state-owned distribution companies. The DGAPP Resolution No. 89/2021 follows the process in the PPP Law (Law No. 47-20), whereby any public or private entity wishing to propose a PPP must submit a formal proposal and justification to the DGAPP. Government officials expect the process to privatize the management and operation of the electricity distribution companies to begin in earnest in the summer of 2022 with the release of tender documents. All indications are that foreign firms will be invited to participate in these tenders. Questions should be directed toward the Ministry of Energy and Mines ( https://mem.gob.do/ ) or DGAPP ( https://dgapp.gob.do/en/home/ ).

The 2014 Law to Strengthen and Optimize Business Partnerships and Stock Markets created the Securities Market Regulation Board to oversee the stock markets. Investment options on the Quito and Guayaquil stock exchanges are very limited. Sufficient liquidity to enter and exit sizeable positions does not exist in the local markets. The five percent capital exit tax also inhibits free flow of financial resources into the product and factor markets. Ecuador is a small market that has relied almost exclusively on the financial sector to undertake medium and short-term financing operations. Foreigners can access credit on the local market. In 2021, the Central Bank of Ecuador (BCE) designed a new methodology to set interest rates aimed at increasing financial inclusion and including technical factors for better determination. Despite these changes, the Government continues setting interest rate ceilings and controls.

Ecuador is a dollarized economy, and its banking sector is healthy. According to the Ecuadorian Central Bank’s Access to the Financial System Report, as of September 2020, 75 percent of the adult (over 15 years old) population (8.5 million people) has access to financial products and services. As of December 2021, Ecuador’s banks hold in total USD 51.9 billion in assets, with the largest banks being Banco Pichincha with USD 13.3 billion in assets, Banco del Pacifico with USD 6.9 billion, Banco de Guayaquil with USD 6.3 billion, and Produbanco with USD 6.1 billion. The Banking Association (ASOBANCA) estimates 2.3 percent of loans are non-performing. Foreigners require residency to open checking accounts in Ecuador.

Ecuador’s Superintendence of Banks regulates the financial sector. Between 2012 and 2013, the financial sector was the target of numerous new restrictions. By 2012, most banks had sold off their brokerage firms, mutual funds, and insurance companies to comply with Constitutional changes following a May 2010 referendum. The amendment to Article 312 of the Constitution required banks and their senior managers and shareholders with more than six percent equity in financial entities to divest entirely from any interest in all non-financial companies by July 2012. These provisions were incorporated into the Anti-Monopoly Law passed in September 2011.

The 2021 Law for the Defense of Dollarization established that the Monetary and Financial Policy and Regulation Board be divided into a Monetary Policy and Regulation Board and a Financial Policy and Regulation Board. The latter should oversee the interest rate system jointly with the BCE as the technical entity. The law gives the Financial Policy and Regulation Board the ability to prioritize certain sectors for lending from private banks. There are 24 private banks in Ecuador as of December 2021.

A 2018 BCE resolution that ordered electronic money accounts closure effectively eliminated electronic currency. However, banks handle transactions by electronic or digital means for transferences and/or payments to transfer resources and/or payments according to the authorization of the Superintendence of Banks. BCE resolutions were integrated into the Codification of Monetary, Financial, Insurance, and Securities Resolutions. This regulatory body requires all financial transfers (inflows and outflows) to be channeled through the BCE’s accounts. In principle, the regulation increases monetary authorities’ oversight and prevents banks from netting their inflows and outflows to avoid paying the five percent currency exit tax.

The Government of Ecuador does not maintain a Sovereign Wealth Fund (SWF). Approved in July 2020, Ecuador’s Public Finance Law (COPLAFIP) established a Fiscal Stabilization Fund to invest excess revenues from extractive industries and hedge against oil and metal price fluctuations.

Ecuador has a total of 17 SOEs. The major SOEs include those for petroleum (Petroecuador), electricity (Electricity Corporation of Ecuador – CELEC – and the National Corporation for Electricity – CNEL), and telecommunications (National Corporation of Telecommunications – CNT). The 17 SOEs combined have approximately 30,000 employees. As part of the government’s austerity measures to deal with the COVID-19-related economic crisis, the Lasso administration continued with the SOE liquidation processes started in May 2020. As of September 2021, there were three liquidated SOEs (Manufacture Ecuador, Pharmaceutical Public Company, Public Cement Company) and eight in the process of liquidation, including the state-owned airline (TAME), railroad company (Ecuadorian Railways Company), a social development firm using profits from natural resource revenues (Strategic Ecuador), training centers for athletes (High Performance Training Centers), an agricultural storage company (National Storage Units), the public media company, and a science and technology research firm (Siembra EP, formerly Yachay City of Knowledge). In February 2021, the government announced that Ecuador Post Office will be replaced by Ecuador Postal Services (SPE). Ecuador’s Coordinator of Public Companies maintains a list of SOEs at: https://www.emco.gob.ec/Emco2/empresas-publicas-2/ .

The 2009 Organic Law of Public Enterprises regulates SOEs. SOEs are most active in areas designated by the 2008 Constitution as strategic sectors. SOEs follow a special procurement regime with greater flexibility and limited oversight. The Law of Public Enterprises requires SOEs to follow generally accepted accounting principles. Still, SOEs are not required to follow the same accounting practices as the central government, nor do they have to participate in the electronic financial management system used in most of the public sector for budget and accounting management. SOEs are eligible for government guarantees and face lower tax burdens than private companies. SOEs generally do not have professionally audited financial statements. The Ministry of Economy and Finance approves SOEs’ annual budgets and often slows distribution of funds to SOEs to compensate for other government expenditures.

Ecuador is not party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization.

The Ecuadorian Constitution prohibits privatization of state-owned enterprises. Still, the Ecuadorian government is seeking to offer long-term concessions and joint-venture agreements with its SOEs to operate some of its assets in strategic sectors including oil and gas exploration and production, electricity generation, and mining. In addition, MPCEIP is considering projects to be developed as potential PPPs.

To date, high returns on Egyptian government debt have crowded out Egyptian investment in productive capacity.  As of February 2022, loans to the government and government-related entities accounted for 67 percent of banks’ assets, and Egypt’s debt-to-GDP ratio was 91.4 percent at the end of 2021. Meanwhile, consistently positive and relatively high real interest rates have attracted large foreign capital inflows since 2017, most of which has been volatile portfolio capital.  Foreign investors sold $1.19 billion of Egyptian treasury bonds following Russia’s full-scale invasion of Ukraine in February 2022.

The Egyptian Stock Exchange (EGX) is Egypt’s registered securities exchange. Some 246 companies were listed on the EGX, including Nilex, as of February 2022. There were more than 3.3 million investors registered to trade on the exchange in July 2021.  Stock ownership is open to foreign and domestic individuals and entities.  The Government of Egypt issues dollar-denominated and Egyptian Pound-denominated debt instruments, for which ownership is open to foreign and domestic individuals and entities.  Foreign investors conducted 18.3 percent of sales on the EGX in 2021. In September 2020, the GoE issued the region’s first sovereign green bonds with a value of $750 million. The GoE issued Eurobonds worth $11.75 billion in 2020 and 2021, and issued its first $500 million Japanese Yen-dominated bond in March 2022. The government has announced its intention to issue its first sovereign sukuk bonds and additional green bonds during the remainder of 2022.

The Capital Market Law 95 of 1992, along with Banking Law 94 that President Sisi ratified in September 2020, constitute the primary regulatory frameworks for the financial sector.  The law grants foreigners full access to capital markets, and authorizes establishment of Egyptian and foreign companies to provide underwriting of subscriptions, brokerage services, securities and mutual funds management, clearance and settlement of security transactions, and venture capital activities.  The law specifies mechanisms for arbitration and legal dispute resolution and prohibits unfair market practices.  Law 10 of 2009 created the Egyptian Financial Supervisory Authority (EFSA) and brought the regulation of all non-banking financial services under its authority.  In 2017, EFSA became the Financial Regulatory Authority (FRA).

Settlement of transactions takes one day for treasury bonds and two days for stocks.  Although Egyptian law and regulations allow companies to adopt bylaws limiting or prohibiting foreign ownership of shares, virtually no listed stocks have such restrictions.  A significant number of the companies listed on the exchange are family-owned or -dominated conglomerates, and free trading of shares in many of these ventures, while increasing, remains limited.  Companies are de-listed from the exchange if not traded for six months.

Prior to November 2020, foreign companies listing on the EGX had to possess minimum capital of $100 million. With the FRA’s passage of new rules, foreign companies joining the EGX must now meet lesser requirements matching those for Egyptian companies: $6.4 million (100 million EGP) for large companies and between $63,000 and $6.4 million (1-100 million EGP) for smaller companies, depending on their size. Foreign businesses are only eligible for these lower minimum capital requirements if the EGX is their first exchange and if they attribute more than 50 percent of their shareholders’ equites, revenues, and assets to Egyptian subsidiary companies.

A capital gains tax of 10 percent on Egyptian tax residents came into force in January 2022 after more than 6 years of suspension, then it was decreased in March to 5 percent for two years. The rate will rise to 7.5 percent once this period ends. Capital increases and share-swaps between listed and unlisted companies will not be taxed. Non-tax residents and foreigners are permanently tax-exempt. The government also set the stamp tax on stock market transactions by non-tax residents at 0.125 percent and at 0.05 percent for tax residents on unlisted securities. Tax residents are exempted from stamp tax on listed securities.

Foreign investors can access Egypt’s banking system by opening accounts with local banks and buying and selling all marketable securities with brokerages.  The government has repeatedly emphasized its commitment to maintaining the profit repatriation system to encourage foreign investment in Egypt, especially since the pound flotation and implementation of the IMF loan program in November 2016.  The current system for profit repatriation by foreign firms requires sub-custodian banks to open foreign and local currency accounts for foreign investors (global custodians), which are exclusively maintained for stock exchange transactions.  The two accounts serve as a channel through which foreign investors process their sales, purchases, dividend collections, and profit repatriation transactions using the bank’s posted daily exchange rates.  The system is designed to allow for settlement of transactions in fewer than two days, though in practice some firms have reported significant delays in repatriating profits due to problems with availability.  Foreign firms and individuals continue to report delays in repatriating funds and problems accessing hard currency for the purpose of repatriating profits.

The Egyptian credit market, open to foreigners, is vibrant and active. Repatriation of investment profits has become much easier, as there is enough available hard currency to execute foreign exchange (FX) trades. Since the flotation of the Egyptian Pound in November 2016, FX trading is considered straightforward, given the re-establishment of the interbank foreign currency trading system.  There have been no reports of difficulties executing FX transactions following the CBE’s interest rate hike and currency devaluation in March, 2022.

Thirty-eight banks operate in Egypt, including several foreign banks. The CBE has not issued a new commercial banking license since 1979. The only way for a new commercial bank, whether foreign or domestic, to enter the market (except as a representative office) is to purchase shares in an existing bank. According to the CBE, banks operating in Egypt held nearly $448 billion (8.6 trillion EGP) in total assets as of December 2021, generating a total profit of $6.8 billion with the five largest banks generating 74 percent, or $5 billion (79 billion EGP).

Egypt’s banking sector is generally regarded as well-capitalized, due in part to its deposit-based funding structure and ample liquidity, especially since the flotation and restoration of the interbank market.  The CBE declared that 3.5 percent of the banking sector’s loans were non-performing by December 2021. However, since 2011, a high level of exposure to government debt, accounting for two-thirds of banks’ assets as of February 2022, has reduced the diversity of bank balance sheets and crowded out domestic investment. Moody’s and S&P consider Egypt’s banking system to be stable, although S&P classifies it as facing high levels of economic and financial system risk due to its high exposure to sovereign debt and the government’s external funding vulnerabilities. In February 2022, S&P affirmed Egypt’s government issuer rating of B stable due to the government’s relatively low issuance of foreign currency loans and relatively low external government debt.

Benefitting from the nation’s increasing economic stability, Egypt’s banks have enjoyed both ratings upgrades and continued profitability. Banking competition is serving a largely untapped retail segment and the nation’s challenging, but potentially rewarding, small and medium-sized enterprise (SME) segment.

The Central Bank of Egypt (CBE) requires that banks direct 25 percent of their lending to SMEs.  Over the past two years, the Central Bank has launched a subsidized loan program worth $16 billion (253 billion EGP) to spur domestic manufacturing, agriculture, and real state development. Also, with only one-third of Egypt’s adult population owning or sharing an account at a formal financial institution (according press and comments from contacts), the banking sector has potential for growth and higher inclusion, which the government and banks discuss frequently. A low median income plays a part in modest banking penetration.

The CBE has taken steps to work with banks and technology companies to expand financial inclusion.  The employees of the government, one of the largest employers, must now have bank accounts because salary payment is through direct deposit. The CBE approved new procedures in October 2020 to allow deposits and the opening of new bank accounts with only a government-issued ID, rather than additional documents. The maximum limits for withdrawals and account balances also increased. In July 2020, President Sisi ratified a new Micro, Small and Medium Enterprises (MSMEs) Development Law (Law 152 of 2020) that will provide incentives, tax breaks, and discounts for small, informal businesses willing to register their businesses and begin paying taxes.

As an attempt to keep pace with best practices and international norms, President Sisi ratified a new Banking Law, Law 94 of 2020, in September 2020. The law establishes a National Payment Council headed by the President to move Egypt away from cash and toward electronic payments; establishes a committee headed by the Prime Minister to resolve disputes between the CBE and the Ministry of Finance; establishes a CBE unit to handle complaints of monopolistic behaviors; requires banks to increase their cash holdings to $320 million (5 billion EGP), up from the prior minimum of $32 million (500 million EGP); and requires banks to report deficiencies in their own audits to the CBE.

The chairman of the EGX stated that Egypt is exploring the use of blockchain technologies across the banking community. The FRA will regulate how the banking system adopts the fast-developing blockchain systems into banks’ back-end and customer-facing processing and transactions. The Central Bank developed a national fintech and innovation strategy in March 2019, and the government has issued regulations to incentivize mobile and electronic payments. The Central Bank launched in March 2022 a new mobile application, InstaPay, which allows Egyptian banking customers to perform instant bank and payments transactions. At the end of 2021 Egypt was among the top four African countries for fintech investment, with investments in fintech startups quadrupling between 2020 and 2021, reaching $159 million. According to research firm Magnitt, Egyptian startups received $509 million in venture capital investments in 2021, with a 100 percent year-on-year compound annual growth rate between 2017 and 2021.

Since 2020, the Central Bank has prohibited all dealings with cryptocurrencies: the issuance of them, trading in them, promoting them, and establishing or operating platforms for their trading.

Alternative financial services in Egypt are extensive, given the large informal economy, estimated to account for between 30 and 50 percent of GDP. Informal lending is prevalent, but the total capitalization, number of loans, and types of terms in private finance is less well known.

The 1992 U.S.-Egypt Bilateral Investment Treaty provides for free transfer of dividends, royalties, compensation for expropriation, payments arising out of an investment dispute, contract payments, and proceeds from sales. Prior to reform implementation throughout 2016 and 2017, large corporations had been unable to repatriate local earnings for months at a time, but repatriation of funds is no longer restricted.

The Investment Incentives Law (Law 72 of 2017) stipulates that non-Egyptian employees hired by projects established under the law are entitled to transfer their earnings abroad. Conversion and transfer of royalty payments are permitted when a patent, trademark, or other licensing agreement has been approved under the Investment Law.

Banking Law 94 of 2020 regulates the repatriation of profits and capital. The current system for profit repatriation by foreign firms requires sub-custodian banks to open foreign and local currency accounts for foreign investors (global custodians), which are exclusively maintained for stock-exchange transactions. The two accounts serve as a channel through which foreign investors process their sales, purchases, dividend collections, and profit-repatriation transactions using the bank’s posted daily exchange rates. The system is designed to allow for settlement of transactions in less than two days, though in practice some firms have reported short delays in repatriating profits due to the steps involved in processing.

Egypt’s sovereign wealth fund (SWF), approved by the Cabinet and launched in late 2018, holds 200 billion EGP ($12.5 billion) in authorized capital as of July 2021.  The SWF aims to invest state funds locally and abroad across asset classes and manage underutilized government assets. The sovereign wealth fund focuses on sectors considered vital to the Egyptian economy, particularly industry, energy, and tourism, and has established four new sub-funds covering healthcare, financial services, real estate, and infrastructure while plans to establish another two sub-funds for education and technology. The SWF participates in the International Forum of Sovereign Wealth Funds.

State and military-owned companies compete directly with private companies in many sectors of the Egyptian economy. Although Public Sector Law 203 of 1991 states that state-owned enterprises (SOEs) should not receive preferential treatment from the government or be accorded exemptions from legal requirements applicable to private companies, in practice SOEs and military-owned companies enjoy significant advantages, including relief from regulatory requirements. IMF reports show that Egyptian SOEs have an average return on assets of just two percent and are only one-fourth as productive as private companies. Some 40 percent of SOEs are loss-making, despite access to subsidized capital and owning assets worth more than 50 percent of GDP. Profitable SOEs, meanwhile, tend to exploit a natural monopoly or hold exclusive rights to public assets. Few of Egypt’s 300 state-owned companies, 645 joint ventures, and 53 economic authorities release regular financial statements.

SOEs in Egypt are structured as individual companies controlled by boards of directors and grouped under government holding companies that are arranged by industry, including Petroleum Products & Gas, Spinning & Weaving; Metallurgical Industries; Chemical Industries; Pharmaceuticals; Food Industries; Building & Construction; Tourism, Hotels, & Cinema; Maritime & Inland Transport; Aviation; and Insurance. The holding companies are headed by boards of directors appointed by the Prime Minister with input from the relevant Minister.

The Egyptian government has announced plans to privatize shares of SOEs several times since 2018, but has only carried out a small number of sales. It sold a minority stake in the Eastern Tobacco Company in March 2018, a 26 percent share of state-owned e-payment firm E-Finance in October 2021, and a 10 percent share of Abu Qir Fertilizers in December 2021. In December 2020 the government announced plans to sell stakes in two military-owned companies and in February 2022 added a handful of other SOEs to the list, but scaled back those plans following Russia’s war against Ukraine. The government has indefinitely delayed plans for privatizing stakes in 20 other SOEs, including up to 30 percent of the shares of Banque du Caire, due to adverse market conditions and increased global volatility. Egypt’s privatization program is based on Public Enterprise Law 203/1991, which permits the sale of SOEs to foreign entities.

Law 32 of 2014 limits the ability of third parties to challenge privatization contracts between the Egyptian government and investors. The law was intended to reassure investors concerned by legal challenges brought against privatization deals and land sales dating back to the pre-2008 period. Court cases at the time Parliament passed the law had put many of these now-private firms, many of which are foreign-owned, in legal limbo over concerns that they may be returned to state ownership.

The Superintendent of the Financial System ( https://www.ssf.gob.sv/ ) supervises individual and consolidated activities of banks and non-bank financial intermediaries, financial conglomerates, stock market participants, insurance companies, and pension fund administrators. Foreign investors may obtain credit in the local financial market under the same conditions as local investors. Interest rates are determined by market forces, with the interest rate for credit cards and loans capped at 1.6 times the weighted average effective rate established by the Central Bank. The maximum interest rate varies according to the loan amount and type of loan (consumption, credit cards, mortgages, home repair/remodeling, business, and microcredits).

In January 2019, El Salvador eliminated a Financial Transactions Tax (FTT), which was enacted in 2014 and greatly opposed by banks.

The Securities Market Law establishes the framework for the Salvadoran securities exchange. Stocks, government and private bonds, and other financial instruments are traded on the exchange, which is regulated by the Superintendent of the Financial System.

Foreigners may buy stocks, bonds, and other instruments sold on the exchange and may have their own securities listed, once approved by the Superintendent. Companies interested in listing must first register with the National Registry Center’s Registry of Commerce. In 2021, the exchange traded $3.7 billion, with average daily volumes between $12 million and $30 million. Government-regulated private pension funds, Salvadoran insurance companies, and local banks are the largest buyers on the Salvadoran securities exchange. For more information, visit: https://www.bolsadevalores.com.sv/ 

All but two of the major banks operating in El Salvador are regional banks owned by foreign financial institutions. Given the high level of informality, measuring the penetration of financial services is difficult; however, it remains relatively low, between 30 percent – according to the Salvadoran Banking Association (ABANSA) – and 37 percent – reported by the Superintendence of the Financial System (SSF). The banking system is sound and generally well-managed and supervised. El Salvador’s Central Bank is responsible for regulating the banking system, monitoring compliance of liquidity reserve requirements, and managing the payment systems. No bank has lost its correspondent banking relationship in recent years. There are no correspondent banking relationships known to be in jeopardy.

The banking system’s total assets as of December 2021 were $21.1 billion. Under Salvadoran banking law, there is no difference in regulations between foreign and domestic banks and foreign banks can offer all the same services as domestic banks.

The Cooperative Banks and Savings and Credit Associations Law regulates the organization, operation, and activities of financial institutions such as cooperative banks, credit unions, savings and credit associations, and other microfinance institutions. The Money Laundering Law requires financial institutions to report suspicious transactions to the Attorney General. Despite having regulatory scheme in place to supervise the filing of reports by cooperative banks and savings and credit associations, these entities rarely file suspicious activity reports.

The Insurance Companies Law regulates the operation of both local and foreign insurance firms. Foreign firms, including U.S., Colombian, Dominican, Honduran, Panamanian, Mexican, and Spanish companies, have invested in Salvadoran insurers.

El Salvador does not have a sovereign wealth fund.

El Salvador has successfully liberalized many sectors, though it maintains state-owned enterprises (SOEs) in energy generation and transmission, water supply and sanitation, ports and airports, and the national lottery (see chart below).

Although the GOES privatized energy distribution in 1999, it maintains significant energy production facilities through state-owned Rio Lempa Executive Hydroelectric Commission (CEL), a significant producer of hydroelectric and geothermal energy.

In October 2021, El Salvador’s legislature enacted the Creation Law of the Power, Hydrocarbons, and Mines General Directorate. The new General Directorate will be responsible for dictating the national energy policy and proposing amendments to energy legislation and by-laws, as well as implementing the energy policy. The law allows the President of the state-owned power company (CEL) to serve as the Director General of the new entity. The law will enter into force in November 2022. Industry stakeholders are concerned about the potential conflict of interest that would result from CEL making energy policy and participating in the sector as SOE.

The primary water service provider is the National Water and Sewer Administration (ANDA), which provides services to 96.6 percent of urban areas and 77 percent of rural areas in El Salvador.

The Autonomous Executive Port Commission (CEPA) operates both the seaports and the airports. CEL, ANDA, and CEPA Board Chairs hold Minister-level rank and report directly to the President.

The Law on Public Administration Procurement and Contracting (LACAP) covers all procurement of goods and services by all Salvadoran public institutions, including the municipalities. Exceptions to LACAP include: procurement and contracting financed with funds coming from other countries (bilateral agreements) or international bodies; agreements bet