Central Bank of Samoa tightens controls on foreign payments
APIA, Samoa — Dividends, land sale income, insurance payments, management fees and airline ticket payments over $1 million tala (US$425,800) are all to come under new exchange controls from next month.
On Friday, the Central Bank of Samoa released a statement signed by Governor Maiava Atalina Ainu’u-Enari, covering the different areas.
“After consultations with commercial banks and money transfer operators, the Central Bank of Samoa wishes to inform the public that, effective from 3rd March 2014, the prevailing exchange control requirements have been revised as follows; “Insurance Payments – All Insurance Payments to be referred to Central Bank of Samoa for prior approval; “Management Fees – All payments relating to Management fees are to be referred to Central Bank of Samoa for prior approval; “Airline Ticket Sales – Payments for Airline Ticket Sales in excess of SAT1.0million is to be referred to C.B.S. for approval.”
But the new controls are not just in those three highlighted areas. All capital payments must also be referred to CBS for prior approval, said the bank. These foreign exchange payments include “dividends, funds for investments overseas, proceeds from sale of property, overseas borrowings, overseas loan repayments, etc.”
The statement did not explain the reasons for the changes. In a separate “Exchange Control Booklet”, the bank said that, “The Central Bank of Samoa has progressively relaxed its exchange control policy over the years since the liberalization of the financial system in January 1998.
“However, the Central Bank regularly reviews its exchange control policy guidelines from time to time, based on the prevailing financial and liquidity conditions in the domestic economy.”
These “liquidity” concerns may refer to a tightening money supply situation although this could not be confirmed, with the latest available statistics dating back to February 2012.
On another website page relating to changes in exchange control, the bank refers to “economic stability.”
“In administering the Exchange Control Regulations 1999, the Central Bank ensures that the country’s foreign exchange reserves are maintained at a sustainable level which is conducive to the country’s financial and economic stability.”
Latest available figures, for March 2013, show that commercial bank loans to the private sector were at their highest ever levels, at $722 million tala (US$307 million). This compares with the earliest figures under the same document, of $488 million tala (US$208 million) in loans in 2006.
The documents do not disclose public debts. But overseas financial institutions like the World Bank have recently expressed concerns about high levels of national debt.
This background may explain the tightening exchange control requirements. Special exemptions to these requirements may be granted by the Central Bank on a case by case basis, C.B.S. said on Friday.
Applications submitted to the Central Bank of Samoa with relevant documentations generally take up to 3 days to process.
“This processing time can be shortened when verification and supporting documents are intact.”
Authorised banks and money transfer operators have been delegated authority to make payments for all other overseas commitments, following relaxation of Exchange Control policy requirements since 2000.
“The general public is reminded to cooperate and ensure that proper supporting documentations are made available to the commercial banks and money transfer operators when processing overseas payments.
“Approval of overseas payments may not be granted unless appropriate requested documents are sighted.”
As well, “all exporters are also reminded to provide relevant documentations and complete your export forms (Form E) at the Central Bank, before proceeding to Customs department.”
Customers are advised to contact the bank for further clarification and assistance on any foreign exchange control matters.
Credit: Island Business