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THE BANK OF ISRAEL ANNOUNCES THE IMPLEMENTATION OF ADDITIONAL FOREIGN-CURRENCY LIBERALIZATION MEASURES
Residents of Israel who are abroad are permitted to open foreign-currency accounts in banks abroad.
Residents and nonresidents traveling abroad are permitted to purchase $ 1,000 at a border crossing point upon leaving Israel, without having to present documentation.
The time-limit on paying advances for imports and receiving export proceeds is abolished.
An Israeli company that issues securities abroad is permitted to place the proceeds of the offering in a bank deposit abroad.
The Bank of Israel today announced the removal of several foreign-exchange controls as part of the process of foreign-currency liberalization. These measures in effect complete the process of relaxing restrictions on residents, as announced by the Minister of Finance and the Governor of the Bank of Israel in August 1997. The remaining measures, which relate to nonresidents, will be implemented once the necessary preparations have been made by the Bank of Israel and the government ministries concerned.
The Bank of Israel pointed out that the object of the measures whose implementation was announced today is to make it easier for the general public to conduct foreign-currency transactions, affording it greater flexibility in managing its portfolio and reducing the red tape involved.
Relaxation of foreign exchange control regulations
Residents who are abroad are permitted to open and manage a bank account there, in which they may deposit foreign currency originating abroad as well as foreign currency taken out of Israel legally. Before returning to Israel, the resident must close the account, unless he or she is an exempt person, or if their visit to Israel is for less than 30 days. The main purpose of this change is to make matters easier for residents who are abroad for extended periods, such as for work or study.
To date, residents who were abroad were permitted to open and manage a bank account abroad only after being there for 180 days.
An Israeli company that issues securities abroad is permitted to deposit the proceeds of the offering in a bank account abroad, and use this money for any purpose permitted under the foreign exchange control regulations, including direct and portfolio investment abroad. The object of this change is to make it easier for the business sector to conduct its foreign-exchange affairs without red tape and the need to obtain special permits. At the same time, a company must report foreign-exchange transactions in its account abroad to the Controller of Foreign Exchange.
Till now, every Israeli company issuing securities abroad was required to request a special permit in order to deposit the proceeds of the offering in a bank account abroad.
Residents and nonresidents are permitted to buy up to $ 1,000 upon leaving Israel, at a border crossing point, without presenting any documentation or identification. The Bank of Israel noted that this amount is part of the allowance permitted to residents (currently up to $ 7,000). This change is intended to make matters easier for the public and reduce the bureaucracy involved in buying foreign currency at border crossing points, especially at overland points (Jordan, Egypt), where bottlenecks are created when organized groups leave.
To date, residents were not allowed to do this at all, while a nonresident was permitted to buy up to $ 500 upon leaving Israel, without submitting documents, but after presenting a passport proving that he or she was a nonresident.
The time-limit on receiving export proceeds, and on making advance payments for imports, has been abolished. At the same time, the time-limit on receiving proceeds on transit transactions-a transaction implemented abroad-and for intermediation transactions with nonresidents has been removed. The Bank of Israel pointed out that even after this change, the requirement that importers at some point bring merchandise purchased abroad into Israel, and that exporters bring into Israel export proceeds-from the moment they are received, with the exception of 10 percent of the value of exports in the preceding year, which may be held in a bank account abroad-is still in effect
Till now, importers were not permitted to make advance payments for imports that reached Israel more than 12 months from the time the advance was paid, and exporters were not permitted to extend credit to buyers abroad for periods of more than 12 months.
Residents are permitted to engage in short sales transactions on foreign securities, and nonresidents are permitted to engage in short sales transactions on Israeli securities.
Till now, the implementation of such transactions, which are routine activities on stock exchanges abroad, was forbidden.
An exempt resident is permitted to implement reconversions-i.e., to sell local currency in order to purchase foreign currency and place it in an unrestricted foreign-currency deposit-even if this involves transferring foreign currency from his or her exempt account to a resident's foreign-currency deposit (Pamah). This change derives from the permit granted to residents to buy foreign exchange in order to deposit it and to transfer it from one foreign-currency deposit to another.
Till now, exempt persons were permitted to undertake reconversions only if they had converted foreign currency in their exempt account into local currency.
The Bank of Israel noted that these relaxations in the foreign exchange control regulations will go into effect on 12 February, 1998.
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