Prior Import Deposit

Summary of Prior Import Deposit

A sum that an importer is obliged to deposit with his nation's central bank or other governmental authority as a condition for the issuance of an import license. Most industrialized nations do not require such deposits, but they are common in many developing nations, where the deposit may equal 100 percent of the value of the imported merchandise. The deposits are almost always denominated in the importer's local currency.

(Main Author: William J. Miller)

Prior Import Deposit in International Trade

Meaning of Prior Import Deposit, according to the Dictionary of International Trade (Global Negotiator): A deposit required by a government of a specific sum, in domestic or foreign currency, usually corresponding to a certain percentage of the value of the imported products. Such deposits are characteristically held without interest, sometimes for many months -from the time an order is placed until after the import transaction is completed – and represent real costs to importers. The purpose of prior deposits is mainly to discourage imports, particularly for balance of payments reasons, and they are generally recognized as non-tariff barriers to trade.