Argentina Reinstitutes Capital Controls: Key Points
Please find below a summary of the main foreign exchange restrictions imposed by the Argentine Central Bank on September 1, 2019:
- Export of Goods
1.01. General. Proceeds from exports shall be settled (repatriated and converted to Argentine Pesos) through the Argentine foreign exchange market (the “FX Market”), subject to the below.
1.02. Exports as of September 2, 2019. Proceeds from exports of goods corresponding to customs declarations dated as of September 2, 2019 shall be settled through the FX Market within the following time frames: (i) 15 calendar days from the shipment date, in case of export transactions with affiliates or exports of commodities; and (ii) 180 calendar days from the shipment date, for any other transaction. In all cases, any payment shall be settled within 5 business days from the date of collection.
1.03. Exports before September 2, 2019. Proceeds from exports of goods corresponding to customs declarations dated before September 2, 2019 and not yet collected shall be settled within 5 business days of the date of collection.
1.04. Export Financing. Advances and export financing loans shall be settled within 5 business days of the disbursement date. Payments of exports of goods may be allocated to repay trade financings, without prior approval, in the following cases: (i) export loans and financings provided or guaranteed by domestic financial institutions; (ii) export loans, export advances and financings settled through the Argentine foreign exchange market and duly registered with the central bank under the External Assets and Liabilities Reporting Regime of the central bank (Relevamiento de Activos y Pasivos Externos); and (iii) financial indebtedness instrumented before August 31, 2019, which terms provide for the earmarking of export proceeds.
- Export of Services
2.01. Proceeds from exports of services shall be settled through the FX Market within 5 business days from the date of collection.
- Import of Goods and Services
3.01. General. Argentine importers may access the FX Market, without prior approval, for the payment of imports of goods and services, subject to the below.
3.02. Imports of Goods with Affiliates. Prior central bank´s approval is required to access the FX Market for the payment of imports of goods to affiliates in excess of US$ 2 million per month.
3.03. Import of Services with Affiliates. Prior central bank´s approval is required to access the FX Market for the payment of imports of services with affiliates, except for credit card issuers for tourism and travel expenses.
3.04. Prepayment of Imports. Prior central bank´s approval is required to access the FX Market for the prepayment of imports of goods and services.
3.05. Import Advances. Importers may access the FX Market for the payment of import advances, provided that the payment is made to the supplier. Customs clearance shall be obtained within the following 180 days.
3.06. Registration. In all cases, the import debt shall be registered with the central bank under the External Assets and Liabilities Reporting Regime (Relevamiento de Activos y Pasivos Externos).
- Formation of External Assets
4.01. Companies and others. Companies, local governments, mutual funds, trusts and other pools of assets residing in Argentina shall require prior central bank´s approval to access the FX Market for: (i) offshore deposits, (ii) other external investments; (iii) debt instruments with affiliates, (iv) investments in real estate located offshore, (v) other foreign direct investments, (vi) purchase of debt securities, (vii) loans to persons residing offshore, (viii) travel checks and notes, (ix) transactions of clearing houses, (x) notes related to transactions between Argentine residents, (xi) transfers from/to a foreign country between Argentine residents, and (xii) posting of collateral on derivatives transactions.
4.02. Individuals. Individuals residing in Argentina may purchase up to US$10,000 per month, without prior central bank´s approval, for the same concepts listed in the previous paragraph.
4.03. Non-residents. Non-residents shall require prior central bank´s approval to access the FX Market in excess of US$ 1,000 per month, exception made for: (i) official export credit agencies; (ii) diplomatic and consular delegations for official expenses, (iii) representatives of courts, special missions, commissions or bilateral bodies established under treaties or international agreements, in which Argentina is a party thereto, for official expenses.
4.04. Swaps and Arbitrages. Swaps and arbitrages shall be permitted to the extent the client would be allowed to access the FX Market for the same amount should the transaction had been settled in Pesos.
- External Financial Indebtedness
5.01. Funds disbursed as of September 1st, 2019 under financing agreements entered into between an Argentine resident and creditors residing offshore shall be settled through the FX Market (there is no specific deadline). Access to the FX Market for the repayment of such loan shall be subject to compliance with such settlement obligation.
5.02. Prior central bank´s approval shall be required to access the FX Market to prepay external financial indebtedness earlier than three (3) business days to the payment date.
5.03. In all cases, the external financial indebtedness shall have been registered with the central bank under the External Assets and Liabilities Reporting Regime (Relevamiento de Activos y Pasivos Externos).
- External Indebtedness between Residents
6.01. Residents shall not have access to the FX Market to repay financial indebtedness among residents, except for debt agreements instrumented by public deed or registered in public registries before August 30, 2019.
- Dividends
7.01. Prior central bank´s approval shall be required to access the FX Market to pay dividends and profits offshore.
- Limitations Applicable to Exchange Agencies
8.01. The central bank suspended the authorization of new exchange agencies (financial institutions and other authorized agencies) that files for authorization as of September 1, 2019.
8.02. Exchange agencies shall not perform blue chip swaps or make payments to their local suppliers with their foreign currency net position.
8.03. Exchange agencies shall not increase their foreign currency holdings, without the central bank´s prior approval, in excess of the greater of: (a) their average holdings in August 2019, and (b) their stock on August 31st, 2019.
8.04. Foreign exchange transactions shall be instrumented in handwritten or electronic sworn affidavits in which the client shall represent and warrant the compliance with the capital controls regime.
The breach of the foreign exchange restrictions imposed by the central bank shall be subject to criminal liability under the Foreign Exchange Criminal Regime (Law No. 19,359).
For further information, please do not hesitate to contact Marcelo R. Tavarone, Federico Salim, Julieta De Ruggiero, Matías Otero or Francisco Molina Portela.
The Argentine Central Bank Restricted Access to Financing in AR$ to Large Exporting Companies
Through Communication “A” 6765, issued on 08/28/2019 and effective immediately, the Argentine Central Bank established that prior consent of the Central Bank will be required for financial entities to grant new financing in Argentine pesos to all clients that fit the definition of "Large Exporting Companies" as provided by said Communication.
In accordance with the Communication, clients that belong to the non-financial private sector whose exports of goods and services of the past year represent at least 75% of their total sales and, in turn, have a total amount of financing in Argentine pesos greater than AR$ 1.5 billion will be considered Large Exporting Companies.
To determine such percentage of total sales, the Communication excludes sales made in the domestic market to related customers -except in the case of sales of goods to distribution companies for sale in the domestic market- and industrial exports made under international complementation agreements to which Argentina is a party.
The different types of financing that fall under the regulation are, namely, all financings that involve disbursements of funds -whatever the modality used- and/or the extensions of limits of credit in the form of advance on an account, renewals, extensions or any other form of refinancing.
For further information, please do not hesitate to contact Mariano Rovelli and Eugenia Pracchia.