New flexibilizations of the local exchange market

1.    Repurchase or payment of foreign restructured debt

The Central Bank allows access to the local exchange market to make portfolio investments abroad in excess of the maximum currently in place (in principle, US$ 500,000), as long as, within 180 days as from the date of access to the local exchange market, such funds are applied to the repurchase or payment of foreign debt existing as of March 31, 2003 and restructured as from August 15, 2003.

To such effects, access to the local exchange market is permitted for up to a maximum amount of US$ 40,000,000 per month including (i) funds to be applied to repurchase or payment of restructured foreign debt as referred to in the previous paragraph and (ii) portfolio investments abroad made in accordance with the general regulations already in place.

The aggregate amount of foreign currency: (i) held for repurchase or payment of foreign restructured debt as referred to above, (ii) transferred to a trust for payment of financial debt in accordance with applicable regulations and pending application, and (iii) acquired by virtue of individual authorizations granted by the Central Bank, may at no time exceed:

(a) 15% of the aggregate principal of the outstanding financial debt being restructured; nor
(b) the aggregate due interest and principal under financial debt being restructured.

Funds not applied to the repurchase or payment of foreign restructured debt must reenter Argentina within five (5) business days as from: (i) the date on which the amount of the debt being restructured is reduced as a result of negotiations or (ii) maximum 180 day period having elapsed, as the case may be.

A local financial entity must be appointed to follow up this proceeding.

2.     Repatriation of investments by non-residents

According to the regulations already in place, non residents are allowed to freely access the local exchange market for a maximum amount of US$ 5,000 per calendar month. This limit is not applicable regarding payment of imports, services, income and other current transfers which non-residents receive from residents, for which residents would have been allowed to access the local exchange market in accordance with applicable regulations. In these cases, the access to the local exchange market is free for non-residents. On the other hand, as a general rule, the repatriation of capital by non-residents in excess of the referred US$ 5,000 limit per calendar month requires prior authorization by the Central Bank.

As from August 15, 2003, the Central Bank has ruled a new exception and allows non residents to access the local exchange market, and transfer the corresponding funds abroad, regarding the collection by non-residents in Argentina of installments of principal of national public bonds denominated in a foreign currency. Payments must have been received in foreign currency and the corresponding funds must be converted into pesos through the local exchange market prior to their transfer abroad.

Also on August 15, 2003, the Central Bank issued forms to be used by non-residents when requesting authorization from the Central Bank in order to access the local exchange market for amounts exceeding US$ 5,000 as repatriation of direct investments and portfolio investments (except in the case of national public bonds denominated in foreign currency referred to in the previous paragraph, regarding which no Central Bank authorization is necessary). From the forms, it appears that the Central Bank does not require the funds to have previously entered the country through the local exchange market for repatriation of direct investments.

This article is based on Argentine regulations as currently in force. Given the dynamics of regulations governing these matters, we suggest verifying the legal framework from time to time, as their amendment is a probable event.