BCRA: Amendments to the Rules on Credit Policy for Local Financial Institutions Expects Major Export Companies to Sell their Foreign Currency Funds from Export of Goods and Services

As of August 28, 2019, financial institutions are only allowed to agree on and disburse new financing – whatever the methods used – in Argentine pesos to the group of clients encompassed by the definition of “Major Export Companies”, subject to prior approval of the Argentine Central Bank (the “BCRA” after its acronym in Spanish), clarifying that, when it comes to economic groups, they must be considered as a sole client.

Clients of the private non-financial sector included in the category of “Major Export Companies” are those:

1. whose total amount of exports of goods and services from the 12 calendar months immediately previous that represent at least 75 % of their total sales – including the domestic market and exports – for that period, considering some exclusions to calculate such relationship; and

2. that keep a total amount of financing in Argentine pesos in the entire financial system that exceeds ARS1,500 million – including not only the actual disbursements of funds, but also the unused amount of the credit limit assigned for credit account overdrafts.

“New financings” refer to those that imply (i) disbursements of funds, and/or (ii) extension of credit limits assigned for credit account overdrafts, renewals, extensions, extensions of the terms of payment (whether expressed or implied), or any other refinancing means regarding current transactions included in the aforementioned category.

The new provisions also impact on current financing agreements, which cannot be disbursed if the mentioned limits are exceeded.

In practice, by limiting financing in Argentine pesos, the aim is that Major Export Companies sell their collections in foreign currency from their exports of goods and services on the exchange market for their day-to-day business operations, to replace said financing.