Devaluation, Pesification, and other Economic Measures

Introduction

Argentina is going through one of its worst economic, political and social crisis of its history. As a result of the crisis, the successive governments have issued a numerous amount of laws, decrees, resolutions and other regulations.

In this article, we do not pretend to cover every aspect of these changes, but rather to highlight certain matters which may currently be of interest. Needless to say, we expect this process to continue evolving.

Devaluation

As of the passing of the Law No. 25,561 of Public Emergency and Reform of the Exchange System (the “Emergency Law”), the convertibility principle based on the peg of 1 peso to 1 dollar, which had been maintained in place during almost 11 years under the regime of Law No. 23,928, as amended by Law No. 25,445 (the “Convertibility Law”) was abandoned.

The Emergency Law abrogated the “convertibity” of the Peso into Dollars, and disposed the “pesification” of certain dollar or foreign currency denominated obligations.

The Emergency Law was latter superseded by Decree 214/2002 of Reordering of the Financial System (“Decree 214”), which increased the “pesification” of the Economy.

Exchange market

The Emergency Law provided for an official and a free currency exchange market. The exchange ratio of the official market was set at $1.40 per US dollar. The regulations listed the specific transaction that could be made in the official exchange market. The remaining non listed transaction were required to be made in the free market, in which the exchange rate was a market rate determined by the offer and demand of the respective currency, with an informal intervention of the BCRA.

On February 3, 2002, Mr. Remes Lenicov, the Minister of Economy, announced that there would only be one currency exchange market where the peso would float freely against the dollar. As of today, legal provisions and regulations in this respect have not been passed to confirm this.

Pesification

As a general rule, all dollar or foreign currency denominated debts which existed as of January 6, 2002, are converted to Peso denominated debts.

Even though this is not expressly stated in Decree 214, it would seem that the “pesification” would not apply to obligations originated after the above referred debt. The Emergency Law specifically provides that the possibility of entering into agreements denominated in foreign currency in accordance with Sections 617 through 619 of the Civil Code is still available. In such case, however, compliance of payment in dollars or other foreign currency obligations may result extremely complicated given the current restrictions.

Financial Obligations

All dollar or foreign currency deposits in financial entities are converted to Pesos at a U$S 1 to $1.40 rate. The restrictions to withdrawal of deposits and transfers of the “corralito”, however, continue to be effective for both deposits in Pesos and deposits in dollars which were “pesified”.

All dollar or foreign currency denominated debts with financial entities are converted to Pesos at a U$S1 to $1 rate.

To compensate the difference of exchange rate at which the deposits and loans would be converted, the financial entities would receive a bond to be issued by the National Government, guaranteed with funds of the National Treasury.

Private Party Non Financial Obligations

All dollar or foreign currency denominated debts between private parties other than financial entities shall be converted to Pesos at a U$S1 to $1 rate. If as a result of the conversion, one of the parties considers that the price in Pesos does not reflect the value of the assets, goods or services which are being paid, such party may claim a price adjustment.

Indexation

The dollar or foreign currency denominated debts mentioned above which are “pesified”, shall be periodically adjusted by an index called the “Coeficiente de Estabilización de Referencia” which will be published and probably determined by the BCRA.

With the exception of the obligations mentioned above, no provisions allowing any kind of monetary adjustments or indexation of prices, debts, taxes or tariffs of services, goods or works may be agreed or applied.

Agreement wit Public Entities

The Emergency Law provides that any clauses in contracts entered with Governmental agencies, including those affecting public works and services, that provide mechanisms of adjustment in dollars or in other foreign currency, or based on price indexes of other countries, or any other similar mechanism of indexation are deemed without effect. Prices and tariffs shall henceforth be denominated in pesos at the rate of 1 to 1.

The Executive Power has the authority to renegotiate the above mentioned contracts. In case of public services, taking into account the following criteria: (i) the impact of the tariffs on the competitiveness of the economy and the distribution of the income; (ii) the quality of the services and investment plans; (iii) the consumers’ interests and their accessibility to the services; (iv) the safety of the systems; and (v) the profitability of the companies.

In no case shall the companies or service providers suspend or alter in any way their compliance with their obligations.

Conflict of Powers

There is a growing conflict of powers within the government. The Supreme Court has ruled that the “corralito” is unconstitutional given that it violates property rights, among other considerations.

In response, the National Executive Power has decreed that all judicial proceedings which challenge the validity of the “corralito” or the “pesification” are to be suspended for a 180 day term. This provision of Decree 214/2002, in turn, has already been considered unconstitutional by several judges of lower courts.

To top off all this power struggle, amidst the banging of pots and pans, the Congress has initiated impeachment proceedings against all the Supreme Court members.

The end of this chapter of Argentine history has not yet been written.

PUBLIC EMERGENCY AND REFORM OF THE EXCHANGE SYSTEM - LAW NO. 25,561

The public emergency is declared in social, economic, administrative, financial and exchange matters. Exchange System. Amendment of the Convertibility Law. Rescheduling of obligations subject to the regime of this Law. Obligations related with the financial system. Obligations stemming from agreements of the public administration governed by the rules of public law. Obligations stemming from agreements between private parties not related with the financial system. Exchange of securities. Protection of end users and consumers. Supplementary and temporary provisions.

Passed into law on January 6, 2002
Partially promulgated on January 6, 2002

TITLE I
DECLARATION OF PUBLIC EMERGENCY

Section 1. In accordance with the provisions of Section 76 of the Argentine Constitution, the social, economic, administrative, financial and exchange public emergency is hereby declared, delegating to the Executive Branch the powers conferred by this Law until December 10, 2003, subject to the basic guidelines specified below:

1. To reorder the financial, banking and exchange systems.
2.To reactivate the operation of the economy and to improve the level of employment and distribution of income, focussing on a program for the development of regional economies.
3.To create conditions that will favor a sustained economic growth, consistent with the rescheduling of public debt.
4.To rule the rescheduling of executory and pending obligations affected by the new exchange regime set forth in Section 2.

TITLE II
EXCHANGE SYSTEM

Section 2. The Executive Branch is hereby empowered (due to the public emergency reasons described in Section 1) to establish a system that will determine the rate of exchange between the Peso and the relevant foreign currencies and to issue exchange regulations.

TITLE III
AMENDMENT OF THE CONVERTIBILITY LAW

Section 3. Sections 1, 2, 8, 9, 12, and 13 of Law No. 23,928, as amended by Law No. 25,445 are hereby repealed.

Section 4. The text of Sections 3, 4, 5, 6, 7 and 10 of Law No. 23,928 and the amendment thereof are hereby restated and shall now read as follows:

“Section 3. The Central Bank of the Republic of Argentina may buy foreign currency with its own resources or issuing the necessary Pesos and may sell them at the price established in accordance with the system defined by the Argentine Executive Branch, subject to the provisions of Section 1 of the Public Emergency and Exchange System Reform Law.

Section 4. The reserves of the Central Bank of the Republic of Argentina in gold and foreign currency shall be at all times allocated to back the monetary base. When reserves are invested in deposits, in other interest-bearing transactions or in government Argentine or non-Argentine securities payable in gold, precious metals, United States Dollars or other currencies of similar solvency, their computation for purposes of this law shall be made at market value.

Section 5. The Central Bank of the Republic of Argentina shall reflect in its balance sheet and financial statements the amount, type and form of investment of the reserves, on the one hand, and the amount and structure of the monetary base, on the other.

Section 6. The goods that make up the reserves mentioned in the previous section shall constitute a general pledge of the monetary base, can not be attached and may be exclusively used for the purposes specified in this Law. The monetary base in Pesos is made up of the monetary circulation plus the demand deposits of financial entities at the Central Bank of the Republic of Argentina in banking or special accounts.

Section 7. The debtor of an obligation to give a certain sum of pesos complies with its obligation if on the date of maturity thereof debtor delivers the nominal amount of its debt. Monetary adjustments, indexation of prices, variation of costs and escalation of debts (no matter their cause and whether or not debtor has incurred in arrears in their respect) shall in no case be admitted, except in those cases specified in this Law.

The legal and regulatory provisions are hereby repealed and any contractual or conventional provision shall be rendered inapplicable, to the extent inconsistent with the provisions hereof.

Section 10. Any legal or regulatory rules establishing or authorizing index-linked adjustments, monetary updatings, costs variations or any other form of escalation of debts, taxes, prices or of the rates of goods, works or services, remain repealed, effective April 1st, 1991. This repeal shall apply even to existing legal relationships and situations, not being permitted to claim any legal, regulatory, contractual or conventional clause (even of a collective bargaining agreement) of prior date as a ground to adjust the sum payable in Pesos.”

Section 5. The wording established in Section 11 of Law No. 23,928 for Sections 617, 619 and 623 of the Civil Code is hereby maintained, with the exceptions and scope set forth in this Law.

TITLE IV
RESCHEDULING OF OBLIGATIONS SUBJECT TO THE REGIME OF THIS LAW

CHAPTER I
OBLIGATIONS RELATED WITH THE FINANCIAL SYSTEM

Section 6. The Argentine Executive Branch shall take the measures aimed at diminishing the impact of the change introduced in the exchange rate under Section 2 of this Law on the individuals or on the entities having in the financial system debts denominated in dollars or in other foreign currencies. To such end, it shall introduce the rules necessary for their adaptation.

The Argentine Executive Branch shall reschedule the debts with the financial sector, establishing an exchange rate of ONE PESO ($ 1) = ONE UNITED STATES DOLLAR (US$ 1), yet only with respect to those debts with the financial system that do not exceed the original amount of ONE HUNDRED THOUSAND UNITED STATES DOLLARS (US$ 100,000) with respect to: (a) housing mortgage loans; (b) construction, refurbishing and/or extension of dwelling houses; (c) personal credits; (d) loans secured with a pledge for the acquisition of vehicles; and (e) credits of individuals or legal entities that comply with the requisites of micro, small and medium enterprises (MIPyME); or up to that sum, if higher, in the case of subsection (a) when the credit was used to purchase the sole dwelling house of a family and in the case of subsection (e).

The Argentine Executive Branch may establish measures in order to offset the imbalances occurred in the affected financial entities due to the impact of the measures authorized in the previous paragraph. These measures may include the issue of guaranteed securities of the Argentine Government in foreign currency. In order to create the aforesaid security, a hydrocarbons export duty is hereby established for the term of FIVE (5) years and the Argentine Executive Brach is hereby authorized to determine the relevant rate. To such end, other resources, including international loans, may be allocated.

For purposes of the calculation and payment of the royalties to the producing provinces, the hydrocarbons export duty shall in no case reduce the wellhead value.

The Argentine Executive Branch shall take measures aimed at preserving the capital of those that have deposited their funds with financial entities as of the effective date of Executive Order 1570/2001, restructuring the original obligations consistently with the evolution of the financial system’s solvency. This protection shall extend to any foreign currency deposits.

Section 7. The debts or balances thereof outstanding as of November 30, 2001 which had been originally agreed in Pesos with the entities of the financial system and which were converted into dollar debts by Executive Order No. 1570/2001 will be maintained in the originally agreed currency, both as concerns the principal and accessories thereof. Section 1 of Executive Order 1570/2001 is hereby repealed.

The debit balances of credit-card holders and the debits corresponding to purchases made in the country shall be specified and paid in Pesos. The only purchases permitted to be specified in Dollars or in other foreign currencies are those made outside the country. The debit balances still outstanding as of the date of promulgation of this Law shall be cancelled in Pesos at the rate of exchange of ONE PESO ($ 1) = ONE UNITED STATES DOLLAR (US$ 1).

CHAPTER II
OBLIGATIONS STEMMING FROM AGREEMENTS WITH THE ADMINISTRATION GOVERNED BY THE RULES OF PUBLIC LAW

Section 8. It is hereby resolved that as from the enactment of this Law, the clauses providing for adjustments in dollars or in other foreign currencies contained in agreements executed by the Public Administration under the rules of public law, including, among others, the public works and services agreements, as well as the adjustment clauses based on price indexes of other countries and any other indexation mechanism, are hereby rendered ineffective. The prices and rates resulting from such clauses are hereby established in Pesos at the exchange rate of ONE PESO ($ 1) = ONE UNITED STATES DOLLAR (US$ 1).

Section 9. The Argentine Executive Branch is hereby authorized to renegotiate the agreements falling under Section 8 of this Law. In the event of agreements providing for the supply of public services the following criteria shall be taken into account: (1) the impact of the rates on the competitiveness of the economy and on the distribution of income; (2) the quality of the services and the investment plans, when same have been contractually provided; (3) the interests of users and the accessibility of the services; (4) the safety of the relevant systems; and (5) the profitability of the companies.

Section 10. The provisions of Sections 8 and 9 of this Law shall in no case be read to authorize the contracting companies or suppliers of public services to suspend or alter the performance of their obligations.

CHAPTER III
OBLIGATIONS UNDER AGREEMENTS AMONG PRIVATE PARTIES NOT RELATED WITH THE FINANCIAL SYSTEM

Section 11. The monetary obligations payable as from the date of promulgation of this Law under agreements subject to the rules of private law executed among private parties and agreed in dollars or in other foreign currency, which agreements contain adjustment clauses in dollars or in any other foreign currencies, shall be subject to the following regulation: (1) the obligations shall be cancelled in Pesos at the exchange rate of ONE PESO ($ 1) = ONE UNITED STATES DOLLAR (US$ 1), in concept of payment on account of the sum that will ultimately result from the procedures herein-below set forth; (2) the parties shall negotiate the restructuring of their mutual obligations, seeking to equitably share the effects of the altered exchange rate resulting from the application of the provisions of Section 2 of this Law during a term not to exceed ONE HUNDRED AND EIGHTY (180) days. Upon agreement of the new terms, the eventual differences resulting from the advance payments made and the ultimately agreed values, will be offset; (3) if no agreement is reached by the parties, they shall be permitted to resort to the mediation proceedings current in their relevant jurisdictions and appear before the courts of competent jurisdiction in order to settle their differences. In this case, the debtor shall not suspend any payment on account and the creditor shall not refuse to receive it. The Argentine Executive Branch is hereby empowered to issue any clarifying and regulatory provisions with respect to any specific case, sustained in the rules of Section 1198 of the Argentine Civil Code and the principle of shared efforts.

TITLE V
EXCHANGE OF SECURITIES

Section 12. Within such term and in such form as shall be established in due time by the regulation, the Argentine Executive Branch shall take the measures necessary in order to proceed with the exchange of national and provincial securities issued as substitutes for the currency of legal tender throughout the country, on prior agreement with all the provincial jurisdictions.

TITLE VI
PROTECTION OF END USERS AND CONSUMERS

Section 13. The Argentine Executive Branch is hereby empowered to temporarily rule the prices of critical inputs, goods and services in order to protect the rights of end users and consumers, from the eventual distortion of markets or from monopolistic or oligopolistic conducts.

TITLE VII
SUPPLEMENTARY AND TEMPORARY PROVISIONS

Section 14. The provinces, the Autonomous City of Buenos Aires and the Municipalities are hereby invited to endorse the provisions of Sections 8, 9 and 10 of this Law.

Section 15. The application of Law No. 25,466 is hereby suspended for the maximum term set forth in Section 1 or until the time that the Argentine Executive Branch considers that the emergency of the financial system has been solved, as concerns the deposits affected by Executive Order No. 1570/2001.

Section 16. The application of Law No. 25,557 is hereby suspended for a term of up to NINETY (90) days. Dismissals without cause are also suspended for a term of ONE HUNDRED AND EIGHTY (180) days. If any dismissal should be resolved in violation of the provisions hereof, the employers shall pay the terminated worker twice the relevant compensation, pursuant to current labor legislation.

Section 17. The net negative results stemming from the application of the exchange rate referred to in Section 2 of this Law concerning foreign currency assets and liabilities existing as of the date of enactment thereof shall only be deductible from the Income Tax in the proportion of TWENTY PER CENT (20%) per annum in each of the first five fiscal years ended after the effective date of the Law. The foregoing shall only apply to taxpayers whose annual revenues or net worth exceed the limits established in Section 127, Chapter XIII, Title I, of Law No. 11,683, as amended in 1998, including any further changes thereto.

Section 18. Section 195 of the Argentine Code on Civil and Commercial Procedure is hereby amended:

“Section 195. When the issue of precautionary measures directly or indirectly affects, hinders, compromises or adversely impacts the development of essential activities of the National State, of the Provinces, of the Autonomous City of Buenos Aires, of the Municipalities, of their respective centralized or decentralized instrumentalities or of the entities involved in any activity of interest for the country, an appeal may be lodged directly before the Supreme Court of Justice of the Nation. The mere filing of the appeal shall by itself suspend the issued resolution.

The Supreme Court of Justice of the Nation shall require the delivery of the dossier. Upon receipt of the dossier, it shall serve notice thereof to the party that requested the ordering of the measure for it to answer such service within the term of FIVE (5) days and so that judgement be rendered in such respect. Once the service is answered or upon expiration of the term to do so, prior notice to the State Attorney, it shall issue judgement either confirming or revoking the measure.

Section 19. This law is a public policy regulation. No person may allege against it the existence of any irrevocably vested rights. Any other provision inconsistent with the terms hereof is hereby repealed.

Section 20. For all purposes of this Law, a Follow-Up Bicameral Commission is hereby formed in order control, verify and resolve with respect to the performance of the Executive Branch. The resolutions made shall in all cases be submitted to the consideration of both Chambers. The Bicameral Commission shall consist of six Members of the Upper House and six Members of the Lower House elected by the Honorable Chambers of the Upper and Lower Houses, abiding by the plurality of the political representation of the Chambers. The Chair of the Commission shall be designated at the proposal of the political block having more legislators in Congress.

Section 21. At the expiration of its mandate and during its mandate on a monthly basis, the Argentine Executive Branch shall render account of the exercise of the powers delegated upon it. Such rendering of accounts shall be made through the Cabinet in Chief before each of the Chambers of Congress, pursuant to Section 101 of the Argentine Constitution.

Section 22. Be it notified to the Argentine Executive Branch.

Executed in Buenos Aires on January 6, 2002

Registered under No. 25,561.

Eduardo O. Camaño – Juan C. Maqueda – Eduardo D. Rollano – Juan C. Oyarzún.

REORGANIZATION OF THE FINANCIAL SYSTEM
Decree No. 214/2002

Conversion into Pesos of the obligation to provide monetary sums, of any nature or origin, expressed in U.S. Dollars or other foreign currencies, existing as of the enactment of Law No. 25,561, and of the deposits in such currencies in the financial system. Exchange rate. Reference stabilization ratio. Issue of a bond by the National Treasury to pay the imbalance resulting from the exchange difference being set forth. Suspension of legal proceedings and precautionary and executory measures in connection with Decree No. 1570/01, Law No. 25,561, Decree No. 71/2002 and this Decree. Amendment to the Financial Institutions Law No. 21,526.

Buenos Aires, February 3, 2002

HAVING SEEN Decree No. 1570 of December 1, 2001 and Law No. 25,561,

THE PRESIDENT OF THE REPUBLIC OF ARGENTINA,
WITH THE GENERAL AGREEMENT OF MINISTERS,
DECREES AS FOLLOWS:

Section 1 — As from the date of this Decree all obligations to provide monetary funds, of any nature or origin – in court or out-of-court – expressed in U.S. Dollars or in other currencies, existing as of the enactment of Law No. 25,561 and not already converted into Pesos will be converted into PESOS.

Section 2 — All deposits in U.S. DOLLARS or other foreign currencies existing in the financial system will be converted into Pesos at the rate one point forty Pesos ($1.40) per each U.S. Dollar or its equivalent in other foreign currencies. Financial institutions shall perform their obligation of returning Pesos at the above-indicated exchange rate.

Section 3 — All debts in U.S. DOLLARS or other foreign currencies to the financial system, whatever their amount or nature, will be converted into PESOS at the rate of one Peso per each U.S. Dollar or its equivalent in other foreign currencies.

Debtors shall perform their obligation of returning Pesos at the above-indicated exchange rate.

Section 4 — The deposits and debts referred to, respectively, in Sections 2, 3, 8 and 11 of this Decree will be applied a Reference Stabilization Ratio, which will be published by the Central Bank of the Republic of Argentina. In addition, a minimum interest rate for deposits and a maximum interest rate for loans will be established. The above-mentioned ratio will be applied as from the issue date of this Decree.

Section 5. — The provisions of the preceding Section do not repeal what has been set forth in Sections 2, 3, 8 and 11 of Law No. 23,928, as amended by Section 4 of Law No. 25,561. The obligations of any nature or origin generated after the enactment of Law No. 25,561 may not contain and will not be subject to adjustment clauses.

Section 6. — In the case of the debts contemplated in Section 3:

(a) in the case of payment obligations in installments, the debtor will continue paying in PESOS an amount equal to that of the last installment during the term of six (6) months, counted as from the effective date of this Decree. Upon expiration of such term, the debt will be rescheduled and will be applied the ratio described in Section 4 hereof as from the effective date hereof.

(b) in the case of all other debts, except those corresponding to credit card balances, the debtor shall have a waiting period of SIX (6) months for their payment, and upon expiration of such period his debt will be recalculated by means of the application of the ratio contemplated in Section 4 as from the effective date hereof.

Section 7. — To issue a Bond against the funds of the National Treasury to pay the imbalance resulting from the exchange difference set forth in Section 3 of this Decree.

Section 8. — The obligations to provide monetary sums, expressed in U.S. DOLLARS or in any other currency not related to the financial system, whatever their origin or nature, will be converted at the rate of one U.S. DOLLAR (US$ 1) = one PESO ($ 1) and they will be applied the provisions of Section 4 of this Decree. If due to the application of this provision, the resulting value of the thing, good or service should be higher or lower than that prevailing at the moment of payment, any of the parties may request an equitable readjustment of the price. In the event of term or deferred performance obligations, this readjustment may be requested annually, except if the duration of the contract is less than one year or when the difference of values is notoriously disproportionate. If the parties do not reach an agreement, the justice shall have to decide on this matter.

This procedure may not be requested by the party who is in arrears and, if such situation is attributable to it. The judges that are to decide on the conflicts that may arise for that reason shall use their best efforts to preserve the continuation of the contractual relation in an equitable way for both parties.

Section 9. — To issue a Bond in U.S. DOLLARS against the funds of the National Treasury, which depositors referred to in Section 2 hereof may elect to receive, instead of having their deposits returned.

Such substitution will be for the maximum amount of THIRTY THOUSAND U.S. DOLLARS (US$ 30,000) per holder and per financial institution. The financial institutions that have payment obligations to depositors electing to receive such Bonds shall transfer to the National Government sufficient assets to provide for their payment. The parties interested in this option may exercise such right within the term of NINETY (90) days after publication of the rule regulating the issue of the Bond.

Section 10. — Financial institutions shall deposit with the Central Bank of the Republic of Argentina all notes in U.S. Dollars or in other currencies they have in stock, which will be converted into Pesos at the exchange rate set forth in Section 2 of this Decree. All balances in U.S. Dollars or other foreign currencies existing at the Central Bank of the Republic of Argentina in favor of each financial institution will be converted at that same rate.

Section 11. — Debts in U.S. Dollars or other foreign currencies, transferred in fiduciary ownership by financial institutions to financial trusts, will be converted into Pesos at the exchange rate set forth in Section 3 of this Decree, and will be applied the provisions of Section 4 hereof.

Section 12. — As from the issue of this Decree, the processing of all judicial proceedings and precautionary and executory measures filed in connection with credits, debts, obligations, deposits or financial reschedulings which may be considered affected by the provisions of Decree No. 1570/01, Law No. 25,561, Decree No. 71/02, this Decree, the Resolutions of the Ministry of Economy and the Central Bank of the Republic of Argentina issued in connection thereto and any other provision on that matter will be suspended for the term of one hundred and eighty (180) days.

Section 13. — The first paragraph of Section 35 bis of the Financial Institutions Law No. 21,526 will be replaced as follows:

“Section 35 bis: When at the exclusive judgment of the Central Bank of the Republic of Argentina, adopted by the absolute majority of its Board of Directors, a financial institution is in any of the situations contemplated in Section 44, the Central Bank may authorize its restructuring to the defense of depositors, before revoking its authorization to conduct business. For such purpose, it may adopt any of the following determinations, or a combination thereof, applying them in a sequential, staggered or direct way, selecting the most adequate alternative according to the timing, merits or convenience, by means of the application of the principles, purposes and objectives derived from the related rules of its Charter, of this Law and its regulations”.

Section 14. — Sub-section (a) of Section 53 of the Financial Institutions Law No. 21, 526 will be replaced as follows:

“(a) Credits with a special privilege on account of a mortgage or pledge and credits granted pursuant to Section 17, Sub-sections (b), (c) and (f) of the Central Bank’s Charter, with the scope of their corresponding provisions.

The Central Bank may waive its privilege with the sole purpose of favoring the restructuring processes of financial institutions on the terms of Section 35 bis”.

Section 15. — To authorize the Central Bank of the Republic of Argentina, on a temporary basis, during the life of Law No. 25,561, to grant the facilities contemplated in Sub-sections (b), (c) and (f) of Section 17 of its Charter to institutions the solvency of which is affected, in conflicts that may arise for such purpose. The judges that are to decide on the conflicts that may arise for that reason shall use their best efforts to preserve the continuation of the contractual relation in an equitable way for both parties.

Section 16. — To add the following text as Section 13 bis of Decree No. 540/95, as amended:

“Section 13 bis: SEDESA may issue registered non endorsable securities to offer them to depositors as payment of the guarantee for deposits, if it does not have sufficient funds for that purpose.

Such securities, the conditions of which will be established in a general way by the Central Bank of the Republic of Argentina, shall be accepted by financial institutions in order to constitute deposits in the conditions stipulated by such rule”.

Section 17. — As from the effective date of this Decree, all the rules contrary to the provisions hereof will be null and void. The Ministry of Economy and the Central Bank of the Republic of Argentina will be empowered, according to their respective authorities, to issue regulatory, supplementary, interpretative or clarifying rules in connection with this Decree.

Section 18. — This measure will take effect as from promulgation thereof.

Section 19. — Be it notified to the Honorable Congress of the Nation.

Section 20. — Be it notified, published and delivered to the National Bureau of the Official Register, and subsequently filed. — DUHALDE. — Jorge M. Capitanich. — Jorge M. Remes Lenicov. – Alfredo N. Atanasof. – Ginés M. González García. – José I. de Mendiguren. – Rodolfo Gabrielli. – Carlos F. Ruckauf. – Jorge R. Vanossi. – Graciela M. Giannettasio. – José H. Jaunarena.