BCRA: Updates to Foreign Exchange Regime

The Argentine Central Bank (the “BCRA”, after its acronym in Spanish) established that the prior approval of the BCRA will not be required to access the foreign exchange market for the prepayment, more than 3 business days in advance of the maturity of payments of principal and interest, of financial debts with foreign counterparties, to the extent that the following conditions are complied with:

• That the prepayment is made simultaneously with the settlement of funds of new financial debt disbursed as of such date;

 

 

• That the average duration of the new debt is longer than the average remaining duration of the prepaid debt;

 

• That the due date of the first payment of principal of the new debt does not fall before the first future due date for the payment of principal of the prepaid debt; and

 

 

• That the amount of the first payment of principal of the new debt is not more than the first payment of principal due under the prepaid debt.

 

Moreover, certain operation details were modified in regards to foreign financial indebtedness with non-related creditors or local trusts to guarantee the payment of principal and interest of such financings.

Likewise, access to the local foreign exchange market is allowed for the payment of premiums, the creation of guarantees and payments which correspond to interest rate hedges for the obligations of Argentine residents with foreign counterparties which are declared and validated under the Survey of Foreign Assets and Liabilities, as long as the risks hedge are not higher than the foreign liabilities which the debtor effectively registers for the interest rate being hedged. The Argentine resident who accesses the local foreign exchange market for this purpose must designate a follow-up bank which will verify compliance with the regulations.

Lastly, foreign currency proceeds received by Argentine residents for the exports of goods and services and for the sale of non-financial non-produced assets are not required to be settled for pesos in the local foreign exchange market, not even as a condition for the repayment in the cases of foreign indebtedness, to the extent that the following conditions are complied with:

• That the funds are brought to Argentina and credited in local foreign currency accounts in local financial institutions held by the client;

 

• That the above is made within the term established for the settlement of the funds which may apply to the transaction;

 

• That the foreign currency proceeds are allocated simultaneously to transactions for which applicable foreign exchange regulations allow access to the local foreign exchange market against local currency, considering the limits provided for each concept involved;

 

• That, if the repatriation corresponds to new foreign financial indebtedness and its purpose were the prepayment of local foreign currency denominated debt, the new foreign financial indebtedness must have a longer average duration than the local prepaid debt; and

 

• That the use of this mechanism is tax-neutral.