Removal of the ‘encaje’ and of the mandatory 365-day waiting period for multilateral credit agencies

On June 3, 2009, the Ministry of Economy and Public Finance (the “Ministry of Economy”) issued Resolution No 280/2009 (the “New Resolution”) that stated

(i) a general exception for multilateral credit agencies to the obligation set forth by Articles 4(c) and 4(d) of Decree No 616/2005 to make a non-transferable interest-free deposit commonly referred to as “encaje” and

(ii) a removal of the mandatory 365-day waiting periodset forth by Articles 4(a) of such Decree . 

The New Resolution was published in the Official Gazette on June 8, 2009 and informed by the Argentine Central Bank (the Central Bank”) on June 18, 2009 through Communication “B” 9566. 

The Ministry of Economy - by means of Resolution No 1076/2006 - had already created certain exceptions to the encaje to the inflow of funds to the local foreign exchange market to be allocated by multilateral and bilateral credit agencies, acting directly or through their related agencies, o the primary subscription of certificates of participations, bonds or debt securities issued by certain trusts, provided certain exposure and allocation conditions were met in accordance with the provisions of such Resolution[2].

Pursuant to the New Resolution, any inflow of funds to the local foreign exchange market to be allocated by multilateral and bilateral credit agencies, or through their related agencies is exempted from the encaje to the extent that such transactions are executed in accordance with the purposes of such multilateral and bilateral credit agencies.

In addition, the New Resolution also provides an exception to the applicability of the mandatory 365-day waiting periodset forth under Article 4(a) of the Decree No 616/2005 for the transfer of funds out of Argentina -for payment purposes- regarding indebtedness with multilateral and bilateral credit agencies acting directly or through their related agencies to the extent that such indebtedness relates to the payment of loans granted by such multilateral and bilateral credit agencies acting directly or through their related agencies in accordance with their purposes.

The Central Bank will be in charge of the supervisory duties and to verify whether the funds are applied to the specific purposes previously described. To the extent that funds are not applied in accordance to such declared purposes, the Central Bank shall initiate those applicable administrative proceedings involving the applicable sanctions in accordance with the criminal foreign exchange regulations.