Temporary limits and registration requirements for transfer of funds to and from Argentina

In the context of the Economic and Financial Emergency Law No 25,561, the Executive Branch issued Decree No 285/2003 effective from its publication in the Official Gazette on June 30, 2003.

The Decree establishes, among other provisions, that:

1. The transfer of funds to and from Argentina, as well as the negotiation of foreign currency into the local market, should be registered with the Argentine Central Bank (the “Central Bank”). The Central Bank may not be charge registration fees nor additional expenses of any other nature in relation to the application of the Decree, other than the penalties that may apply in the event of non-compliance of the same.
2. Foreign funds entering the Argentine market may be transferred abroad only after the expiration of a 180 calendar day term (as a minimum), counted as from the date of the registration of the entry of the funds.
3. The 180 day term may be extended or reduced by the Ministry of Economy based on changes in the macroeconomic conditions.
4. Foreign trade and direct foreign investment operations are expressly excluded from the compliance of the minimum 180 day term mentioned above.

This measure was presumably enacted to avoid the eventual departure of speculative capital that could be entering Argentina pursuing higher yield rates than the ones currently predominant in the developed markets. This measure has been applauded by some economists and opinion leaders, and rejected by others.

The Central Bank will issue the corresponding regulation of the decree today or in the next following days. Such regulation will define the final scope and requirements of this new Decree.