Suspension of the Obligation to make a Mandatory Deposit for the Repatriation of Foreign Funds.

Pursuant to Resolution No 195/2008, the Ministry of Economy has suspended for a 30-day period as from July 30, 2008 the applicability of the requirements set forth in Articles 4(c) and 4(d) of Decree No 616/2005 with respect to foreign currency sold in the foreign exchange market by Argentine residents as repatriation of investments outside of Argentina.

Decree No 616/2005 imposed restrictions on certain inflows of funds through the foreign exchange market under foreign financial loans and investments of foreign residents in Argentina. Articles 4(c) and 4(d) of such decree impose the obligation to constitute a 365-days non-transferable mandatory deposit (“encaje”), which does not accrue interest, for an amount equal to 30% of the foreign currency sold in the foreign exchange market. 

Article 2, first paragraph of Resolution No 365/2005 of the Ministry of Economy extended the applicability of the encaje to Argentine residents, individual or legal entities of the financial and/or the private sector, for any amount exceeding US$2,000,000 per calendar month. This restriction has currently suspended for 30 days.

According to Resolution No 195/2008, the repatriation of export proceeds corresponding to the agricultural and farming has been delayed and, therefore, the Central Bank believes that certain restrictions can be eased without having a negative impact on current foreign exchange policy. 

Simultaneously with the publication of this resolution, the Central Bank enacted Communication “B” 9913 suspending the implementation of regulations (Section 1(b) of Communication “A” 4,377 dated June 29, 2005 of the Central Bank).