In recent months Argentina has been experiencing both formal and
informal additional foreign exchange restrictions both to purchase
in the country and to transfer foreign currency abroad. These
restrictions are aimed at deterring outflows of foreign currency in
Argentina and keeping a positive balance of payment. In 2011, the
capital flight amounted to US$21,504 millions, a sharp increase of
90% compared to 2010.
The non-regulated restrictions were initiated via an information
regime set up by the Central Bank and communicated to the financial
institutions and banking associations via e-mails sent on November
29 and December 12, 2011 (the "Information Regime").
These e-mails have no binding effect for legal purposes as the
Information Regime has not been established through a valid
regulation issued by the Central Bank. However they currently have
a real impact on the foreign exchange market.
Pursuant to such e-mails, the Central Bank requested financial
institutions to inform in advance of any foreign exchange
transaction to be entered into through the Foreign Exchange Market.
Such advance period is currently of 10 business days.
The obligation to supply this information applies to all foreign
exchange transactions, without distinction, exceeding US$500,000
per item (concepto), client and day. Hence, if a client
must pay services for an amount of US$300,000 and imports for an
amount of US$300,000, such foreign exchange transactions does not
need to be informed as such amounts do not exceed the minimum of
US$500,000 for each item. If a client must pay sight imports for an
amount of US$400,000 and make a deferred payment of imports for an
amount of US$150,000, such foreign exchange transactions should be
informed, as these transactions fall within the same
"imports" item and therefore, together they exceed the
minimum of US$500,000.
Currently, transactions not included in the list provided to the
Central Bank (the "List") are not performed by financial
institutions unless previously and "informally approved"
by the Central Bank.
Simultaneously with the Information Regime, the Central Bank has
"informally" instructed financial institutions to request
Central Bank prior approval before executing foreign exchange
transactions included in the List. In recent weeks, however,
several foreign exchange transactions that were included in the
List have not been "approved" by the Central Bank"
and therefore their execution has been delayed.
In addition, on February 8, Argentine newspapers reported that
the Central Bank (through their trade-desk officers) had
"informally" (i.e. on an oral basis) instructed financial
entities to obtain the Central Bank's prior approval for any
purchase of foreign currency to pay dividends abroad –
irrespective the amount involved. This de facto
restriction has not been stated in a regulation or even via an
e-mail but however has been confirmed by several players on the
foreign exchange market.
Furthermore, although purchase of foreign currency to pay
imports, dividends, foreign debt and services abroad is allowed
under Argentine foreign exchange regulations, foreign exchange
transactions are being delayed or denied as a result of these
de facto restrictions.
As a consequence of the formal and informal foreign exchange
restrictions, the Argentine Government has succeeded in recent
months in slowing foreign currency outflows and in improving the
balance of payments outcome, though the levels of 2010 have not yet
been reached. Therefore, there is no expectation of the Central
Bank lifting these formal and informal restrictions, at least in
the short term.
* Partner of Marval, O'Farrell & Mairal, Buenos
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