Diapositiva 1

1
ARGENTINE FOREIGN EXCHANGE MARKET
María Victoria Funes
2
Index

• Foreign Exchange Market General
  Features.............
• Inflows of funds. General features
  ...
• Inflows of funds. Mandatory deposit
  .
• Inflows of funds. Financial debts General
  information ..
• Inflows of funds. Direct investment. Capital
  contributions
• Inflows of funds. Direct investments. Purchase of
  real estate ..
• Inflows of funds. Collection of exports of goods
  and services .
• Outflows of funds. Foreign currency purchase by
  non-Argentine residents. Repatriation
  ..
• Outflows of funds. Payment of imports of goods
  and services and distribution of profits and
  dividends .
• Outflows of funds. Payment of financial debts
  ..
• Information regime ..............
  .
• Criminal exchange regime Law No. 19,359
  ..

3 4 5 6 7 8 9 10 11 12 13 14
3
Foreign Exchange Market General Features

• Transactions through entities authorized to deal
  in the exchange market (banks, financial
  entities, credit institutions, foreign exchange
  agencies).
• Inflows and outflows of currency shall be
  registered before the Argentine Central Bank
  (ACB)
• Each foreign exchange transaction must be
  performed pursuant to one of the concepts
  foreseen in the ACB regulations.
• If a transaction does not fit under any of the
  authorized concepts, an expressed authorization
  of the ACB is needed.
• The entities are responsible for checking the
  authenticity of the transaction and the
  compliance with ACB regulations.
• Non-compliance with ACB constitutes an
  infringement of the Criminal Foreign Exchange
  Law No. 19,359 (as amended in Decree No. 480/95).

4
Inflows of funds. General features

• Creation of mandatory interest-free deposit of
  30 of the inflows into the foreign exchange
  market.
• The mandatory deposit shall be constituted in an
  Argentine bank during 365-day term and bears no
  interest. Pending such term funds cannot be
  disposed nor used as collateral for any
  transaction.

5
Inflows of funds. Mandatory deposit

• General Rule. Concepts included in the mandatory
  deposit
• External financial debts.
• Inflows of currency by non-Argentine residents.
• Repatriation of funds by Argentine residents
  exceeding US2 million.
• Exceptions to the mandatory deposit
• Primary subscription of debt securities and of
  shares issued by public companies in
  self-regulated markets.
• Direct investments of non-Argentine residents
• Capital contributions in local companies
• Acquisition of capital stock in local companies
• Purchase of real estate
• Financing of foreign trade transactions advances
  and pre-exports financing.

6
Inflows of funds. Financial Debts General
Information

• General Rule Funds derived from financial debts
  shall be entered and liquidated in the foreign
  exchange market within the first 365 consecutives
  days following the disbursement The mandatory
  deposit is applicable.
• Exceptions Loans exempted from the mandatory
  deposit
• Granted by multilateral and bilateral agencies
  and official lending agencies.
• Simultaneously allocated to the repayment of
  external debts.
• For the investment in long-term external
  assets.
• Taken to an average life not lower than 2 years
  and aimed at the investment in non-financial
  assets. Includes
• Investment registered in the balance sheet under
  fixed assets (machinery and equipment)
• Goods and services registered in the balance
  sheet as inventories (raw materials and goods)
• For the primary subscription of bonds and shares
  with public offer granted by the CNV.

7
Inflows of funds. Direct Investment. Capital
Contributions

• Criteria for direct investment 10 of the
  capital stock.
• There is no obligation to enter and liquidate the
  foreign currency in the foreign exchange market
  and no mandatory deposit is applicable.
• Capital Contributions. Filing of certain
  documentation is requested.
• Acquisition of capital stock. Filing of certain
  documentation is requested.

8
Inflows of funds. Direct investments. Purchase of
real estate

• Transfers of funds to Argentina by non-Argentine
  residents for the purchase of real estate are
  exempted from the mandatory deposit in case
• The public deed is signed simultaneously with the
  liquidation of the funds.
• Real estates under construction. The financial
  entity must certify that
• The seller, client of the financial entity, is a
  company or individual which performs its activity
  in the building business and in the sale of real
  estate and
• The funds are applied, together with the
  liquidation of the funds, to the payment of the
  purchase and sale agreement and expenses involved
  in the transaction.

9
Inflows of funds. Collection of exports of goods
and services

• Goods
• Liquidation of exports. Terms set forth by the
  Ministry of Economy and Productions Secretariat
  for Industry, Trade and Small and Medium
  Enterprises. Depending on the type of product the
  terms range between 60 and 360 consecutives days
  as from the approval of the loading permit.
• The ACB regulations provide for 120 additional
  business days to liquidate the transaction.
• Services
• Liquidation of exports to services rendered to
  non-Argentine residents. Term 135 business days
  as from the disbursement of the funds.

10
Outflows of funds. Foreign currency purchase by
Non-Argentine residents. Repatriation

• Purchase of foreign currency by non- Argentine
  residents is limited to a monthly cap of US
  5,000.
• Repatriation of funds by non-Argentine residents
  subject to prior authorization of the ACB, except
  for the following cases
• Repatriation of direct investments
• Sale of direct investments
• Definitive liquidation of the direct investment
• Capital reduction by the local company
• Repayment of irrevocable contributions by the
  local company
• Liquidation of portfolio investments (up to US
  500,000 each month).
• Court- Compensations in favor of non-Argentine
  residents.
• Collection of imports, services, rents,
  recoveries of bankruptcies, payment of
  inheritance.

11
Outflows of funds. Payment of imports of goods
and services and distribution of profits and
dividends

• Goods
• May be wholly paid in advance, whether by cash or
  deferred payment regardless of the type of good.
• Services
• There are no restrictions for the payment abroad
  of services rendered by non-Argentine residents
  regardless of the kind of services.
• Dividends and profits
• There is no restriction to pay profits and
  dividends abroad provided they result from
  audited financial statements

12
Outflows of funds. Payment of financial debts

• Interest Access to the foreign exchange market
  is allowed to pay interest from financial loans
  provided that
• Interest is accrued at any time during the
  current period
• Payments are made up to 15 consecutive days
  before due date of each interest installment
• Principal repayment may take place only after
  365 days as from the liquidation date and
• At any time within 365 consecutives days before
  due date
• In advance within terms of over 365 days and
  provided that
• a) if the payment is not part of a debt
  restructuring process, the amount in foreign
  currency to pay external debt in advance does not
  exceed the present value of the debt portion that
  is being paid or
• b) if the payment is part of a debt
  restructuring process, the new terms and
  conditions and the cash payment should not imply
  an increase in the present value of the debt
• In order to repay principal and interest the
  informative regime set forth by Communication A
  3602 of the ACB must be complied.

13
Information regime

• Foreign Debt (Communication A 3602)
• Includes financial and commertial debts
• Each calendar quarter
• Direct investment capital and real estate
  investments (Communications A 4237 y 4305)
• Includes direct investment in Argentina by
  non-Argentine residents and Argentine residents
  direct investment abroad (US 500,000 or more)
• Each semester

14
Criminal exchange regime Law No. 19,359

• Penalties
• Fines up to 10 times the aumont of the
  transaction
• Prison from 1 to 4 years or fines from 3 to 10
  times the amount of the transaction in case of
  first recidivism
• Prison from 1 to 8 years or fine of 10 times the
  amount of the transaction in case of second
  recidivism
• Suspention or cancelling of the authorization to
  perform foreing exchange transactions or
  forbiding to act as an importer, exporter or
  broker
• The corporation and its directors, legal
  representatives, managers and syndics that took
  part in the transaction are jointly liable for
  the fine.

35380. mpm