The Board of the BCRA together with other agencies of the National State have adopted different measures to promote a more efficient allocation of foreign currency; to deter non-resident investors from conducting disruptive transactions in financial markets; to favor the development of the local capital market; to set guidelines for restructuring the foreign private debt in harmony with the smooth functioning of the forex market; and to prioritize credits for the pre-financing of exports to small and medium-sized enterprises (SMEs).
With a view to boosting economic growth and employment, the Federal Administration of Public Revenues (AFIP) will collect a 35% contribution in advance of income and personal property taxes from natural persons applying for foreign currency to build up foreign assets, or pay their debit and/or credit card bills.
The aim is to maintain the current USD 200 monthly quota available to natural persons so as to deter them from applying for foreign currency for saving and making payments on cards for foreign consumption abroad.
In this sense, the BCRA has established that any payments made in foreign currency using credit or debit cards since past September 1 will count as part of the monthly quota. There will be no ceiling on consumption with debit and/or credit cards. Where monthly expenses exceed the quota, they will count towards the quota of subsequent months.
In order to ensure normal processing, expenses in excess of the quota will be charged at the beginning of the following month of consumption in foreign currency. In the event that credit card payments are higher than the limit available for building up foreign assets, expenses in excess will be charged to the subsequent months until they are paid in full.
In addition, the BCRA and financial institutions will streamline control and monitoring mechanisms for ensuring that clients’ financial and income capacity allow them to open US dollar bank accounts. They will also limit co-owners’ access to purchase US dollars for the buildup of foreign assets.
The BCRA has also implemented a strategy for financing to get back to normal conditions, whereby non-resident financial agents will no longer be able to exchange securities for foreign currency. The aim is to regulate foreign currency outflows through the local capital market. Moreover, the BCRA will limit the exchange of securities in the local market where they are entirely traded abroad, a measure that seeks to deter circumvention of these provisions.
These decisions will limit speculative trading by non-resident investment funds and their impact on financial and foreign exchange market behavior.
The BCRA has adopted the resolution to remove the minimum holding terms for the purchase of securities in foreign currency by natural persons and their subsequent exchange for domestic currency, which aims at encouraging local actors’ participation and the subsequent exchange of foreign currency for domestic currency in the local financial market.
In the same vein, the National Securities Commission (CNV) will implement certain requirements to encourage actors to conduct financial transactions in the local market. In this regard, the CNV will extend to 15 business days the minimum holding term for exchanging any securities in foreign currency transferred from abroad for domestic currency.
In addition, any foreign currency exchanged through an agent will be subject to new requirements which seek to encourage actors to conduct financial transactions in the local market, thus strengthening market development.
The sovereign debt restructuring process in foreign currency was successfully carried out by the National State. In symphony with this measure, the BCRA set out guidelines for private sector companies to restructure their foreign liabilities so that they may be aligned to the new requirements, thus ensuring the smooth functioning of the forex market.
Within this new framework, private sector companies are encouraged to refinance their indebtedness in foreign currency at a pace consistent with Argentina's foreign currency needs and exchange rate stability levels.
The focus is placed on companies with monthly maturities higher than USD 1 million. The provisions establish a grace period for negotiating with creditors, and allow companies to apply for foreign currency for paying up to 40% of their principal.
The BCRA seeks to reduce the participation of big companies in the credit lines offered by financial institutions for the pre-financings of exports. This measure encourages big companies with access to international credit markets to take advantage of the new conditions created by the sovereign debt restructuring process, thus leaving room for channeling more local credit lines to exporting SMEs.
September 15, 2020.