Summary:
The Central Bank has imposed new foreign exchange restrictions aimed at curtailing the acquisition by both individuals and legal entities of foreign currency through transactions involving the purchase and sale of securities which are settled in foreign currency either abroad (which are known as "contado con liquidación") or within Argentina (which are known as "dollar MEP").
The Argentine Central Bank (the "
Central Bank
") has issued Communication "A" 7001 (the "
Communication
") by which: (i) purchasing and/or wiring abroad foreign currency through the Argentine FX market (by both individuals and legal entities) is subject to the requirement that no sales of securities with settlement in foreign currency or transfers of securities abroad are made within certain timeframes, and (ii) additional restrictions are imposed on micro, small and medium sized-businesses ("
MiPyMEs
" for its Spanish acronym) that have drawn funds under government-promoted COVID-19 pandemic emergency credit lines, affecting their ability to purchase and/or wire abroad foreign currency through the Argentine FX market and their execution of the aforementioned securities transactions.
Brief Description
The main provisions of the Communication are as follows:
1.
Foreign exchange restrictions relating to securities transactions
The purchase and/or wiring of foreign currency through the Argentine FX market is subject to, in addition to compliance with all other applicable requirements, the filing of an affidavit by the relevant individual or legal entity stating that:
- no sales of securities settled in foreign currency or transfers of securities abroad have been made by such individual or legal entity within 30 calendar days immediately preceding the date of the foreign currency purchase and/or wire request; and
- no such securities sales or transfers shall be made within 30 calendar days immediately following the date of the foreign currency purchase and/or wire request.
The aforementioned rule entails that access to the Argentine FX market, either to purchase foreign currency or to transfer foreign currency abroad (including import payments, repayment of foreign financial indebtedness, payment of services or dividends abroad, foreign currency-savings by individuals and/or any other purchase or transfer of foreign exchange) will be subject to the requirement that: (a) no sales of securities with settlement in foreign currency or transfers of securities abroad have been made within 30 calendar days immediately preceding the date of the foreign currency purchase and/or wire request; and (b) no such securities sales or transfers shall be made within 30 calendar days immediately following the date of the foreign currency purchase and/or wire request.
2. Additional restrictions applicable to MiPyMEs
a)
Payment of foreign indebtedness
Purchasing and/or wiring abroad foreign currency through the Argentine FX market
to make payments of principal or interest under foreign indebtedness outstanding as of March 19, 2020 (either matured as of such date or bearing no maturity date) will require prior Central Bank approval unless the individual or legal entity that requests to purchase or transfer foreign exchange files an affidavit stating that: (i) no Peso-denominated loans under Central Bank Communication "A" 6937, as amended (
government-promoted COVID-19 pandemic emergency credit lines for
MiPyMEs) are outstanding as of the date of the foreign currency purchase and/or wire request, and (ii) it will not
draw funds
under such credit lines within 30 calendar days immediately following the date of the foreign currency purchase and/or wire request.
b)
Securities transactions
MiPyMEs that have drawn funds under the credit lines mentioned in 2.a) above are not allowed to sell securities with settlement in foreign currency or transfer securities abroad at any time while amounts due under such credit lines are outstanding.
