The Board of the BCRA, together with other agencies of the National State, has 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 SMEs.
Promote an Efficient Foreign Currency Allocation
With a view to prioritizing the allocation of foreign currency to boosting economic growth and employment, the Federal Administration of Public Revenues (Administración Federal de Ingresos Públicos, AFIP) will collect a 35% contribution in advance of income and personal property taxes from natural persons’ build-up of foreign assets and debit and/or credit card purchases in foreign currency.
The aim is to maintain the current USD200 monthly quota available to natural persons so as to deter them from buying foreign currency for saving and making foreign currency payments on cards.
In this sense, the BCRA has established that any payments made in foreign currency using credit or debit cards since September 1, 2020, will count as part of the monthly quota. There will be no ceiling on consumption with debit and/or credit cards. Where monthly consumption exceeds the quota, they will count towards the quota of subsequent months.
In order to ensure normal processing, any amount paid in foreign currency will be deducted from the available quota at the beginning of the following month of consumption. In the event that card payments in a month are higher than the quota available for building up foreign assets, any amount in excess will be charged to the subsequent months until it is covered 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.
Avoid Disruptive Transactions of Non-Residents in the Local Financial Market
The BCRA has also implemented a strategy for financial conditions to get back to normal, whereby non-resident financial agents will no longer be able to settle securities in foreign currency. The aim is to regulate foreign currency outflows through the local capital market. Moreover, the BCRA will limit the settlement 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 in the country and their impact on financial and foreign exchange market behavior.
Promote Capital Market Development
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 settlement in domestic currency, which aims at encouraging local players’ participation and the conduct of transactions in the local financial market.
In the same vein, the National Securities Commission (Comisión Nacional de Valores, CNV) will implement certain requirements to encourage 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 settlement in domestic currency.
In addition, the local settlement of transactions conducted by clearing and settlement agents (agente de liquidación y compensación, ALyC) will be a new requirement.
Said initiatives seek to encourage players to conduct financial transactions in the local market, thus strengthening market development.
Guidelines for Restructuring Financial Private Sector Debt in Foreign Currency
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 USD1 million. The provisions establish a grace period for negotiating with creditors, and allow companies to repay up to 40% of their principal maturities.
Prioritization of SMEs for the Pre-financing of Exports
The BCRA seeks to reduce the participation of big companies in the credit lines offered by financial institutions for the pre-financing 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.
