Article by Juan M. Diehl Moreno*
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...