Productive Investment Credits

Author:Mr Jorge Cappellini
Profession:Marval O'Farrell & Mairal

Certain financing institutions must grant credits for the productive investment.

On July 5, 2012, the Central Bank of Argentina ("Banco Central de la República Argentina" or "BCRA") issued Resolution "A" 5319 which provides that certain financing institutions shall grant credits for the productive investment. On July 13 the BCRA issued Resolution "A" 5325, which complements Resolution "A" 5319.

The new regulations state that the financing institutions obliged to grant credits are the ones that operate as financial actors of the national, provincial, City of Buenos Aires and/or municipal governments and those whose deposits amount – considering the average of the last three months before June 1, 2012 – to a sum the equal of or in excess of 1% of the amount of deposits of the financial system.

The financing institutions shall allocate, at least, an equivalent amount to 5% of the monthly average of the daily balance of the deposits of the non-financial private sector in Argentine currency in June, 2012. For that purpose, only the branches of institutions in the country would be considered.

At least 50% of the credits shall be granted to micro, small and medium-sized enterprises.

Characteristics of the credits:

Eligible credits: Financing of investment projects for the acquisition of capital assets and/or the construction of the necessary facilities for the production of goods and/or services and the marketing of goods (excluding inventories). Capital asset is a type of asset that is not easily sold in the regular course of a business's operations for cash and is generally owned for its role in contributing to the business's ability to generate profit. Inventories are the raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale. In addition, the credits shall involve the disbursement of new funds. Ineligible credits: The funds shall not be used for the purchase of an on-going business nor lands nor for the financing of working capital. Credits included in the Regulations about "Advances of the Central Bank intended to finance the productive sector" and financings included in other special regimens of credits are ineligible credits...

To continue reading