With the objective of having major export companies obtain financing in foreign currency abroad, and in order to compensate the fall of reserves, the Argentine Central Bank limited these companies’ ability to finance locally.
Through Communication “A” 5493, effective as of November 7, 2013 the Argentine Central Bank (the “Central Bank”) amended the legal framework that regulates the “Credit Policy” by restricting Peso financings granted by local banks to major export companies. This amendment is intended for these companies to finance themselves abroad, thereby transferring to Argentina and selling for Pesos foreign currency proceeds from foreign financings on the Argentine foreign exchange market (“FX Market”), in order to restore the Central Bank’s reserves. The following are some of the most important changes:
- Included under the category of “Major export companies” are those companies which: (i) in the last year carried out exports of goods and services representing at least 75% of its total sales (taking into consideration local market and exports); and (ii) maintain a total amount of financings in Argentine Pesos which in whole exceed the amount of 200 million Argentine Pesos.
- The calculation of the amount described in paragraph (i) above does not include: a) sales carried out with related costumers, with the exemption of the sales of goods made to distribution companies for commercialization in the local market; and b) industrial exports included in international complementary agreements which Argentina is part of.
- The Communication provides that, in the event that the total amount of the outstanding loan granted to the company exceeds the amount of 50 million Argentine Pesos, the local financial entities must require the filing by its clients of an affidavit regarding whether or not they are included under the category of “Major export company”. Said affidavit shall be effective for 30 calendar days. Additionally, an accounting certificate must be filed as well if: (i) the total debt of the company exceeds the amount of 200 million Argentine Pesos and; (ii) the client states in its affidavit that it is not included under the category of “Major export company”. The accounting certificate shall be effective for 90 calendar days.
- Local funding for “Major export companies” was limited to 0.3% of the sum of the deposits in pesos (net of the minimum cash requirement) and the liquid equity of the financial entity granting the financing. Therefore, the Communication amends the 15% maximum limit which was previously in force.
- The Central Bank’s prior approval is needed in order to have financial entities granting new funding in pesos to “Major export companies” when the amount of the outstanding loans granted to the company exceeds the maximum lending ability (0.3% of the sum of the deposits in pesos and liquid equity of the financial entity).
- Finally, the Central Bank is empowered to modify both the amount of financings attained, which is used to establish the category of “Major export companies”, as the percentage to determine the borrowing ability. In addition, the Communication provides that it does not reach foreign currency financings.