New conditions introduced to the Foreign Exchange regulations of the Argentine Central Bank

On April 20, 2023, the Argentine Central Bank (“Central Bank”) increased controls over cross border payments from Argentina. Below, we share a summary of the most relevant points of the Communiqué “A” 7746.

1. Prior approval by the Central Bank is required for payments of services performed by foreign residents, unless made 60 (sixty) days from the date of approval of their administrative approval¹. Since Central Bank authorization is rarely obtained, in the practice, this entails a deferral of payments of professional and business services2 for an additional period of 60 (sixty) days. This deferral does not apply to other type of services such as passenger transportation services, construction and repair services, financial services, telecommunications, computer, and information services (inter alia), as well as insurance premiums and claims services. In this respect, the new regulation lists the exceptions of prior approval by the Central Bank:
   1. Payment made by means of a swap and/or arbitrage using foreign currency deposited in a local account of the local resident intending the transfer.
   2. The local resident intending the transfer obtains a new financial indebtedness from foreign lenders (with a principal maturity longer than 60 calendar days), which proceeds are transferred to Argentina and settled for pesos in the foreign exchange market and simultaneously allocated to payment of the service abroad.
   3. The local resident intending the transfer is financed by a local financial institution through a commercial credit line from foreign lenders (with a principal maturity longer than 60 calendar days), which is simultaneously allocated to the payment of the service.
2. The local resident intending the transfer is financed by a local financial institution through a commercial credit line from foreign lenders (with a principal maturity longer than 60 calendar days), which is simultaneously allocated to the payment of the service. Freights and related transportation cross border services (collected locally by related party agents) are postponed to 90 (ninety) calendar days after the services are rendered.
3. Payment of interest on (i) commercial debts for imports of goods and services and (ii) financial loans with foreign related parties are deferred until December 31, 2023.
4. The Central Bank extended from 90 (ninety) to 180 (one hundred and eighty) calendar days the blackout period (before and after the access to the foreign exchange market) during which the customer cannot perform swap transactions with securities issued under foreign law, known as blue chip transaction of contado contra liquidación, to obtain foreign currency (at a premium) through capital markets. In the practice, this means that when a local or foreign resident access to foreign currency through a blue chip transaction, such local or foreign resident will be prevented from using the official foreign exchange market for 360 (three hundred and sixty) calendar days. This term extension is not applicable to blue chip transactions performed with securities issued under Argentine law, where the applicable period shall remain at 90 (ninety) calendar days (before and after the access to the foreign exchange market). The extension applies only to securities transactions carried out after April 21, 2023.
5. To partially compensate the effects of this deferral and postponement, the Central Bank provided for a procedure to adjust certain local peso-deposits by local residents to the variation of the official exchange rate.

1 By means of General Resolution No. 5271, the Federal Administration of Public Revenues (“AFIP”), along with the Commerce Secretariat, created the “Import System of the Argentine Republic Payment of Services to Foreign Countries” (SIRASE) to regulate and monitor the granting of administrative authorizations for the payments of services performed by foreign residents.
Subjects importing and/or accessing the official exchange market for service payments abroad must obtain the administrative approval of the AFIP, Commerce Secretariat and Central Bank. These entities have up to 60 (sixty) days to process approval.
2 Professional services: research and development services, legal, accounting, and managerial services, advertising, market research, and public opinion polling services and architectural, engineering, and other technical services, and other business services.–

This report cannot be considered as legal or any other kind of advice by Allende & Brea.