4 June 2020
The Argentinian Central Bank continues to tighten access to the foreign exchange market for Argentine residents. New rules released at the end of May have added a 90-day delay on individuals accessing the foreign exchange market. We have reported on the increasingly stringent foreign exchange regime in Argentina several times since it was reintroduced in September, most recently in our alert in April.
With limited exceptions, accessing the FX market to purchase or transfer foreign currency abroad is subject to the prior approval of the Central Bank. Individuals are permitted to purchase up to USD200 per month but, under the latest extension of the rules, they must confirm that, for 90-days prior to the day of the purchase of the foreign currency, they have not sold securities (or transferred securities to a foreign depository) in foreign currency. They must also undertake that they will not carry out such transactions for an additional 90-days after the purchase of the foreign currency. Similar rules apply to purchases of foreign currency by companies.
New restrictions also apply to the outflow of funds from Argentina to pay for imports (including services) and to carry out financial transactions, such as the payment of profits and dividends. These restrictions may be permitted subject to the filing of a sworn affidavit. There are exemptions to the obligation to file the affidavit and, if applicable, we recommend that these additional restrictions are discussed with your local finance teams.
The FX restrictions detailed above are just the latest saga in the increasingly tough FX environment in Argentina and need to be considered in the context of the other foreign exchange restrictions that have been put in place since September. In particular the USD200 monthly limit on outward transfers and the 30% FX tax. The 90-day “freeze” on access to FX markets is now another limiting factor to be taken into account when operating a share plan involving outward remittance for employees in Argentina. Monthly share purchases and transfers may no longer be possible and may have to be replaced by accumulation periods and quarterly purchases, subject to general legal requirements relating to the enforceability of any post-acceptance plan amendments.
We suggest that you discuss this new measure along with existing restrictions with your local finance teams and consider if you can find a way to navigate the rules in practice. We will continue to alert you to these developments although most companies will already have taken action in response to the FX controls, which look likely to remain in place for some time.
The situation in Argentina is complex so please let us know if you require any assistance navigating these foreign exchange regulations.
Carla and Sharon