Circular Active Operations OPRAC-1-143: Loans from the Central Bank linked with the taking of fixed-term deposits in foreign currency

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION "A" 933
14/10/86

TO THE AUTHORIZED FINANCIAL INSTITUTIONS:

Ref: Circular ACTIVE OPERATIONS OPRAC-1-
143. Loans from the Central Bank linked
with the taking of fixed-term deposits in foreign currency.

We address you and through you the interested parties, to inform you that it has been decided to introduce modifications to the provisions made known by Communication "A" 886, of 13.5.86, replacing the text of the third and fourth paragraphs of point 2.c. of the referred norm, as indicated:

... 2. To formulate their requests for funds, cancellation of loans and payment of interest, the banks registered in the registry of entities authorized to operate in the system of taking fixed-term foreign currency deposits, shall follow the following procedure:

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c.

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When no export is made and, consequently, the loan has not been canceled within the maximum admitted terms, the intervening entities, under their exclusive responsibility and after determining that the invoked reasons justify it, may grant extensions that will reach, at most, thirty days. For the period covered by said extension, the entities must pay this Bank the charges that are set. If after the maximum term arising from the admitted extension the export has not been completed, or the intervening entity has not agreed to the requested extension, the repayment of the loan must be made with access to the Exchange Market, after payment of the charge set by this Bank, for the entire term of the loan, including the extension period if it had been agreed.

For the purposes of calculating the charge (for extension or cancellation), the equivalent in australes of the agreed loan, according to the exchange rate on the day of the crediting of the funds, shall be considered as capital.

Other provisions

The charge that will govern for these operations, for the extension period or for the entire term of the foreign currency loan, shall be the one resulting from comparing the default charge index detailed below, corresponding to the day of the crediting of the funds or of the maturity of the foreign currency loan and the day of cancellation, and is applicable when said quotient is greater than 1.

The default charge index referred to in the preceding paragraph is the following:

[ ( ) ] t t t t r c I = 1 − 1 1 + 1 + a −

where:

I t = Default charge index corresponding to day t of month j. By definition it is I(0) = 100.

r(t) = Daily equivalent rate corresponding to the maximum (monthly) rediscount rate to address temporary illiquidity situations for entities not included in Annex V of Communication "A" 865, corresponding to day t of month j, expressed in per unit. In case day t is not a business day, the rate corresponding to the last immediate preceding business day shall be considered in the calculation.

a = Coefficient applicable to the maximum rediscount rate expressed in per unit. Initially a = 0,30 is established.

C(t) = Rate of variation that the buyer's exchange rate of the Banco de la Nación Argentina experiences between day t and day t-1 of month j, expressed in per unit.

For this purpose, the entities shall submit Form 4098, in which they shall state whether the charge is paid for extension, for cancellation or for both concepts.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Oraldo N. Fernández
Manager of
Foreign Affairs and Exchange

Elías Salama
General Manager