Circular CAMEX 1-205 and REFEX 1-46: Exchange Operations and Reporting Regime for Foreign Exchange Operations and Obligations with Foreign Countries

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION "A" 1435 29/05/89

TO THE FINANCIAL INSTITUTIONS:

Ref.: Circular Exchange operations and movement of funds with foreign countries CAMEX-1-205. Cir- cular Reporting regime for exchange operations and obligations with foreign countries RE- FEX-1-46.

We address you through your intermediary to all interested parties, to bring to your knowledge that as from the start of activities corresponding to 30.5.89, all exchange transactions shall be conducted through the SINGLE EXCHANGE MARKET.

The aforementioned provision, which was adopted by this Institution in accordance with the guidelines established by the economic authorities, renders ineffective the operation of the Free Exchange Market established by Communication "A" 1396 of 13.4.89, at the close of operations corresponding to 19 May 1989.

Consequently, the SINGLE EXCHANGE MARKET is established in accordance with the following provisions:

I. Operations with foreign currency and foreign currency banknotes

1. Exchange rate

The Central Bank shall set daily the buying and selling exchange rates, spot normal value, for transfer of the US dollar, at which it will operate in this Market. The institutions, exchange houses, agencies and offices shall do likewise by applying exchange rates in accordance with those set by the Central Bank, as required by the development of the market.

2. Exchange position

Financial institutions authorized to operate in exchange shall maintain as maximum exchange position the level recorded at the close of operations on 19 May last, or the amount resulting from considering 10% of the Non-Immobilized Own Resources corresponding to the month of April last, converted to US dollars by applying the selling exchange rate of the Banco de la Nación Argentina at the close of operations on 27.4.89, that is Australes 77.- per dollar, whichever is lower.

Exchange houses, agencies and offices shall maintain as maximum spot position the level recorded at the close of operations on 19.5.89 or the amount resulting from considering 50% of the Net Equity after deducting immobilized assets, converted to US dollars by applying the selling exchange rate of the Banco de la Nación Argentina at the close of operations on the day on which its last approved annual balance sheet closed, whichever is lower.

Financial institutions, exchange houses, agencies and offices shall be framed within the provisions set forth above, at the close of operations of the first exchange business day in the Single Exchange Market.

Variations in the Exchange Position may not exceed by more than 5% of the balance corresponding to the previous business day or US$ 10,000.-, whichever is greater, always limited to the maximum established in the preceding paragraphs.

Exchange houses, agencies and offices that did not comply with the provisions of Communication "B" 2897 shall regularize the situation by paying the difference established therein, calculated by applying the selling exchange rate for transfers in US dollars of the Banco de la Nación Argentina at the close of operations on 19.5.89 in the Free Exchange Market.

The payments arising from considering the provisions of the preceding paragraph shall be made in 6 equal and biweekly installments due on 2, 16 and 30 June, 14 and 28 July and 11 August next, and shall be adjusted in all cases by the variation experienced by the selling quotation set by the Central Bank for the Single Exchange Market between the date of commencement of activities and the payment date.

The declarations of the corresponding exchange operations and their settlements on the indicated due dates shall proceed according to the usual form.

3. Permitted operations

Financial institutions, exchange houses, agencies and offices, within the regulations in force regarding permitted operations for each class and category of operator, may carry out the following operations, which in no case may constitute an arbitrium to dispose of or place lendable resources in Argentine currency.

3.1. Operations with clients

• Purchases without limitations and sales in accordance with the rules established by Communication "A" 1434 of this date.

B.C.R.A.
COMMUNICATION "A" 1435
29/05/89

• Arbitrages, without limitations, provided they are carried out between equal types of different currency.

• Swaps, limited to operations carried out by cargo and passenger transport and related companies, with international activity, provided they are related qualitatively and quantitatively to said activity; those responding to income from retirement and pensions received from abroad and those requested by international organizations, embassies, legations or consulates accredited to the National Government, as well as their officials with diplomatic status, a situation that must be verified by the intervening operators.

3.2. Operations between authorized operators

The Single Exchange Market shall operate with normal value exchange rates. “Value today” operations may be carried out exceptionally when at least one of the parties does so for justifiable needs to cover client operations.

3.2.1. Operations with foreign currency.

• Purchases and sales, limited to the total amount sold and bought from clients, respectively, including as traded between entities that agreed with the Central Bank.

• Arbitrages. Entities may freely arbitrage the foreign currency of their exchange position. Operations with entities originating from arbitrages or giving rise to their execution shall be subject to the limitation established by point 3. above.

3.2.2. Operations with banknotes.

Foreign currency banknotes purchased by one entity from another through currency exchange or arbitrage for banknotes or foreign currencies of a different currency may only have as their final destination the sale to clients - in accordance with regulations - the export with its corresponding counterpart deposited in foreign currency, or the return of deposits in US dollars Comunicación “A” 725.

Likewise, banknotes sold by one entity to another may only come from purchases from its clients, from imports, or from the receipt of Deposits Comunicación “A” 725.

II. Collection and payment operations processed through reciprocal credit agreements

1. Exchange rates

The buyer and seller exchange rates established by Section I, point 1. of this Comunicación shall apply.

Consequently, operations carried out by entities with their clients must be channeled to the Central Bank at the buyer or seller exchange rates, as applicable, indicated above.

2. Permitted operations

Collections and payments processed through the Mercado Unico de Cambios must comply with the rules established by Comunicación “A” 1434 of the same date.

For the cancellation of foreign currency loans received to finance exports (point 1.5. of Circular COPEX-1 and complementary), the Central Bank shall deliver free foreign currency through arbitrage to be carried out in the Mercado Unico de Cambios.

III. Operations in minted gold and in “good delivery” bars.

1. Prices

It shall be set by the operators based on the buyer exchange rate established daily by the Central Bank, in accordance with the provisions of Section I point 1., of this Comunicación.

2. Permitted operations

Purchase from clients and arbitrage against free foreign currency through sale to local or foreign entities.

IV. Operations with special exchange treatment

All operations processed in accordance with the rules established in this section must be channeled to the Central Bank at the same exchange rates applied to clients.

1. Expenses for medical treatment abroad, purchase of medicines abroad and imports of inputs destined for the manufacture of medicinal products.

For the purposes of proceeding with the sales of foreign currency considered by Section II, point 1., of Comunicación “A” 1434 of the same date, the application of 60% of the seller exchange rate set daily by this Central Bank in the Mercado Unico de Cambios shall apply.

B.C.R.A. COMMUNICATION "A" 1435 29/05/89

2. Exports to be settled or re-settled through the application of reduced exchange rates.

2.1. The following exchange treatment shall apply to exports included in Chapter II, point 7.1. of Comunicación “A” 1434 that are settled from 30.5.89, inclusive, depending on whether the goods have or do not have an “official price” established by the Administración Nacional de Aduanas and whether or not they are included in Decrees Nos. 553/89 and 713/89.

2.1.1. Non-prefinanced operations

SITUATION	Percentage of the buyer exchange rate of the Mercado Unico de Cambios
	Product with "official price"	Products without "official price"
2.1.1. a) Products included in the list annexed to Decreto Nº 713/89 that have not paid the duty established by Decreto Nº 553/89	70,000%	76,923%
2.1.1. b) Products not included in the list annexed to Decreto Nº 713/89 that have not paid the duty established by Decreto Nº 553/89	80,000%	83,333%
2.1.1. c) Products included in the list annexed to Decreto Nº 713/89 that have set or paid the duty established by Decreto Nº 553/89	90,000%	93,590%

These exchange rates shall be made known daily through the exchange desk in accordance with the usual procedure.

2.1.2. Prefinanced operations

2.1.2.1. In the case of exports prefinanced under the terms of Chapter II, point 7.2. of Comunicación “A” 1434, the portion of the export proceeds not applied in accordance with the provisions of said rule must be assigned to the Central Bank under the conditions established in point 2.1.1. above.

2.1.2.2. In the case of prefinanced exports covered by Chapter II, point 7.3. of Comunicación “A” 1434, the purchase of the foreign currency or the agreement credit shall apply under the terms of point 2.1.1. above and the sale of free foreign currency at the seller exchange rate of the Mercado Unico de Cambios corresponding to the settlement date.

2.2. The following exchange treatment shall apply to exports included in Chapter II, point 7.4. of Comunicación “A” 1434, that are settled from 30.5.89:

2.2.1. Exports that do not contain temporarily imported inputs (Decreto Nº 1554/86).

Their re-settlement shall apply through the purchase of the foreign currency or agreement credits at the buyer exchange rate of the Mercado Unico de Cambios and the sale of free foreign currency at the exchange rates indicated in points 2.1.1.a) or 2.1.1. b) above, as applicable.

2.2.2. Exports that contain temporarily imported inputs (Decreto Nº 1554/86) and that enjoy the exemption of article 4º of Decreto 1554/86.

Their re-settlement shall apply in accordance with the provisions of point 2.2.1. above, only for the net amount after deducting from the F.O.B. value of the export the C.I.F. value of the imported component.

2.3. For the cancellation of prefinancings included in Chapter II, point 8. third paragraph; point 9.b), first paragraph and point 9. b), last part of the second paragraph, of Comunicación “A” 1434, the sale of free foreign currency shall apply at the exchange rate applied for the settlement of the export.

2.4. The settlement of foreign currency or agreement credits corresponding to the FOB value of exports, excluding the portion of the imported component pending cancellation as of 13.4.88, in accordance with the provisions of Chapter II, point 10, first paragraph of Communication "A" 1434, shall be carried out as provided in point 2.1.1. of this Communication.

2.5. The portion of an export corresponding to foreign merchandise temporarily imported, pending cancellation as of 13.4.89, which is applied to the cancellation of foreign currency loans received up to the same date, included in Chapter II, point 10, second paragraph of Communication "A" 1434, shall be re-settled through purchase at the buyer's exchange rate in the Single Exchange Market and sale in accordance with the provisions of point 2.1.1. above, as applicable.

B.C.R.A. COMMUNICATION "A" 1435 29/05/89

2.6. Foreign currency and agreement credits from exports not received on time shall be settled to exporters at the exchange rates detailed for each case in point 12 of Chapter II of Communication "A" 1434, and must be sold to the Central Bank at the same exchange rates.

V. Information Regime

1. Operations with clients

1.1. Private Sector

1.1.1. Purchases of foreign currency

Collections from exports, advances, pre-export financing loans, export financing, loans from International Organizations, financial loans and investments in the country by non-residents, must be individually reported regardless of the amount in form 4001 A or B, as applicable.

The rest of the operations shall be reported globally, classified by concept, in form 4031 A or B.

1.1.2. Sales of foreign currency

Transactions for all concepts and amounts shall be reported through individual sworn statements in form 4002 A or B as the case may be, except for the operations indicated in point 3.9 of Communication "A" 1434, which must be reported globally by currency and country with an attached detail of beneficiaries and amount.

1.2. Public Sector (Government Departments, Enterprises and State Agencies)

All operations carried out by this Sector must be individually reported regardless of amount and concept through forms 4001 A or B and 4002 A or B as applicable.

2. Operations between financial institutions, exchange houses, agencies and offices and with the Central Bank.

Transactions between the aforementioned operators shall be reported in form 115 A or B or 112 depending on whether they are purchases-sales or arbitrages. In the latter case, for operations in gold, the class and quantity in grams must be detailed in each case.

In order to comply with current customs requirements, for shipments abroad of foreign banknotes and gold, a form 113 must be submitted in original and two copies, destined for the National Customs Administration and the intervening entity.

3. Summary of operations and exchange position.

3.1. Financial institutions authorized to operate in foreign exchange.

The summary of daily movement shall be reported in form 4009 and the exchange position in form 111.

3.2. Exchange houses, agencies and offices.

The summary of daily movement and the exchange position shall be reported in form 4033.

4. On the responsibility of entities in carrying out exchange operations.

Entities and houses authorized to operate in foreign exchange must take extreme precautions to strictly comply with the following provisions:

4.1. Operations with clients.

Especially in sales of foreign currency to clients, they must adopt all necessary means to verify that these are real operations, requiring when appropriate, reliable proof of the identity and domicile of the applicants, regularity of the corporate contracts, the client's habitual engagement in business in the relevant field and the relationship of the operation with their financial capacity.

They must also request, taking as guidelines the background required for credit operations, any other information and documentation used in generally accepted banking practices, in order to determine that the transaction is real and complies with the exchange regulations that make its execution possible.

If from the analysis of the requests an attempt or existence of violations of the provisions can be presumed, this circumstance must be immediately brought to the attention of the Inspection Management of this Bank, for the adoption of appropriate measures.

The determination of irregularities in exchange operations gives rise to the application of the provisions of the Criminal Exchange Law.

Without prejudice to this, this Bank considers it appropriate to point out that authorization to operate in foreign exchange is granted on the basis that the entities have qualified personnel and an organization that ensures the execution of legitimate operations.

B.C.R.A. COMMUNICATION "A" 1435 29/05/89

Such aspects are considered fundamental for the activity of the entities to develop under conditions of seriousness and responsibility. Consequently, the verification of deficiencies in this regard affects the attributes necessary to maintain the authorization.

In the sworn statements of exchange operations processed by their clients and in the consultations and requests submitted for the execution of exchange operations - in addition to the record of compliance with the provisions of the preceding paragraphs - it must be expressly stated that the holder of the operation is not disqualified from operating in foreign exchange.

They may only process applications for the execution of exchange transactions required by disqualified persons or firms when the resolution of this Bank on those requests expressly establishes that such authorization includes the exception to the provision by which the disqualification was communicated.

Without prejudice to strict compliance with these provisions, entities authorized to operate in exchange must allocate and retain in their possession, at the disposal of the Central Bank, all documentation justifying the transaction carried out. When the intervened originals are requested by the interested parties, they must supply in their replacement and so that they serve as background for the transaction, copies duly authenticated by the applicants and by the intervening entities.

When it concerns documentation in a foreign language, it must be accompanied by its corresponding translation.

5. General provisions.

5.1. Submission of forms.

5.1.1. Entities located in the Federal Capital and Greater Buenos Aires districts.

The submission of forms shall be made on the day of the transactions, at the General Secretariat Department - Sarmiento 476 until 19:00.

5.2.2. Entities located outside the Federal Capital and the Greater Buenos Aires Districts.

Category "C" banks shall do so within 24 hours after the close of their operations.

Category "A" and "B" banks, financial entities, exchange houses, agencies and offices, within 48 hours.

5.2. New numerical sequence.

A new numerical sequence shall be initiated for all those transactions that, pursuant to point v.1. of this provision, must be declared individually on forms 4001 A or B and 4001 A or B.

6. Table of concepts

The conceptual coding shall be carried out in accordance with the detail set forth in the annex.

7. The provisions of the exchange reporting regime that do not conflict with this Communication remain in force.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Raúl O. Planes
Exchange Manager
Antonio G. Zoccali
Deputy General Manager

ANNEX

B.C.R.A.
TABLE OF CONCEPTS
PUBLIC AND PRIVATE SECTORS
SINGLE EXCHANGE MARKET
EXCHANGE PURCHASES
Annex to
Com. "A" 1435

Code	Concept
001	Freights earned by Argentine vessels and aircraft abroad.
002	Passages earned by Argentine vessels and aircraft abroad.
011	Export freights
021	Vessel chartering
031	Expenses in the country of foreign vessels and aircraft
041	Insurance on merchandise
042	Other insurance
051	Tourism and travel
061	Retirements and pensions
081	Exports against delivery of shipping documents
082	Exports (conversion of prefinancings)
083	Exports (conversion of prefinancing of promoted exports or with letters rediscounted by the Central Bank)
084	Advance collections of exports
085	Exports (conversion of advance collections)
122	Loans to finance exports instrumented with letters rediscounted by the Central Bank
123	External loans to finance promoted exports
125	Long-term loans (up to one year)
126	Long-term loans (more than one year)
128	External loans to prefinance exports
130	Loans to finance imports from countries with a Reciprocal Credit Agreement
132	Loans to prefinance exports granted with resources from the collection of local deposits in foreign currency

Code	Concept
135	External loans to prefinance promoted exports
139	Loans from International Organizations
141	Investments in the country made by non-residents
143	Other capital movements
151	Bank expenses and commissions
154	Interest
161	Profits and dividends
171	Royalties
174	Technical services
191	Commercial commissions
211	Telephone, postal, telegraph and telex rates
221	Argentine consular collections abroad
222	Expenses of embassy, legations, consulates and other official representations in the country.
298	Other unspecified concepts

B.C.R.A.
TABLE OF CONCEPTS
PUBLIC AND PRIVATE SECTORS
SINGLE EXCHANGE MARKET
EXCHANGE SALES
Annex to
Com. “A” 1435

Code	Concept
501	Freight earned by foreign ships and aircraft
502	Passages earned by foreign ships and aircraft
511	Export freight
521	Leasing of vessels
522	Leasing of aircraft
523	Container rentals
531	Expenses abroad for Argentine vessels and aircraft or those leased by Argentine companies
541	Insurance on merchandise
542	Other insurance
551	Tourism and travel
552	Sale of foreign exchange to foreign tourists from non-bordering countries
561	Retirements and pensions
571	Family assistance
581	Advance payment for imports
582	Imports against delivery of shipping documents
583	Imports with deferred payment
584	Import interest
585	Import freight
586	Consular expenses for imports
589	Lease agreements with option to purchase (leasing)
590	Payment for repairs of goods or items temporarily exported
621	Repayment of short-term loans (up to one year)
622	Repayment of long-term loans (more than one year)

Code	Concept
623	Repayment of external loans to prefinance exports
626	Repayment of loans to finance exports instrumented with letters rediscounted by the Central Bank
627	Repayment of external loans to finance promoted exports
630	Repayment of loans to finance exports from countries with Reciprocal Credit Agreement
632	Repayment of loans to prefinance exports granted with resources from the collection of local deposits in foreign currency
635	Repayment of external loans to prefinance exports
639	Repayment of loans from International Organizations
643	Other capital movements (includes repayment of “on lending” loans)
672	Interest on export financing
691	Bank expenses and commissions
692	Commercial commissions
693	Commissions of representatives or sales agents for Argentine exports
701	Patents and trademarks
711	Remittances from embassies and members of diplomatic corps
722	Consular collections
726	Salaries of Argentine personnel assigned abroad
737	Payment and amortization of global contracts for works and services
740	Subscription to newspapers and magazines
741	Purchase of books by individuals
743	Contributions to foreign pension funds
744	Purchase of medicines by individuals

B.C.R.A.	TABLE OF CONCEPTS PUBLIC AND PRIVATE SECTORS SINGLE EXCHANGE MARKET EXCHANGE SALES	Annex to Com. “A” 1435
Code	Concept
745	Copyright
746	Information services (includes registration and purchase of telex directory)
748	Extraction and legalization of birth, baptism, marriage and death certificates
749	Membership fees to International Organizations
751	Medical treatment expenses abroad
753	Payment of salaries and per diems in favor of diplomats and other official Argentine representatives accredited abroad and of obligations contracted during the exercise of their functions
754	Registration fees for international congresses and meetings
755	Expenses for attending international fairs and exhibitions
756	Per diems, salaries and fees of hired foreign personnel working in the country
757	Technical services (includes salaries and fees of foreign personnel)
759	Expenses of commercial representations abroad
760	Scholarships and study expenses
761	Interest on financial debt
762	Payment of default and compensatory interest
764	Royalties
767	Alimony payments derived from compliance with judicial sentences
768	Fees for legal proceedings processed abroad, linked to Argentine export operations