Circular COPEX 1 - 109 and REFEX 1 - 28: Amendments to the Foreign Exchange Regime for Exports

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION "A" 932
14/10/86

TO FINANCIAL INSTITUTIONS AUTHORIZED TO OPERATE IN FOREIGN EXCHANGE AND FOREIGN EXCHANGE BROKERS:

Ref.: Circular EXTERNAL COLLECTIONS AND PAYMENTS - COPEX - 1 - 109. Circular REGULATORY REGIME OF FOREIGN EXCHANGE OPERATIONS AND OBLIGATIONS WITH ABROAD - RE- FEX - 1 - 28

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" 12 of 2.3.81 (COPEX - 1), modified by Communication "A" 690 of 28.6.85.

I. Scope of the provisions

Replace in each case the texts of the points included in Chapter I (Foreign Exchange Regime for Exports), as indicated:

… 1.4. Advance payment of exports.

… When the export is not made, the provisions of point 1.5.2 shall apply.

… 1.5. Loans in foreign currency to finance exports.

… 1.5.2. … … … … … When the export is not made and, consequently, such income has not been applied within the maximum admitted periods, 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 credit to this Bank's account the charges that are set.

If after the maximum period arising from the admitted extension the export has not been completed, the repayment of the foreign currency loan to finance exports may only be made through any of the procedures indicated below, which are also applicable when the extension is not granted by the intervening entity or when the exporter chooses not to avail itself of it and does not comply with the export within the maximum period admitted by the provisions in force.

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a. In accordance with the rules that, on the date on which the negotiation of the foreign exchange occurred, govern the reimbursement of financial loans in foreign currency. The new period must be computed from the referred maturity, that is, from the moment in which it ceased to be valid as a foreign currency loan to finance exports: or

b. With access to the Foreign Exchange Market, after payment of the charge set by the Central Bank, for the entire validity of the foreign currency loan to finance exports. The amount of the resulting charge must be transferred in full to this Bank by the intervening entities.

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

In the event of exports that cover partial amounts, for the unapplied balances the same procedure shall be followed, unless the amount to be repaid does not exceed 10% of the amount of the foreign currency loan, in which case it may be repaid without complying with the requirements indicated in points a. and b. above. The aforementioned repayment of up to 10% must be made, at most, simultaneously with the cancellation of the foreign currency loan or in accordance with the provisions of point 1.5.2.a. above.

II. Other provisions

i. In cases where the extension has been used or the advance payments of exports or foreign currency loans to finance exports with access to the Foreign Exchange Market are cancelled, the intervening entities must record on the back of Form 4002 for foreign exchange sale (Code No. 623 "Repayment of other export financings" or Code No. 628 "Repayment of advance payments of exports", as applicable), the amounts of the charges credited to this Bank (for extension, for cancellation with access to the Foreign Exchange Market, or for both concepts), indicating in each case the number of days they comprise.

ii. Grant up to 30 business days from the date of this Communication for the cancellation of the unapplied balances of advance payments or foreign currency loans to finance exports, which do not exceed 10% of the amount received, and which are pending amortization at the date, for which they shall have access to the Foreign Exchange Market, indicating in the respective forms the number of this Communication. For operations in progress with maturities after the date, the cancellation of said balance must be made, at most, simultaneously with the cancellation of the advance payment or the foreign currency loan. In both cases the cancellation may also be made in accordance with the provisions of point 1.5.2.a.

B.C.R.A. COMMUNICATION "A" 932 14.10.86

iii. The charge that will govern for these operations for the extension period or for the entire validity of the advance payment or the foreign currency loan to finance exports, will be the one resulting from comparing the default charge index detailed below, corresponding to the day of the receipt of the funds or 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:

It
= It-1
1 + rt
(1 + α) - ct

where:

It = Default charge index corresponding to day t of month j. By definition, Io = 100.

rt = 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 as a decimal. If day t is not a business day, the rate corresponding to the last immediate preceding business day shall be considered in the calculation.

α = Coefficient applicable to the maximum rediscount rate expressed as a per-unit value. Initially, α = 0.30 is established.

ct = 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 as a per-unit value.

iv. For the crediting of charges in favor of this Bank, the intervening entities shall use Form 3030, which must be submitted in triplicate to the Exchange Operations Department of the Foreign and Exchange Management of this Bank, in the usual manner.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Oraldo N. Fernández
Manager of
Foreign and Exchange
Elías Salama
General Manager