Circular Foreign Exchange Operations and Movement of Funds and Securities Abroad - CAMEX 1 - 26

CENTRAL BANK OF THE ARGENTINE REPUBLIC
COMMUNICATION "A" 137 05/07/82
TO FINANCIAL ENTITIES AUTHORIZED TO OPERATE IN FOREIGN EXCHANGE AND FOREIGN EXCHANGE BROKERS:
Ref: Circular FOREIGN EXCHANGE OPERATIONS AND MOVEMENT OF FUNDS AND SECURITIES ABROAD - CAMEX - 1 - 26

We address you and, through you, the interested sectors, to inform you that, in accordance with the policy guidelines established by the economic authorities, a special foreign exchange insurance regime has been implemented, applicable to foreign currency loans entered and negotiated in the foreign exchange market prior to 6.7.82 and that are due or about to become due.

This regime aims to improve the profile of private external financial debt while seeking to mitigate the damages caused to local borrowers, due to the maintenance of foreign currency obligations, by the devaluations arranged for the Argentine currency.

Within these guidelines, the purpose is to distribute the maturities of the new foreign exchange insurance with an approximate limit of US$ 600 million per quarter, which will inevitably mean that this Bank will not always agree to the proposed extensions, especially in the medium term, and must agree with local debtors on the relevant adjustments.

The system does not imply that in operations, especially long-term ones, debtors have the express consent of one or more creditors, who may vary or be complemented, without altering the foreign exchange insurance contract formalized with this Bank.

1. Scope of the provisions
   These are applicable to financial loans in foreign currency that natural or legal persons had entered and negotiated in the foreign exchange market prior to 6.7.82 and that are due or about to become due, registered with the Central Bank through the permanent survey of foreign obligations.

These provisions apply to loans that were unpaid as of 30.6.82, with or without foreign exchange insurance, being an essential condition to enjoy the benefit, to extend the maturity of each obligation for a minimum period of 1 year and a maximum of 5 years.

2. Exchange rate
   An exchange rate of $15,750 per US dollar will be applied.

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3. Forward rate
It will be the result of the variation of wholesale prices, general level, deducting international inflation.

To this end, and regarding the local wholesale price index -general level- the one prepared by INDEC corresponding to the second previous month will be used. As an index of international inflation, the producer's price index for finished goods, -unadjusted for seasonality- of the United States of America, prepared by the Department of Labor of that country for a similar period, will be used.

The daily variation of the index for a given month will be obtained from the difference by quotient between both inflation rates -defined previously- and transformed into an equivalent daily rate (regime of Communication "A" 36).

The resulting rate will be adjusted with a bonus of 1.25% per expired quarter, attributable to the extension period obtained, when it is greater than 1 year and up to 5 years.

The forward rate will be paid to the Central Bank upon settlement -at its maturity- of the respective foreign exchange insurance contract. The same provision applies from 6.7.82 for the payment of forward premiums for insurance arranged under the rules of Communications "A" 31 of 5.6.81; "A" 54 of 14.8.81 and "A" 61 of 24.9.81.

4. Application
   4.1. To foreign currency financial debt without foreign exchange insurance, registered with the Central Bank as of 30.6.82, regardless of its maturity, provided that when applying for foreign exchange insurance it is extended as established in these provisions.

When local borrowers also register financial debts with foreign exchange insurance, the insurance referred to in this Circular will be granted on the condition that the debt already insured under previous regimes is also extended as provided in point 4.2. for an amount not less than that of the uninsured debt that opts for the benefits of these rules.

4.2. Debtors who, as of 30.6.82, have obligations for external financial loans with foreign exchange insurance registered with the Central Bank, under previous regimes, may request to avail themselves of these rules, complying with extensions from the current maturities. Accordingly, existing foreign exchange insurance will continue until their maturities under the conditions in which they were arranged, and from those maturities, the contracts arising from these rules will operate and will be arranged when the respective applications are authorized.

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B.C.R.A. COMMUNICATION “A” 137 5.07.82

Upon the maturity of the current foreign exchange insurance, firms will proceed to offset them with this Bank between the agreed exchange rate and $15,750 per US dollar. The difference in pesos obtained by the contract holders -excluding amounts already paid to the Central Bank for forward premiums- must be applied unfailingly through the intervening entity to the cancellation of domestic credit in that or another entity.

In these cases of succession of two foreign exchange insurance contracts, the forward premiums of the first of them, together with those corresponding to the second, will be paid to this Bank upon the maturity of the last contract, as provided in point 3.

5. Deadline for submitting applications
   Taking into account the special characteristics of the regime referred to in this Circular, the corresponding applications must be submitted to this Bank within 60 calendar days from the date.

6. Procedure
   When submitting requests on form 4008 A, which will be considered in strict order of presentation, interested parties must comply with the following requirements:
   6.1. Provide a detailed list of unpaid financial debts in foreign currency, registered with this Bank as of 30.6.82, attaching a copy of the respective forms 3189 or 3191 - as the case may be - separating those with foreign exchange insurance from those without.
   6.2. Regarding the operations for which adherence to the rules of this Circular is requested, the new maturity dates resulting from extensions must be indicated, and express confirmation - under sworn declaration - must be provided that the debts have not been canceled under any procedure.
   6.3. Once authorizations are granted, interested parties, within the validity period, must proceed to register the new forms 3191, an essential requirement to arrange foreign exchange insurance contracts with this Bank, through the Foreign Exchange Switchboard, reporting the number of the authorized forms 4008 A and registered forms 3191.

7. Reporting regime
   On form 4002 A, the number of form 3191 submitted in compliance with the rules on the survey of foreign obligations, modifying the previous one, must be unfailingly indicated, proceeding to its return, attached to form 4004 B, at the time of settlement of operations. In the case of renewals, they must comply with the reporting regime provided for financial loans and indicate on the reporting forms the number assigned to the new form 3191 modifying the previous one. When settling the operation, it will be added to form 4004 B. Counterparties with the Central Bank will be reported on form 116 in duplicate, separately from other transactions between entities or with this Institution.

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All these forms will be delivered, under receipt, to the General Secretariat Department on the same day of their arrangement, separately from transactions in the Commercial and Financial Foreign Exchange Markets.

8. Authorized intervening entities
   The operations referred to in these provisions can only be processed through financial entities authorized to operate in foreign exchange in categories B and C.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC
Antonio E. Conde Evaristo H. Evangelista
Principal Manager Deputy General Manager