Circular Foreign Exchange Operations and Movements of Funds and Securities with the Exterior - CAMEX 1 - 227. Circular External Collections and Payments - COPEX 1 - 182

BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
COMMUNICATION "A" 1504 02/08/89
TO FINANCIAL ENTITIES AUTHORIZED TO OPERATE IN FOREIGN EXCHANGE AND FOREIGN EXCHANGE BROKERS:
REF.: Circular FOREIGN EXCHANGE OPERATIONS AND MOVEMENTS OF FUNDS AND SECURITIES WITH THE EXTERIOR - CAMEX 1 - 227 Circular EXTERNAL COLLECTIONS AND PAYMENTS - COPEX -1- 182

We address you and, through you, to the interested sectors in order to communicate to you the provisions to which the settlement of obligations in foreign currency of the private sector will be subject, which are included in the Agreement concluded between the Government of the Argentine Republic and the Government of the Italian Republic on the consolidation of external debts of the Argentine Republic, within the framework of the Paris Club.

Obligations of the private sector that have the guarantee of the Nation, official banks, provinces, or municipalities, and mixed-economy companies, are also included in this regime.

I. Scope of the Provisions

These provisions cover maturities for principal and interest that have operated between January 1, 1986, and June 30, 1988, corresponding to credits with terms exceeding one year, which were the subject of a contract or any other form of financial arrangement concluded before December 10, 1983, and which have a guarantee from the Sezione Speciale per l'Assicurazione del Credito all'Exportazione (SACE).

The Central Bank of the Republic Argentina will assume the payment obligation for the refinanced operation for the countervalue of the amount deposited by the debtor in australes in the corresponding foreign currency, from the moment the debtor communicates to the Central Bank of the Republic Argentina the application of the deposit to the effective cancellation of the debt, with effect from the date the respective deposit was made. To this end, Form No. 4074-E must be presented through the entity authorized to operate in foreign exchange where the documentation of the operation is located.

The detail of the operations covered by this Communication will be delivered directly to the entities authorized to operate in foreign exchange. Their classification by entity responds to the information registered by the debtor in the External Debt Survey (Form 5003 or 5005). Entities authorized to operate in foreign exchange must notify in writing the debtors included in the preceding list of these payment provisions and their execution deadlines.

For the purpose of verifying the cancellation of all included obligations, the intervening entity must indelibly record in the space reserved for such effect in Form No. 4074-E referred to in Chapter II (Procedural Rules), the internal reference number established by the Central Bank and the external reference indicated by SACE, both of which appear in the detail.

The following obligations are exempt from this treatment, those without foreign exchange insurance included in the details referred to above, resulting:
a) Of up to US$ 3,000 or its equivalent in other currencies, per maturity date, adding original principal and interest, and b) Considering the total of unpaid maturities for original principal and interest of the same debtor with the set of creditors guaranteed by Sezione Speciale per l'Assicurazione del Credito all'Exportazione, amounts of up to US$ 25,000, or its equivalent in other currencies.

Cases included in the preceding exceptions, as well as their contractual interest accrued from their maturities, will be cancelled directly through the foreign exchange market.

Obligations contracted from 12/10/83 are not covered by this treatment and must be cancelled with adjustment to the general norms in force in the matter.

II. Procedural Rules

The settlement of each obligation included in this Communication will follow the following procedure, depending on whether it is covered by foreign exchange insurance or not.

1. Obligations not covered by foreign exchange insurance

a) When no deposit has been constituted under the terms of Communication "A" 459 and complementary

The cancellation of the obligations (principal and original interest) will be carried out by paying the amount in australes, equivalent to the unpaid sums in foreign currency. To this end, it will be necessary to complete Table I, row 1, of Form No. 4074-E, by which the intervening entity authorizes debiting its current account at the Central Bank. Entities will apply the selling exchange rate to clients reported by the Banco de la Nación Argentina at the close of operations of the foreign exchange market, on the business day prior to the debtor's settlement.

For obligations maturing up to 04/30/87, together with the deposit of the countervalue in australes of the principal and/or original interest, the deposit of the countervalue in australes of the interest accrued on the total debt from the maturity date until 04/30/87 will be required. To this end, it will be necessary to complete Table III of Form No. 4074-E, by which the entity authorizes debiting the countervalue in australes in its current account at the Central Bank.

Interest accrued on the same obligations from 05/01/87 must be transferred directly to the external creditor.

When the obligation matures after 04/30/87, the deposit of the countervalue in australes of the principal and/or original interest will be required as indicated in the preceding paragraph, while the interest accrued on the total debt (principal plus original interest) between the maturity and payment dates must be transferred directly to the external creditor. In such case, the debtor will have access to the foreign exchange market and its payment must be reported by completing Table IV of the form.

The applicable interest rates are as follows:

1) Debts in Dollars
Period % p.a.
01/01/86-30/04/87 6.60
01/05/87- to total cancellation of the debt
7.75

2) Debts in Italian Liras
Period % p.a.
01/01/86-30/04/87 11.10
01/05/87- to total cancellation of the debt
10.70

In both cases, interest will be calculated on the basis of a 360-day year, for the actual number of days elapsed.

If the external creditor has the right to receive a higher interest rate and/or other concepts for the delay occurred, the payment of the difference must be made directly to them. In such case, it must be reported by completing Table IV of the form.

b) When a deposit has been constituted under the terms of Communication "A" 459 and complementary

The deposit constituted by virtue of Communication "A" 459 of 02/29/84 and complementary, must be applied to the cancellation of the obligation for which it was constituted, according to the nominal values deposited at origin by completing Table I, row 2, of Form No. 4074-E, consequently, the entries for the constitution of those deposits as well as those corresponding to the accrual of their adjustments will be reversed; the amount of the latter must be included with a negative sign in Column 2 - row 1.3 - of Table B of Form No. 3922 corresponding to the month in which the funds are applied.

If the "Communication "A" 459" deposit was constituted in deficit, the difference up to the total amount of the obligation (principal and/or original interest) must be covered by applying the procedure provided in the first paragraph of Chapter II, point 1.a), preceding.

In the event that the "Communication "A" 459" deposit was made after the maturity of the obligation, the debtor is responsible for cancelling the interest accrued on the obligation from the maturity until the date of its constitution, according and in accordance with the procedures indicated in Chapter II, point 1.a).

2. Obligations covered by foreign exchange insurance

a) The cancellation of obligations covered by foreign exchange insurance, both principal and interest, will be carried out by applying the payment made on the day of the maturity of the foreign exchange insurance. Maturities for original interest not covered by foreign exchange insurance must be settled in accordance with what is expressed in points 1.b) and 1.a) preceding, depending on whether the countervalue in australes has been deposited or not, with adjustment to what is provided by Communication "A" 459 and complementary.

b) When it concerns original obligations taken in a currency other than the United States dollar, the excess of the foreign exchange insurance resulting from the application of a different exchange rate than the one contracted, will be cancelled and the countervalue resulting from the deposit may be requested by the policyholder with adjustment to the procedure established by Communication "A" 506 of 07/04/84.

When the result is in deficit, the net missing amount in United States dollars must be settled with adjustment to the mechanism provided in point 1., section a), integrating point I of the same Form No. 4074-E. The settlement of the respective complement will be made in the currency of origin.

The exchange rates to be applied must be requested from the Foreign Exchange Clearinghouse of this Central Bank.

c) According to the norms established by Communications "A" 31 of 06/05/81 and "A" 137 of 07/05/82 and complementary, it is an essential condition for the foreign exchange insurance contract to have effect, the agreement of extension of the original obligation by the creditor or the achievement of that through the substitution of one or more creditors.

In cases where the original maturity date supplied by the Sezione Speciale per l'Assicurazione del Credito all'Exportazione does not contemplate the extension communicated to the Central Bank when contracting the foreign exchange insurance, the following procedures will apply:

c)1. Obtaining extension by the external creditor or its replacement by another external creditor. In these cases, it will be necessary for the Sezione Speciale per Assicurazione del Credito all Exportazione to communicate the extension of the maturity or report that the credit has been excluded from the Consolidation Agreement. In the latter situation, the debtor, for the attention of the foreign exchange insurance through the issuance of the "B.C.R.A. Note" must adjust to the norms established by Communication "A" 1084 of 09/22/87.

c)2. When the obligation with the external creditor subsists and the discrepancy between the original maturity date reported by it and the one communicated to the Central Bank to contract the foreign exchange insurance remains, it will be necessary to cancel it.

To this effect, the Central Bank will proceed to return to the authorized entities the amounts deposited, adjusted from the date the intervening entity's debit was made until the day its credit is effective, according to the methodology established by Communication "A" 506 of 07/04/84 points 1. or 2., as appropriate. The amounts will be applied directly by the intervening entity to the cancellation of the obligation with adjustment to the procedure established for obligations not covered by foreign exchange insurance referred to in point 1. Section a), of this Chapter. When the result is in deficit, the missing amount must be covered up to the amount corresponding to the total of the obligation being cancelled.

In the event that the foreign exchange insurance covers an obligation with an original term of up to 1 (one) year and consequently is not included in the Consolidation Agreement, the cancellation or settlement of the foreign exchange insurance will be required according to the general application norms.

III. General Provisions

The intervening entities, with adjustment to the general norms in force at the time of payment, will verify the settlement of interest and other expenses contractually agreed that are cancelled directly through the foreign exchange market, by this Communication. They must also verify the determination of the interest calculation period when deposits have been constituted under the terms of Communication "A" 459 and the reasonableness of the payment issued, retaining the supporting documentation that accredits it.

Interest transferred abroad for periods subsequent to the original maturity that must now be settled with adjustment to the procedure indicated in point 3. first paragraph, must be re-entered into the foreign exchange market. When they correspond to be settled by the remaining paragraphs of the same point, they must be applied as if they were advance payments.

In these cases, any excesses that may have been transferred must be re-entered. Non-compliance with this provision is covered by the Foreign Exchange Criminal Regime.

For the purpose of settlement, for each original obligation in terms of principal and interest, jointly or separately, as stated in each line of the list that will be delivered to each intervening banking institution, it will be necessary to complete Form No. 4074-E except when the application of two or more foreign exchange insurances corresponds, which will give rise to individual presentations for each of them.

Form No. 4074-E must be presented in original and 5 copies until 14:00, in the Foreign Exchange Operations Department, Office 304, 3rd floor.

IV. Other Provisions

The regime on the settlement of foreign exchange insurance (principal payments and future rates) is maintained, and therefore, the holders and intervening banks must strictly adhere to the norms in force.

We salute you very attentively.

BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
Esteban Molfino Antonio G. Zoccali
Manager of International Relations General Deputy Manager