Circular on Foreign Exchange Operations and Fund Transfers with Abroad

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION "A" 1409
02/05/89

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

Ref.: Circular FOREIGN EXCHANGE OPERATIONS AND TRANSFERS OF FUNDS WITH ABROAD - CAMEX - 1 - 200. ACTIVE OPERATIONS OPRAC - 1 - 228. COLLECTION AND FOREIGN PAYMENTS

• COPEX - 1 - 161. FOREIGN OPERATIONS
  OF THE PUBLIC SECTOR SEPEX - 1 -
  28

We address you and through you all interested parties, to bring to your knowledge that, in accordance with the guidelines established by the economic authorities, the following provisions were adopted in foreign exchange matters.

I. SCOPE OF THE PROVISIONS

1. The foreign exchange treatment given by Communication "A" 1397 of 13.4.89, modified by Communication "A" 1399 of 17.4.89, to foreign currency from the export of merchandise whose shipping permits have been registered with the National Customs Administration until 17.4.89, and from exports of products covered by Law No. 21.453, whose sales were declared before the National Grain Board until 18.4.89, is modified as from 3.5.89 inclusive.

2. The foreign currency from the exports of the products referred to in point 1. above must be sold to this Bank at the exchange rate that will be announced daily ("Exchange Rate Communication "A" 1409").

3. The requirement to sell to this Bank the foreign currency from exports, established in point 2. above, shall be considered fulfilled when the same is applied to the cancellation of foreign currency loans to finance exports (point 1.5. of Circular COPEX -, Communication "A" 12 and complementary) that entered until 13.4.89 through the former Official Exchange Market. The balance remaining to complete the export proceeds may be applied to cancel foreign currency loans to finance exports negotiated in the Free Exchange Market.

In the event that a portion of the export proceeds is not applied to the cancellation of loans under the conditions indicated in the preceding paragraph, it must be sold to this Bank in the terms of point 2.

4. The foreign currency from exports of merchandise not registered with the National Customs Administration nor declared before the National Grain Board as of 17.4.89 and 18.4.89, respectively, that pay the duty

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established by Decree No. 534/89, of the National Executive Branch, and that have foreign currency loans to finance exports (point 1.5. of Circular COPEX - 1, Communication "A" 12 and complementary), entered until 13.4.89 through the former Official Exchange Market and the Free Exchange Market, may be used to cancel that financing under the conditions indicated in point 3. above, and shall have the following foreign exchange treatment:

a. Exports that do not contain temporarily imported inputs (Decree No. 1554/86).

The foreign currency from the export must be sold to this Bank at the buyer's exchange rate of the Free Exchange Market of the Banco de la Nación Argentina, at the close of operations of the previous business day, and may be repurchased at the exchange rate established in point 2. above.

b. Exports that contain temporarily imported inputs (Decree No. 1554/86) and enjoy the exemption of article 4 of Decree No. 534/89.

The foreign currency from the FOB value of the export, less the CIF value of the temporarily imported component, must be sold to this Bank at the buyer's exchange rate of the Free Exchange Market of the Banco de la Nación Argentina, at the close of operations of the previous business day, and may be repurchased at the exchange rate established in point 2. above.

II. OTHER PROVISIONS

1. Prefinancing operations for Promoted Exports (Point 2.1. of Circular OPRAC - 1 Communication "A" 1205 and complementary)

a) Prefinancing operations for promoted exports granted until 27.4.89 inclusive shall be canceled at the exchange rate established in Chapter I, point 2., above.

b) With respect to the operations referred to in point 1 above, which had begun execution with the disbursement of funds of the first stages, the new agreements, if any, and their cancellations shall be made according to the treatment provided in the previous point.

c) The provisions of points a. and b. above apply to operations in force under the regime of Communications "A" 598 and "A" 886 of 28.2.85 and 13.5.86, respectively.

d) New operations shall be agreed and canceled at the exchange rate established in Chapter I, point 2, above.

2. Financing Operations for Promoted Exports (point 2.3. of Circular OPRAC - 1, Communication "A" 1205 and complementary) and Credit Lines (formula 2417)

a) Operations presented for discount to this Bank, whose shipping per

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B.C.R.A. COMMUNICATION "A" 1409 2.5.89

mit is dated prior to that of this Communication, shall be settled at the exchange rate established in Chapter I, point 2., above, except for the following operations:

1. That accompany a copy of the deposit slip certified by the intervening entity of the payment of the duty established by Decree No. 534/89.

2. Export proceeds covered by Chapter I, point 3. of this Communication.

3. Proceeds from services (expenses and salaries of personnel in the importing country, royalties, technical services and commissions) that make up the F.O.B. value of Argentine exports of industrial plants or works contracted with the condition of being delivered "turnkey".

The operations indicated in points 1., 2. and 3. above shall be settled at the buyer's exchange rate of the Free Exchange Market of the Banco de la Nación Argentina on the day prior to the exchange closing date of the operation.

b) In the case of operations covered by Chapter I, point 4. of this Communication, the following procedure shall be followed: the export letter discount operation shall be settled at the buyer's exchange rate of the Free Exchange Market of the Banco de la Nación Argentina at the close of operations on the previous business day, and exporters may acquire the corresponding foreign currency at this Bank, at the exchange rate established in Chapter I, point 2. above, when the export does not contain temporarily imported inputs.

When the export contains temporarily imported inputs (Decreto Nº 1554/86) and they enjoy the exemption of Art. 4º of Decreto Nº 534/89, the purchase of foreign currency shall have the following treatment: the portion of the temporary import that forms part of the FOB value shall be settled at the seller's exchange rate of the Free Exchange Market of the Banco de la Nación Argentina at the close of operations on the previous business day. The balance, up to covering the total value of the export, shall be settled at the exchange rate established in Chapter I, point 2. above.

c) New operations that certify having paid the duty of Decreto Nº 534/89 shall be settled at the buyer's exchange rate of the Free Exchange Market of the Banco de la Nación Argentina on the business day prior to the exchange closing date of the operation.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Clodomiro R. Raposo
Subgerente de
Comercio Exterior
Antonio G. Zoccali
Subgerente General