Circular OPRAC 1 - 563: Foreign Currency Lending Capacity. Application. Modifications

BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
COMMUNICATION “A” 4015 19/09/2003
TO FINANCIAL ENTITIES:
Ref.: Circular
OPRAC 1 - 563
Foreign Currency Lending Capacity.
Application. Modifications

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We address you to inform you that this Institution adopted the following resolution:

“- Substitute point 1. of the resolution made known through Communication “A” 3528 (text according to Communication “A” 4011) with the following:

“1. Establish that the lending capacity arising from deposits constituted in foreign currency, including time deposits in US dollars payable in pesos, shall be applied, indistinctly, to the following destinations:

1.1. Pre-financing and financing of exports carried out directly or through agents, consignees, or other intermediaries acting on behalf and order of the owner of the goods, as provided in Communication “A” 3818.

1.2. Financing granted to producers or processors of goods, provided they have firm sales contracts for the goods to be produced with an exporter, with price fixed in foreign currency, and the goods are fungible and have a normal and habitual quotation in foreign currency in local or international markets, widely disseminated and easily accessible to public knowledge.

1.3. Financing to producers of goods to be exported, either in the same state or as an integral part of other goods, by third-party acquirers thereof, provided they have total foreign currency guarantees or sureties from said third parties.

1.4. Debt titles or certificates of participation in financial trusts -including other specifically recognized receivable rights in the trust contract to be established under the framework of “IDB Loan No. 1192/OC-AR”- whose underlying assets consist of loans originated in financial entities under the conditions referred to in points 1.1. to 1.3.

By way of exception, allocation of up to 10% of the lending capacity will also be admitted for financing that has other destinations, different from those mentioned above, included in the credit program referred to in that loan of the Inter-American Development Bank.

1.5. Interfinancial loans.

Entities must identify the interfinancial loans granted with these resources.

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1.6. US dollar Central Bank of the Republic Argentina Letters, acquired in auctions or through secondary negotiation.

The application, at a minimum, must be equivalent to the deposits in US dollars payable in pesos.

Entities must verify that the financing agreed upon and the maturities established maintain a relationship with the expected income flow in the currency of granting the loans, except for the cases referred to in the second paragraph of point 1.6.

Loans granted must be settled in the Single and Free Foreign Exchange Market.

The resulting lending capacity will be the sum of the foreign currency deposits and the interfinancial loans received, which have been identified by the granting financial entity as coming from its lending capacity of time deposits of that kind, net of the deduction of the minimum cash requirement on the deposits.

Defects in application will be subject to an equivalent increase in the minimum cash requirement, except where they correspond to the minimum application provided for in point 1.6. These latter defects will be subject to a charge equivalent to twice the nominal annual effective interest rate resulting from the auctions of the Central Bank of the Republic Argentina Letters in pesos. The accepted cut-off rate reported by this Institution will be taken into account, which is expressed as a nominal annual effective rate, corresponding to the last auction carried out in the period. In the event that letters are awarded for different terms on the same date, the rate corresponding to the operation with the shortest term will be considered.”

Finally, we point out that, based on what is provided in point 1.1. referenced in the preceding resolution, it will be possible to arrange operations destined to finance working capital and/or the acquisition of all kinds of goods, including temporary imports of inputs, linked to the production of goods for export.

We salute you very respectfully.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Alfredo A. Besio José Rutman
Manager of Emission of Norms
Principal Manager of Norms