On January 5, 2017, the Argentine Ministry of Treasury (Ministerio de Hacienda) issued Resolution No. 1-E/2017 (the Resolution), reducing to zero the prior minimum stay of 120 calendar days during which proceeds received from (a) portfolio investments of non-residents, and (b) new financial indebtedness incurred by residents and granted by foreign creditors, were required to be retained in Argentina. With that said, by not completely eliminating the minimum stay, the Argentine Ministry of Treasury preserved its ability to reinstitute a minimum stay in the future.
The minimum stay required any foreign financial indebtedness incurred by financial and non-financial private sector residents that entered Argentina through the local exchange market (Mercado Único y Libre de Cambio) (MULC) to be maintained in Argentina for a minimum of 120 calendar days from the date the funds were received in Argentina, without the ability to repay or prepay the indebtedness prior to the expiration of such term. Repayment or prepayment was prohibited even if the payment was processed through the MULC.
The Resolution supplements additional economic reforms already implemented by President Macri’s administration concerning foreign inflow and outflow of funds into and out of Argentina, the repatriation of funds by Argentine residents and the purchase of foreign currency in-country. Similar to the foregoing economic reforms, it is anticipated that the Resolution will result in additional flexibility in the Argentine exchange control market.
Santos Gonzalez Victorica* is a co-author of this Alert.
*Not admitted to the practice of law in the United States. Admitted to practice in Argentina.