Government lifts “corralito” restrictions

A month after Resolution No 668/02, issued by the Ministry of Economy on November 22, 2002, lifted the restrictions on cash withdrawals from savings and checking bank accounts, the implications of the end of the “corralito” are becoming clearer.

• The end of the corralito did not entail any significant changes to the “corralón” (rescheduling of term deposits and Cedros).

• Distinctions among bank accounts were erased by equating those accounts that had been affected by the corralito to the free accounts created under Decree No 905/02 and its implementing regulations (Central Bank Communication “A” 3,827).

• The purchase of foreign exchange does not require the use of cash any more, as the regulations now also allow the use of the purchaser’s checks or bank account debits, without taking into consideration the purpose of the transaction (Central Bank Release No 45,285 and Communication “A” 3,826).

• The elimination of the corralito was followed by an increase in the items that require prior Central Bank approval for the purchase of more than US$100,000 of foreign currency per calendar month. As a general rule, this restriction applies to investments and savings (atesoramiento), including, but not limited to, investments in foreign real estate, loans to non-Argentine residents, direct investments outside Argentina by Argentine residents, portfolio investments outside Argentina by Argentine individuals, purchases of foreign currency cash to be held within Argentina, and purchases of traveler checks (Central Bank Communication “A” 3,826).

• New regulations clarified that the payment outside Argentina of services must result from services rendered by non-Argentine residents to Argentine residents (Central Bank Communication “A” 3,826).

• The end of the corralito allows cashing checks at the bank and repaying loans with cash up to Argentine Pesos 50,000, while higher amounts must still be credited electronically (Central Bank Release No 45,285).