Doing Business In Argentina

• Forward exchange transactions
Within the context of a healthier and more liquid financial system and several years of
sustained GDP growth, increasing exports, and a historical record of fiscal surplus,
banks are compelled to expand their portfolio of services in order to capture new clients
and increase market-share.
In the late nineties there were 120 banks operating in Argentina, whereas there are
currently 67 in business today. The financial system is perceived to be healthier than it
was in the last decade. Most financial institutions in Argentina plan to continue
expanding operations in order to achieve greater financial margins.
Although access to credit for SMEs at reasonable interest rates is scarce, the demand
for mortgage and personal loans is increasing. Argentina’s re-industrialization is one of
the driving forces that will lead to growth in the sector, and eventually greater access to
credit, particularly for SMEs.
Some public banks have improved management quality, and as a result, benefited from
a significant increase in deposits. Banks currently enjoy higher-quality client-portfolios
than in the pre-crisis scenario. Better clients translate into lower credit risk, and as the
perception of risk decreases, credit is expected to become more accessible in the short
term. Credit represents nearly 2% of Argentina’s GDP, compared to 40% in Chile, an
indicator that there is still room for growth in the marketplace.
Foreign-Exchange Controls Return to top
The Argentine Central Bank lifted all restrictions on release of foreign exchange and
allows advance payment for imports. For advance payments, Argentine importers must
submit customs clearance documents to their commercial bank within 360 days from
payment as proof that the goods have indeed entered the market. If products are
brought into Argentina as a temporary import, importers must submit within 90 days, a
“suspensive” destination document for temporary import.
Another payment option may be direct payment from Argentine importers’ overseas
bank accounts. Bank drafts and documentary collections are also being used. While
they do help safeguard the U.S. exporter's title to goods until payment has been
received, all credit and country risk remains with the exporter. There is no obligation for
the bank to cover these risks. Consequently, documentary collections are less costly
than letters of credit and, where the exporter is comfortable with these risks, they offer a
practical and efficient solution, particularly for Argentine subsidiaries of U.S. companies.
Letters of credit (L/Cs) may be used to pay for U.S. exports to Argentina. However,
commercial bankers consulted report that only large companies importing products for
huge amounts of money are now opening irrevocable letters of credit with a foreign
bank. Even though Argentina has not yet returned to pre-crises levels, some local banks
are starting to open letters of credit once the line of credit has been approved for that
Argentine company. Multinational firms and large Argentine companies are still the
primary customers for these L/Cs.
3/4/2008