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The Argentine government has introduced currency restrictions to prevent depletion of reserves in the face of increased volatility in financial markets and political uncertainty. In particular, exporters were ordered to sell foreign exchange earnings; for transfers abroad, companies will now need prior permission from the Central Bank. For individuals, the limit on the purchase of foreign currency is set at $ 10 thousand per month, while there are no restrictions on withdrawing currency from accounts. A statement explaining the need for such measures says that the measures are aimed at "temporarily strengthening control over the exchange regime to ensure the normal functioning of the economy."
These restrictions were introduced following last week’s announcement of plans to restructure part of Argentina's public debt (primarily a loan from the International Monetary Fund (IMF). Recall that the decision to open a credit line of up to $ 56 billion was made by the fund in June 2018, against the background of increased capital outflows from the country and weakening national currency.
So far, the IMF has only said that they are studying the consequences of restrictions on capital flows, and continue to "be in close contact and support the Argentine authorities in these difficult times."
The next tranche of a $ 5.4 billion fund loan from Argentina is scheduled for September.
Also, the Argentine Ministry of Finance is now talking about deferring payments on short-term bonds issued under national law starting from August 30. Once the bonds expire, investors will be able to receive only 15% of the required payments; the remaining amount is promised to be paid within six months). These plans resulted in a decrease in the credit rating of Argentina by Fitch and Standard & Poor’s to the level of “selective default”. However, Fitch indicated that it was awaiting confirmation of payments to debt holders in order to return the country to the previous CCC rating, and S&P had already made such a decision, since the conditions announced by the government "took effect immediately and the default was liquidated."
source: cnn.com
These restrictions were introduced following last week’s announcement of plans to restructure part of Argentina's public debt (primarily a loan from the International Monetary Fund (IMF). Recall that the decision to open a credit line of up to $ 56 billion was made by the fund in June 2018, against the background of increased capital outflows from the country and weakening national currency.
So far, the IMF has only said that they are studying the consequences of restrictions on capital flows, and continue to "be in close contact and support the Argentine authorities in these difficult times."
The next tranche of a $ 5.4 billion fund loan from Argentina is scheduled for September.
Also, the Argentine Ministry of Finance is now talking about deferring payments on short-term bonds issued under national law starting from August 30. Once the bonds expire, investors will be able to receive only 15% of the required payments; the remaining amount is promised to be paid within six months). These plans resulted in a decrease in the credit rating of Argentina by Fitch and Standard & Poor’s to the level of “selective default”. However, Fitch indicated that it was awaiting confirmation of payments to debt holders in order to return the country to the previous CCC rating, and S&P had already made such a decision, since the conditions announced by the government "took effect immediately and the default was liquidated."
source: cnn.com
