As part of Alejandro Vanoli’s first measures as newly-appointed Central Bank governor, the monetary authority’s board passed yesterday two new regulations that set higher controls on the imports of goods and the repatriation of foreign direct investment.

The measures, which seek to discourage the purchase of foreign exchange currency for imports in advance and the purchase of dollars through the blue-chip swap, were decided on the same day Vanoli met with representatives of the Public and Private Banks Association (ABAPPRA) and dismissed the possibility of a new devaluation of the peso.

The Central Bank lowered from one year to four months the deadline importers have to demonstrate the entry of goods in case of advance import payments. Meanwhile, it decided to revoke financial entities’ authorization they had to extend to importers their deadline to demonstrate the entry of goods, being now the Central Bank the one responsible to evaluate such cases.

“Importers who anticipate payments for foreign trade operations will now have 120 days to prove genuine admission of the goods imported,” the Central Bank said in a press release late last night. “On the other hand, the 365-day deadline for advance payments for imports of capital goods will be maintained.”

At the same time, non-financial companies that seek to repatriate foreign direct investment prior to 2011 will now require an authorization of the Central Bank, demonstrating also that the funds used for the investment were originally transferred into the country through the foreign exchange market (MULC) and not illegally.

“This seeks to guarantee a more detailed revision by the Central Bank of transactions done at the foreign exchange market to repatriate foreign direct investment,” the Central Bank said. “The decision is also oriented to avoid manoeuvres in the foreign exchange market with real assets.”

Vanoli was picked two weeks ago to be the sixth Central Bank governor of the Kirchnerite era after Juan Carlos Fábrega’s surprise resignation. As his first measure, he established a minimum interest rate for fixed-income deposits using a formula that today places it at between 22 and 23 percent.

“This means that the problems the country has with foreign currency are larger than we thought. We were already experiencing problems with import authorizations and now this measure makes it even harder,” Miguel Ponce, the general manager of the CIRA imports chamber, told the Herald. “This doesn’t agree with Vanoli’s first statements when he took office.”

Meeting with Vanoli

Following a meeting last week with the Argentine Foreign Banks Association (ADEBA) and with the Argentine Banks Association (ABA), Vanoli met yesterday with representatives of ABAPPRA and guaranteed the continuity of the monetary policy and assured there won’t be a new devaluation of the peso.

“Vanoli highlighted the importance of banks providing loans for the productive sector, especially for small- and medium-sized companies,” the Central Bank said in a press release. “He also said a devaluation of the peso shouldn’t be expected and anticipated a favourable scenario in the future to keep the activity level and maintain the level of employment.”

Vanoli met at the headquarters of the monetary authority with representatives of several banks that belong to ABAPPRA such as Juan Ignacio Forlón (Banco Nación), Carlos Heller (Credicoop), Gustavo Marangoni (Banco Provincia), Rogelio Frigerio (Banco Ciudad), Osvaldo Luján (Banco del Chubut) and Hugo Secondini (Banco de Formosa).

“Vanoli said the government’s monetary policy doesn’t include a devaluation,” Heller, head of Credicoop, said yesterday after the meeting. “The minimum interest rate for fixed-income deposits was also discussed.”

While the meeting took place, a higher interest of investors to purchase dollars through the blue-chip swap made the currency jump 54 cents and it closed at 13.79 pesos. Meanwhile, the “blue” or illegal dollar dropped eight cents and closed at 14.65 pesos amid fears of new raids by the federal government.

The Central Bank bought US$25 million yesterday, which helped the foreign currency reserves grow US$3 million and closed at US$27.443 billion. Nevertheless, reserves accumulate this week a US$174 million drop.

Date: October 17, 2014

Source: http://www.buenosairesherald.com/article/172391/central-bank-sets-more-controls-on-importers