May 21, 2013
Gov't urges insurance companies to repatriate funds, oil , mining firms to liquidate exports
In another attempt to ease the pressure on the dollar and decrease the outflow of the Central Bank's foreign currency reserves, the government urged oil and mining companies to liquidate the country’s exports and insurance companies to repatriate their foreign investments.
The government issued a decree restablishing a mandate that says that mining and oil companies must liquidate their foreign currency (almost 4.000 billion dollars per year), a system similar to the one applied on agrarian exporters – the main liquid income of the country.
The measure was published in the Official Gazette and aims to stop the outflow of foreign currency reserves that the Central Bank is going through in order to keep the dollar steady.
The government indicated in the Official Gazette that the measure is looking for an egalitarian deal regarding the rest of the productive activities of the country.
Up to now, the oil companies had to liquidate 30 percent of the sales in the foreign market.
However, the mining sector did not have any kind of commitment over these transactions.
Sources estimated that the decision could raise the amount of currencies winding-up in the local market between 3.000 and 4.000 billion dollars.
A member of a well-known finance company assured that “it is a relevant measure because the oil companies only brought 30 percent of the exports to the country. Nevertheless, I don’t believe that is going to solve the pressure problem of the dollar, because the exchange rate is delayed and the depreciation of the peso over the dollar will continue.”
Later and by a resolution signed by the superintendant of Seguros de la Nación, Francisco Durañona, it established that the insurance firms must repatriate their investments and availabilities set in foreign countries.
The resolution states that the insurance companies must repatriate the investments in the next 50 days. This means 15 percent of the total investments of the sector that reaches to 7 billion pesos.
“This measure represents a significant contribution to the maintained growth process that the Argentine economy is developing by the creation of adequate conditions so that the total investments and availabilities of the firms remain in the country,” Durañona affirmed.