It covers payment methods and information on, banking systems, foreign exchange controls, and U.S. and correspondent banking.
Methods of Payment
Letters of credit (L/Cs) may be used to pay for U.S. exports to Argentina. A number of banks in Argentina open letters of credit once the bank has approved a line of credit for the Argentine importer.
Another payment option may be direct payment from the Argentine importer’s overseas bank account. Bank drafts and documentary collections are also of common use. 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. However, 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.
A vast majority of sales to Argentine importers are currently performed on open accounts. As a result of the pandemic, small and medium-sized Argentine companies across the board are experiencing liquidity challenges, which impact their ability to innovate and upgrade production lines. Open account sales generally take place between small and medium-sized firms. U.S. exporters should consider open account payment terms only if they have a great deal of trust in the local importer and feel confident in the client’s ability and willingness to pay.
Another good option for U.S. exporters is to utilize financing tools offered by the United States Export Import Bank (EXIM). EXIM provides trade financing solutions – including export credit insurance, working capital guarantees, and guarantees of commercial loans to foreign buyers – to empower exporters of U.S. goods and services. Another EXIM tool is export credit insurance, a policy to protect against commercial and political risks. For more information on U.S. EXIM Bank tools, contact the U.S. Commercial Service Buenos Aires at Office.Buenosaires@trade.gov or visit https://www.exim.gov/tools-for-exporters/country-limitation-schedule and be sure to read the “Notes: 13” section.
For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide and consult these sites:
U.S. Export-Import Bank: https://www.exim.gov/
United States Trade Representative information site on Argentina: https://ustr.gov/countries-regions/americas/argentina
Argentina’s Central Bank (BCRA) is the implementing authority and the regulatory body which issues standards and controls activities of financial institutions. In order to operate in Argentina, foreign banks must register with the BCRA and obtain appropriate authorization prior to engaging in banking activities in the country. Furthermore, there are minimum capital requirements for these entities to be allowed to do business.
Foreign Exchange Controls
The BCRA is the regulatory body that oversees foreign exchange acquisition for import-related transactions.
Foreign exchange sales for import payments must be carried out through check or debit transaction in a client’s local banking account. Cash payments will not be accepted. Advance payments should be made to the foreign supplier, a foreign financial institution, or the official credit agency that financed the advance payment to the foreign provider. The transaction should be well documented in order for the importer to be granted BCRA approval for foreign exchange acquisition. Generally speaking, for credit payments, entities have access to the foreign exchange market to make payments abroad with restrictions set forth by Central Bank regulation, which purportedly aims to preserve international reserves.
U.S. Banks and Local Correspondent Banks
There are currently no U.S. banks operating in Argentina’s retail segment. However, American Express Bank, Bank of America, Citibank, and J.P. Morgan Chase offer financial services to government and corporate clients in Argentina. To obtain a list of Argentine commercial banks with offices in the United States or banks operating in Argentina, please review the Portal of the Central Bank of the Republic of Argentina (BCRA) at http://www.bcra.gob.ar/varios/English.