Through communications "A" 7918 and 7925, the Central Bank of the Argentine Republic (BCRA) has introduced the Bond for the Recovery of a Free Argentina (BOPREAL), which can be purchased by importers of goods and services.

Importers of goods may subscribe to bonds for an amount up to the pending debt for their imports with customs entry records until 12/12/23.

The banking institution presenting the subscription offer on behalf of the client must possess certifications detailing the outstanding payment amount issued by the entity responsible for monitoring Payments for Imports of Goods (SEPAIMPO).

Additionally, the banking institution must verify that:

• the obligation qualifies as a debt for imports of goods according to point 10.2.4. of the "Foreign Exchange" rules;
• the transaction is declared in the last overdue submission of the "Survey of External Assets and Liabilities";
• the conditions stipulated in point 10.3.2.1. of the "Foreign Exchange" rules are met;
• the client meets the requirements specified in points 3.16.2. to 3.16.6. of the "Foreign Exchange" rules; and
• there is a sworn statement from the client stating that the debt for which the subscription is requested is outstanding and that they have not requested the use of this mechanism in another bank for this debt."

On the other hand, service importers have the option to purchase bonds for an amount up to the outstanding debt for their operations in which services were provided or accrued by the non-resident entity up until 12/12/23.

Likewise, the entity presenting the subscription offer on behalf of the client must show documentation supporting the existence of the service, the amount owed at the subscription date, and verify that:

• the obligation qualifies as a debt for service imports according to point 3.2.4. of the "Foreign Exchange" rules;
• the transaction is declared in the last overdue submission of the "Survey of External Assets and Liabilities";
• the client meets the requirements specified in points 3.16.2. to 3.16.6. of the "Foreign Exchange" rules; and
• the client has submitted a sworn statement stating that the debt for which the subscription is requested is outstanding and that they have not requested the use of this mechanism in another bank for this debt.

Considering that, under the regime implemented by Communication "A" 7917, importers are not authorized to access the Foreign Exchange Market ("MULC") for the payment of the operations detailed above (except for a few exceptions); the intention of the BCRA is to manage and distribute over time the obligation of the BCRA to allow access to the official exchange market to participants in foreign trade.

In this way, local importers of goods and services can settle their debt with foreign suppliers either by directly transferring these bonds or by engaging in an exchange and/or arbitration. This can be facilitated  with funds deposited in a local account and sourced from the collection of both capital and interest in foreign currency generated through these bonds.

These bonds, denominated and payable in US dollars, can be acquired in Argentinian pesos through the execution of a technical foreign exchange acquisition agreement. Additionally, three different series will be issued with different conditions and benefits for the importer:

• Series 1 with maturity on October 31, 2027;
• Series 2 with maturity on June 30, 2025; and
• Series 3 with maturity on May 31, 2026.

According to decree 72/2023, the total amount of the subscription operation for BOPREAL bonds will be subject to the PAIS tax, equating it to the treatment applicable to the payment of imports of goods or services with access to the MULC. However, with the aim of promoting a quick subscription by importers with outstanding debt as of December 12, 2023, it has been established that the subscription of the bonds will not be subject to the PAIS tax as long as the subscription for bonds  is made before or on January 31, 2024.

On the other hand, this decree stipulates that BOPREAL bonds issued until March 31, 2024, can be used as payment for the settlement of national and customs taxes including associated interests, fines, and accessories, except for the following exceptions:

• Contributions to the Social Security System;
• Contributions to the Social Works System;
• installments destined for Mandatory Life Insurance and/or Work Risk Insurers;
• Tax on Credits and Debits; and
• obligations arising from substitute or joint liability for third-party debts or their role as withholding and collection agents.

At the moment, only the BOPREAL Series 1 is available for subscription . As the title with the longest maturity period, it offers some additional advantages for importers who subscribe to it compared to the other series. These bonds will accrue an annual interest rate of 5% in dollars, and starting from March 1, they will be divided into 4 independent series (1A, 1B, 1C, 1D). However,  only the first three will enjoy the benefit of early redemption. It is important to note that these bonds will not be subject to the PAIS tax as long as the auction is placed until January 31, 2024.

Finally, BOPREAL Series 1 grants importers an exceptional authorization to access the foreign exchange market from February 1, 2024. This allows for the payment of goods and services imported prior to December 13, 2023, up to 5% of the total value of securities acquired in the primary auction. To qualify, the subscription must be completed before January 31, 2024, covering at least 50% of the eligible debt.