Navigating Argentina's Import Landscape: The SIRA to SEDI Transition
The government has ended the SIRA, the importation system designed by the Ministry of Economy under Sergio Massa's leadership, with the promise of transparency. However, it was more discretionary than before October 2022 when it was created.
Joint Resolution 5466/2023 by the AFIP (Federal Administration of Public Revenue) and the Ministry of Commerce, published on December 26 in the Official Gazette, puts an end to the SIRA and, at the same time, establishes its replacement: the SEDI (Import Statistical System), a kind of registry where imports must be declared before being processed for clearance.
With this new instrument, the need for approval by the Ministry of Commerce is eliminated, reducing discretion. The government will release a procedural manual for SEDI, which should be implemented immediately and valid for 365 days.
From the moment of submission, the agencies involved in imports - ANMAT, SENASA, Ministry of Health, etc. - have 30 days to express their opinions. If they fail to do so, SEDI is automatically approved, although the importer must first go through the "Economic and Financial Capacity System" (CEF).
This system had become a virtual restriction during the previous government, which never clarified the criteria companies had to meet. Now, the government promises to make them transparent.
Once they receive approval, access to dollars for importers will follow the guidelines established by the Central Bank. There will no longer be a need for prior approval to pay for new imports; instead, a staggered access system has been established based on the type of goods or services.
Payments can be immediate for foreign purchases of hydrocarbons and derivatives and electric power. After 30 calendar days, payments for pharmaceutical products or inputs for this industry and fertilizers or phytosanitary products could be released.
The agency has also imposed a deadline of six months (180 days) for payments related to car imports.
For the rest of the goods, payments can be made in four installments: 25% at 30 calendar days, an additional 25% at 60 days, another 25% at 90 days, and the remaining 25% at 120 calendar days.
The exact resolution that annuls the SIRA also creates, as anticipated, the registry of import debtors - it is estimated that companies have more than USD 50 billion in liabilities with their suppliers or parent companies. The government aims to filter through this registry and expects that there will be claims that will be left unresolved.
Companies have only 15 days to register (afterward, the registry is closed). Once officially approved, they can subscribe to dollar-denominated bonds (Bopreal) to settle these debts.
Dollar Dominated Bonds
With Decree 72/2023, which formalized the possibility for importers to settle tax and customs debts with bonds issued by the Central Bank, the monetary authority defined the characteristics of these bonds.
The origin of this debt instrument is the Central Bank's debt to importers, estimated at USD 62 billion. This debt arose from the SIRA (Import Statistics System) granted to companies by the previous government but not exchanged for dollars. In other words, the government formally authorized companies to buy dollars to pay for imports but did not sell them the corresponding dollars. In this case, SIRA functions as an obligation contracted by the government with importing companies, and this obligation will be paid with the newly issued bond.
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In a statement released this Friday, the Central Bank noted that the provision of import permits and associated access to foreign exchange in an administratively managed manner, in the context of a high exchange rate gap, led to the accumulation of commercial debts by importers significantly above the historical average. The inconsistency between the amount of internationally available foreign reserves and the accumulated amount of commercial debts necessitated the implementation of a new access regime to the foreign exchange market for foreign trade operations starting from December 13, 2023, through a transparent and automatic access mechanism for import payments.
In this context, the Central Bank will issue new instruments consisting of three series of Bonds for the Reconstruction of a Free Argentina (BOPREAL). These bonds will be offered as vehicles to channel the demand for foreign exchange from importers of goods and services with commercial debts for operations with customs registration or services effectively provided until December 12, 2023.
Importers will have the opportunity to acquire these instruments with the liquidity in pesos they have available to meet their commitments abroad and, in return, will receive a particular flow of foreign exchange from the Central Bank.
The Central Bank will offer a range of alternatives through three instruments, considering the impossibility of providing a single short-term solution for all importers. The three instruments, denominated and payable in dollars, can be acquired in pesos through a technical foreign exchange ticket to acquire foreign exchange.
Based on the projected trade balance for the coming years, the future commitments of the Central Bank have been staggered, distributing the delivery of foreign exchange through a short-term bond (Series 2 with maturity in June 2025 and a 0% rate), a medium-term bond (Series 3 with maturity in May 2026 with a 3% rate), and a third bond (Series 1 with maturity in October 2027 and an annual rate of 5%). Those who purchase this bond will be exempt from paying the PAIS tax.
The BOPREAL Series 1 will be offered by the Central Bank starting from December 26, 2023. Series 2 and 3 of BOPREAL will be offered in maximum amounts established based on data provided by the registry of commercial debts of importers jointly prepared by AFIP and the Secretariat of Commerce and Industry (the "Registry of Commercial Debts with Foreign Countries")
IA Insights
In summary, the short-term expectations for importers in Argentina involve:
Porters will need to adapt to the changes in procedures and take advantage of the government's new options. These recent developments initially present a positive outlook, introducing a fresh perspective on compiling and handling existing and forthcoming debt collection cases. However, our extensive experience in the Latin American context underscores the importance of exercising prudence in situations where the outlook seems overly optimistic.
Written by: Mark Horstman
*This article is informative and is not to be used as legal, economic, or commercial advice.