Argentina Eases Dollar Lending Rules for Companies
The Argentine government has lifted a restriction on banks lending US dollars to companies that do not earn foreign currency. The move, announced by Economy Minister Luis Caputo, is intended to stimulate economic growth and encourage businesses to borrow in dollars.
Under the previous rules, banks could only lend dollars to companies with foreign income or those who provided a guarantee from another company. This change allows all companies to access dollar loans, which are often cheaper than peso borrowing costs.
The Central Bank has set guardrails for these operations, including a 15% limit on the total amount of dollar loans that can be issued by each bank. Additionally, banks must assess borrowers' repayment capacity under varying exchange-rate scenarios and maintain a minimum capital requirement of 125% of what is required for similar circumstances.
The new rule does not apply to individuals, who will continue to face restrictions on borrowing in dollars. Caputo explained that this decision was made to ensure economic prudence and because legal precedents are firmer when contracts involve companies rather than individuals.