Examining Argentina’s evolving economy and its effect on cross-border business operations

2 min. read

Recent changes to economic regulation in Argentina by the newly elected Milei administration brings opportunities for global companies looking at regional growth in Argentina.

In December 2023, newly elected Argentinian President Javier Milei announced substantial measures to address the country's acute economic crisis, including spending cuts. These actions will likely affect cross-border payments positively, opening up business opportunities for international companies in Argentina.

Before the Milei government entered office, cross-border businesses and local consumers alike faced controls that limited opportunities and access related to:

  • International trade
  • Capital
  • Foreign exchange

A fragile currency,  macroeconomic problems, rampant inflation, and political instability are some of the difficulties that explain why the third-largest economy in Latin America has historically been a challenge for cross-border business operations.

Through the following amendments to economic reforms, specifically with the country’s foreign exchange, Argentina is ready for increased market activity, providing a promising environment for those looking to establish regional operations.

The Argentinian Peso

Since 2019, Argentina's peso currency has been kept artificially strong by strict capital controls. Towards the end of April 2023, the Central Bank of Argentina restricted access to the official market for USD for companies in Argentina, resulting in a historic gap of 200% between the official exchange rate of 366 per dollar and parallel rates as high as 1,000 per dollar.

Cross-border payments and international business operations in Argentina going forward

The door to local payment processing for global companies is finally open, ushering in what is expected to be a new era for international businesses looking to engage with the Argentine market.

The latest reforms have also brought reductions in tax structures and rates (PAIS tax), which could positively impact financial planning for cross-border companies. And with the import system (SIRA) undergoing a revamp, a new statistical method is being introduced to simplify the process of accessing foreign exchange for payments to non-residents.

Unpacking the latest foreign exchange reforms in Argentina

FX access has recently been one of the biggest hurdles for conducting business in Argentina. The latest announcements signal changes in the direction of lifting foreign exchange controls, alongside ongoing adjustments to these regulations to streamline current and future foreign exchange operations.

Towards the end of April 2023, the Central Bank of Argentina restricted access to the official market for USD for companies in Argentina, resulting in a historic gap of 200% between the official exchange rate of the MULC and the parallel markets in August.

What is the MULC?

The "MULC" refers to the "Mercado Unico y Libre de Cambios," or the “Unified Free Exchange Market”' – Argentina’s official fx market. Financial institutions and businesses trade foreign currency and currency exchange transactions on the MULC.

Foreign exchange access for service providers

Specific verticals including (but not limited to) advertising, hosting, streaming, and web services, can now access the MULC thanks to the lifting of the capital controls.

As of December 13 2023, streaming providers (audio and visual) have immediate access to the MULC from collected proceeds. While services such as advertising, hosting, and web services gain access to the MULC subject to bank approval, with a required wait period of 30 days once payment is received.

Foreign exchange access for physical goods

While access to MULC for physical goods is still more limited than services, selling physical goods now grants access to Contado con Liquidación (CCL), providing a helping avenue for currency exchange.

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