Latin America: What happened in 2020 and significant events in 2021
Response to the COVID-19 pandemic: Measures requiring social isolation and closed borders were enacted, resulting in a significant slowdown of economic activity.
Other government measures included: Guaranteeing payments to affected workers; employer payroll contribution exemptions; fixing prices for essential products; barring the suspension of certain services; and freezing mortgage payments.
The Central Bank (the “BCRA”) has taken steps to provide working capital credit facilities, as well as to establish refinancing plans for local currency denominated debt.
Restructuring of the public debt: The restructuring of the foreign-law-governed sovereign debt reached a 99% acceptance rate among creditors. Regarding the domestic-law-governed sovereign debt, the restructuring also involved a broad acceptance by institutional investors. The government is still negotiating with the IMF to convert its stand-by program, with a repayment term of four years, into an Extended Fund Facility, extending its repayment term for up to 10 years.
FX restrictions: The BCRA tightened controls on the access to the Foreign Exchange Market for the repayment of principal amounts of external financial debt and repayment of foreign currency denominated domestic securities.
Companies facing maturities of principal exceeding US$1m per month, in U.S. dollar-denominated debt, were requested to submit a mandatory restructuring plan.
Foreign exchange transactions by Argentine residents were levied with a new federal tax created by the Public Emergency Law (Tax for an Inclusive and Caring Argentina or “PAIS”).