Argentina orders foreign mining, oil companies to repatriate funds
In a move that seems certain to slow foreign investment, the government of Argentinian President Fernandez de Kirchner has passed a law requiring oil, gas and mining companies to repatriate future export revenue.
The Vancouver Sun reports: “President Cristina Fernandez de Kirchner, in her first move since being re-elected Oct. 23, changed a 2002 decree requiring companies such as Repsol YPF SA, Total SA, Petroleo Brasileiro SA and Pan American Energy LLC to to keep at least 30 percent of their export revenue in the country.”
Effective immediately, resource companies will have to repatriate (convert into pesos) all of their export revenues. Mining companies have until now been allowed to keep all of their revenue outside the country.
The decision sent Canada-based resource companies operating in Argentina tumbling. Silver and gold miner Extorre Gold Mines (TSE:XG) dropped 20.5%, Pan American Silver Corp. (TSE:PAA) slipped back 4.1%, and Americas Petrogas Ltd. (CVE:BOE), a Calgary-based oil and gas explorer, plunged 17.6%.
The Sun reported that Fernandez has already nationalized the US$24 billion pension fund industry and called for a limit on purchases of farmland by foreign companies, all in an effort to slow capital flight estimated at some $3 billion per month that is draining central bank reserves.
The repatriation measure is expected to represent between $3 billion and $4 billion by year-end.
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Comments
Mario Faz
Measures like this slow down the economy. Why social demagoguery is so common in Latin American countries? Either you nationalize the industry or operate the industry in a Government/Private contract and put government funds to work. the trend is to create a welfare state with a bureaucratic politicized government. A complete failure as ever in Latin American countries. Wait and see. Corruption will dilapidate the funds.