- The Washington Times - Friday, March 28, 2003

BUENOS AIRES, Argentina, March 28 (UPI) — The Argentine government said Friday that it has finalized an accord between credit card companies and the nation's largest group of retailers that will ease a credit crunch businesses have endured for months.

"It is an alternative mechanism of financing for retailers, that without a doubt is a great help for a sector at a time when credit has still not reappeared," said Alfredo Atanasof, the president's chief of cabinet, at a Friday press conference.

The deal was reached between the retailers' group CAME and an association representing credit card companies, ATACYC.

The agreement will go into affect April 1 and will allow retailers to pass their credit card receipts to their goods providers as a form of payment. Credit card companies will then pay those providers directly instead of the retailers.

This change is a great help to retailers, analysts say.

Before, retailers had to wait a minimum of 21 days before receiving cash from credit card companies. Yet the providers of goods demanded payments for their products from seven to 20 days after delivery.

Because of that, may retailers in Argentina have halted credit card sales, which have hurt credit card companies, dampened sales for retailers, and left cash-strapped consumers stranded.

As part of the deal, the providers are then allowed to in turn pass the credit card receipt to another party, though that third party cannot make transfers of the receipts in any way.

According to a Friday report in the daily newspaper Clarin, some 230,000 retailers stand to benefit from the program, which analysts say should quickly add liquidity to the retail market.

The transferal of the credit card receipts can be performed via the Internet, according to Clarin. All transfers will carry a cost of 0.5 percent of the amount of each receipt.

Retailers will be able to transfer 70 percent of their gross sales, while the providers can transfer 90 percent of their sales to a third party, Clarin reported.

Access to credit has been a severe problem at all levels of Argentine society since the country's December 2001 default.

It was then that the government imposed a freeze on banking accounts, severely restricting or not allowing citizens to make withdrawals from their own accounts.

In that atmosphere, international credit for Argentine businesses dried up, while domestic banks themselves were reluctant to extend any credit to either businesses or private individuals.

Also on Friday, Argentine media reported that President Eduardo Duhalde signed a decree spelling out how Argentina will lift the freeze on certificates of deposit, or CDs.

According to the reports, the lifting of the freeze will start next Tuesday and will be carried out in three stages.

It will first be given to depositors with CDs up to $30,000.

CDs above that amount will be freed at intervals, with accounts up to $72,000 freed after 90 days. Any accounts larger than that will be freed in 120 days.

Economy Minster Roberto Lavagna did say, though, that if banks feel they have the liquidity to do so, they can accelerate this schedule.

Government officials report that depositors will receive their money back in pesos at a rate of 1.4 to the dollar, which was the rate at which the accounts were forcibly converted from dollars to pesos last year.

Additionally, depositors will earn interest calculated under a government inflation-indexing method.

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