Resolution No. JPRM-2024-002-G — Approve the Audited Financial Statements of the Central Bank of Ecuador for the Period from January 1 to December 31, 2023

RESOLUTION No. JPRM-2024-002-G THE MONETARY AND REGULATORY POLICY BOARD

CONSIDERING:

That the Constitution of the Republic of Ecuador, in Article 226, prescribes that public servants and persons acting by virtue of a state power shall exercise only the competencies and faculties attributed to them in the Constitution and the Law;

That Article 227 ibidem states that Public Administration constitutes a service to the community governed by the principles of effectiveness, efficiency, quality, hierarchy, coordination, planning, among others;

That the first clause of Article 303 ut supra determines that the formulation of monetary, credit, exchange, and financial policies is the exclusive faculty of the Executive Function and will be implemented through the Central Bank of Ecuador;

That Article 30 of the Organic Monetary and Financial Code states: “The net results of the Central Bank of Ecuador will be determined based on the financial statements prepared in accordance with internationally recognized accounting standards applicable to the institution, which must have the opinion of an independent auditor. (…)”;

That Article 31 of the aforementioned Code determines: “The Monetary and Regulatory Policy Board shall review and approve the annual financial statements whenever they comply with the accounting policies and procedures of the Central Bank of Ecuador, which must be based on internationally recognized accounting standards. Within three (3) months following the closing of its financial year, the Central Bank of Ecuador shall present to the entity in charge of public finances and to the National Assembly the financial statements approved by the Monetary and Regulatory Policy Board, signed by the General Manager, the accountant, and audited by the external auditor. Within a period of thirty (30) days, from the certification of the annual financial statements by the external audit, the Central Bank of Ecuador must publish the financial statements, the notes to said financial statements, and the opinion issued by the external auditor. The Central Bank of Ecuador must publish monthly financial statements within fifteen (15) days following the closing date of each month. It must present copies of said balances to the entity in charge of public finances”;

That Article 33 ibidem prescribes: “Within the general balance sheet of the Central Bank of Ecuador, the following systems are created: First System: In the liability of this System, national monetary species minted by the Central Bank of Ecuador that are in circulation, the Central Bank Titles (TBC) referred to in Article 126 of this Code, any other direct obligation with the public, and the deposits of other deposit societies, which include: private banks, mutualist banks, savings and credit cooperatives, public banks with demand deposits. These liabilities must be covered one hundred percent with the assets of the international reserve. Second System: In the liability of this System, the deposits of other financial entities will be recorded, including the National Financial Corporation B.P., the Bank of the Ecuadorian Social Security Institute, other financial entities of the public sector, and financial intermediaries that do not capture demand deposits from the public. These liabilities will be covered with the residual reserve assets once the First System is covered and must be equivalent to one hundred percent of the liabilities in this system. Third System: In the liability of this System, the deposits of the Non-Financial Public Sector (NFPS), duly authorized private legal entities, in the Central Bank of Ecuador, and transfers through the Payment System pending settlement, as well as the external debt specific to the Central Bank of Ecuador, will be recorded. These liabilities must be covered one hundred percent with the assets of the international reserve, once the second system has been fully covered. Fourth System: Records the rest of the asset and liability accounts of the Central Bank of Ecuador, including equity and results accounts. Once the Third System is covered, its remainder will be added to the assets covering this System. The liabilities of a system of lower precedence cannot be honored with the assets of preceding systems. The Monetary and Regulatory Policy Board will determine and publish the methodology for the distribution of assets and liabilities of each of the systems. The publication of the general balance sheet of the Central Bank of Ecuador, classified into the four systems, will be carried out on a monthly basis”;

That Article 47.1 of the aforementioned Organic Code created the Monetary and Regulatory Policy Board as part of the Executive Function, responsible for the formulation of monetary policy, the highest governing body of the Central Bank of Ecuador, and determines its composition;

That numeral 17 of Article 47.6 ut supra, regarding the functions of the Monetary and Regulatory Policy Board, establishes: “(…) 17. Review and approve the annual financial statements of the Central Bank of Ecuador (…)”;

That, through Resolution No. JPRM-2021-006-A, of December 17, 2021, reformed through Resolution No. JPRM-2022-030-A of December 19, 2022, the Monetary and Regulatory Policy Board issued the “Regulation of the Audit Committee of the Central Bank of Ecuador”; whose Article 9, as a function of the Audit Committee, regarding financial statements, establishes “(…) d) Review the financial statements of the Central Bank of Ecuador, prior to their presentation to the approval body; (…)”;

That, through Resolution No. JPRM-2022-006-G, of February 11, 2022, the Monetary and Regulatory Policy Board issued the “Standard for the Contracting of External Auditors of the Central Bank of Ecuador”;

That, through Resolution No. JPRM-2022-012-G, of March 28, 2022, the Monetary and Regulatory Policy Board resolved to reform the “Standard for the Contracting of External Auditors of the Central Bank of Ecuador” issued through Resolution No. JPRM-2022-006-G, of February 11, 2022;

That, through Resolution No. JPRM-2022-014-G, of April 11, 2022, the Monetary and Regulatory Policy Board appointed the company KRESTON AUDIT SERVICES ECUADOR CIA. LTDA., to perform the external audit of the Central Bank of Ecuador for the economic years 2021, 2022, and 2023;

That the company KRESTON AUDIT SERVICES ECUADOR CIA. LTDA., through letter No. KRESTON/0017/2024, of February 7, 2024, issued the opinion on the reasonableness of the financial statements of the Central Bank of Ecuador, for the period from January 1 to December 31, 2023, with their respective notes;

That, as recorded in the extraordinary meeting minutes No. 003-2024 of February 7, 2024, the Audit Committee reviewed the opinion on the reasonableness of the financial statements of the Central Bank of Ecuador issued by the external audit firm, for the period from January 1 to December 31, 2023, with their respective notes;

That, through memorandum No. BCE-JPRM-2024-0022-M of February 7, 2024, the President of the Audit Committee of the Central Bank of Ecuador sent to the members of the Monetary and Regulatory Policy Board his report and recommendations regarding the audited financial statements of the Central Bank of Ecuador, corresponding to the period from January 1 to December 31, 2023.

That, the Monetary and Regulatory Policy Board, in an extraordinary session by mixed modality, on February 8, 2024, reviewed the pronouncement of the Audit Committee related to the opinion on the reasonableness of the financial statements of the Central Bank of Ecuador, for the period from January 1 to December 31, 2023, with their respective notes; likewise, it reviewed the request for approval of the financial statements and the draft resolution sent via memorandum No. BCE-BCE-2024-0031-M, of February 8, 2024, by the General Manager of the Central Bank of Ecuador to the President of the Monetary and Regulatory Policy Board; and, the technical report No. BCE-CGAF-001-2024/BCE-DFP-004-2024, of January 31, 2024, and the legal report No. BCE-CGJ-012-2024, of February 8, 2024; and,

In exercise of its functions and in accordance with Article 47.7 of the Organic Monetary and Financial Code, the Monetary and Regulatory Policy Board:

RESOLVES

Article 1.- Approve the audited financial statements of the Central Bank of Ecuador, for the period from January 1 to December 31, 2023, with their respective notes.

Article 2.- Order the Central Bank of Ecuador to publish the audited and approved financial statements, for the period from January 1 to December 31, 2023, as well as the notes to said financial statements and the opinion issued by the external auditor, on the institutional website.

FINAL PROVISION. - This resolution will enter into force from its issuance, without prejudice to its publication in the Official Register.

The publication on the institutional website is entrusted to the Document Management and Archive Directorate of the Central Bank of Ecuador.

NOTIFY AND PUBLISH. - Given in the Metropolitan District of Quito, on February 8, 2024.

THE PRESIDENT Dr. TATIANA MARIBEL RODRÍGUEZ CERÓN

The preceding resolution was signed by Dr. Tatiana Maribel Rodríguez Cerón - President of the Monetary and Regulatory Policy Board, in the Metropolitan District of Quito, on February 8, 2024.- I CERTIFY.

ADMINISTRATIVE SECRETARY Attorney MARÍA ALEXANDRA GUERRERO DEL POZO