Circular No. 02/RC/20 on Margins Applicable by Banks in Foreign Exchange Operations with Customers (Revised December 10, 2022)

BANQUE DE LA REPUBLIQUE DU BURUNDI LE GOUVERNEUR

CIRCULAIRE N° 02/RC/20 RELATIVE AUX MARGES APPLICABLES PAR LES BANQUES DANS LEURS OPERATIONS DE CHANGE AVEC LA CLIENTELE

Article 1: Object and Scope The present circular aims to specify the procedures for banks to set buyer and seller foreign exchange rates, as well as applicable margins for foreign exchange operations, in accordance with Article 6 of the Foreign Exchange Regulation of September 17, 2019.

Article 2: Reference for Rate Setting Every bank must set buyer and seller rates for foreign exchange operations by referring to the daily purchase and sale rates fixed by the Banque de la République du Burundi (BRB).

Article 3: Foreign Exchange Margins Depending on the sources of foreign currency, exchange margins are set as follows: a. Foreign exchange sales operations received from the BRB through the Interbank Foreign Exchange Market (MID) or outside MID must be carried out by referring to the acquisition cost of these currencies, applying a margin not exceeding 2.5% relative to this cost, with all fees and commissions related to these operations included. b. Foreign exchange purchase operations arising from the mandatory cession of export proceeds must be carried out by referring to the daily buyer rate fixed by the BRB, applying a minimum margin of 2.5% relative to this rate, with all related fees and commissions included. Foreign exchange sales operations arising from the mandatory cession of export proceeds must be carried out by referring to the daily seller rate fixed by the BRB, applying a margin not exceeding 2.5% relative to this rate, with all related fees and commissions included. c. For the Foreign Exchange Office (Manual Foreign Exchange Operations) opened within commercial bank branches, foreign exchange purchase and sales operations must be carried out by referring, respectively, to the daily buyer and seller rates fixed by the BRB, applying a margin not exceeding 15%, with all related fees and commissions included. d. Foreign exchange purchase and sales operations from sources other than those mentioned in points a), b) and c) must be carried out by referring, respectively, to the daily buyer and seller rates fixed by the BRB, applying a margin not exceeding 10%, with all related fees and commissions included.

Article 4: Other Application Measures The reference rates and foreign exchange margins applied by banks must be displayed in a visible location, in accordance with Article 33 of Regulation No. 001/2019 on the Protection of Consumers of Financial Products and Services. Foreign currencies allocated to banks by the BRB, via MID or outside MID, must not remain unused for more than fifteen (15) calendar days. After this period, these currencies must be returned to the BRB at their acquisition cost. For foreign currencies from export proceeds, banks must primarily consider the foreign currency needs of exporters who have ceded proceeds from their exports and need to import raw materials and production tools for export goods. In case of surplus, these currencies must be used exclusively to cover imports falling under strategic products. Operations of the Foreign Exchange Office opened within bank branches must be clearly separated from other bank operations, in accordance with Articles 77 and 78 of the Foreign Exchange Regulation. For each operation, the Foreign Exchange Office must perform necessary controls and issue a foreign exchange statement, in accordance with Articles 79 (points 1, 2, 3 and 5) and 80. The bank must open dedicated accounts in its books for operations of the Foreign Exchange Office opened within its branches.

Article 5: Information to be Available at All Times The bank must maintain, in a chronological manner and in specially designed files or registers, information on: a. amounts received via MID or outside MID, their utilization status, and beneficiaries; b. validation of exports; c. collected export proceeds and their utilization; d. purchase and sales operations of foreign currency by the Foreign Exchange Office; e. purchase and sales operations of foreign currency for customers other than those of the Foreign Exchange Office. These information must include, among others: a. beneficiary; b. operation date; c. purpose of exchange; d. amounts in Burundian Franc (BIF) and foreign currency; e. reference exchange rate; f. applied exchange rate. These information must be transmitted weekly to the BRB, by Tuesday of the following week at the latest.

Article 6: Management of Foreign Exchange-Related Complaints In accordance with Regulation No. 001/2019 on the Protection of Consumers of Financial Products and Services, any person benefiting from foreign exchange in a bank under conditions other than those stipulated by this Circular is invited to send correspondence to said bank requesting regularization, while reserving a copy for the BRB. If unsatisfied with the handling of their complaint, the affected person may appeal directly to the BRB or to competent courts and tribunals.

Article 7: Penalties In case of violation of the margins set by this Circular, the bank must refund the overcharge to the client along with a compensation premium equivalent to 50% of said overcharge, without prejudice to other penalties provided by the Foreign Exchange Regulation. Any amount not remitted to the beneficiary, for any reason, must be paid into the General Treasury Account within a period not exceeding 10 calendar days from the date of refund demand.

Article 8: Entry into Force This Circular applies in strict respect of the Foreign Exchange Regulation and enters into force on the day of its publication in the Official Bulletin of Burundi and on the Website of the Banque de la République du Burundi.

Done in Bujumbura, on February 1, 2020