Instruction No. 003-DCR/09 of August 5, 2009 on Central Bank Interventions in the Money Market

INSTRUCTION NO. 003-DCR/09 OF AUGUST 5, 2009 ON CENTRAL BANK INTERVENTIONS IN THE MONEY MARKET

The Governor of the Central Bank of Madagascar, Having regard to the amended Law No. 94-004 of June 10, 1994 on the Statutes of the Central Bank of Madagascar; Having regard to Decree No. 2007-027 of January 29, 2007 on the appointment of the Governor of the Central Bank; HEREBY DECIDES:

Section I: General Provisions Article 1: Central Bank Interventions in the Money Market Central Bank interventions in the money market include refinancing operations and liquidity take-backs.

Section II: Refinancing Operations Article 2: Categories of Refinancing Operations Refinancing operations may be initiated: • either by the Central Bank; • or at the request of credit institutions. Refinancing operations bear interest.

Article 3: Forms of Refinancing Operations Operations initiated by the Central Bank are carried out through securities repurchase agreements conducted via positive tender. Operations at the request of credit institutions may take two forms: • securities reverse repos for a one-day term; • special securities reverse repos.

Article 4: Collateral for Refinancing Operations Central Bank refinancing operations require the provision of collateral. Accepted collateral consists exclusively of Treasury Bills or other negotiable claims and securities eligible for its portfolio. Securities placed in reverse repos are returned to credit institutions at maturity after full repayment.

Article 5: Submission to Positive Tender 5.1 Reverse repos under positive tender are executed based on the central bank money needs estimated by the Central Bank for the period covered by the tender. 5.2 The general procedure of the tender follows the provisions of Article 10 below. 5.3 Credit institutions must indicate in their positive tender submissions the proposed rates, the reference and number of securities to be placed in reverse repos for each operation. 5.4 Following the tallying, the Central Bank accepts requests by prioritizing those submitted at the highest rates. 5.5 Requests are fulfilled up to the amount of central bank money to be injected. The marginal tranche is, therefore, fulfilled at a percentage defined by the Central Bank. 5.6 At maturity, the amounts, plus interest, are debited to the beneficiary's account and the securities placed in reverse repos are returned to them.

Article 6: Refinancing Requests by Credit Institutions 6.1 Within the framework of one-day securities repurchase agreements, credit institutions may use reverse repos with value date. The term of these repos is one day, renewable at the discretion of credit institutions. When maturity falls on a holiday, it is postponed to the next following business day. 6.2 The repo rate is set at 1 point above the Central Bank's policy rate. 6.3 Credit institutions interested in this operation must submit their request to the Central Bank by any written traceable method according to the model in Annex III before the daily closing of the money market. 6.4 The Central Bank notifies its decision by any written traceable method on the same day and proceeds with book entry. 6.5 At maturity, the amounts, plus interest, are debited to the beneficiary's account. 6.6 If after the money market closing or at the end of the day, a credit institution's account shows a debit balance, the Central Bank may grant them refinancing via special securities reverse repos for a twenty-four (24) hour term, with the rate set at two (2) points above the ordinary repo rate.

Section III: Liquidity Take-Backs Article 7: Forms Liquidity take-backs are carried out in two different forms: • via negative tender; • through securities sales.

Article 8: Submission to Negative Tender 8.1 Negative tenders are executed based on the central bank money surpluses estimated by the Central Bank for the period covered by the tender. 8.2 The general procedure of the tender follows the provisions of Article 10 below. 8.3 Credit institutions must indicate in their submissions the rates they propose for central bank money offers. 8.4 Following the tallying, the Central Bank accepts offers by prioritizing those submitted at the lowest rates. 8.5 Submissions are accepted up to the amount of central bank money to be withdrawn. 8.6 The marginal tranche is, consequently, fulfilled at a percentage defined by the Central Bank. 8.7 At maturity, the amounts, plus interest, are credited to the credit institution's account.

Article 9: Sale of Securities 9.1 The Central Bank may proceed with securities sales on the secondary market. 9.2 The adjudication procedure follows the provisions of Article 10 below. 9.3 The Central Bank communicates to credit institutions the day before the operation (Day J-1): • the nature of the operation (securities sale); • the settlement date and conditions of the operation; • the exhaustive list of securities offered for sale, with their characteristics (nature, reference, nominal amount). 9.4 Credit institutions must indicate in their submission: • the nature and reference of securities; • the maturity; • the number and amount of securities; • the proposed rate. 9.5 The adjudication modalities for securities sales follow the technique provided in Article 8.4. 9.6 At maturity, the amounts, plus interest, are credited to the beneficiary's account and the securities are returned by them to the Central Bank.

Section IV: Miscellaneous Provisions Article 10: Provisions Common to Tenders 10.1 The Central Bank announces the launch of a tender by any written traceable method. To this end, the following are disseminated to credit institutions: • the amount to be withdrawn or injected; • the settlement date and maturity date of the operation; • refinancing and liquidity take-back maturities for the period covered by the tender; • the floor rate for refinancing or the ceiling rate for liquidity take-backs; • in the case of refinancing operations, the nominal amount of securities placed in reverse repos; • the deadline date and time for receiving offers. 10.2 Credit institution submissions must reach the Central Bank by any written traceable method, on the day following the launch, before 10:00 AM, and be prepared according to the models in Annexes I and II of this instruction. 10.3 Tender submissions are irrevocable. Upon announcing the results, the Central Bank communicates by any written traceable method to each credit institution: • the total amount of offers or requests received; • the range of proposed rates; • the number of bidders; • the total amount of liquidity take-backs or refinancing allocated; • the amount of liquidity take-backs or refinancing granted to the credit institution; • the percentage of offers or requests fulfilled for the marginal tranche; • the weighted average rate of served offers or requests. 10.4 Results are communicated on the same day as adjudication. The accounts of credit institutions whose proposals are accepted are, depending on the case, debited or credited by the Central Bank with the granted amount on the settlement day.

Article 11: Final Provisions This instruction enters into force as of August 5, 2009. All provisions contrary to this instruction are hereby repealed, notably Instructions No. 02-CR/05 of June 13, 2005 and No. 001-CR/07 of May 10, 2007.

Antananarivo, on The Governor, Frédéric RASAMOELY.

Nom de la banque : A N N E X E - I SOUMISSIONS A L’APPEL D’OFFRES POSITIF OU A L’APPEL D’OFFRES NEGATIF (1)

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Lancement du ___________________ N° D’ORDRE SOUMISSION Montant (en Ar) Taux proposés (avec deux décimales) TOTAL... N° D’ORDRE GARANTIE (2) Nature et Référence Taux à l’acquisition Maturité Nombre de titres Montant nominal d'un titre (En Ar) Montant total de la garantie (3) TOTAL... (1) Rayer les mentions inutiles suivant le cas des soumissions. (2) A remplir seulement en cas d’appel d’offres positif (le nombre entier de titres : multiple de 100 millions Ariary). (3) Montant demandé majoré des intérêts A ______________________, le ________________ (Signatures et cachet de la banque)

Nom de la banque : A N N E X E - I I SOUMISSIONS A LA VENTE DE TITRES DE LA BANQUE CENTRALE

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N° D’ORDRE TITRES TAUX PROPOSES Nature et référence Montant nominal de titre Maturité Montant total (en Ar) TOTAL .................................................... A ______________________, le ________________ (Signatures et cachet de la banque)

(1) Le montant nominal d’un titre est de 100 millions Ariary Nom de la banque : A N N E X E - I I I DEMANDE DE MISE EN PENSION

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Demande de mise en pension VOUS EMPRUNTEZ Montant (en Ar) Durée (en jours) Date de règlement Taux en chiffre en lettre échéance GARANTIE : montant minimum de la garantie : Ar _____________________,- (montant pension majoré des intérêts) Nature Référence Taux d’acquisition Maturité Montant nominal en lettres en chiffres Les titres mis en pension doivent être multiples de 100 millions Ariary A ______________________, le ________________ (Signatures et cachet de la banque)