JPRF-F-2024-0126 — Budget Management Standards for Entities of the Public Financial Sector

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | Resolution No. JPRF-F-2024-0126 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING: That, Article 82 of the Constitution of the Republic of Ecuador establishes that the right to legal certainty is based on respect for the Constitution and the existence of prior, clear, public legal norms applied by competent authorities; That, Article 84 ibid determines that any body with normative power shall have the obligation to formally and materially adapt laws and other legal norms to the rights provided for in the Constitution; That, Article 132 of the Constitution of the Republic of Ecuador, number 6, grants public control and regulation bodies the authority to issue general norms in matters within their competence, without being able to alter or innovate legal provisions; That, Article 226 of the Magna Carta collects the principle of legality, understanding that State institutions, their bodies, dependencies, public servants, and persons acting by virtue of a state power shall exercise only the competencies and faculties attributed to them by law; That, Article 292 of the Magna Carta states that the General State Budget is the instrument for determining and managing State revenues and expenditures, and includes all revenues and expenditures of the public sector, with the exception of those belonging to social security, public banking, public companies, and decentralized autonomous governments; That, Article 309 ibid prescribes that the national financial system is composed of the public, private, and popular and solidary sectors, which intermediated public resources; determining that each of these sectors will have specific and differentiated control norms and entities, which will be responsible for preserving their security, stability, transparency, and solidity; That, Article 13 of the Organic Code of Monetary and Financial Affairs, Book I, creates the Financial Policy and Regulation Board as part of the Executive Function, responsible for the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care services policy and regulation; That, Article 14 of the aforementioned Code establishes that it corresponds to the Financial Policy and Regulation Board, among others, the attribution to issue regulations that allow maintaining the integrity, solidity, sustainability, and stability of the national financial, securities, insurance, and prepaid comprehensive health care services systems in accordance with what is provided for in article 309 of the Constitution of the Republic of Ecuador”; That, letter a) of number 14 of Article 14.1 ut supra prescribes that, among the duties and faculties of the Financial Policy and Regulation Board, is the approval annually of the budget of the entities of the public financial sector, its reforms, as well as regulating its execution; That, Article 163 of the aforementioned Code recognizes that mutual savings and credit associations for housing are part of the popular and solidary financial sector; That, Article 15 of the Organic Administrative Code prescribes that "The State shall be liable for damages as a consequence of the lack or deficiency in the provision of public services or the actions or omissions of its public servants or subjects of private law who act in the exercise of a public power by delegation of the State and their dependents, controlled or contractors (...)"

Resolution No. JPRF-F-2024-0126 Page 2 of 3

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | exercise of a public power by delegation of the State and their dependents, controlled or contractors (...)" That, Article 106 of the aforementioned Code mandates that the approval of the General State Budget shall be carried out in the manner and terms established in the Constitution of the Republic. In the event of presidential reelection, the reelected President shall send the draft 30 days after the results of the second round are proclaimed. Each entity and organism that is not part of the General State Budget must approve its budget by the last day of the year prior to which it is issued; That, Article 107 of the mentioned Code provides that until the General State Budget of the year in which the President or President of the Republic takes office is approved, the initial budget of the previous year shall apply. In the rest of the public sector budgets, this same rule shall apply; That, Article 110 of the aforementioned Code determines that the budgetary exercise or fiscal year begins on January 1st and ends on December 31st of each year; That, Article 81 of the General Regulation of the Organic Code of Public Planning and Financial Affairs establishes that for the year of taking office of the President or President of the Republic, the body in charge of public finances shall issue budgetary guidelines to prepare the budget for the fiscal year of that year, up to one month after the start of their management; That, Article 82 of the General Regulation of the Organic Code of Public Planning and Financial Affairs establishes that, until the General State Budget is approved in the years in which the President of the Republic takes office, the budget of the immediately preceding year shall apply, and the same rule must be observed for the rest of the entities of the public sector; That, the Twenty-Ninth General Provision of the Organic Code of Monetary and Financial Affairs, Book I, provides that in the current legislation where mention is made of the "Monetary and Financial Policy and Regulation Board", it shall be replaced by "Financial Policy and Regulation Board"; That, the Fifty-Fourth Transitional Provision mandates that resolutions contained in the Codification of Monetary, Financial, Securities and Insurance Resolutions of the Monetary and Financial Policy and Regulation Board and norms issued by control bodies, shall remain in force until the Monetary Policy and Regulation Board and the Financial Policy and Regulation Board decide what corresponds, within the scope of their competencies; That, the Technical Secretary of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2024-0102-M of November 27, 2024, submits to the President of the Board the Technical-Legal Report No. JPRF-CTCJ-2024-012 of November 27, 2024, as well as the respective draft resolution; That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means, convened on November 28, 2024 and carried out through video conference on November 29, 2024, reviewed the Memorandum No. JPRF-ST-2024-0102-M of November 27, 2024, issued by the Technical Secretary of the Board; as well as the Technical-Legal Report No. JPRF-CTCJ-2024-012 of November 27, 2024, issued by the Technical Coordination of Policy and Regulation of the Financial System; and, by the Legal Coordination of Policy and Financial Norms, and the corresponding draft resolution;

Resolution No. JPRF-F-2024-0126 Page 3 of 3

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means, convened on November 28, 2024 and carried out through video conference on November 29, 2024, reviewed and approved the following Resolution; and, In exercise of its functions, RESOLVES: ARTICLE FIRST.- - Add the Fourth General Provision to Section III "Of the Public Financial Sector Capital Budget", of Subsection I "Budget Management Standards for Entities of the Public Financial Sector", Chapter XXXIII "Of the Government and Administration of the Public Financial Sector", Title II "National Financial System", Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities and Insurance Resolutions: "FOURTH.- For the budgetary exercise of the fiscal year 2025, and once the body in charge of public finances has issued the corresponding budgetary guidelines, within a term of thirty (30) days counted from said issuance, the entities of public banking must present and request from the Financial Policy and Regulation Board the approval of the corresponding budget draft for that fiscal year, duly authorized by the board of directors of each entity or the body acting on its behalf. In the event of observations by the Board on the draft, the entities of public banking must correct them within a term not exceeding five days, counted from the date of notification by the Board." SINGLE FINAL PROVISION.- This Resolution shall enter into force from the present date, without prejudice to its publication in the Official Register, and shall be published on the institutional website of the Financial Policy and Regulation Board within a maximum term of two days from its issuance. COMMUNICATE.- Given in the Metropolitan District of Quito, on November 29, 2024. THE PRESIDENT, Mgs. María Paulina Vela Zambrano The aforementioned Resolution was processed and signed by Master María Paulina Vela Zambrano, President of the Financial Policy and Regulation Board, in the Metropolitan District of Quito, on November 29, 2024.- I CERTIFY. TECHNICAL SECRETARY, Mgs. Luis Alfredo Olivares Murillo