JPRF-G-2022-017 — Does Not Approve the Budget of BANECUADOR

Resolution No. JPRF-G-2022-017 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING: That, Article 226 of the Constitution of the Republic of Ecuador prescribes that public servants and persons acting under state authority shall exercise only the competencies and powers attributed to them in the Constitution and the Law; That, Article 280 of the Constitution of the Republic defines the National Development Plan as the instrument to which public policies, programs, and projects, as well as the programming and execution of the State budget, shall be subject; That, the second clause of Article 70 ibid., regarding the National System of Public Finances, states: “All entities, institutions, and organisms included in Articles 225, 297, and 315 of the Constitution of the Republic shall be subject to the SINFIP, under the terms provided in this code, without prejudice to the autonomous management faculty of administrative, economic, financial, budgetary, and organizational order that the Constitution or laws establish for certain entities”; That, Article 109 of the Organic Code of Planning and Public Finances orders that the budgets of the entities and organisms indicated in that legal body shall enter into force and be obligatory from January 1 of each year; That, Article 101 supra, provides: “In the formulation of budget proformas for the public sector, including those of public companies, decentralized autonomous governments, public banking, and social security, the technical norms, guidelines, classifiers, and catalogs issued by the governing body of the SINFIP shall be obligatorily observed”; That, through Article 13 of the Organic Monetary and Financial Code, Book 1, the Financial Policy and Regulation Board was created as part of the Executive Function, as a legal person of public law, with administrative, financial, and operational autonomy, responsible for the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care service policy and regulation; and its composition was determined; That, Article 14.1, numeral 14, literal a) of the Organic Monetary and Financial Code establishes as a function of the Financial Policy and Regulation Board to annually approve the budget of the entities of the public financial sector, their reforms, as well as regulate their execution; That, the First Transitory Provision of the Organic Law for Economic Development and Fiscal Sustainability mandates “In order to achieve the technical and capital parameters necessary to grant low-cost and long-term credit to the agricultural and productive sectors, within sixty (60) days counted from the publication of this law in the Official Register, the competent instances will initiate the pertinent procedures to merge BANECUADOR EP [sic] and the CORPORACIÓN FINANCIERA NACIONAL EP [sic] into a single entity called BANCO DE FOMENTO ECONÓMICO DEL ECUADOR”; That, in the Codification of Monetary, Financial, Securities, and Insurance Resolutions, Book I "Monetary and Financial System", Title II "National Financial System", Chapter XXXIII "On the Government and Administration of the Public Financial Sector", Section III "On the Public Financial Sector Capital Budget", Subsection I, the Budget Management Standards for Entities of the Public Financial Sector are contained; That, Chapter XXXIII "On the Government and Administration of the Public Financial Sector", Section III "On the Public Financial Sector Capital Budget", Subsection I, was renumbered by Article 2 of

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Resolution of the Monetary and Financial Policy Board No. 647-2021-F, published in Official Register No. 415 of March 22, 2021; That, on September 27, 2021, the Ministry of Economy and Finance issued the guidelines for the programming and formulation of the General State Budget corresponding to the fiscal year 2022 and the Quadrennial Budget Programming 2022-2025. Within that instrument, section 4.2.2. develops the guidelines for the budgets of public banking; That, through Resolution No. JPRF-F-2021-003 of December 10, 2021, the Financial Policy and Regulation Board, based on the guidelines issued by the Governing Body of Public Finances, issued the guidelines for the preparation of the budget proforma for Public Financial Entities for the year 2022; That, through Memorandum No. BANECUADOR-BANECUADOR-2021-1141-MEM of December 28, 2021, the General Management submitted the budget proforma for the year 2022 for the knowledge and approval of the Board of Directors of BANECUADOR B.P.; That, with Resolution No. D-2021-103 of December 29, 2021, the Board of Directors of BANECUADOR B.P. approved by simple majority the respective budget proforma for the year 2022; That, through Official Letter No. BANECUADOR-BANECUADOR-2021-1044-OF of December 30, 2021, the General Manager of BANECUADOR B.P. submits to the President of the Financial Policy and Regulation Board the Budget Proforma for the year 2022 for the knowledge and approval of this Collegiate Body; That, through Resolution No. JPRF-F-2021-009 of December 30, 2021, the schedule for the presentation and approval of budget proformas for the current year was modified, in accordance with the Second and Third Transitory Provisions of Section XI “Guidelines for the preparation of the budget proforma of Public Financial Entities for the year 2022”, of Chapter XXXIII "On the Government and Administration of the Public Financial Sector", Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions; That, on January 6, 2022, through Official Letter No. JPRF-JPRF-2022-0002-O, the Financial Policy and Regulation Board requested the pronouncement of the Ministry of Economy and Finance within the approval procedure of the budget proforma of the National Financial Corporation B.P. for the economic exercise of 2022; That, the Ministry of Economy and Finance, through the Undersecretary of Economy, responded to the request mentioned in the immediately preceding consideration, with Official Letter No. MEF-VE-2022-0007-O of January 12, 2022, the Undersecretary of Economy attaches Report No. MEF-CESFM-2022-004 of January 11, 2022, and pronounces itself in the following terms “does not recommend the approval of the Budget Proforma of BanEcuador B.P. corresponding to the economic exercise of the year 2022, according to the figures contained in Annex 1 and in concordance with the unfavorable vote issued by the MEF in the Extraordinary Session of the Board of Directors of BANECUADOR B.P. instrumented via email from December 28 to 29, 2021.”; That, the Technical Secretary of the Financial Policy and Regulation Board through Memorandum No. JPRF-SETEC-2022-0008-M of January 14, 2022, submits to the President of the JPRF the technical and legal analyses that support the pertinence of this resolution, contained in Reports No. JPRF-CT-2022-0012 and No. JPRF-CJ-2022-0007 of January 14, 2022, respectively;

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That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means convened on January 16, 2022, and carried out via video conference on January 17, 2022, learned of the budget of BANECUADOR B.P. for the economic exercise of the year 2022; and, In exercise of its functions, RESOLVES: SINGLE ARTICLE.– Do Not Approve the budget of BANECUADOR B.P., corresponding to the economic exercise of the year 2022, which was submitted by the General Manager of BANECUADOR B.P. to the Financial Policy and Regulation Board with Official Letter No. BANECUADOR-BANECUADOR-2021-1044-OF of December 30, 2021. Without prejudice to which, this financial institution will prepare a budget proforma that must observe the guidelines established by the Board through Resolution No. JPRF-F-2021-003, as well as incorporate the recommendations exposed in Report No. MEF-CESFM-2022-004 of January 11, 2022, from the Strategic Coordinator of the Monetary Financial Sector of the Ministry of Economy and Finance. For this purpose, BANECUADOR B.P. will comply with the procedure provided for in Article 8 of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, Book I “Monetary and Financial System”, Title II “National Financial System”, Chapter XXXIII “On the Government and Administration of the Public Financial Sector”, Section III “On the Public Financial Sector Capital Budget”, Subsection I “Budget Management Standards for entities of the public financial sector”. FINAL PROVISION.- This resolution shall enter into force from the date of its issuance, without prejudice to its publication in the Official Register. Publish this resolution on the 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 January 17, 2022. THE PRESIDENT, Mgs. María Paulina Vela Zambrano The resolution above 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 January 17, 2022.- I CERTIFY. TECHNICAL SECRETARY Dr. Nelly Arias Zavala