Instruction No. 003-DOM/20 annulling and replacing the provisions of Instruction No. 002-DOM/20 of April 10, 2020 on the establishment of an exceptional refinancing instrument to support SME activities

[Logo: Central Bank of Madagascar]

CENTRAL BANK OF MADAGASCAR

DIRECTORATE OF MONETARY OPERATIONS

INSTRUCTION NO. 003-DOM/20 annulling and replacing the provisions of Instruction No. 002-DOM/20 of April 10, 2020 on the establishment of an exceptional refinancing instrument to support the activities of SMEs

The Governor of the Central Bank of Madagascar,

Having regard to Law No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions, as amended,

Having regard to Law No. 2017-026 of February 8, 2018 on Microfinance,

Having regard to Law No. 2016-004 of July 29, 2016, supplemented by Law No. 2016-057 of February 2, 2017 establishing the Statutes of the Central Bank of Madagascar,

Having regard to Decree No. 2019-2069 of November 6, 2019 repealing the provisions of Decree No. 2014-1684 of October 29, 2014 on the appointment of the Governor of the Central Bank of Madagascar and appointing the Governor of the Central Bank of Madagascar,

Having regard to Instruction No. 006-DOM/19 of October 25, 2019 on money market instruments,

DECIDES

Article 1: CONTEXT

In response to the consequences suffered by certain enterprises and Microfinance Institutions (MFIs) due to the prevailing global health situation, the Central Bank of Madagascar (BFM) is establishing a credit line in favor of banks governed by Law No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions or the "banking law".

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Article 2: OBJECTIVE

Within this specific framework stipulated in Article 1 of this Instruction, the market instrument provided for in Article 9 of Instruction No. 006-DOM/19 of October 25, 2019 on money market instruments is subject to specific provisions.

Article 3: SCOPE

The application of the provisions of this Instruction is exclusively linked to the support by banks of certain enterprises defined below, on the one hand, and Microfinance Institutions, on the other.

For the purposes of this Instruction, all MFIs approved by the Banking and Financial Supervision Commission are among the beneficiaries of this financial support from BFM. Eligible enterprises, in addition to these MFIs, are those with an annual turnover of less than or equal to two billion Ariary (2,000,000,000 Ariary) at the time of publication of their latest financial statements.

Article 4: IMPLEMENTATION MODALITIES

This article prescribes the specific implementation modalities for the instrument provided for in Article 9 of Instruction No. 006-DOM/19 of October 25, 2019 on money market instruments.

4.1 BFM may launch liquidity injection operations at a fixed rate with total or partial allocation of bids, with a maturity of up to three (3) years. The adjudication of bids submitted by banks remains at BFM's discretion based on the evolution of monetary aggregates and monetary stability.

4.2 These operations are launched at most once per month, on the first Friday of the month.

4.3 The rate for these exceptional liquidity injection operations is set at 4.97%.

4.4 Banks must indicate in their bid, in accordance with the model in Annex I, the amount of their offer relative to this rate fixed by BFM.

4.5 Eligible collateral for this exceptional refinancing are BTA and BTF, respecting the principle of covering liquidity injection operations on the money market. At the time of launching repurchase operations, this type of refinancing will comply with the processing modalities of any liquidity injection operation by BFM.

Article 5: OBLIGATIONS AND SANCTIONS

Under penalty of forfeiture of term in case of non-compliance with the obligations arising from this Instruction, banks are required to:

• exclusively allocate the funds obtained under this Instruction to support the MFIs and enterprises indicated in paragraph 2 of Article 3 above.

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• declare to BFM, with a copy to the General Secretariat of the Banking and Financial Supervision Commission, all information relating to credits granted under this Instruction in accordance with the model in Annex II.

Article 6: RESTRICTIONS

Banks that have already benefited from liquidity via the instrument governed by this Instruction may not submit to other operations on the same instrument until the previously obtained funds have been exhausted. This exhaustion is characterized by the unavailability and retention by the beneficiaries of the entirety of the funds lent by BFM at the time of launching the operation.

Article 7: FINAL PROVISIONS

Without prejudice to the specific provisions stated above, the procedures applicable to exceptional refinancing operations governed by this Instruction are identical to those for fixed-rate operations with total or partial allocation of bids stipulated in Article 9 of Instruction No. 006-DOM/19 of October 25, 2019 on money market instruments.

Article 8: ANNEXES

The annexes form an integral part of this Instruction.

Article 9: ENTRY INTO FORCE

This Instruction enters into force as of the date of its signature.

Article 10:

All provisions contrary to this Instruction, including those of Instruction No. 002-DOM/20 of April 10, 2020 on the establishment of an exceptional refinancing instrument to support SME activities, are hereby repealed.

Antananarivo, 28 MAY 2020

[Signature and seal] THE GOVERNOR Henri Edmond RABARIJOHN

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ANNEX I

BID FOR EXCEPTIONAL LIQUIDITY INJECTION OPERATIONS TO SUPPORT THE ACTIVITIES OF CERTAIN ENTERPRISES AND MICROFINANCE INSTITUTIONS

Bank name: Rate: Launch date: ____________________

BID
Total Amount (in Ar)
In figures

COLLATERAL:

Total collateral amount(1) (2): Ariary………………… Interest amount: Ariary …………………

ORDER NO.	Nature	Reference	Acquisition Rate	Maturity	Number of securities	COLLATERAL	Nominal Amount of Security (In Ariary)
							In words
TOTAL...

(1) Amount requested plus interest (2) Multiple of 100 million Ariary.

At ____________________, on ____________________ (Authorized signatures and bank seal)

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ANNEX II

NAME OF ESTABLISHMENT Date: ____________________

List of clients who benefited from credit, subject to exceptional refinancing by BFM, during the month of ...............

Rank	Beneficiary Name	Nature of Credit	Amount of Credit Disbursed	Amount of Installment	Date of 1st Repayment	Credit Duration	Maturity Date	Other Information
1								- Credit Rate<br>- Sector of Activity<br>- Turnover for non-MFIs<br>- Etc.
...
n
			TOTAL

Authorized signature and seal