JPRF-G-2022-014 — Approves Third Reform to the 2021 Budget of the Development Bank of Ecuador B.P.

Resolution No. JPRF-G-2022-014 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 by virtue of state authority shall exercise only the competencies and powers attributed to them in the Constitution and the Law; That, the second paragraph of Article 70 of the Organic Code of Public Planning and Public Finances, regarding the National System of Public Finances (SINFIP), 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 105 of the General Regulation of the Organic Code of Public Planning and Public Finances establishes: “Budgetary Modifications.- These are changes in the allocations of the approved budget that alter the assigned amounts, the destination of the allocations, their economic nature, the source of financing, or any other identification of each of the components of the budget item. In cases where budgetary modifications imply an impact on the budget execution programming, the corresponding reprogramming must be carried out.”; That, Article 107 supra prescribes that: “Increases and decreases in income and expenses. - Institutional budgets may be subject to increases and/or decreases in income and expenses. The governing body of public finances will issue the technical norm that will regulate the corresponding procedures and scopes of competence. Increases and decreases in income and expenses must be registered in the integrated financial administration information systems used by each entity.- These increases and decreases must be subject to: global, institutional, and expenditure ceilings; and, to the limits established for budgetary modifications: determined in the Code of Planning and Public Finances.”; That, numeral 20 of Standard NTP 19. (SPECIFIC BUDGETARY MODIFICATIONS) of Ministerial Agreement 103, published in the Official Register supplement No. 381 of January 29, 2021, which contains the Technical Norms of the National System of Public Finances -SINFIP-, mandates that: “Budget Reforms of Entities outside the General State Budget 20. Modifications to the budgets of public sector entities that are not part of the General State Budget will be carried out in accordance with what is established in their creation laws and in the provisions issued by the highest institutional instance. In no case may budgetary modifications be approved that imply transfers of resources from the General State Budget that are not expressly stated therein.”; 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 services policy and regulation; and its composition was determined;

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That, Article 14.1, numeral 14, literal a) of the Organic Monetary and Financial Code, Book 1, establishes as a function of the Financial Policy and Regulation Board, to approve the reforms of the budgets of the entities of the public financial sector; That, in the Codification of Monetary, Financial, Securities, and Insurance Resolutions, Book I "Monetary and Financial System", Title II "National Financial System", Chapter XXXIII "Of the Government and Administration of the Public Financial Sector", Section III "Of the Public Financial Sector Capital Budget", Subsection I, the Budget Management Standards for Entities of the Public Financial Sector are found; That, in accordance with Article 12 of Subsection I “Budget Management Standards for entities of the public financial sector” referred to above, the Financial Policy and Regulation Board must authorize the reforms of public financial institutions that exceed 5% of the policy budget (investment) and 10% of the approved operational budget; That, through Memorandum No. BDE-GPL-2021-0092-M of October 29, 2021, the Planning Manager of the Development Bank of Ecuador B.P. sent to the Director of Financial Business the results of the proposal of goals for the year 2021, and requested its pronouncement regarding Annexes 1, 2, and 3 of the PAI (reform and proforma) with the corresponding adjustments, to continue with the reform and proforma of the institutional PAI, for which it also requested that the availability of resources be ensured according to the types of funds and their income, based on the proposal programmed by each of the Zonal Branches and Headquarters; That, through Memorandum No. BDE-DNF-2021-0093-M of November 4, 2021, the Director of Financial Business of the Development Bank of Ecuador B.P. sent to the Planning Manager the Resource Availability Flow for the budgetary reform, considering income and expenses, determining that “there would be financing for the end of the year 2021 regarding the ordinary fund”; That, through Memorandum No. BDE-GPL-2021-0095-M of November 4, 2021, the Planning Manager of the Development Bank of Ecuador B.P. sent to the Acting General Manager of Business, the Total Approvals 2021 by Zonal Branch, Sector, Program, Use, and Source; the Total Disbursements 2021, New and Carry-over 2020 by Zonal Branch, Sector, Program, Use, and Source; and, the National Public Investment Portfolio and by Zonal Branch, and Commercial Portfolio 2021; and requested that it issue its pronouncement on the consolidated proposal of the Second Reform to the PAI of the year 2021; That, with Memorandum No. BDE-SG-2021-0035-M, of November 5, 2021, the Acting General Manager of Business, in response to Memorandum No. BDE-GPL2021-0095-M, of November 4, 2021, from the Planning Management, issued the conformity and validation of the figures presented in the Reform to the Annual Investment Plan; That, with Memorandum No. BDE-GPL-2021-0102-M, of November 7, 2021, the Planning Management sent to the Institutional Management Sub-management, the validated information in order to continue with the Second Reform of the Annual Investment Plan 2021;

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That, through Memorandum No. BDE-DNF-2021-0097-M of November 9, 2021, the Director of Financial Business of the Development Bank of Ecuador B.P. sent to the Operations Manager the Net Resource Flow, for the budgetary reform, attaching the updated file with the net of the investment and capture portfolio 2021; That, through Memorandum No. BDE-DAFT-2021-0050-M of November 9, 2021, signed by the Director of Fund and Treasury Administration of the Development Bank of Ecuador B.P., addressed to the Director of Planning and Investment, Acting, and to the Director of Budget, the information corresponding to the amortization of the credits that financed “CAF, BID, KFW, AFD AND CDB” was sent; the request for transfer of balances between the same budget group of items was ratified, and it was reiterated that the adjustments must be incorporated in the reform to the Institutional Budget 2021 and in the next reform of the annual operational plan 2021; That, through Memorandum No. BDE-DNF-2021-0153-M of December 15, 2021, the Director of Financial Business of the Development Bank of Ecuador B.P. sent to the Operations Manager an addendum to Memorandum No. BDE-DNF-2021-0097-M of December 9, 2021, and in conformity with the request made by the Operations Management of the Development Bank of Ecuador B.P., sent the Net Resource Flow for the budgetary reform, for which it attached the updated files with the cash flow 2021 and the net of the investment and capture portfolio 2021; That, through Memorandum No. BDE-GOP-2021-0363-M of December 16, 2021, the Operations Manager of the Development Bank of Ecuador B.P. sent to the Legal Manager the Draft Resolution and Technical Report, regarding the proposal of the Second Reform to the Annual Investment Plan 2021 of the Third Reform to the Budget of the Development Bank of Ecuador B.P., as well as the Technical Feasibility Report of the mentioned Draft Resolution, feasibility report dated December 16, 2021 signed by the Director of Budget and by the Operations Manager of the BED; That, Technical Report No. BDE-GOP-2021-013 of December 16, 2021, referred to in the previous section, which was signed by the Operations Manager of the Development Bank of Ecuador B.P., addressed to the Sub-manager of Institutional Management, determined that: (…) “in accordance with what is provided in Article 5, of the Budget Management Standards for the Public Financial Sector, in order to justify the need to carry out the third reform to the budget, its impact on execution, the expected economic results, the impact on the current financial programming and its corresponding financial indices; this management issues the technical report of the modification of the reformed budget of the Development Bank of Ecuador B.P.”, and concluded that: (…) “the Operations Management recommends to the General Management elevate the proposed budgetary reform for approval by the Board of Directors and the Financial Policy and Regulation Board, in order to guarantee the timely operation of the Development Bank of Ecuador B.P., safeguarding the efficient use of our shareholders' resources.”. Three technical support annexes were attached to the Technical Report for the validation of the criteria issued; That, on December 17, 2021, the Operations Manager of the Development Bank of Ecuador B.P. signed the Executive Summary regarding the Proposal of the Second Reform to the Annual Investment Plan of the Third Reform of the Budget of the Development Bank of Ecuador B.P., in which it determined that “the goals set for 2021 are inconsistent with the economic reality of the country, in this sense the need arises for the Development Bank of Ecuador B.P. to reform the Annual Investment Plan, considering the macroeconomic situation that the country is going through and the technical factors mentioned above (…)”, and concluded that: “The proposal of the second reform to the Annual Investment Plan of the Third Reform of the budget of the Development Bank of Ecuador B.P. is viable and is subject to the current legal, regulatory and normative provisions. (…)”; and, it also concluded that: “the proposed modification exceeds 5% of the policy budget and 10% of the operational budget, in accordance with what is established in the Budget Management Standards for the Public Financial Sector; therefore, its approval is subject to the Financial Policy and Regulation Board.”; That, through Office No. BDE-SEG-2021-0311-OF of December 21, 2021, the General Secretary of the Development Bank of Ecuador B.P. informed the members of the Board of Directors of the Development Bank of Ecuador B.P., the result of the voting on the agenda items of the ordinary session No. 006-DIR-BDE BP-2021 of the Board of Directors of the Development Bank of Ecuador B.P., held by videoconference on December 21, 2021; and, regarding the fifth point of the agenda, it informed that it was known and approved unanimously the Second Reform to the Annual Investment Plan 2021 of the third reform to the budget of the Development Bank of Ecuador B.P.; That, through Certification No. 003-066-DIR-BDE BP-2021 of December 22, 2021, the Secretary of the Board of Directors of the Development Bank of Ecuador B.P. certified the result of the ordinary session No. 006-DIR-BDE BP-2021 held on Tuesday, December 21, 2021, determining that: “With 6 votes in favor, the fifth point of the agenda is approved, therefore the Second Reform to the Annual Investment Plan 2021 of the third reform to the budget of the Development Bank of Ecuador B.P. is approved.”; That, through Office No. BDE-BDE-2021-0480-OF of December 22, 2021, the General Manager of the Development Bank of Ecuador B.P. sent to the President of the Financial Policy and Regulation Board the supporting documentation regarding the Second Reform to the Annual Investment Plan 2021 of the Third Reform to the Budget of the BDE, which includes among others, the certification of what was resolved by the Institutional Board of Directors of the BDE regarding what was proposed and the respective analyses on the need for the reform, its impact on execution and on planning and economic results; and requested this collegiate body to approve the Reform to the Annual Investment Plan 2021 of the Third Reform to the Budget of the Development Bank of Ecuador B.P.; That, the Technical Secretariat of the Financial Policy and Regulation Board through Memorandum No. JPRF-SETEC-2022-0004-M of January 10, 2022, sends to the President of the JPRF, the technical and legal analyses that support the appropriateness of approving the Third Reform to the Budget of the Development Bank of Ecuador B.P. of the year 2021., contained in Reports No. JPRF-CT-2022-0010 and No. JPRF-CJ-2022-0004 of January 10, 2022, respectively; and, it is ratified that the proposed modification exceeds 5% of the policy budget and 10% of the operational budget, in accordance with what is established in the Budget Management Standards for the Public Financial Sector; therefore, its approval is subject to the Financial Policy and Regulation Board.”; That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means convened on January 10, 2022 and carried out through video conference on January 11, 2022, learned of the project of Reform to the Annual Investment Plan of the year 2021 of the Third Reform to the Budget of the Development Bank of Ecuador B.P.; and, In exercise of its functions,

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RESOLVES: SINGLE ARTICLE.- Approve the Third Reform to the Budget of the Development Bank of Ecuador B.P., of the year 2021, according to the attached annex, which forms an integral part of this resolution. The Development Bank of Ecuador B.P. must apply this reform and all necessary adjustments to implement it in terms of budgetary consistency and technical operability during the closure process, liquidation of the Institutional Budget with validity from December 31, 2021 and must be instrumented in the records of the financial management system of the Development Bank of Ecuador B.P. FINAL PROVISION.- This resolution will 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 11, 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 11, 2022.- I CERTIFY. TECHNICAL SECRETARY Dr. Nelly Arias Zavala

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Source BDE Source: BDE