Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 033/2018

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES MODIFICATIONS TO THE FINANCIAL CONDITIONS OF CONTRACT SANO NO. 184/2011 – EASBA I (FIRST CREDIT).

VISTOS (VIEWED):

• The Political Constitution of the State promulgated on February 7, 2009.
• Law No. 1670 of the Central Bank of Bolivia (BCB) of October 31, 1995.
• Law No. 050 modifying the General State Budget (PGE) – Management 2010 of October 9, 2010.
• Law No. 062 approving the PGE – Management 2011 of November 28, 2010.
• Law No. 111 approving modifications to the PGE – Management 2011 of May 7, 2011.
• Ministerial Resolution of the Ministry of Economy and Public Finance (MEFP) No. 318 of August 26, 2009.
• Ministerial Resolution of the MEFP No. 060 of February 28, 2011.
• Ministerial Resolution MDPyEP/DESPACHO/N°035.2018 of the Ministry of Productive Development and Plural Economy (MDPyEP) of March 5, 2018.
• Administrative Resolution No. 005/2018 of the San Buenaventura Sugar Company (EASBA) of February 6, 2018.
• Board Resolution of the BCB No. 055/2011 of May 17, 2011.
• Contract SANO No. 184/2011 of May 18, 2011.
• Addendum SANO No. 288/2011 of August 23, 2011.
• Addendum SANO No. 292/2012 of October 10, 2012.
• Addendum SANO No. 195/2015 of June 19, 2015.
• Modifying Contract SANO-DLBCI No. 112/2016 of December 21, 2016.
• Note from the MDPyEP CITE: EASBA-NE-GG-N°035/2018 of January 15, 2018.
• Copies of the notes Cite: EASBA-NE-GG-N°096/2018, EASBA-NE-GG-N°097 and EASBA-NE-GG-N°108/2018, all dated February 7, 2018 from EASBA.
• Note CITE: EASBA-NE-GG-N°109/2018 of February 9, 2018 from EASBA.
• Notes from the MDPyEP CITE: CAR/MDPyEP/DGAJ/UAJ No. 0033/2018 and CAR/MDPyEP/DGAJ/UAJ No. 0036/2018 of March 6 and 8, 2018, respectively.
• Report BCB-GOM-SOSP-DCE-INF-2018-18 of March 9, 2018, from the Monetary Operations Management (GOM).
• Report BCB-GAL-SANO-DLBCI-INF-2018-38 of March 9, 2018, from the Legal Affairs Management (GAL).

CONSIDERING:

That the Political Constitution of the State (CPE), promulgated on February 7, 2009, in numeral 6 of its article 9, establishes that it is the end and function of the State to promote and guarantee the responsible and planned use of natural resources, and to boost their industrialization, through development and the strengthening of the productive base in its different dimensions and levels. Likewise, in paragraph I numeral 10 of article 158 and article 322, it is established that the Plurinational Legislative Assembly has the attribute to approve the contracting of public debt.

That article 322 of the CPE provides that the Plurinational Legislative Assembly authorizes the contracting of public debt when the capacity to generate income to cover capital and interest is demonstrated, and the most advantageous conditions in rates, terms, amounts, and other circumstances are technically justified. Public debt will not include obligations that have not been expressly authorized and guaranteed by the Plurinational Legislative Assembly.

That Law No. 050, modifying the PGE – 2010, in its article 9 authorizes the BCB to grant EASBA an extraordinary credit of up to Bs 1,254,600,000.- (One Billion Two Hundred Fifty-Four Million Six Hundred Thousand 00/100 Bolivianos) on concessional conditions, with the object of financing productive investment projects for which the BCB is excepted from the application of articles 22 and 23 of Law No. 1670 of October 31, 1995. Likewise, it authorizes EASBA to contract the credit with the BCB and establishes that the MDPyEP, through Ministerial Resolution, must justify to the BCB that the use and destination of the resources of the credit to be acquired by EASBA are of national priority within the framework of the National Development Plan and that future flows will be used for the payment of the credit.

That Law No. 062 of the PGE – 2011, in its article 14 extends the validity of article 9 of Law No. 050, for the contracting and execution of extraordinary concessional credits.

That Law No. 111 of modifications to the PGE – 2011, in its sixth additional provision authorizes the MEFP through the General Treasury of the Nation to issue and grant Non-Negotiable Treasury Bonds in favor of the BCB to guarantee extraordinary credits granted by said entity in favor of the Strategic National Public Enterprises foreseen in Law No. 062, at the written request of the lead sector ministry and jointly with the BCB.

That Ministerial Resolution No. 318 of the MEFP in subsection b) of its article 15 establishes a Degree of Concessionality of 2.3%, and in its article 17 determines the update of the Degrees of Concessionality (Internal Debt) and the period of update of the same (subsections a. and c.).

That Ministerial Resolution No. 060 of the MEFP determines to maintain during the quarter March to May 2011, the degree of concessionality for internal credits at 2.3%.

That through Ministerial Resolution MDPyEP: MDPyEP/DESPACHO/N°035.2018, the MDPyEP justifies before the BCB and resolves among other things: 1) Validate the modification of numerals 6.3 and 6.4 of clause sixth of Contract SANO No. 184/2011, extending the grace period on capital from 6 to 9 years and the current interest from 0.85% to 0.88% annually, payable annually. The interest accrued during the first nine years will be paid at the conclusion of the ninth year. 2) Validate the Reports EASBA-CM-IT-N°002/2018 of January 23, 2018 and EASBA-IL-DJ-N° 013/2018 of February 6, 2018 issued by EASBA that justify the technical feasibility and the economic-financial evaluation of the project, considering the new financial conditions approved that guarantee the payment capacity of the credit; as well as also approving the reports INF/MDPyEP/VPIMGE/DGDI/UGP N°0027/2018 of February 16, 2018 and INF/MDPyEP/DGAJ/UAJ N°0043 of February 20, 2018, issued by the Vice Ministry of Medium and Large-Scale Industrial Production and the General Directorate of Legal Affairs of the MDPyEP. 3) Determine that the financial funds of the credit were and will be used in the execution and implementation of the Project complying with the Economic-Social Development Plan within the framework of Integral Development for Living Well 2016 – 2020 and the Patriotic Agenda 2025 and that future flows will be used for the payment of the credit considering the new financial conditions approved by EASBA. 4) Carry out the evaluation and follow-up of the execution of the resources granted by the BCB, through the competent instance designated within the MDPyEP.

That Administrative Resolution No. 005/2018, issued by the General Manager of EASBA, approves the Technical Report EASBA-CM-IT-N°002/2018 of January 23, 2018 and the Legal Report EASBA-IL-DJ N° 013/2018 of February 6, 2018, which technically and legally support the modification of the financial conditions of credit SANO No. 184/2011, clause sixth, numerals 6.3 and 6.4. Likewise, it authorizes the modification of clause sixth of said Contract, extending the grace period on capital from 6 to 9 years and the current interest from 0.85% to 0.88% annually, payable annually. The interest accrued during the first 9 years will be paid at the conclusion of the ninth year.

That the Board of Directors of the BCB through Board Resolution No. 055/2011 approved the request for extraordinary concessional credit in favor of EASBA, for an amount of Bs 1,254,600,000.-

That Contract SANO No. 184/2011 stipulates among other aspects, the following:

• The object of the contract is the granting of an extraordinary credit on concessional conditions for an amount of Bs 1,254,600,000.- (clause fourth) that the BCB grants in favor of EASBA for the execution of the EASBA Project for the production of high-quality direct white sugar and its derivatives.
• EASBA will use and allocate under its exclusive responsibility the resources coming from the credit for the execution of the EASBA Project for the production of high-quality direct white sugar and its derivatives, according to Ministerial Resolution MDPyEP/DESPACHO/N°057.2011 of April 20, 2011 (Clause fifth).
• The conditions of the credit established in clause sixth are the following:

Concept	Detail
Currency:	Bolivianos.
Amount:	Bs 1,254,600,000.- (One Billion Two Hundred Fifty-Four Million Six Hundred Thousand 00/100 Bolivianos).
Term:	24 (twenty-four) years.
Grace Period:	On capital 6 (six) years.
Annual interest rate:	0.85% (zero point eighty-five percent).
Interest payment method:	The interest accrued during the first six years will be paid in the sixth year in a single payment. From the seventh year onwards, payments will be annual together with the capital.
Guarantee:	Treasury Bonds.
Disbursement deadline:	December 31, 2017.
Payment Plan:	Annual Installments.

That Addendum SANO No. 288/2011 clarifies the nature of Contract SANO No. 184/2011.

That Addendum SANO No. 292/2012 modifies the object, use, and destination of the credit resources and extends the disbursement deadline until June 30, 2015.

That Addendum SANO No. 195/2015 modifies numeral 6.7 of Clause Sixth of the Contract modified through the Second Addendum SANO No. 292/2012, extending the disbursement deadline until December 31, 2016.

That Modifying Contract SANO-DLBCI No. 112/2016 extends the disbursement deadline until December 31, 2017.

That through note CITE: EASBA-NE-GG-N°035/2018, the MDPyEP requests the BCB to manage the extension of the grace period of Contract SANO No. 184/2011; this addendum will allow EASBA to have additional time to expand its sugarcane crops and generate financial flows that allow it to pay its debt.

That through notes CITE: EASBA-NE-GG-N°096/2018 and EASBA-NE-GG-N°097 and EASBA-NE-GG-N°108/2018, EASBA informs the MEFP, Ministry of Development Planning, and MDPyEP, respectively, of a copy of Administrative Resolution No. 005/2018 of February 6, 2018.

That through note CITE: EASBA-NE-GG-N°109/2018, EASBA requests the modification of clause sixth of the Contract and for this effect sends the corresponding documentation.

That through note CITE: CAR/MDPyEP/DGAJ/UAJ N°0033/2018, the MDPyEP requests the BCB the modification of clause sixth of Contract SANO No. 184/2011, for this effect sends a legalized copy of Ministerial Resolution MDPyEP/DESPACHO/N°035.2018.

That through note CITE: CAR/MDPyEP/DGAJ/UAJ N°0036/2018, the MDPyEP clarifies that it requests the modification of Contract SANO No. 184/2011 and not SANO No. 181/2011.

That GOM through Report BCB-GOM-SOSP-DCE-INF-2018-18, states that to consider EASBA's request, the interest rate scenarios proposed for the debt restructuring of Contract SANO No. 184/2011 and the new financial conditions proposed must be considered. Likewise, it states that if the request to extend the grace period to 9 years is approved and the BCB's interests are safeguarded, it is necessary to increase the credit interest rate by 3 basis points above the initial one (from 0.85% to 0.88%) due to the direct relationship between the grace period and the interest rate. The first payment of accumulated interest of the credit would be April 4, 2021, once the additional grace period requested by the established amounts is concluded, and the first capital installment payment April 4, 2022. The BCB must return to the MEFP the Treasury Bonds for the nine disbursements made that serve as guarantee of the credit, with the object that that state portfolio carries out the corresponding swap with the new amortization tables, a procedure previously used in credits whose financial conditions were also modified.

That GAL through Report BCB-GAL-SANO-DLBCI-INF-2018-38, states that the request for modification of Contract SANO No. 184/2011, presented by EASBA is legally appropriate, since it does not contravene the current legal framework; concluding that the modification of these conditions implies the modification of numerals 6.3. and 6.4. of clause sixth of said Contract, corresponding that they be approved by the Board of Directors of the BCB, by two-thirds of the votes of its members present at the respective meeting. Likewise, by virtue of what is provided by article 57 and subsection e) of article 59 of Law No. 1670, the President of the BCB is authorized to sign the corresponding modifying contract.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve exceptionally the modification of the financial conditions of Contract SANO No. 184/2011 for extraordinary credit granted in favor of EASBA within the framework of Laws No. 050 modifying the PGE – 2010 and No. 062 of the PGE – 2011, under the following terms:

Concept	Detail
Currency:	Bolivianos.
Total Credit Amount:	Bs 1,254,600,000.- (One Billion Two Hundred Fifty-Four Million Six Hundred Thousand 00/100 Bolivianos).
Term:	24 years.
Grace Period:	On capital 9 years.
Annual interest rate:	0.85% from 04/04/12 to 04/04/18<br>0.88% from 05/04/18 to 04/04/36
Interest payment method:	The interest accrued during the first nine years will be paid in the ninth year in a single payment. From the tenth year onwards, payments will be annual together with the capital.
Disbursement deadline:	December 31, 2017.
Payment Plan:	Annual Installments.
Guarantees:	Treasury Bonds.

Article 2.- That Contract SANO No. 184/2011 for extraordinary credit granted in favor of EASBA and its Addenda, may not be subject to subsequent modifications, regarding the financial conditions of the credit.

Article 3.- Authorize the President of the BCB to sign the contract with EASBA under the terms of this Resolution.

Article 4.- The Presidency and the General Management are in charge of the execution and compliance of this Resolution.

La Paz, March 13, 2018

Pablo Ramos Sánchez Abraham Pérez Alandia Gabriel Herbas Camacho Luis Baudoin Olea Ronald Polo Rivero Sergio Velarde Vera