Board Resolution No. 050/2014

BOARD RESOLUTION NO. 050/2014

SUBJECT: MONETARY OPERATIONS MANAGEMENT — APPROVES MODIFICATIONS TO THE SPECIFIC REGULATION FOR THE GRANTING OF CREDIT PROVIDED FOR IN LAW NO. 261.

HAVING SEEN:

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. 261 of July 15, 2012.

Ministerial Resolution (R.M.) No. 540 of August 16, 2012.

Ministerial Resolution No. 213 of March 28, 2014.

Board Resolution (R.D.) of the BCB No. 159/2012 of August 28, 2012, modified by R.D. No. 194/2012 of November 20, 2012.

Letters from the Ministry of Economy and Public Finance (MEFP) CITE: MEFPNTCP/DGCP/UEPS-403 and 464/2014 of April 1 and 10, 2014.

The Report from the Monetary Operations Management CITE: BCB-GOM-SOSP-DCE-INF-2014-27 of May 12, 2014.

The Report from the Legal Affairs Management CITE: BCB-GAL-SANO-INF-2014-163 of May 16, 2014.

CONSIDERING:

That the Political Constitution of the State (CPE), approved by Referendum on January 25, 2009, and promulgated on February 7, 2009, in item 6 of Article 9, establishes that it is the goal and function of the State to promote and guarantee the responsible and planned use of natural resources, and to boost their industrialization, through the development and strengthening of the productive base in its different dimensions and levels. Likewise, in item 10 of paragraph I of Article 158 and Article 322, it establishes that the Plurinational Legislative Assembly has the attribute to approve the contracting of public debt.

That Article 322 of the Political Constitution of the State provides that the Plurinational Legislative Assembly will authorize the contracting of public debt when the capacity to generate income to cover the principal and interest is demonstrated, and the most advantageous conditions in terms of rates, terms, amounts, and other circumstances are technically justified.

That public debt will not include obligations that have not been expressly authorized and guaranteed by the Plurinational Legislative Assembly.

That Law No. 261 authorizes the MEFP to contract a credit with the Central Bank of Bolivia in national currency for an amount up to Bs 1,633,372,800.00 (One Million Six Hundred Thirty-Three Million Three Hundred Seventy-Two Thousand Eight Hundred 00/100 Bolivianos) destined for the construction of the Cable Transport System (Teleferico) in the cities of La Paz and El Alto, for which the BCB is exempted from the application of Articles 22 and 23 of Law No. 1670 of October 31, 1995.

That Ministerial Resolution No. 540 establishes a concessionality degree of 25% for the internal credit authorized by Law No. 261.

That Ministerial Resolution No. 213 updates the concessionality degree, establishing at least twenty-five percent (25%) for the internal credit authorized by Law No. 261.

That the Board Resolution of the BCB No. 159/2012 approves the Specific Regulation for the Granting of Credit provided for in Law No. 261.

That the Board Resolution of the BCB No. 194/2012 modifies Articles 2 item 2), 3, 9, and 10 of the Specific Regulation for the Granting of Credit provided for in Law No. 261, referring to the credit application, acceptable guarantees, conditions for disbursements, and the registration and accreditation of the use and destination of the credit resources, respectively.

That by letter CITE: MEFPNTCP/DGCP/UEPS-403/2014, the MEFP sends a legalized copy of R.M. No. 213 of March 28, 2014.

That by letter CITE: MEFP/VTCP/DGCP/UEPS-464/2014, the MEFP sends a legalized copy of Presidential Decree No. 1869 of January 23, 2014, appointing the Minister of Economy and Public Finance, and requests that the first item of R.M. No. 213 be taken into account for the update of financial conditions.

That the Monetary Operations Management, through report CITE: BCB-GOM-SOSP-DCE-INF-2014-27, recommends modifying the Specific Regulation for the Granting of Credit provided for in Law No. 261.

That the Legal Affairs Management, through report CITE: BCB-GAL-SANO-INF-2014-169, concludes that the modification to the Specific Regulation for the Granting of Credit provided for in Law No. 261 is legally appropriate, as it does not contravene the current legal framework.

LA PAZ, May 20, 2014

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Modify Article 6 of the Specific Regulation for the Granting of Credit provided for in Law No. 261, as follows:

It says:

"Article 6.- (Financial Conditions) The financial conditions of the credit will be established and determined by the Board of Directors of the BCB, taking into account the request of the MEFP and the concessionality degree established by the MEFP through Ministerial Resolution."

It must say:

"Article 6.- (Financial Conditions) The financial conditions of the credit will be established and determined by the Board of Directors of the BCB, taking into account the request of the MEFP and the concessionality degree established by this entity through Ministerial Resolution, following the procedure established in the Appendix of this Regulation."

Article 2.- The modification of the Specific Regulation for the Granting of Credit provided for in Law No. 261 will enter into force from the date of approval of this Resolution.

Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

Abraham Pérez Alandia Raúl Boyar Tellez Reynaldo Yujra Segales Ronald Polo Rivero

APPENDIX PROCEDURE TO DEFINE THE DISCOUNT RATE AND THE CONCESSIONALITY DEGREE OF CREDITS IN CONCESSIONAL CONDITIONS WITHIN THE FRAMEWORK OF FINANCIAL LAWS OR OTHER SPECIFIC LAWS

Section 1.- (Discount Rate) The Discount Rate will be calculated as the average of at least the last twelve adjudication rates in the Auction of the General Treasury Bonds of the Nation, corresponding to the term of the credit application. In case the obtained discount rate is not congruent, i.e., is not higher for longer terms (and vice versa) with the discount rates of credits approved in the last twelve months, an additional observation must be systematically added until this result is achieved.

Section 2.- (Concessionality Degree) The Concessionality Degree will be defined based on the Ministerial Resolution issued by the MEFP for this effect.

• In case the Ministerial Resolution explicitly establishes the concessionality degree, this data will be taken. • If the Ministerial Resolution establishes a minimum value for this variable, the BCB will follow the following procedure:

1. Calculate consistent with a minimum concessionality degree established in the MEFP Resolution.
2. Take as the reference rate (iref) the yield of the International Reserves (iref = iRIN) of the last twelve (12) months.
3. The interest rate (i*) of the credit to be granted will be: • imax if iref > imax • iRIN if iref < imax

Once the concessionality degree consistent with iref is defined, the Board may consider scenarios that maintain the same concessionality degree.

If the Ministerial Resolution establishes a minimum and maximum value for the concessionality degree, the interest rate will be established according to the mentioned procedure.

1 Calculated from the monthly non-annualized yield and does not consider variations in the quotes of the euro, Canadian dollar, Australian dollar, yuan, and gold.