Board Resolution No. 055/2011

BOARD RESOLUTION NO. 055/2011

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES APPLICATION FOR CONCESSIONAL EXTRAORDINARY CREDIT IN FAVOR OF THE SAN BUENAVENTURA SUGAR COMPANY (EASBA), FOR AN AMOUNT OF Bs1,254,600,000.-

SEEING:

The Political Constitution of the State (CPE) promulgated on February 7, 2009.

Law No. 1670 of the Central Bank of Bolivia (BCB) of October 31, 1995.

Law No. 2042 on Budgetary Administration of December 21, 1999.

The General State Budget for the 2010 management period (PGE-2010).

Law No. 50 modifying the PGE – 2010 of October 9, 2010.

Law No. 62 approving the General State Budget for the 2011 management period (PGE – 2011) of November 28, 2010.

Supreme Decree No. 637 of September 15, 2010.

The Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the General State Budget for the 2010 and 2011 management periods, approved by Board Resolution of the Central Bank of Bolivia No. 23/2011, of February 22, 2011, and modified by Board Resolutions No. 26/2011, No. 27/2011, and No. 30/2011, of March 2, 18, and 22, 2011, respectively.

The notes CITE: EASBA-GG-N°72/2011 and CITE: EASBA-GG-N° 76/2011 of April 25 and 26, 2011, respectively.

The Ministerial Resolution of the Ministry of Productive Development and Plural Economy MDPyEP/DESPACHO/N° 057.2011 of April 20, 2011.

Administrative Resolution No. 022/2011 issued by the General Manager of EASBA of April 25, 2011.

The Notes Cite: EASBA-GG-N° 69/2011 and Cite: EASBA-GG-N° 70/2011 from EASBA both dated April 25, 2011.

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Act No. 022/2011 corresponding to the Ordinary Meeting of the Board of Directors of the BCB of May 3, 2011.

Note BCB-PRES-CE-2011-416 from the BCB of May 3, 2011.

Note BCB-PRES-CE-2011-418 from the BCB of May 3, 2011.

Note Cite: EASBA-GG-N° 84/2011 from EASBA of May 9, 2011.

Note BCB-PRES-CE-2011-445 from the BCB of May 11, 2011.

Note CITE: EASBA-GG-N° 95/2011 from EASBA of May 12, 2011.

Note BCB-PRES-CE-2011-454 and MDP/MDP/2011-0170 from the BCB and the Ministry of Productive Development and Plural Economy of May 12, 2011.

Note MEFP/VTCP/DGCP/UEPS-0803/2011 from the MEFP of May 17, 2011.

Report BCB-APEC-SSMF-INF-2011-13 from the Economic Policy Advisory of May 3, 2011.

Report BCB-GOM-SOSP-DCE-INF-2011-7 from the Monetary Operations Management of May 3, 2011.

Report BCB-GAL-SANO-INF-2011-150 from the Legal Affairs Management of April 29, 2011.

CONSIDERING:

That the Political Constitution of the State approved by Referendum on January 25, 2009, and promulgated on February 7, 2009, in item 6 of its 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 the PGE-2010 approved within the framework of item 11, paragraph I of article 158 of the CPE, in its article 41 authorizes the BCB to grant an extraordinary credit up to the equivalent of $us1,000,000,000.- (One Billion 00/100 United States Dollars), in favor of National Strategic Public Enterprises (EPNE’s) under concessional conditions, with the exclusive objective of financing productive investment projects within the framework of the country's food and energy security; for which effect the BCB is exempted from the application of articles 22 and 23 of Law No. 1670.

That Law No. 50 in its article 9 establishes that within the framework of what is provided in article 41 of the PGE-2010, the BCB is authorized to grant EASBA an extraordinary credit of up to Bs1,254,600,000 (One Billion Two Hundred Fifty-Four Million Six Hundred Thousand 00/100 Bolivianos) under concessional conditions, with the objective of financing productive investment projects, for which the BCB is exempted from the application of articles 22 and 23 of Law No. 1670. Likewise, it determines that according to what is established by item 10, paragraph I of article 158 and article 322 of the Political Constitution of the State, EASBA is authorized to contract the aforementioned credit with the BCB and that the Ministry of Productive Development and Plural Economy, 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 (PND) and that future flows will be used for the payment of the credit.

That article 19 of Law No. 50 determines that within the framework of what is provided in the aforementioned article 9, EASBA is released from the application of articles 33 and 35 of Law No. 2042.

That Law No. 62 in its article 14 provides for the extension for the 2011 management period, among others, of the validity of articles 9 and 19 of Law No. 50 for the contracting and execution of the aforementioned extraordinary and concessional credit.

That through Supreme Decree No. 637, EASBA is created as an EPNE, providing that EASBA does not have a Board of Directors, its highest Executive Authority being the General Manager designated by Supreme Resolution.

That the Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the PGE for the 2010 and 2011 management periods, issued by the BCB, has the objective of regulating the granting of credits by the BCB in favor of EPNE’s within the framework of what is provided in the PGE-2010, reformed by Law No. 50, and the PGE-2011 approved by Law No. 62.

That through notes CITE: EASBA-GG-N°72/2011 and CITE: EASBA-GG-N° 76/2011, of April 25 and 26, 2011, respectively, and within the framework of what is established in Law No. 50, EASBA requests the BCB to grant a credit for the execution of the EASBA Project for Bs1,254,600,000.- (One Billion Two Hundred Fifty-Four Million Six Hundred Thousand 00/100 Bolivianos).

That by Ministerial Resolution MDPyEP/DESPACHO/N° 057.2011, the Ministry of Productive Development and Plural Economy justifies to the BCB the following: 1) That according to the PND, the execution of the EASBA Project is of national priority and will be executed by the same, through its General Management, for which EASBA is authorized to request a credit of Bs1,254,600,000.- from the BCB, provided for in article 9 of Law No. 50 approving modifications to the PGE-2010; 2) The financed funds will be destined to the execution and implementation of the EASBA project, for the production of high-quality direct white sugar and its derivatives, therefore, the flows generated by the sales of industrialized products will be used for the payment of the credit contracted with the BCB; 3) It approves the Technical Report INF/MDP/DPL/2011-0039, of April 20, 2011, issued by the General Directorate of Planning, regarding the technical feasibility and economic-financial evaluation of EASBA, which justifies and ensures the payment capacity of the credit; and, 4) It authorizes EASBA, any disbursement request to be directed to the BCB and instructs the General Directorates of Administrative Affairs and Planning of the Ministry of Productive Development and Plural Economy to carry out the follow-up on the execution of the credit resources.

That through Administrative Resolution No. 022/2011, the General Manager of EASBA approves the Investment Plan, the Payment Plan, and the Disbursement Schedule, with a breakdown of national currency expenses and foreign currency expenses.

That through notes Cite: EASBA-GG-N° 70/2011 and Cite: EASBA-GG-N° 69/2011, EASBA informs the Ministry of Development Planning and the Ministry of Productive Development and Plural Economy of the approval of the Investment Plan.

That point three of Act No. 22/2011 of the Ordinary Meeting of the Board, of May 3, 2011, states that the Board of Directors of the BCB took note and determined to accept EASBA's credit request, establishing the corresponding conditions, and decided not to accept the guarantee offered by EASBA, determining that it proceed to request the issuance of Treasury Bonds to the Ministry of Economy and Public Finance (MEFP), entrusting the President of the Institution to communicate the determinations adopted.

That through Note BCB-PRES-CE-2011-416, the BCB communicates to EASBA that the Board of Directors of the BCB has considered its credit request and has determined to approve it under the conditions established by it, likewise, it communicates that since the offered guarantee was not accepted, it will proceed to request the issuance of Treasury Bonds to the MEFP, requesting its acceptance by EASBA, to continue with the processing of the credit.

That through Note BCB-PRES-CE-2011-418, the BCB communicates to the Ministry of Productive Development and Plural Economy that its Board has considered and approved the concessional credit request made by EASBA, under the conditions described in note BCB-PRES-CE-2011-416. Likewise, it communicates that it has not accepted the guarantee offered by EASBA, corresponding to jointly request the issuance of Treasury Bonds to the MEFP that will constitute the guarantee for the obligations to be contracted by EASBA with the BCB.

That through Note CITE: EASBA-GG-N°95/2011, EASBA accepts the conditions of the credit to be granted contained in Notes BCB-PRES-CE-2011-416 and BCB-PRES-CE-2011-445 of the BCB.

That through note BCB-PRES-CE-2011-454 and MDP/MDP/2011-0170, from the BCB and the Ministry of Productive Development and Plural Economy, by which both institutions communicate to the MEFP, that the Board of Directors of the BCB has considered and approved in favor of EASBA, the request for the concessional credit of Bs1,254,600,000.-, however, that it has not accepted the guarantee offered by EASBA, so in order to enable the signing of the Contract and make the credit effective, they request to issue the list of Treasury Bonds that will constitute the guarantee for the obligations contracted by EASBA.

That through Note MEFP/VTCP/DGCP/UEPS-0803/2011, the MEFP in response to note BCB-PRES-CE-2011-454 and MDP/MDP/2011-0170 of the BCB and the MINISTRY, attaches the serial number of the Non-Negotiable – Amortizable Treasury Bond that it will deliver simultaneously with the disbursement that the BCB makes in favor of EASBA, as backing guarantee for the credit granted to said company.

That through Report BCB-APEC-SSMF-INF-2011-13, of May 3, 2011, the Economic Policy Advisory (APEC) concludes that the credit requested by EASBA of Bs1,254,600,000.- is part of the extraordinary credit of Bs6.970.- million in favor of the EPNE’s and is within the amounts provided in the Monetary Program of the 2011 management period, which was incorporated in the Decision of Execution of the Fiscal-Financial Program 2011 signed between the MEFP and the BCB on February 9, 2011, and approved by Board Act No. 008/11, of February 23, 2011. Likewise, they indicate that with respect to the impact of the credit requested by EASBA on the 2011 Monetary Program, the APEC informs that the disbursement of Bs1,254,600,000.- will not affect the fulfillment of the variables subject to measurement in said Program.

That through Report BCB-GOM-SOSP-DCE-INF-2011-7, of May 3, 2011, the Monetary Operations Management (GOM) concludes that: 1) The financial conditions of the credit must be concessional within the framework of current regulations; 2) Under the financial conditions proposed by EASBA and considering that the average TRE of the last six months reaches 1.01%, the degree of concessionality is 7.22% which exceeds the level provided in the regulations; 3) To comply with the degree of concessionality provided in current regulations (2.3%), the credit could be granted at a rate of 0.85%, a level at which the concessionality reaches what is required; and, 4) The recovery of the credit must be ensured in the shortest possible time, seeking to safeguard the capital and complying with the degree of concessionality provided in the regulations.

//6. B.R. No. 055/2011

That through Report BCB-GAL-SANO-INF-2011-150, of April 29, 2011, the Legal Affairs Management within its competence, concludes that the request made by EASBA, through Note CITE: EASBA-GG-N°72/2011, for the granting of a credit of Bs1,254,600,000.-, falls within what is provided by current regulations, having complied with the presentation of the documents required in article 2 of the Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the General State Budget - Management 2010 and 2011, therefore, it will correspond to the Board of Directors of the BCB, prior to the criterion of the technical area, the consideration of the aforementioned credit request, by two-thirds of the votes of the members present in the meeting.

That the Board of Directors of the BCB in its ordinary meeting of May 10, 2011, redefined the financial conditions with respect to the payment of interest during the grace period, agreeing that the interest corresponding to this period will be paid in the sixth year.

That by virtue of what is provided in article 44 of Law No. 1670, the Board of Directors of the BCB is the competent instance to authorize the granting of the extraordinary credit in favor of EASBA, in order to comply with what is expressly provided in the PGE-2010 and PGE-2011 and applicable legal provisions to the case.

That article 6 of the Regulation for the Granting of Credit to National Strategic Public Enterprises within the Framework of the General State Budget - Management 2010 and 2011, establishes that the Board of Directors of the BCB in consideration of the technical and legal reports, will consider the credit request and in its case approve it, through the favorable vote of two-thirds of its members present in the Board meeting, issuing the corresponding Resolution; and it will instruct the elaboration and subsequent signing of the contract by the President of the BCB, prior to review and approval by the Board.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve within the framework of article 41 of the PGE-2010, article 9 of Law No. 50, article 14 of Law No. 62, and the Regulation for the Granting of Credit to National Strategic Public Enterprises within the Framework of the General State Budget - Management 2010 and 2011, the granting of a concessional extraordinary credit to EASBA under the following terms and conditions:

Currency: Bolivianos Total Credit Amount: Bs1,254,600,000.- (One Billion Two Hundred Fifty-Four Million Six Hundred Thousand 00/100 Bolivianos) Term: 24 years Grace Period: On principal 6 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 principal Guarantee: Treasury Bonds Deadline for Disbursements: Until December 30, 2012 Payment Plan: Annual Installments

Article 2.- Authorize the President of the BCB to sign the contract with EASBA under the terms established in this Resolution.

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

La Paz, May 17, 2011

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Marcelo Zabalaga Estrada

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Hugo Dorado Araníbar Rolando Marín Ibáñez

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Gustavo Blacutt Alcalá Rafael Boyán Téllez