Board Resolution No. 077/99

BOARD RESOLUTION NO. 077/99
SUBJECT: ECONOMIC POLICY ADVISORY – TEMPORARILY FLEXIBLE ACCESS TO LIQUIDITY OF THE FIRST TRANCHE OF THE RAL FUND.

VIEWING:
Law 1670 of October 31, 1995.
Law No. 1488 of April 14, 1993.
Board Resolution of the Central Bank of Bolivia (BCB) No. 180/97 of December 23, 1997.
The Expanded Meeting of the National Council of Economic Policy (CONAPE) of September 10, 1999.
The Report of the Economic Policy Advisory APEC-ARINV No. 016/99 of September 14, 1999.
The Note of the Legal Affairs Unit UAJUR No. 603/99 of September 14, 1999.

CONSIDERING:
That on September 10, 1999, an Expanded Meeting of the National Council of Economic Policy was held under the leadership of the President of the Republic, with the presence of the President of the Central Bank of Bolivia, the Superintendent of Banks and Financial Entities, and the Superintendent of Pensions, Securities, and Insurance, at which the needs of the productive sector emerging from the adverse international economic situation were evaluated, as well as the execution of policies that facilitate the restructuring of obligations of said sector.

That in consultation with the President of the Central Bank of Bolivia, it was agreed to flexibly access liquidity with the guarantee of the Reserve Requirements Fund (RAL), with the purpose of facilitating the restructuring of credits by the banking system.

That to make this agreement viable, the Economic Policy Advisory states that modifications must be introduced to the second and third paragraphs of Article 29 of the Regulation on Legal Reserve for Institutions of the Financial System, approved by Board Resolution of the BCB No. 180/97 of December 23, 1997.

That in the opinion of the Legal Affairs Unit, the Board is empowered by Article 54, item o) of Law 1670, to approve, modify, and interpret the regulations it issues.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Temporarily flexibly access liquidity of the first tranche of the Reserve Requirements Fund (RAL), modifying the second and third paragraphs of Article 29 of the Regulation on Legal Reserve for Institutions of the Financial System approved by Board Resolution No. 180/97 of December 23, 1997, in the following terms:

SAYS:
(Second paragraph Article 29)
The BCB may lend for a term not exceeding seven days, an amount equivalent to up to the first 30% of the value deposited in the Fund by each financial entity, to finance: (i) automatic overdraft coverage operations, without prior communication, and/or (ii) free availability resources, requested through written instruction to the Currency and Credit Management of the BCB.

(Third paragraph Article 29)
The BCB may grant an amount equivalent to up to an additional 40% in free availability resources for a term not exceeding seven days, prior to written request to the Financial System Management of the BCB, justifying the reasons motivating this requirement.

SHOULD SAY:

(Second paragraph Article 29)
“The BCB may lend for a term not exceeding seven days, an amount equivalent to up to the first 40% of the value deposited in the Fund by each financial entity, to finance: (i) automatic overdraft coverage operations, without prior communication, and/or (ii) free availability resources, requested through written instruction to the Financial System Management of the BCB.”

(Third paragraph Article 29)
“The BCB may grant an amount equivalent to up to an additional 30% in free availability resources for a term not exceeding seven days, prior to written request to the Financial System Management of the BCB, justifying the reasons motivating this requirement.”

Article 2.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, September 14, 1999

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Juan Antonio Morales A.

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____________________ Armando Pinell S.

Jaime Ponce G.

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Fernando Campero P. Armando Méndez M.