BOARD OF DIRECTORS

BOARD RESOLUTION NO. 091/2024

SUBJECT: INTERNATIONAL OPERATIONS MANAGEMENT – USE OF SDR HOLDINGS.

VIEWING:

• The Political Constitution of the State of February 7, 2009.
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia and its modifications.
• Supreme Decree No. 4857 of January 6, 2023, on the Organization of the Executive Branch.
• Supreme Resolution No. 218056 of July 30, 1997, which approves the Basic Norms of the State Treasury System.
• Board Resolution No. 095/2022 of October 6, 2022, which approves the Statute of the Central Bank of Bolivia.
• The Regulation for the Administration of International Reserves, approved by Board Resolution No. 071/2023 of May 9, 2023, and its modification.
• Notes MEFP/VTCP/DGAPF/UAEF/N°575/2021, MEFP/DM/JG N°0498/2023, and MEFP/DM/JG-573/2023 issued by the Ministry of Public Economy and Finance (MEFP) on August 20, 2021, and February 16 and 24, 2023, respectively.
• Report BCB-GOI-SRES-DNI-INF-2024-45 of July 8, 2024, from the International Operations Management (GOI).
• Report BCB-GAL-SANO-DLBCI-INF-2024-270 of July 8, 2024, from the Legal Affairs Management (GAL).

CONSIDERING:

That Article 327 of the Political Constitution of the State states that the Central Bank of Bolivia (BCB) is a public law institution, with legal personality and its own assets. Within the framework of the State's economic policy, it is the function of the BCB to maintain the stability of the internal purchasing power of the currency, to contribute to economic and social development.

That Article 328 of the Political Constitution of the State states that the BCB, in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by law, among others, has the following attributes: Determine and execute monetary policy; execute exchange rate policy and administer International Reserves.

That Law No. 1670 in its Article 1 modified by Article 67, section A3, numeral 1 of Law No. 1864 of June 15, 1998, on Popular Property and Credit, determines that the BCB is a State institution, of public law, of an autarkic nature, of indefinite duration, with legal personality and its own assets and with legal domicile in the city of La Paz. It is the sole monetary and exchange rate authority of the country, with administrative, technical, and financial competence and specialized regulatory powers of general application.

That Article 4 of Law No. 1670 establishes that the BCB will take into account the Government's economic policy, within the framework of the Law, when formulating its policies.

That Law No. 1670, in Article 14, establishes that the BCB will ensure the strengthening of International Reserves so as to allow the normal functioning of Bolivia's international payments.

That Law No. 1670 in Article 15 provides that the BCB's International Reserves are constituted by one or more of the following assets in accordance with international order norms: a) Physical gold; b) Currencies deposited in the BCB itself or in financial institutions outside the country at the order of the BCB, which must be of first rank according to accepted international criteria; c) Any internationally recognized reserve asset; d) Bills of exchange and promissory notes in favor of the BCB, denominated in foreign currencies of general acceptance in international transactions and promissory notes abroad; e) Public bonds and other negotiable instruments issued by foreign governments, entities and international organizations or first-rank foreign financial institutions duly qualified as eligible by the BCB Board of Directors, and f) Own contributions to international financial organizations when such contributions are internationally regarded as reserve assets.

That Law No. 1670 in its Article 16 determines that the BCB will administer and manage its International Reserves, being able to invest them and deposit them in custody, as well to dispose of and pledge them, in the manner it considers most appropriate for the fulfillment of its object and its functions and for their adequate safeguard and security. It may also purchase foreign exchange hedging instruments in order to reduce risks. In the case of the pledge of gold, it must have legislative approval.

That also in its Article 44, it provides that the highest authority of the BCB is its Board of Directors, which is responsible for defining its policies, specialized regulations of general application and internal norms; as well as to establish administrative, operational and financial strategies of the Issuing Entity, approving their respective short and medium-term programs, for the monitoring and supervision of their execution it will have independent information, analysis and audit services.

That likewise in its Article 54, subsections a) and c) indicate as attributes of the BCB Board of Directors to issue the norms and adopt the general decisions that were necessary for the Issuing Entity to fulfill the functions, competencies and powers assigned by the Law; to monitor the execution of monetary, exchange rate, credit, financial intermediation, International Reserves administration policies and regulations and others that correspond to the BCB; as well as to approve, modify and interpret the Statute and Regulations of the BCB by two-thirds of the votes of all its members, without the need for an additional administrative act.

That Supreme Decree No. 4857 of January 6, 2023, establishes that the Ministry of Public Economy and Finance is the Fiscal Authority, the Governing Body of the National Treasury and Public Credit System and titular governor before the International Monetary Fund.

That the BCB Statute in its Article 5, numerals 1) and 3) indicate as competencies of the Issuing Entity, the normative competence to issue specialized norms in the fields assigned to it by the Law and the technical competence for the formulation of policies and the application of instruments that allow it to fulfill its object.

That in its Article 10, of the BCB Statute, in its numerals 1) and 6) determine that the Board of Directors of the Issuing Entity has the attributes to approve general decisions and issue the norms that are necessary for the BCB to fulfill the functions, competencies and powers that the Law assigns to it; to approve the policy and norms for the administration of International Reserves, as well as to monitor their execution.

That the Statute of the Issuing Entity in its Article 26 establishes that the Board of Directors pronounces itself on matters within its competence through Resolutions. It may also do so through decisions that will be expressly recorded in the Minutes. Likewise, every draft Board Resolution must be motivated and justified by a technical report from the Management or Managements to which the matter subject to the Resolution corresponds and by a report from the Legal Affairs Management. These reports must be sent to the Board of Directors by the General Management with its recommendation.

That the Regulation for the Administration of International Reserves, approved by Board Resolution No. 071/2023, establishes the definition of Special Drawing Rights that form part of the Structure of International Reserves and that SDR Holdings (SDR) constitute a reserve asset that allows complementing International Reserves and represent a potential right against International Reserve currencies.

That the MEFP through notes MEFP/VTCP/DGAPF/UAEF/N°575/2021, MEFP/DM/JG N°0498/2023 and MEFP/DM/JG-573/2023 communicated and instructed the BCB that all procedures and prerogatives are established in the BCB's own regulations, in the current Balance of Payments and International Investment Position Manual and in the international practice of Central Banks. In turn, in its capacity as Titular Governor of the Plurinational State of Bolivia before the IMF, in compliance with the norms governing the use of resources by member countries, the compliance with what is established in the “GUIDANCE NOTE FOR FUND STAFF ON THE TREATMENT AND USE OF SDR ALLOCATIONS” carrying out all necessary actions within the framework of the attributes of the Issuing Entity conferred by the Political Constitution of the State and Law No. 1670 referred to the administration of International Reserves with the Reserve Asset of SDR Holdings for its equivalent in United States Dollars to strengthen the liquidity of the International Reserves administered by the BCB.

That Report BCB-GOI-SRES-DNI-INF-2024-45 concludes that in order to reinforce the liquidity position of International Reserves and give continuity to international payments, it is necessary to use SDR Holdings, for which it recommends to the Board of Directors to Authorize the sale of 19,100,000 SDRs, authorize the purchase of SDRs for an amount sufficient to replenish SDR Holdings to a level equal to or greater than SDR allocations, according to foreign exchange availability in Working Capital and that the resources obtained from the sale of SDRs be allocated to Working Capital and that the BCB will assume the replenishments of SDR Holdings, the charges, exchange rate variations and administrative costs that emerge from their monetization charged to International Reserves.

That the Legal Affairs Management, through Report BCB-GAL-SANO-DLBCI-INF-2024-270 concludes that the recommendations of the technical report do not contravene the legal order, for which it recommends to the Board of Directors to Authorize the sale of 19,100,000 SDRs, authorize the purchase of SDRs for an amount sufficient to replenish SDR Holdings to a level equal to or greater than SDR allocations, according to foreign exchange availability in Working Capital and that the resources obtained from the sale of SDRs be allocated to Working Capital and that the BCB will assume the replenishments of SDR Holdings, the charges, exchange rate variations and administrative costs that emerge from their monetization charged to International Reserves.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.-

Authorize the sale of 19,100,000.- (Nineteen Million One Hundred Thousand Special Drawing Rights - SDRs) corresponding to the SDR Holdings of the International Reserves.

Article 2.-

Authorize the purchase of SDRs to replenish SDR Holdings to a level equal to or greater than SDR Allocations, according to foreign exchange availability in Working Capital.

Article 3.-

The resources obtained from the sale of SDRs will be allocated to Working Capital.

Article 4.-

The BCB will assume the replenishments of SDR Holdings, the charges, exchange rate variations and administrative costs that emerge from their monetization charged to International Reserves.

Article 5.-

The BCB will inform the Governor of the Plurinational State of Bolivia before the IMF about the SDR operations, the replenishments and the costs described in article 4, as well as any other relevant aspect regarding SDRs.

Article 6.-

The Presidency and General Management are entrusted with the compliance of this Resolution.

La Paz, July 9, 2024

SIGNED. ROGER EDWIN ROJAS ULO, Oscar Ferrufino Morro, Gabriel Herbas Camacho, Gumercindo Héctor Pino Guzmán, Diego Alejandro Pérez Cueto Eulert.