Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 094/2021

SUBJECT: ECONOMIC POLICY ADVISORY AND FINANCIAL ENTITIES MANAGEMENT – MODIFICATION OF THE LEGAL RESERVE REGULATION FOR FINANCIAL INTERMEDIATION ENTITIES

VISTOS:

• The Political Constitution of the State (CPE), of February 7, 2009.
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB).
• Supreme Decree No. 4539 of July 7, 2021.
• The BCB Statute, approved by Board Resolution No. 128/2005 of October 21, 2005, and its modifications.
• The Legal Reserve Regulation for Financial Intermediation Entities, approved by Board Resolution No. 018/2020 of February 18, 2020, and its modifications.
• Report BCB-APEC-SIE-INF-2021-35 of August 12, 2021, from the Economic Policy Advisory (APEC) and the Financial Entities Management (GEF).
• Report BCB-GAL-SANO-DLBCI-INF-2021-161 of August 12, 2021, from the Legal Affairs Management (GAL).

CONSIDERING:

That the Political Constitution of the State in its article 327 determines that the 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 in its article 328 it establishes that the attributions of the BCB, in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by law, are: 1. Determine and execute monetary policy, 2. Execute exchange rate policy, 3. Regulate the payment system, 4. Authorize the issuance of currency, and 5. Administer international reserves.

That Law No. 1670, in its article 7, determines that the BCB may establish legal reserves of mandatory compliance by Banks and Financial Intermediation Entities (EIF).

//2. B.D. No. 094/2021

Their composition, amount, method of calculation, characteristics, and remuneration, shall be established by the Board of the Bank, by an absolute majority of votes. The control and supervision of the legal reserve shall correspond to the Superintendency of Banks and Financial Entities, currently the Financial System Supervisory Authority (ASFI).

That in its article 8 it states that the reserve and the deposits constituted in the BCB by banks and financial entities shall not be subject to any type of judicial embargo or retention by third parties.

That in its article 37 it establishes that the BCB will be the depositary of the liquid reserves intended to cover the legal reserve and attend the payment system and other operations with the BCB of EIF subject to the authorization and control of the Superintendency of Banks and Financial Entities, now ASFI.

That in its article 44, it establishes that the highest authority of the BCB is its Board of Directors, responsible for defining its policies, specialized regulations of general application, and internal rules; as well as establishing administrative, operational, and financial strategies of the BCB, approving their respective short and medium-term programs.

That subsections a) and i) of its article 54, provide that the Board of Directors of the BCB has among its attributions to issue the rules and adopt general decisions that are necessary for the BCB to fulfill the functions, competencies, and powers assigned by Law; and to fix and regulate the administration of the legal reserve to which banks and other financial entities must be subject, disposing of the measures for its compliance.

That Supreme Decree No. 4539, has the object of comprehensively incentivizing the use of electricity with the aim of contributing to the improvement of the environment, energy savings, and efficiency, through: i) Tax incentives for the manufacture, assembly, and importation of electric, hybrid motor vehicles, and electric and hybrid agricultural machinery; ii) Financial incentives for the manufacture, assembly, and purchase of electric, hybrid motor vehicles, and electric and hybrid agricultural machinery; iii) Tax incentives for equipment and/or accessories of energy systems and distributed generation.

That the BCB Statute, establishes in numerals 1) and 7) of its article 11 that the Board of Directors of the Issuing Entity has the attributions to approve general decisions and issue the rules that are necessary for the BCB to fulfill the functions, competencies, and powers assigned by Law; as well as to establish by absolute majority of votes, legal reserves of mandatory compliance by Financial Intermediation Entities and approve their composition, amount, calculation, characteristics, forms of administration, custody, and remuneration, in accordance with the Regulation.

//3. B.D. No. 094/2021

That in its article 26, it determines that the Board pronounces itself on matters within its competence through resolutions. Every draft resolution of the Board of Directors 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 Legal Reserve Regulation for Financial Intermediation Entities, has the object of establishing the technical and operational conditions on the constitution and form of administration of the legal reserve for EIF authorized by ASFI.

That through Report BCB-APEC-SIE-INF-2021-35, APEC and GEF submit to the consideration of the Board of Directors the proposal for the modification of the Legal Reserve Regulation for Financial Intermediation Entities with the objective of maintaining the expansive orientation of monetary policy, preserving adequate levels of liquidity and in this way contributing to the dynamism of productive credit.

That through Report BCB-GAL-SANO-DLBCI-INF-2021-161, GAL concludes that the modification of the Legal Reserve Regulation for Financial Intermediation Entities proposed by APEC and GEF does not contravene the current legal framework, therefore it is legally procedent, being within the competence of the Board of Directors of the BCB, its approval by absolute majority of votes, in accordance with what is established in article 7 of Law No. 1670 and numeral 7) of article 11 of its Statute.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.- Approve the modification of article 35 of the Legal Reserve Regulation for Financial Intermediation Entities, as follows:

IT SAYS:

Article 35.- (Liquidity Loans in Local Currency with Guarantee of the CAPROSEN Fund)

The resources of each participant in the CAPROSEN Fund will serve as guarantee for the liquidity loans in local currency that they request from the BCB, under the following conditions:

a) EIF may request liquidity loans from the BCB in local currency at an interest rate of 0%, with the purpose of granting credits in local currency for the acquisition of national products and the payment of services of national origin, except for the purchase of individual housing or horizontal property.

//4. B.D. No. 094/2021

horizontal property. These loans may be requested from the constitution of the CAPROSEN Fund until November 30, 2021.

b) The maximum amount of accumulated liquidity loans will be the participation amount of each EIF in the CAPROSEN-LC Fund, plus the CAPROSEN-FC equivalent in LC at the prevailing purchase exchange rate. The liquidity loans will have a maturity date of December 30, 2022. These loans may be paid early.

c) The credits in local currency for the acquisition of national products and the payment of services of national origin, that EIF grant to their clients must have a term of at least one year and at an interest rate not greater than 3% annually.

d) With information as of the end of each month, the balance of credits in local currency for the acquisition of national products and the payment of services of national origin of each entity will be compared with the balance as of June 30, 2020 provided by ASFI. If this increase is less than the accumulated loans granted by the BCB, the difference will pay the interest of the local currency repo rate on the evaluation date (end of each month cut) plus 50 basis points, from that date until the EIF has remedied that difference. The control will begin with information as of the end of the month of August 2020.

e) For the purposes of the comparison indicated in point (4) above, EIF with loans guaranteed with the CAPROSEN Fund must send to the BCB a letter in the character of Sworn Declaration with information on the credits granted for the acquisition of national products and the payment of services of national origin, as of the cut date of each month, until the 5th business day of the following month. The control will begin with information as of the end of the month of August 2020.

f) On December 30, 2022, the BCB will return in LC and FC to EIF their participation in the CAPROSEN-LC and CAPROSEN-FC Funds, respectively; prior to the cancellation of their liquidity loans in LC with guarantee of these funds. In the event that an EIF does not have sufficient resources in its current or reserve account in LC to pay its liquidity loans, the BCB may compensate the difference with its participation in the CAPROSEN-LC Fund and, in case of insufficiency of this fund, it will compensate the balance with the CAPROSEN-FC Fund at the prevailing purchase exchange rate.

g) The validity of the CAPROSEN Fund may be extended to the extent that the BCB considers pertinent.

//5. B.D. No. 094/2021

IT MUST SAY:

“Article 35.- (Liquidity Loans in Local Currency with Guarantee of the CAPROSEN Fund)

The resources of each participant in the CAPROSEN Fund will serve as guarantee for the liquidity loans in local currency that they request from the BCB, under the following conditions:

a) EIF may request liquidity loans from the BCB in local currency at an interest rate of 0%, with the purpose of granting credits in local currency for the acquisition of national products and the payment of services of national origin, except for the purchase of individual housing or horizontal property. These loans may be requested from the constitution of the CAPROSEN Fund until August 20, 2021.

b) The maximum amount of accumulated liquidity loans will be the participation amount of each EIF in the CAPROSEN-LC Fund, plus the CAPROSEN-FC equivalent in LC at the prevailing purchase exchange rate. The liquidity loans will have a maturity date of December 30, 2022. These loans may be paid early.

c) The credits in local currency for the acquisition of national products and the payment of services of national origin, that EIF grant to their clients must have a term of at least one year and at an interest rate not greater than 3% annually.

d) With information as of the end of each month, the balance of credits in local currency for the acquisition of national products and the payment of services of national origin of each entity will be compared with the balance as of June 30, 2020 provided by ASFI. If this increase is less than the accumulated loans granted by the BCB, the difference will pay the interest of the local currency repo rate on the evaluation date (end of each month cut) plus 50 basis points, from that date until the EIF has remedied that difference. The control will begin with information as of the end of the month of August 2020.

e) For the purposes of the comparison indicated in subsection (d) above, EIF with loans guaranteed with the CAPROSEN Fund must send to the BCB a letter in the character of Sworn Declaration with a copy to ASFI with information on the credits granted for the acquisition of national products and the payment of services of national origin, as of the cut date of each month, until the 5th business day of the following month. The control will begin with information as of the end of the month of August 2020.

f) On December 30, 2022, the BCB will return in LC and FC to EIF their participation in the CAPROSEN-LC and CAPROSEN-FC Funds, respectively; prior to the cancellation of their liquidity loans in LC with guarantee of these funds. In the event that an EIF does not

//6. B.D. No. 094/2021

have sufficient resources in its current or reserve account in LC to pay its liquidity loans, the BCB may compensate the difference with its participation in the CAPROSEN-LC Fund and, in case of insufficiency of this fund, it will compensate the balance with the CAPROSEN-FC Fund at the prevailing purchase exchange rate.

g) The validity of the CAPROSEN Fund may be extended to the extent that the BCB considers pertinent.”

Article 2.- Incorporate Title VII into the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

TITLE VII

OF THE FUND FOR INCENTIVE FOR THE USE OF ELECTRIC AND RENEWABLE ENERGY (FIUSEER)

Article 37.- (Constitution of the Fund for Incentive for the Use of Electric and Renewable Energy)

The Fund for Incentive for the Use of Electric and Renewable Energy (FIUSEER) is constituted in the BCB, in local currency (FIUSEER-LC) with the resources of the CAPROSEN-LC Fund and in foreign currency (FIUSEER-FC) with the resources of the CAPROSEN-FC Fund as of August 23, 2021, that are not guaranteeing liquidity loans with the BCB. Additionally, EIF may pay the liquidity loans with guarantee of the CAPROSEN Fund until September 30, 2021, so that these resources become part of the FIUSEER.

Article 38.- (Liquidity Loans in Local Currency with Guarantee of the FIUSEER Fund)

The resources of each participant in the FIUSEER Fund will serve as guarantee for the liquidity loans in local currency that they request from the BCB, under the following conditions:

a) The liquidity loans from the BCB to EIF, guaranteed with the resources of each entity in the FIUSEER, will have an interest rate of 0% and may be requested until July 31, 2022. The liquidity loans must be used by EIF to grant credits in local currency according to what is established in article 3 of Supreme Decree No. 4539 of July 7, 2021.

//7. B.D. No. 094/2021

b) The maximum amount of accumulated liquidity loans will be the participation amount of each EIF in the FIUSEER-LC, plus the FIUSEER-FC equivalent in LC at the prevailing purchase exchange rate. The liquidity loans will have a maturity date of August 31, 2022.

c) The credits in local currency that EIF grant to their clients must have a term of at least one year and other conditions established in Supreme Decree No. 4539 of July 7, 2021.

d) The balances, at the end of each month, of the credits in local currency that EIF grant to their clients will be compared with the balance as of July 31, 2021 provided by ASFI. If the reported increase is less than the accumulated loans granted by the BCB, the difference will pay the interest of the local currency repo rate on the evaluation date (end of each month cut) plus 50 basis points, from that date until the next measurement made by the BCB.

e) For the purposes of the comparison indicated in subsection (d) above, EIF with loans guaranteed with the FIUSEER-LC must send to the BCB a letter in the character of Sworn Declaration with a copy to ASFI with the information on the credits granted in the framework of the FIUSEER, until the 5th business day of the following month. The included information must not consider the credits reported in other sworn declarations (CPVIS III and CAPROSEN). The control will begin with information as of the end of the month of August 2021.

f) In the event that the bank with loans guaranteed with the FIUSEER does not send the letter cited in the previous point within the established period, the BCB will communicate the non-compliance to ASFI so that this authority applies the corresponding fines or sanctions.

g) On August 31, 2022, the BCB will return in LC and FC to EIF their participation in the FIUSEER-LC and FIUSEER-FC Funds, respectively; prior to the cancellation of their liquidity loans in LC with guarantee of these funds. In the event that an EIF does not have sufficient resources in its current or reserve account in LC to pay its liquidity loans, the BCB may compensate the difference with its participation in the FIUSEER-LC Fund and, in case of insufficiency of this fund, it will compensate the balance with the FIUSEER-FC Fund at the prevailing purchase exchange rate.

//8. B.D. No. 094/2021

h) The validity of the FIUSEER may be extended to the extent that the BCB considers pertinent.

Article 39.- (Rights and Responsibilities)

The participating EIF will be beneficiaries of all the rights and responsibilities of the FIUSEER.

Article 3.- Incorporate the single final provision into the Legal Reserve Regulation for Financial Intermediation Entities, with the following text:

Single final provision. The CAPROSEN Fund constituted in article 34 of this Regulation, from August 20, 2021, is composed of the resources of each EIF that in this Fund are guaranteeing valid liquidity loans on the cited date.

Article 4.- This Resolution will enter into force from its publication.

Article 5.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, August 13, 2021

Roger Edwin Rojas Ulo Samuel Rafael Boyan Téllez Bismarck Arevilca Vásquez

//9. B.D. No. 094/2021

Gabriel Herbas Camacho Gumerindo Héctor Pino Guzmán