Board Resolution No. 095/99

BOARD RESOLUTION NO. 095/99 SUBJECT: MONETARY OPERATIONS MANAGEMENT - ACCESS TO BCB LIQUIDITY COUNTERS FOR THE YEAR 2000 CONTINGENCY.

SEEING: Law No. 1670 of October 31, 1995. The Report from the Monetary Operations Management No. 013/99 of October 26, 1999. The Report from the Legal Affairs Management SASJUR No. 713/99 of October 26, 1999.

CONSIDERING: That the transition to the year 2000 may generate additional liquidity demand from financial agents, due to their own needs or derived from their clients' requirements. That the Central Bank of Bolivia must ensure the stability of the Financial System through the regulation of credit and the money supply, based on the liquidity demand of agents and other economic factors, through the use of monetary policy instruments. That the Monetary Operations Management in its Report No. 013/99 recommends adopting temporary measures to satisfy potential additional liquidity demands of the system, arising from the transition to the new millennium. That in the opinion of the Legal Affairs Management, the Board of Directors is authorized to approve these exceptional measures.

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

Article 1.- Extend, between December 1, 1999, and January 14, 2000, the hours of service at the BCB for banks in the system for the withdrawal of cash in national currency and US dollars until 18:30 hours, from Monday to Friday. This measure also applies to the service provided by correspondent banks.

Article 2.- Extend the term of loans with RAL Fund guarantee (first tranche) that are made between December 1, 1999, and January 7, 2000. These loans may have a maturity date up to January 14, 2000. Early repayments will be accepted without additional surcharge. The interest rates for liquidity loans with RAL Fund guarantee will be determined weekly by the Open Market Operations Committee (COMA) of the Central Bank of Bolivia. The term of loans with RAL Fund guarantee (second tranche) remains unchanged. These loans may be renewed provided that the maturity date of the renewal is equal to or prior to January 14, 2000. The BCB may use external resources to cover automatic overdrafts and requirements for freely available resources, when the total of requested resources exceeds 5% of the constituted RAL Fund.

Article 3.- Modify the operation of repos carried out with the Central Bank of Bolivia between December 1, 1999, and January 14, 2000, in the following manner: a. Repo operations may be carried out between December 1, 1999, and January 7, 2000, with a maturity date up to January 14, 2000. Early repayments will be accepted without additional surcharge. b. Each day at 11:00 a.m., a repo auction with public securities will be held. Authorized financial entities must present their requests by the aforementioned hour. After the auction, repo requests will be attended at the money desk, at a rate 50 basis points higher than the highest rate resulting from the corresponding auction, until the limit of available resources is exhausted. c. The COMA will determine the daily offers for the Auction and Money Desk, as well as the base premium rate for the Desk in case the auction is not held on that day. d. Additionally, authorized entities may use Fixed-Term Deposit Certificates (DPFs) from banks in the system, whose issuance date is equal to or prior to October 31, 1999. However, the value of the repo cannot exceed 80% of the Curve Price (according to calculation performed by the BCB) of the presented Certificate, and the premium rate will be 50 basis points higher than the corresponding Money Desk rate. Likewise, repos with DPFs issued by banks in the system cannot exceed 30% of the technical equity of the reporting entity or that which issued them.

Article 4.- Brokerage Agencies authorized for operation by the Superintendence of Securities, Pensions and Insurance; as well as Savings and Loan Mutuals, Savings and Loan Cooperatives, and Private Financial Funds with operational authorization from the Superintendence of Banks and Financial Entities, may carry out repos directly with the Central Bank of Bolivia under the terms established in Article 3 of this Resolution, under the following conditions: a. Comply with the conditions and procedures for repos with the BCB, established in Board Resolution 103/98 of November 24, 1998, and in this provision. The reporting entity must, in any case, sign a contract for each operation instead of the Annual Repo Contract. b. The credits and withdrawals of the amounts involved in repo operations must necessarily be executed through a current account at the BCB of a bank in the system. c. Until 15:30 hours on the day of the repo maturity, the bank whose account would be debited confirms that the reporting entity has made the corresponding deposit. In case such confirmation is not made, the BCB will consider the repo as uncancelled, consolidating in its favor the title used for that operation, without prejudice to other sanctions that the COMA may determine against the reporting entity.

Article 5.- From January 15, 2000, repo and RAL operations will again be subject to currently in force procedures.

Article 6.- The Presidency and the General Management are in charge of the execution and compliance with this Resolution.

La Paz, October 26, 1999

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Juan Antonio Morales A.

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Armando Pinell S. Juan Medinaceli Fernando Campero P.