Board Resolution No. 097/2020 Approving Conditions and Characteristics of Exceptional Repos as Part of Open Market Operations of the Central Bank of Bolivia

BOARD RESOLUTION NO. 097/2020 SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES THE CONDITIONS AND CHARACTERISTICS OF EXCEPTIONAL REPOS AS PART OF THE OPEN MARKET OPERATIONS OF THE CENTRAL BANK OF BOLIVIA SEEN: The Political Constitution of the State, of February 7, 2009. Law No. 1670, of October 31, 1995, of the Central Bank of Bolivia (BCB). Law No. 1834, of March 31, 1998, of the Securities Market. Law No. 1319, of August 25, 2020, Modifying Law No. 1294, of April 1, 2020, Exceptional Law for Deferral of Credit Payments and Temporary Reduction of Basic Services Payment. The BCB Statute, approved by Board Resolution No. 128/2005, of October 21, 2005 and its subsequent modifications. The Repo Operations Regulation, approved by Board Resolution No. 130/2003, of November 11, 2003. The Open Market Operations Regulation, approved by Board Resolution No. 149/2015, of August 25, 2015 and its subsequent modifications. The Open Market Operations Regulation for Monetary Regulation Purposes with Securities Issued by the Central Bank of Bolivia or by the General Treasury of the Nation, approved by Board Resolution No. 150/2015, of August 25, 2015 and its subsequent modification. The Regulation for Repo Operations, Title IV of the Compilation of Norms for the Securities Market of the Authority for Supervision of the Financial System (ASFI). Technical Report BCB-APEC-SMF-INF-2020-29, of September 10, 2020, issued by the Economic Policy Advisory (APEC) and the Monetary Operations Management (GOM). Legal Report BCB-GAL-SANO-DLBCI-INF-2020-86, of September 11, 2020, issued by the Legal Affairs Management (GAL).

//2. R.D. N° 097/2020 CONSIDERING: That paragraph I of article 326 of the Political Constitution of the State, determines that the State through the Executive Branch, will determine the objectives of the monetary and exchange policy of the country, in coordination with the BCB That article 327 of the Political Constitution of the State, determines that the BCB is a public law institution, with legal personality and own assets, which within the framework of the State's economic policy, has the function of maintaining 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, determines that the BCB in coordination with the economic policy determined by the Executive Branch, has among others, the attribution to determine and execute monetary policy. That article 1 of Law No. 1670, establishes that the BCB is a State institution, of public law, of autarchic character, of indefinite duration, with legal personality that constitutes the sole monetary and exchange authority of the country, with administrative, technical and financial competence and specialized normative powers of general application. That article 2 of Law No. 1670, establishes that the object of the BCB is to procure the stability of the internal purchasing power of the national currency. That article 3 of Law No. 1670, establishes that the BCB will formulate policies of general application in monetary, exchange and payment system matters for the fulfillment of its object That article 6 of Law No. 1670, empowers the BCB to execute monetary policy and regulate the quantity of money and the volume of credit according to its monetary program, being able to this effect, to issue, place and acquire securities and perform other open market operations. That article 3 of Law No. 1834, defines as over-the-counter market that which is carried out outside the stock exchanges, with the participation of authorized intermediaries, with securities registered in the Securities Market Registry and authorized by the Superintendency of Securities, currently ASFI; and establishes that "Security" both documentary, as represented in book entries, are the Securities-Titles regulated by the Commercial Code, the Securities issued by the Bolivian State and its entities, and those transaction instruments in the Securities Market, which have executive force and are freely transferable.

//3. R.D. N° 097/2020 That in the single article of Law No. 1319 authorizes the automatic deferral of the payment of credit amortizations to capital and interest, and other types of levies of the national credit system, from the Declaration of Emergency due to the Coronavirus Pandemic (COVID-19) to December 31, 2020, to all borrowers without distinction, which in a context of lower liquidity, would aggravate the slowdown of credit with adverse effects on economic activity and employment. That article 1 of the Repo Operations Regulation, establishes that said Regulation has the object of regulating the Repo Operations carried out by the BCB (OR-BCB) with authorized financial entities. That article 2 of the Repo Operations Regulation, defines that an OR-BCB consists of the sale carried out by an agent (the reported), at a certain price (go value) calculated on the basis of unit values, of securities issued by the BCB or the TGN, to a second agent (the reporter), with the commitment of the reported to repurchase the securities, or other equivalents, within a term and at a price (return value) pre-established on the date of the transaction. The repurchase date may not be later than the maturity date of the reported security. That articles 4, 5 and 6 of the Repo Operations Regulation determine the entities enabled to carry out OR-BCB, the modalities of the OR-BCB and the attributions that the Open Market Operations Committee (COMA) applies in the OR-BCB. That article 1 of the Open Market Operations Regulation, establishes that said Regulation has the object of establishing the norms for the Open Market Operations (OMA) that the Central Bank of Bolivia carries out with financial entities, natural persons and other entities authorized by the Board of the BCB, in compliance with its functions as monetary authority. That article 4 of the Open Market Operations Regulation, establishes that the Board of the BCB defines monetary policies in general and open market operations policies (OMA) in particular. That article 14, paragraph II of the Open Market Operations Regulation, establishes that operations in the secondary market may be carried out with any security issued by the TGN, the BCB or with securities of private issuers expressly authorized by the Board of the BCB, through repo operations and others authorized. That article 1 of the Open Market Operations Regulation for Monetary Regulation Purposes with Securities Issued by the Central Bank of Bolivia or by the General Treasury of the Nation, establishes that said Regulation has the object of determining

//4. R.D. N° 097/2020 the conditions for the auction, adjudication, redemption, administration and control of operations with securities issued by the BCB or by the General Treasury of the Nation (TGN), and placed by the BCB for monetary policy purposes. That article 6 of the Open Market Operations Regulation for Monetary Regulation Purposes with Securities Issued by the Central Bank of Bolivia or by the General Treasury of the Nation establishes among the attributions of the COMA, to define the form of issuance, the rates or cut-off prices, the quantities offered, the terms, the currencies, the minimum and/or maximum amounts and other characteristics of the securities for the operations authorized by the Board. That article 1 of Section II of Chapter II "Of the securities subject to repo, of the repo operations and of the obligations", of the Regulation for Repo Operations, Title IV of the Compilation of Norms for the Securities Market of the ASFI, establishes that the over-the-counter repo operations authorized for Brokerage Agencies are those in which the BCB acts as counterparty, only in the negotiation with securities registered in the Securities Market Registry and in at least one Stock Exchange. That Technical Report BCB-APEC-SMF-INF-2020-29, of September 10, 2020, issued by the APEC and the GOM, concludes that due to the propagation of Covid-19, since the beginning of 2020 there is a abrupt deterioration in the worldwide economic scenario and the measures adopted to face the pandemic; panorama that has also manifested in Bolivia with greater needs of economic and social order that demand measures by the authorities. In that sense, the monetary policy assumed by the BCB has been decisive to maintain the liquidity and the payment chain of the economy, to maintain the liquidity of the financial system at adequate levels and to contain the rise of interest rates; and recommends to the Board of the BCB to approve the conditions and characteristics of the exceptional repos to facilitate the flow of resources in the monetary and financial market, and sustain the payment chain helping to dynamize economic activity. That Legal Report BCB-GAL-SANO-DLBCI-INF-2020-86, of September 11, 2020, issued by the GAL, concludes that there is no legal impediment for the Board of the BCB within the framework of its attributions to modify the conditions and characteristics of the OR-BCB with the financial system according to the criteria and justifications contained in the Technical Report BCB-APEC-SMF-INF-2020-29 elaborated jointly between the APEC and the GOM. That by virtue of the attributions conferred by incises a), d) and q) of article 54 of Law No. 1670 and numerals 1), 4) and 51) of article 11 of the Statute of the BCB, the Board of the BCB is empowered to dictate the norms and adopt the general decisions so that the BCB complies with the functions, competences and powers assigned by

//5. R.D. N° 097/2020 Law, as well as dictate the norms for the open market operations that the BCB carries out THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES: Article 1.- Approve the Regulation of Exceptional Repo Operations of the Central Bank of Bolivia with the Financial System, and the conditions and characteristics that appear in the Annex. Article 2.- The Presidency and the General Management are in charge of the execution and compliance of this Resolution. La Paz, September 15, 2020.

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Armando Pinell Siles

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Walter Morales Carrasco Alejandro Banegas Rivero

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José Gabriel Espinoza Yañez

//6. R.D. N° 097/2020 ANNEX REGULATION, CONDITIONS AND CHARACTERISTICS OF EXCEPTIONAL REPOS WITH THE BCB

1. (Definition). - Exceptional repos are an instrument of exceptional liquidity injection at a longer term and at a lower rate than usual repos. This instrument will operate only on Fridays of each week, for a period between September 25 and November 20, 2020. Exceptionally, the COMA may determine the operation of this instrument on another day. On days when exceptional repos operate, usual repos will not operate.
2. (Authorized Participants). - All those entities that establishes the current regulation of the BCB, unless there are restrictions imposed in the regulation issued by the corresponding regulatory entities.
3. (Instruments admitted as collateral). - Public securities issued by the BCB or TGN, and Fixed Term Deposits (DPF) in MN with issuer risk rating up to A1 issued to natural persons and to legal persons until June 30, 2020 (that are in ownership of the participating entities), with single interest payment at maturity and with coupon payment (does not include DPF with advance interest payment).
4. (Offered amount of exceptional repos). - The offer will be divided into two segments: Banking Entities (EB) and Non-Banking Entities (ENB). The COMA will define the offered amount in each of these segments, according to the Open Market Operations Regulation, approved by Board Resolution No. 149/2015, of August 25, 2015. In the case of brokerage agencies, the bids in each segment will correspond to the classification of the client for which they are carrying out the operation.
5. (Term of the operation). - 90 days
6. (Renewal of operations). - Once under the same original conditions (amount, rate and term), by means of a note addressed to the BCB with five business days of anticipation to the maturity of the first operation. In the case of EIFs, they must also indicate in said note, as a sworn declaration, the net disbursements to final clients for the acquisition of national products and the payment of services of national origin, except purchase of individual housing or in horizontal property. with the resources guaranteed by the CAPROSEN Fund. The amount granted in the renewal will be Banking Entities | Non-Banking Entities --- | --- Multiple Banks | Housing Financial Entities SME Banks | Brokerage Agencies (own account operations) State Financial Entities or with Majority State Participation (BDP and BUN) | SAFI and Investment Funds | Insurance and Reinsurance Companies | Pension Fund Administrators (AFP)

//7. R.D. N° 097/2020 independent of the current offer. Renewals may be carried out until February 18, 2021, with the indicated anticipation. 7. (Repo yield rate). - between 0.2% and 0.5% annual. This rate range will apply to both segments. 8. (Haircut). - : Defined by the COMA. 9. (Application Mechanism). - Competitive auction at discriminant rate. The bids of the participants are expressed by means of demanded amounts and offered yield rates, which will be known to all participants, without the individual identification of the proponent. The winning bids are adjudicated at the offered rate until exhausting the offer. In case of equality in the margin rate, the available balance is adjudicated pro rata. There will be no possibility of improving the bids, that is, if two or more bids are introduced and the same are adjudicated, then all must be effected. The amount of each bid must not exceed the total offer defined for each segment. 10. (Early cancellation of repos). - Without penalty. 11. (Service hours). - Defined by the COMA. 12. (Minimum amount for repos). - Defined by the COMA. 13. (Additional coverage Mechanism Margin call). - Conditions defined by the COMA. 14. (Destination of resources). - The entities that access these resources through the indicated repos, must allocate the same to operations exclusively in national currency. The EIFs, before entering into a repo operation under these conditions, must have disbursed to final clients credits for the acquisition of national products and the payment of services of national origin, except purchase of individual housing or in horizontal property, with the resources guaranteed by the CAPROSEN Fund. For this purpose, the EIFs must send a note with three business days of anticipation, as a sworn declaration, indicating the net disbursements to final clients of said credits. To be able to access the renewal of the repo under the initial conditions, the net disbursements to final clients for the acquisition of national products and the payment of services of national origin, except purchase of individual housing or in horizontal property, must be at least 50% of their resources in the CAPROSEN Fund at the date of renewal. 15. (Sanctions). - In addition to those determined in the Repo Operations Regulation and SSE Operational Guide, the COMA may determine other sanctions that it considers pertinent and/or the suspension of the participation of any entity. --0--