BOARD OF DIRECTORS

BOARD RESOLUTION NO. 113/2022

SUBJECT: FINANCIAL ENTITIES MANAGEMENT – MODIFY THE REGULATION ON LIQUIDITY CREDITS TO THE PRODUCTIVE DEVELOPMENT BANK MIXED SOCIETY ANONYMA.

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.
• Law No. 393 of August 21, 2013, on Financial Services.
• Supreme Decree No. 4442 of January 6, 2021.
• Board Resolution No. 095/2022, of October 6, 2022, which approves the Statute of the Central Bank of Bolivia.
• The Regulation on Liquidity Credits to the Productive Development Bank – Mixed Society Anonyma, approved by Board Resolution No. 007/2021 of January 11, 2021, and its modification.
• Technical Report BCB-GEF-SASF-DAN-INF-2022-35 of November 30, 2022, from the Financial Entities Management (GEF) and Economic Policy Advisory (APEC).
• Legal Report BCB-GAL-SANO-DLBCI-INF-2022-260, of December 2, 2022, issued by the Legal Affairs Management (GAL).

CONSIDERING:

That Article 327 of the Political Constitution of the State establishes 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 paragraph I of Article 328 of the Political Constitution of the State provides, among the attributions of the BCB, in coordination with the economic policy determined by the Executive Branch, as well as those indicated by Law, to determine and execute monetary policy, execute exchange rate policy, regulate the payment system, authorize the issuance of currency, and administer international reserves.

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That Article 1 of Law No. 1670 establishes 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 36 of Law No. 1670 on the BCB, provides that to meet liquidity needs in duly justified and qualified cases by its Board of Directors, by an absolute majority of votes, the BCB may grant banks and financial intermediation entities credits for terms of ninety days, renewable. The credit limits and their guarantees shall be established by the BCB Board of Directors by absolute majority. To consider applications for these credits, the BCB will conduct non-binding consultations with the Financial System Supervision Authority - ASFI.

That Article 44 establishes 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 rules; as well as establishing administrative, operational, and financial strategies for the BCB, approving their respective short and medium-term programs.

That subsections a) and q) of Article 54 establish, among the attributions of the Board of Directors, to issue norms and adopt general decisions that are necessary for the BCB to fulfill the functions, competencies, and powers assigned to it by law and those that are necessary for the fulfillment of its functions.

That Law No. 393 on Financial Services in subsection a) of its Article 179 determines, among the functions of the Productive Development Bank – Mixed Society Anonyma (BDP-SAM), framed within its first and second tier activities, to provide financial and non-financial services to the different actors of the plural economy by itself or through third parties.

That Law No. 393 on Financial Services, in its Article 430, states that the BCB may grant liquidity credits to financial intermediation entities with the guarantee of the legal reserve constituted, as well as others determined by the Issuing Entity, according to a regulation approved by its Board of Directors.

That Supreme Decree No. 4442 aims to allow access to liquidity resources, through the Productive Development Bank – Mixed Society Anonyma (BDP – S.A.M.) to Development Financial Institutions - IFD and Savings and Credit Cooperatives - CAC

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with operating licenses granted by the Financial System Supervision Authority – ASFI.

That subsections 1) and 9) of Article 10 of the BCB Statute establish that the Issuing Entity's Board of Directors has the attributions to approve general decisions and issue the norms that are necessary for the BCB to fulfill the functions, competencies, and powers assigned to it by Law, as well as to approve by absolute majority of votes, liquidity credits for terms of up to 90 days, renewable, to financial intermediation entities.

That Article 26 of the BCB Statute establishes that the Board of Directors pronounces itself on matters within its competence through resolutions or decisions that shall be expressly recorded in the minutes. Every draft Board of Directors resolution must be motivated and justified by a technical report from the Management or Managements to whom 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 on Liquidity Credits to the Productive Development Bank Mixed Society Anonyma, in its Article 5, establishes that the term for liquidity credits shall be up to 90 (ninety) calendar days, which may be renewed for similar terms up to a maximum of 7 times each, with the cancellation of interest being necessary for each renewal.

That the operations included in the Regulation on Liquidity Credits to the Productive Development Bank Mixed Society Anonyma, obey only what is established in Supreme Decree No. 4442, whose main object is to allow access to liquidity resources, to be granted by the Productive Development Bank – Mixed Society Anonyma to Development Financial Institutions - IFD and Savings and Credit Cooperatives – CAC, with operating licenses, which corresponds to the modification of the cited regulation in the cited Article.

That through Report BCB-GEF-SASF-DAN-INF-2022-35, GEF and APEC conclude that: “Recent social conflicts, announced rescheduling measures, and the seasonal behavior of liquidity determine the need to foresee mechanisms for access to liquidity for entities in the financial system. In turn, the technical report submitted by the BDP, to justify its request for the expansion of credits granted to this entity, reflects the importance of this mechanism in channeling resources to IFDs and CACs. Likewise, it highlights the convenience of continuing these credits by expanding from 7 to 9 renewals. The technical viability of the expansion

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of these credits by 2 additional renewals is supported by the financial situation of the BDP which, according to ASFI, has adequate levels of solvency and profitability, although a decrease in its liquidity was recorded during 2022”. Recommending approval of the modification of Article 5 (term) of the Regulation on Liquidity Credits to the Productive Development Bank S.A.M., increasing from 7 to 9 times the number of periods allowed for the renewal of operations with this entity and authorizing the drafting of a modifying contract to the contract signed with the BDP – S.A.M.

That GAL through Report BCB-GAL-SANO-DLBCI-INF-2022-260, concludes that the proposal for the modification of Article 5 of the Regulation on Liquidity Credits of the Productive Development Bank – Mixed Society Anonyma, presented by GEF and APEC, does not contravene the current legal framework, therefore it is legally procedent, recommending to the Board of Directors of the BCB its approval.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the modification of Article 5 (term) of the Regulation on Liquidity Credits to the Productive Development Bank Mixed Society Anonyma, with the following text:

“The term for liquidity credits shall be up to 90 (ninety) calendar days, which may be renewed for similar terms up to a maximum of 9 (nine) times each, with the cancellation of interest being necessary for each renewal.”

Article 2.- The modification of the Regulation on Liquidity Credits to the Productive Development Bank – Mixed Society Anonyma, shall enter into force from its publication.

Article 3.- The Acting President of the BCB is authorized to sign the modifying contracts for the extension of terms of the contract with the Productive Development Bank – Mixed Society Anonyma.

Article 4.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

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La Paz, December 6, 2022

SIGNED. OSCAR FERRUFINO MORRO, Gabriel Herbas Camacho, Gumercindo Héctor Pino Guzmán, Diego Alejandro Pérez Cueto Eulert.