Central Bank of Bolivia

Board of Directors

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BOARD RESOLUTION NO. 116/2019

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVAL OF A CREDIT TO THE PUBLIC SECTOR UNDER LAW NO. 1670.

VIEWING:

• The Political Constitution of the State (CPE).
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB).
• Law No. 602 of November 14, 2014, on Risk Management.
• Supreme Decree No. 3812 of February 27, 2019.
• The Regulation for the Approval of Credits to the Public Sector within the framework of Law No. 1670, approved via Board Resolution No. 110/2019 of August 27, 2019.
• Note MEFP/VTCP/DGCP/UEPS-1288/2019 of August 30, 2019, from the Ministry of Economy and Public Finance (MEFP).
• Report BCB-GOM-SOSP-DCE-INF-2019-159 of September 2, 2019, from the Monetary Operations Management (GOM).
• Report BCB-GAL-SANO-DLBCI-INF-2019-255 of September 2, 2019, from the Legal Affairs Management (GAL).

CONSIDERING:

That Article 108, numeral 11, of the CPE establishes as a duty of Bolivian women and men to provide all necessary support in cases of natural disasters and other contingencies.

That Article 327 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 Law No. 1670, in its Article 22, provides that the BCB may not grant credit to the public sector nor incur contingent liabilities in its favor. Exceptionally,

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it may do so in favor of the National Treasury, with the favorable vote of two-thirds of the members present at a meeting of its Board of Directors, in the following cases: a. to attend to urgent needs derived from public calamities, internal or international unrest, declared by Supreme Decree; and b. to attend to temporary liquidity needs, within the limits of the monetary program.

That Article 23 determines that the operations provided for in the previous article shall be documented in all cases through negotiable public debt securities issued by the National Treasury, which, in the case provided for in subsection b), shall have a maximum term of one year.

That Article 44 states 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. For the monitoring and oversight of their execution, it will have access to independent information, analysis, and audit services.

That subsection a) of Article 54 states that the Board of Directors has the authority to issue regulations and adopt general decisions that are necessary for the BCB to fulfill the functions, competencies, and powers assigned by the Law.

That Law No. 602 aims to regulate the institutional and competency framework for risk management, which includes risk reduction through prevention, mitigation, and recovery; and the attention of disasters and/or emergencies through preparation, alert, response, and rehabilitation against risks of disasters caused by natural, socio-natural, technological, and anthropogenic threats, as well as social, economic, physical, and environmental vulnerabilities.

That Paragraph I of Article 34 establishes that once a disaster and/or emergency situation is declared, the exception regime established in the same law comes into effect and will last for a maximum period of nine (9) months.

That numeral 1, subsection a) of Article 39 establishes that at the central level of the State, the President, via Supreme Decree, upon recommendation of the National Council for Risk Reduction and Attention of Disasters and/or Emergencies (CONARADE), will declare a national emergency when the presence of a real or imminent phenomenon is of such magnitude that the affected autonomous departmental governments cannot address the disaster with their own economic and/or technical capacities; a situation in which the Ministry of Defense and all institutions destined for emergency attention at the central level of the State, as well as autonomous departmental and municipal governments, will execute their coordination and intervention protocols.

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That Supreme Decree No. 3812 aims to declare a National Emergency Situation due to the presence of adverse climatic phenomena.

That Article 2 declares a National Emergency Situation due to the presence of adverse climatic phenomena, causing floods, overflows, flash floods, landslides, hailstorms, public calamity, among others, in different regions of the national territory.

That Article 3 authorizes public institutions and entities, within the framework of their competencies, to make the corresponding budget adjustments for the attention of what is stated in the preceding article.

That in its second final provision, the MEFP is authorized to carry out the necessary management and sign the corresponding instruments.

That the Statute of the BCB, in numerales 1) and 10) of Article 11, establishes that the Board of Directors of the Issuing Entity has the authority to approve general decisions and issue regulations that are necessary for the BCB to fulfill the functions, competencies, and powers assigned by the Law, as well as to approve by two-thirds of the votes of the members present, credits to the General Treasury of the Nation to attend to urgent needs derived from public calamities, internal or international unrest, declared by Supreme Decree.

That the second paragraph of Article 26 provides that every draft Board Resolution must be motivated and justified by a Technical Report from the Management or Managements to whom the subject matter of 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 Approval of Credits to the Public Sector aims to regulate Articles 22 and 23 of Law No. 1670 and establish the requirements and procedures in the cases provided for in the aforementioned Article 22.

CONSIDERING:

That the MEFP, via Note MEFP/VTCP/DGCP/UEPS-1288/2019, states that Supreme Decree No. 3812 declares a National Emergency Situation due to the presence of adverse climatic phenomena, causing floods, overflows, flash floods, landslides, hailstorms, public calamity, among others, in different regions of the national territory.

That it also states that CONARADE, in Resolution No. 04/2019 of August 21, 2019, establishes that the National Emergency Situation declared via Supreme Decree No. 3812 is maintained, aggravated by forest fires, making it necessary to anticipate greater resources than those initially programmed in the 2019 National Emergency Plan, and taking into account that the declaration of Emergency Situation established in the aforementioned Supreme Decree is in effect within the framework of Law No. 602 of November 14, 2014; therefore, within the framework of subsection a) of Article 22 of Law No. 1670, it requests the granting of a national emergency credit, for an amount of Bs1,400,000,000.00.- (One Billion Four Hundred Million 00/100 Bolivianos), which will be backed by the issuance of Treasury Bonds with the following characteristics: i) amount and currency: Bs1,400,000,000.00.- (One Billion Four Hundred Million 00/100 Bolivianos), ii) term: thirty (30) years, iii) interest rate: 0.73%, iv) grace period for principal: five (5) years, v) grace period for interest: two (2) years, vi) backing value: negotiable treasury bonds; and vii) payment method: annual.

That GOM, via Report BCB-GOM-SOSP-DCE-INF-2019-159, concludes that the credit request made by the MEFP falls within what is established by Law No. 1670 and Supreme Decree No. 3812; therefore, within the framework of Article 5 (procedure) of the Regulation for the Approval of Credits to the Public Sector within the Framework of Law No. 1670, it presents the outstanding debt balance of the MEFP as of the date of the request, future payment maturities of the General Treasury of the Nation (TGN) to the BCB, and the suitability of the public value offered to back the operation, recommending considering the highest rate placed for Letters with early redemption option issued by the BCB for monetary regulation purposes. Prior legal opinion, in case the credit request is considered favorably, the MEFP must open the corresponding accounts.

That via Report BCB-GAL-SANO-DLBCI-INF-2019-255, the GAL concludes that the Public Sector Credit request made by the MEFP, via Note MEFP/VTCP/DGCP/UEPS-1288/2019, for the attention of the National Emergency Situation declared through Supreme Decree No. 3812, falls within what is provided by current regulations; therefore, it is established that the MEFP has complied with the presentation of the documentation provided for in the Regulation for the Approval of Credits to the Public Sector within the Framework of Law No. 1670, and that said request should be submitted for consideration to the Board of Directors of the BCB, an instance that may approve the public credit in case of a favorable vote of at least two-thirds of the members present, via express resolution, as provided by Article 8 of the Regulation for the Approval of Credits to the Public Sector within the Framework of Law No. 1670 and numeral 10) of Article 11 of the Statute of the BCB.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

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Article 1.- Within the framework of what is established by subsection a) of Article 22 and Article 23 of Law No. 1670, approve the granting of a Credit to the Public Sector in favor of the TGN – Management 2019, represented by the MEFP, under the following terms and conditions:

Amount:	Bs1,400,000,000.00 (One Billion Four Hundred Million 00/100 Bolivianos).
Currency:	Bolivianos.
Term:	30 years.
Interest Rate:	0.73%
Grace Period for Principal:	5 years.
Grace Period for Interest:	2 years.
Backing Value:	Negotiable Treasury Bonds.
Payment Method:	Annual.
Deadline for Disbursements:	December 30, 2019

Article 2.- Authorize the Acting President of the BCB to sign the contract with the MEFP under the terms of this Resolution.

Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, September 3, 2019

Pablo Ramos Sánchez Gabriel Herbas Camacho Sergio Velarde Vera Abraham Pérez Alandia Rónald Polo Rivero Luis Baudoin Olea