BOARD OF DIRECTORS

BOARD RESOLUTION NO. 120/2023

SUBJECT: INTERNATIONAL OPERATIONS MANAGEMENT – MODIFY THE REGULATION ON FINANCIAL OPERATIONS WITH FOREIGN ENTITIES FOR STATE PUBLIC ENTERPRISES AT THE CENTRAL LEVEL AND ENTERPRISES IN WHICH THE STATE HOLDS A MAJORITY SHAREHOLDING.

VISTOS (SEEING):

• The Political Constitution of the State of February 7, 2009 (CPE).
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB) and its modifications.
• Law No. 1493 of December 17, 2022, on the General State Budget - Management 2023.
• Supreme Decree No. 4848 of December 28, 2022, Regulation for the application of Law No. 1493.
• The Statute of the BCB approved by Board Resolution No. 095/2022 of October 6, 2022.
• The Regulation on Financial Operations with Foreign Entities for State Public Enterprises at the Central Level and Enterprises in Which the State Holds a Majority Shareholding, approved by Board Resolution No. 006/20234 of January 2023.
• The Technical Report BCB-GOI-SOEXT-DOCC-INF-2023-43 of August 28, 2023, from the International Operations Management (GOI).
• The Legal Report BCB-GAL-SANO-DLBCI-INF-2023-290 of August 28, 2023, from the Legal Affairs Management (GAL).

CONSIDERING:

That Article 326 of the Political Constitution of the State establishes that the State, through the Executive Branch, will determine the objectives of the country's monetary and exchange rate policy, in coordination with the Central Bank of Bolivia, and that public transactions in the country will be carried out in national currency.

That Article 327 of the Political Constitution of the State determines that the BCB is a public law institution, with legal personality and its 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 paragraphs 1) and 2) of paragraph I of Article 328 of the Political Constitution of the State establish that the BCB has the authority to determine and execute monetary policy and execute exchange rate policy.

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 its own legal personality and assets, and with its 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 normative powers of general application.

That Article 20 of Law No. 1670 establishes that the BCB is authorized to regulate financial operations with foreign entities carried out by persons or entities.

That Article 44 of Law No. 1670 establishes that the highest authority of the BCB is its Board of Directors, which is responsible for defining its policies, specialized norms of general application, and internal rules.

That subsections a) and o) of Article 54 of Law No. 1670 designate the following as attributions of the Board of Directors: a) Issue norms and adopt general decisions that are necessary for the BCB to fulfill the functions, competencies, and powers assigned to it by the Law, and o) Approve, modify, and interpret the Statute and Regulations of the BCB, by two-thirds of the votes of all its members, without the need for any additional administrative act.

That the Sixth Final Provision of Law No. 1493 on the General State Budget - Management 2023 establishes that the amount of exports carried out by State Public Enterprises at the central level and enterprises in which the State holds a majority shareholding must be settled through the Central Bank of Bolivia.

That the Ninth Final Provision of Supreme Decree No. 4848, Regulation for the application of Law No. 1493, prescribes that for the purposes of applying the Sixth Final Provision of Law No. 1493, State public enterprises at the central level and those in which the State holds a majority shareholding must be governed by the settlement regulation for the export amount issued by the BCB within the framework of its competence.

That paragraph 1) and 3) of Article 5 of the BCB Statute provides that it has normative competence to issue specialized norms in the fields assigned to it by the Law and technical competence for the formulation of policies and application of instruments that allow it to fulfill its objective.

That paragraphs 1) and 30) of Article 10 of the BCB Statute provide that the Board of Directors has the authority to approve general decisions and issue norms that are necessary for the BCB to fulfill the functions, competencies, and powers assigned to it by the Law, and to approve, modify, and interpret the Statute and Regulations of the BCB, by two-thirds of the votes of all its members, without the need for an additional administrative act.

That paragraph I of Article 24 of the BCB Statute provides that resolutions and decisions of the Board of Directors are adopted by a simple majority of votes of its members present at the meeting, except in cases where Law No. 1670 or this Statute require qualified majorities.

That Article 26 stipulates that the Board of Directors pronounces itself on matters within its competence through resolutions. It may also do so through decisions that will be expressly recorded in the Minutes. Likewise, 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 submitted to the Board of Directors by the General Management with its recommendation.

That Articles 1 and 2 of the Regulation on Financial Operations with Foreign Entities for State Public Enterprises at the Central Level and Enterprises in Which the State Holds a Majority Shareholding establish that its purpose is to regulate operations with foreign entities of State public enterprises at the central level and enterprises in which the State holds a majority shareholding, their subsidiaries, and their affiliates, within the framework of Article 20 of Law No. 1670 of October 31, 1995, and the Sixth Final Provision of Law No. 1493 of December 17, 2022. Its scope of application covers financial operations with resources derived from exports, from State public enterprises at the central level and enterprises in which the State holds a majority shareholding, their subsidiaries, and their affiliates, and investments in Financial Instruments abroad, either directly or through trusts, and excess balances of capital from operations, from public enterprises in which the State holds a majority shareholding, as well as their affiliates and subsidiaries constituted in national territory.

That paragraph I of Article 4 of the same legal body provides that State public enterprises at the central level and those in which the State holds a majority shareholding, their subsidiaries, and their affiliates, may not maintain investments in Foreign Currency directly or through trusts abroad.

That the Technical Report BCB-GOI-SOEXT-DOCC-INF-2023-43 from the GOI concludes that there is a need to modify the Regulation on Financial Operations with Foreign Entities for State Public Enterprises at the Central Level and Enterprises in Which the State Holds a Majority Shareholding, considering the impossibility of settling funds invested abroad through trusts due to sanctions imposed on the issuer of the securities, recommending that the Board of Directors of the BCB approve the modification of the aforementioned Regulation.

That the Legal Report BCB-GAL-SANO-DLBCI-INF-2023-290 concludes that, in accordance with Report BCB-GOI-SOEXT-DOCC-INF-2023-43, the proposal to include a Third Final Provision in the Regulation on Financial Operations with Foreign Entities for State Public Enterprises at the Central Level and Enterprises in Which the State Holds a Majority Shareholding, aims to exempt enterprises in which the State holds a Majority Shareholding, their subsidiaries, and affiliates from the application of paragraph I of Article 4, solely in the case of international sanctions imposed on the issuers of investment securities and when duly justified reasons are demonstrated; that it does not contravene any regulatory provision, and is therefore legally viable, recommending the approval of the BCB Board of Directors.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.- Incorporate the Third Additional Provision into the Regulation on Financial Operations with Foreign Entities for State Public Enterprises at the Central Level and Enterprises in Which the State Holds a Majority Shareholding, approved by Board Resolution No. 006/2023 of January 4, 2023, with the following text:

“Third Final Provision. Enterprises in which the State holds a Majority Shareholding, their subsidiaries, and their affiliates that present difficulties in settling funds derived from investments made abroad, directly or through trusts, must substantiate the causes before the BCB regarding the existence of factors not attributable to said entities to avoid incurring the suspensions provided for in Article 8 of this Regulation. The General Management will communicate to the ASFI the justifications that have been accepted.”

Article 2.- This Resolution shall enter into effect from the date of its approval.

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

La Paz, August 29, 2023

SIGNED: ROGER EDWIN ROJAS ULO, Oscar Ferruño Morro, Gabriel Herbas Camacho, Gumercindo Héctor Pino Guzmán, Diego Alejandro Pérez Cueto Eulert.