BOARD OF DIRECTORS

BOARD RESOLUTION NO. 147/2023

SUBJECT: INTERNATIONAL OPERATIONS MANAGEMENT – MODIFY THE REGULATION ON GOLD PURCHASES IN THE INTERNAL MARKET DESTINED TO STRENGTHEN INTERNATIONAL RESERVES.

VISTOS:

• 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. 1503 of May 5, 2023, on the Purchase of Gold Destined to Strengthen International Reserves.
• The BCB Statute approved by Board Resolution No. 095/2022 of October 6, 2022.
• The Regulation for the Administration of International Reserves, approved by Board Resolution No. 071/2023 of May 9, 2023, and its modifications.
• The Regulation on Gold Purchases in the Internal Market Destined to Strengthen International Reserves, within the framework of Law No. 1503 of May 5, 2023, approved by Board Resolution No. 096/2023 of July 3, 2023.
• The Technical Report BCB-GOI-SRES-DOI-INF-2023-66 of November 3, 2023, issued by the International Operations Management (GOI).
• The Legal Report BCB-GAL-SANO-DLBCI-INF-2023-368 of November 3, 2023, issued by the Legal Affairs Management (GAL).

CONSIDERING:

That Articles 327 and 328 of the CPE determine 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 internal purchasing power stability of the currency, to contribute to economic and social development, being its attribution, in coordination with the economic policy determined by the Executive Branch, to administer international reserves.

That Article 1 of Law No. 1670, modified by Article 64, section A3, numeral 1) of Law No. 1864 of June 15, 1998 on Popular Property and Credit, 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 authority of the country, with administrative, technical and financial competence and specialized regulatory powers of general application.

That Article 14 of Law No. 1670 establishes that the BCB will ensure the strengthening of International Reserves so that they allow the normal functioning of Bolivia's international payments.

That Article 15 of Law No. 1670 provides that the BCB's International Reserves are constituted by one or more of the following assets in accordance with international order norms: a) Physical gold; b) Currencies deposited in the BCB itself or in financial institutions outside the country at the order of the BCB, which must be of first rank according to accepted international criteria; c) Any internationally recognized reserve asset; d) Bills of exchange and promissory notes in favor of the BCB, denominated in foreign currencies of general acceptance in international transactions and payable abroad; e) Public bonds and other negotiable instruments issued by foreign governments, entities and international organizations or first-rank foreign financial institutions duly qualified as eligible by the BCB Board of Directors; and f) Own contributions to international financial organizations when such contributions are internationally regarded as reserve assets.

That Article 16 of Law No. 1670 determines that the BCB will administer and manage its International Reserves, being able to invest and deposit them in custody, as well to dispose of and pledge them, in the way it considers most appropriate for the fulfillment of its object and its functions and for their adequate safeguard and security. It may also purchase currency hedging instruments with the objective of reducing risks. In the case of the pledge of gold, this must have Legislative approval.

That Article 17 of Law No. 1670 provides that International Reserves are unseizable and cannot be subject to precautionary, administrative or judicial measures or be subject to any state tax or contribution, except for the quotas of the Financial System Supervision Authority (ASFI).

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 regulations of general application and internal rules; as well as establishing administrative, operational and financial strategies of the BCB, approving their respective short and medium-term programs. For the monitoring and oversight of their execution, it will have independent information, analysis and audit services.

That subsections a), c) and o) of Article 54 of Law No. 1670 indicate as attributions of the Board of Directors the following: a) Issue the norms and adopt the general decisions that were necessary for the BCB to fulfill the functions, competencies and powers assigned to it by Law; c) Monitor the execution of monetary, exchange, credit, financial intermediation, international reserve administration and other policies and regulations corresponding to the BCB in accordance with Law No. 1670; 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 Articles 1 and 2 of Law No. 1503 provide that its object is to authorize the BCB to purchase gold from the internal market to strengthen International Reserves and to carry out financial operations with International Reserves in gold in international markets, being under the scope of its application the individual and legal persons, public and private, legally established, registered and authorized by the competent entities, that participate in the commercialization of gold.

That Articles 4 and 5 of the aforementioned Law No. 1503 establish that the BCB for the purchase of gold in the internal market, will pay in national currency, taking as a base the price of the international quotation of gold, in competitive conditions, in accordance with regulations issued by said Issuing Entity and will establish the conditions, characteristics, periodicity, limits and procedures for the acquisition of gold from the internal market, in accordance with regulations issued by the BCB.

That Article 9 of the aforementioned Law No. 1503 establishes that the BCB will carry out operations in international markets with gold reserves, being able to buy, invest, deposit in custody, use in hedging instruments, transform and convert them into currencies, in order to optimize the liquidity and/or yield of said reserves and based on the market conditions of liquidity of currencies of International Reserves.

That numerals 1) and 3) of Article 5 of the BCB Statute provide that its Board of Directors has regulatory competence to issue specialized norms in the fields assigned by Law and technical competence for the formulation of policies and the application of instruments that allow it to fulfill its object.

That numerals 1), 6) and 30) of Article 10 of the BCB Statute provide that the Board of Directors has the attributions to approve general decisions and issue the norms that were necessary for the BCB to fulfill the functions, competencies and powers assigned to it by Law, approve the policy and norms for the administration of International Reserves, as well as monitor their execution, as well as 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 said norm provides that resolutions and decisions of the Board of Directors are adopted by simple majority of votes of its members present in a meeting, except in cases where Law No. 1670 or the BCB Statute require qualified majorities.

That paragraphs I and II of Article 26 of the BCB Statute stipulate 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 which 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 Article 9 and paragraph I of Article 11 of the Regulation for the Administration of International Reserves establishes that the structure of International Reserves is composed of International Monetary Reserves, Gold Reserves and SDR Holdings;

and that Gold Reserves are constituted by physical gold in BCB vaults, investments in time deposits and balances in gold accounts.

That Articles 1 to 3 of the Regulation on gold purchase destined to strengthen International Reserves approved by Board Resolution No. 096/2023 dispose as its object to establish the regulation of Law No. 1503 and the requirements for the purchase of gold in any of its forms and states, in the internal market by the BCB, destined to strengthen international reserves being the scope of application all individual and legal persons, public and private legally established, registered and authorized by the competent entities voluntarily in the commercialization of gold to the BCB. It also disposes that the purpose of the regulation is to regulate and establish the mechanisms and formalities for the purchase of gold within the internal market destined to strengthen international reserves and define the requirements to commercialize gold with the BCB.

That Report BCB-GOI-SRES-DOI-INF-2023-66 concludes and puts before the Board of Directors the approval of the modification of Annex I and the inclusion of Annex IV to the Regulation on gold purchase destined to strengthen International Reserves, with the aim to strengthen International Reserves, improve the management of gold reserves, the purchase of gold under responsible gold practices, as well as contribute to the stability of the country's monetary and exchange policy for the benefit of the economy.

That Legal Report BCB-GAL-SANO-DLBCI-INF-2023-368 concludes that in accordance with Report BCB-GOI-SRES-DOI-INF-2023-66 the GOI proposal for the modification of Annex I and inclusion of Annex IV of the Regulation on gold purchase destined to strengthen International Reserves has the object to strengthen International Reserves, improve the management of gold reserves, the purchase of gold under responsible gold practices, as well as contribute to the stability of the country's monetary and exchange policy for the benefit of the economy, being viable for approval; recommending to the BCB Board of Directors to approve the modifications to the Regulation on gold purchase destined to strengthen International Reserves.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Modify Annex I and include Annex IV to the Regulation on gold purchase destined to strengthen International Reserves, which form an integral part of this Resolution as Annexes.

Article 2.- This Resolution will enter into force from its approval.

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

La Paz, November 7, 2023

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

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ANNEX I - Calculation Methodology

1. Calculation Methodology for BCB Gold Purchases

a) Fine Weight
Fine Weight (gr) = Net Weight (gr) × Gold Purity (%)

b) Purchase Price (USD/OT)
Purchase Price (USD/OT) = International Market Quotation (USD/OT) × [1 + % premium or discount]

c) Purchase Price (Bs/gr)
Purchase Price (Bs/gr) = [ (Purchase Price (USD/OT) / 31.1035 (gr/OT)) × Exchange Rate (Bs/USD) ]

d) Market Sale Value
Market Sale Value (Bs) = Fine Weight (gr) × Purchase Price (Bs/gr)

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2. Percentage of Premium or Discount per Operation

Ranges by quantity of grams of gold	% Premium or Discount*
Lower	Upper
500	2,000
2,001	3,000
3,001	4,000
4,001	5,000
5,001	6,000
6,001	7,000
7,001	8,000
8,001	9,000
9,001	10,000
10,001	20,000
20,001	30,000
30,001	40,000
40,001	50,000
50,001	60,000
60,001	70,000
70,001	80,000
80,001	Onwards

3. Percentage of Premium or Discount for Periodic Sales

The seller may present a commitment note in accordance with Annex IV, committing to sell to the BCB a quantity equal to or greater than 50,001 grams within a maximum period of fifteen (15) calendar days. In case the commitment is fulfilled, the premium indicated according to the total quantity effectively delivered in the committed period will be applied, taking into account the international quotation on the last business day of the period, according to the range established in the Table of point 2.

The 90% advance and the settlement of the 10% of each operation carried out during the committed period will only be made based on the international quotation, without including the premium in each delivery of gold sale to the BCB.

In case the seller does not fulfill the sales commitment, on the last day of the committed period, the premium will be applied to each of the gold sales that had been made, according to the range established in the Table of point 2, as applicable.

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ANNEX IV – Format of Note

La Paz, ……………………

Sir
………………
General Manager
Central Bank of Bolivia
Present.

Ref. Gold Sales Commitment

I have the honor to address you:

I …………… representative of the company ………………… commit to selling gold to the Central Bank of Bolivia, in a quantity equal to or greater than 50,001 grams of gold in ……… (…) calendar days between the ………… and the ……… of ……… of ………

In case of non-compliance with the delivery indicated in the previous paragraph, on the last day of the committed period, the premium will be applied to each of the gold sales that had been made, in accordance with Annex I point 2, as applicable.

Sincerely.

………………