Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 148/2017

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES THE SPECIFIC REGULATION FOR THE APPROVAL OF THE CREDIT PROVIDED FOR IN ARTICLE 7 OF LAW NO. 975

VISTOS (VIEWED):

• The Political Constitution of the State promulgated on February 7, 2009.
• Law No. 1670 of the Central Bank of Bolivia (BCB) of October 31, 1995.
• Law No. 975 on Modifications to the General State Budget – Management 2017 (PGE-2017) of September 13, 2017.
• Note MEFP/VTCP/DGCP/UEPS-1369/2017 received on October 20, 2017 from the Undersecretariat of Treasury and Public Credit (VTCP) dependent on the Ministry of Economy and Public Finance.
• The Report from the Monetary Operations Management (GOM) CITE: BCB-GOM-SOSP-DCE-INF-2017-174 of October 23, 2017.
• The report from the Legal Affairs Management (GAL) CITE: BCB-GAL-SANO-DLBCI-INF-2017-312 of October 24, 2017.

CONSIDERANDO (CONSIDERING):

That the Political Constitution of the State (CPE), promulgated on February 7, 2009, in numeral 6 of its Article 9, establishes that it is the end and function of the State to promote and guarantee the responsible and planned use of natural resources, and to boost their industrialization, through development and strengthening of the productive base in its different dimensions and levels. Likewise, in paragraph I numeral 10 of article 158 and article 322, it is established that the Plurinational Legislative Assembly has the attribution to approve the contracting of public debt.

That article 322 of the CPE provides that the Plurinational Legislative Assembly will authorize the contracting of public debt when the capacity to generate income to cover capital and interest is demonstrated, and the most advantageous conditions in rates, terms, amounts, and other circumstances are technically justified. Public debt will not include obligations that have not been expressly authorized and guaranteed by the Plurinational Legislative Assembly.

That Law No. 975, in its Article 7, Paragraph 1, authorizes the BCB to grant an extraordinary credit of up to Bs93,480,996.52 (Ninety-Three Million Four Hundred Eighty Thousand Nine Hundred Ninety-Six 52/100 Bolivianos) in order to continue the construction and

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implementation of the Cable Transport System (Teleférico) in the cities of La Paz and El Alto, in its second phase. To this effect, the MEFP is authorized, through the General Treasury of the Nation (TGN), to contract the credit under concessional conditions; for which the BCB is exempted from the application of Articles 22 and 23 of Law No. 1670 of October 31, 1995.

That Paragraph II of the cited Article provides that the State-Owned Cable Transport Company “Mi Teleférico”, responsible for the administration and operation of the Cable Transport System (Teleférico), is responsible for the use and destination of the resources effectively transferred by the TGN.

That Paragraph III of the mentioned Article establishes that the Ministry of Public Works, Services and Housing is responsible for the evaluation and monitoring of the construction of the Cable Transport System (Teleférico) in the cities of La Paz and El Alto.

Likewise, it authorizes the MEFP, through the TGN, to issue and grant Non-Negotiable Treasury Bonds in favor of the Central Bank of Bolivia, to guarantee the referred credit.

That by note MEFP/VTCP/DGCP/UEPS-1369/2017, the Undersecretariat of Treasury and Public Credit dependent on the Ministry of Economy and Public Finance, requests the BCB to send the requirements for the granting of the credit authorized for the referred credit.

That the Monetary Operations Management recommends in its report CITE: BCB-GOM-SOSP-DCE-INF-2017-174, concludes that it is necessary to approve a specific regulation for the credit in favor of the MEFP for the construction and implementation of the Cable Transport System (Teleférico) in the cities of La Paz and El Alto in its second phase, authorized by the Plurinational Legislative Assembly and recommends that the BCB Board of Directors consider the specific regulation proposal contained in Annex 1.

That the Legal Affairs Management concludes in its report CITE: BCB-GAL-SANO-DLBCI-INF-2017-312, that the Specific Regulation proposed by the GOM is legally appropriate, as it does not contravene the current legal framework, and it is within the competence of the BCB Board of Directors to consider its approval by two-thirds of the votes of all its members, in accordance with what is established in subsection o) of article 54 of Law No. 1670 and article 24 of the Institution's Statute.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the “Specific Regulation for the Approval of the Credit in favor of the MEFP for the Construction and Implementation of the Cable Transport System (Teleférico) in the cities of La Paz and El Alto in its second phase, provided for in Article 7 of Law No. 975”, which is attached and forms an integral part of this Resolution.

Article 2.- This Regulation will enter into force from the date of its approval.

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

La Paz, October 24, 2017

Pablo Ramos Sánchez

Luis Baudoin Olea

Ronald Polo Rivero

Abraham Pérez Alandia

Sergio Velarde Vera

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ANNEX 1

SPECIFIC REGULATION FOR THE APPROVAL OF THE CREDIT IN FAVOR OF THE MEFP FOR THE CONSTRUCTION AND IMPLEMENTATION OF THE CABLE TRANSPORT SYSTEM (TELEFÉRICO) IN THE CITIES OF LA PAZ AND EL ALTO IN ITS SECOND PHASE, PROVIDED FOR IN ARTICLE 7 OF LAW NO. 975 OF SEPTEMBER 13, 2017

CHAPTER I

PRELIMINARY PROVISIONS

Article 1 (Object).

This Regulation aims to regulate the granting of the extraordinary credit provided for in article 7 of Law No. 975 of September 13, 2017, which modifies the General State Budget – Management 2017.

Article 2 (Destination of the Credit).

The extraordinary credit is granted by the Central Bank of Bolivia (BCB) in favor of the Ministry of Economy and Public Finance (MEFP) through the General Treasury of the Nation (TGN), under concessional conditions, for an amount of Bs93,480,996.52 (Ninety-Three Million Four Hundred Eighty Thousand Nine Hundred Ninety-Six 52/100 Bolivianos), to continue with the construction and implementation of the Cable Transport System (Teleférico) in the cities of La Paz and El Alto, in its second phase.

CHAPTER II

CONDITIONS FOR THE APPROVAL OF THE CREDIT

Article 3 (Credit Application).

For the consideration and approval of the credit application, the MEFP must present the following documentation:

a) Credit application note signed by its Highest Executive Authority (HEA), addressed to the President of the BCB, requesting the authorized credit specifying the following:

a. Mention of the article of the Law that authorizes the granting of the credit;
b. Amount requested;
c. Proposed disbursement schedule and payment plan;
d. Proposed deadline for disbursements;
e. Proposed term and form of payment of capital and interest;
f. Guarantee backing the credit.

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b) To the credit application note, a legalized photocopy of the Presidential Decree appointing the Minister of Economy and Public Finance and a simple photocopy of their Identity Card must be attached.

Article 4 (Credit Guarantees).

The payment of the capital and interest of the credit granted to the MEFP will be guaranteed by Non-Negotiable Treasury Bonds in favor of the BCB that will be issued and granted by the MEFP through the General Treasury of the Nation.

Article 5 (Reports for the Consideration of the Credit).

Upon receipt of the application and the documentation provided for in article 3 of this Regulation, prior to the consideration by the Board of Directors, the President of the BCB will request the following reports:

a) Technical Report on financial conditions, which must be issued by the Monetary Operations Management (GOM).

b) Legal Report regarding compliance with regulations and presentation of required documentation, which must be issued by the Legal Affairs Management (GAL).

c) Other reports to be issued by other areas of the BCB, as required.

Article 6 (Financial Conditions).

a) The financial conditions of the credit will be established and determined by the BCB Board of Directors, taking into account the MEFP's application and the degree of concessionality established by the MEFP through ministerial resolution following the procedure established in the Appendix of this regulation.

b) Once the financial conditions of the credit are approved, they will be communicated in writing to the MEFP, which must express its acceptance or rejection through a note signed by its HEA.

c) The approval of the financial conditions will be recorded in the Minutes corresponding to the respective Board of Directors meeting.

Article 7 (Approval of the Credit).

Upon receipt of the MEFP's conformity on the financial conditions and based on the reports indicated in Article 5 of this regulation, the BCB Board of Directors will approve the granting of the credit by Resolution, with the favorable vote of two-thirds of its members present at the respective meeting. It will also authorize the President of the BCB to sign the respective contract.

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CHAPTER III

CREDIT CONTRACT

Article 8 (Contract).

The financial conditions of the credit approved by the BCB Board of Directors and accepted by the MEFP will be recorded in the credit contract drafted by the BCB that will be signed with the MEFP.

Article 9 (Evaluation and Monitoring).

The evaluation and monitoring of the resources of the credit granted by the BCB in favor of the MEFP will be the exclusive responsibility of the Ministry of Public Works, Services and Housing (MOPSV), in accordance with what is established in paragraph III of article 7 of Law No. 975.

Article 10 (Conditions for Disbursements).

The disbursements of the resources of the credit granted will be made only when the following are available:

a) Disbursement request note signed by the HEA of the MEFP addressed to the President of the BCB, in which it is specified:

i. Contract Number;
ii. Disbursement Number;
iii. Amount requested.
iv. Account number from which operational costs will be debited.
v. Non-Negotiable Treasury Bond(s) that will serve as guarantee for the requested disbursement (attached).

b) Two specific accounts enabled at the BCB in Bolivianos, one for disbursements and another for the payment of the credit's debt service. For this effect, the MEFP must request their opening at the BCB.

Article 11 (Modification of the Contract).

For the eventual modification of the credit contract, the MEFP must send the following documentation:

a) Request note addressed to the President of the BCB signed by its HEA. b) New Payment Plan and Disbursement Schedule. c) Legalized Presidential Decree appointing the Minister of Economy and Public Finance.

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d) Other documentation that the BCB considers necessary.

Article 12 (Protocolization of the Contract). I.

The protocolization procedure of the Contract will be carried out jointly under the supervision of the BCB, before the General Directorate of Government Notary, of the Autonomous Departmental Government of La Paz.

i. To this effect, the MEFP will have the following obligations:

e) Send to the GAL of the BCB the documentation that may be required by the General Directorate of Government Notary.
f) Pay the fees for protocolization before instances of the Autonomous Departmental Government of La Paz within a period not exceeding six months from the signing of the Contract.
g) Appear on the day and time established by the General Directorate of Government Notary and notified by the BCB, in order to proceed with the signing of the respective protocol matrix.
h) Pay the fees for the franking of the Testimony, sending a copy thereof to the Legal Affairs Management of the BCB.

ii. Failure to comply with the preceding obligations will hinder the continuity of disbursements requested by the MEFP.

CHAPTER IV

MODIFICATION OF THE INVESTMENT PLAN OR DISBURSEMENT SCHEDULE

Article 13 (Modifications to the Investment Plan or Disbursement Schedule)

In the event that the Investment Plan or the Disbursement Schedule are subject to modification, the MEFP must communicate this situation to the BCB.

Article 14 (Registration, Accreditation, Use and Destination of Credit Resources) The registration, accreditation, use and destination of the resources of the credit effectively transferred by the TGN corresponds to the State-Owned Cable Transport Company “Mi Teleférico”.

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Appendix

PROCEDURE TO DEFINE THE DISCOUNT RATE AND THE DEGREE OF CONCESSIONALITY – CREDIT TO THE MEFP

Section 1 (Discount Rate).

The Discount Rate will be calculated as the average of at least the last twelve award rates in Auctions of the General Treasury Bonds of the Nation, corresponding to the term of the credit application. In the event that the obtained discount rate is not congruent i.e., is not higher for longer terms (and vice versa) with the discount rates of extraordinary credits granted to Strategic National Enterprises approved by the BCB in the last twelve months, an additional observation must be systematically added until the result is coherent.

Section 2 (Degree of Concessionality).

The degree of concessionality will be defined based on a specific Ministerial Resolution issued by the MEFP for this effect. In the event that the Resolution explicitly establishes the degree of concessionality, this data will be taken. If the Resolution establishes a minimum value for this variable, the BCB will follow the following procedure:

1. Calculate $i^{max}$ consistent with a minimum degree of concessionality established by Resolution of the Ministry of Economy and Public Finance.

2. Take as the reference rate $i^{ref}$ the yield of Net International Reserves ($i^{ref} = i^{RIN}$) of the last twelve (12) months¹.

3. The $i^*$ of the credit to be granted will be:

   ✓ $i^{max}$ if $i^{ref} \ge i^{max}$

   ✓ $i^{max}$ if $i^{ref} < i^{max}$

Once the degree of concessionality consistent with $i^{ref}$ is defined, the BCB Board of Directors may consider scenarios that maintain the same degree of concessionality.

If the Ministerial Resolution establishes a minimum and maximum value for the degree of concessionality, the interest rate will be established according to the procedure mentioned.

¹ Calculated from the monthly non-annualized yield and does not consider variations in the quotes of the euro, Canadian dollar, Australian dollar, yuan, and gold.