Board Resolution No. 165/2013

BOARD RESOLUTION NO. 165/2013

SUBJECT: MONETARY OPERATIONS MANAGEMENT — APPROVES MODIFICATIONS TO THE SPECIFIC REGULATION FOR THE GRANTING OF CREDIT PROVIDED FOR IN LAW NO. 317

HAVING SEEN:

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. 317 on the General State Budget - Management 2013 of December 11, 2012.

Law No. 396 modifying the General State Budget GSB-2013 of August 28, 2013.

Ministerial Resolution No. 302 of May 24, 2013.

Board Resolution No. 041/2013 of April 23, 2013, which approves the Specific Regulation for the granting of credit provided for in Law No. 317, modified by Board Resolution No. 130/2013 of September 17, 2013 and Board Resolution No. 151/2013 of October 29, 2013.

Report from the Monetary Operations Management CITE: BCB-GOM-SOSP-INF-2013-11 dated November 18, 2013.

Report from the Legal Affairs Management CITE: BCB-GAL-SANO-INF-2013-405 dated November 18, 2013.

CONSIDERING:

That the Political Constitution of the State (CPE) establishes in Article 158, paragraph I, numeral 10, that the Plurinational Legislative Assembly has the attribute to approve the contracting of loans that commit the general revenues of the State.

That Article 322 of the Political Constitution of the State provides that the Plurinational Legislative Assembly will authorize the contracting of public debt when the capacity to generate income to cover the principal and interest is demonstrated, and the most advantageous conditions in terms of 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 Articles 22 and 23 of Law No. 1670 determine that the BCB cannot grant credits to the Public Sector or incur contingent liabilities in its favor, except in favor of the General Treasury of the Nation (TGN) to attend to urgent needs derived from declared public calamities, internal or international unrest by Supreme Decree, and to attend to temporary liquidity needs, within the limits of the monetary program; these operations will be documented in all cases through negotiable public debt securities issued by the National Treasury.

That Law No. 317, in its Article 26, authorizes the BCB to grant to the Ministry of Economy and Public Finance (MEFP), through the General Treasury of the Nation (TGN), an extraordinary credit in national currency on concessional conditions, to finance the construction of the Railway Transport System in the Montero - Bulo Bulo section.

Likewise, it exempts the BCB from the application of Articles 22 and 23 of the BCB Law No. 1670 of October 31, 1995.

That Law No. 396, in its Article 8, modifies Article 26 of Law No. 317, modifying Paragraphs III and IV regarding the granting of Non-Negotiable Treasury Bonds in favor of the BCB to guarantee the credit and that the Ministry of Public Works, Services, and Housing is responsible for the use and destination of the resources. Likewise, it incorporates Paragraphs V and VI regarding the expansion of the credit amount to Bs 696 million, making a total amount of Bs 1,740 million, and that the credit contract will be exempt from notarization expenses and other expenses required for its formalization.

That Ministerial Resolution No. 302 of the Ministry of Economy and Finance (MEFP) determines a concessionality degree of at least twenty-five percent (25%), for the Project: Construction of the Railway Transport System in the Montero - Bulo Bulo section.

That Board Resolution No. 041/2013 approves the Specific Regulation for the Granting of Credit provided for in Law No. 317.

That Board Resolution No. 130/2013 and Board Resolution No. 151/2013 modify the Specific Regulation for the Granting of Credit provided for in Law No. 317.

That the Monetary Operations Management, through Report BCB-GOM-SOSP-INF-2013-11, concludes that it is pertinent to modify the "Specific Regulation for the Granting of Credit provided for in Law No. 317" and recommends to the BCB Board of Directors approve the modification to Article 6 of said Regulation.

That the Legal Affairs Management, through report CITE: BCB-GAL-SANO-INF-2013-405, establishes that it has no observations regarding the modification of Article 6 of the Specific Regulation for the Granting of Credit provided for in Law No. 317, since it does not contravene the current legal framework.

LA PAZ, November 26, 2013

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Modify Article 6 of the Specific Regulation for the Granting of Credit to the MEFP Project: Construction of the Railway Transport System in the Montero — Bulo Bulo section, as follows:

SAYS:

"Article 6.- (Financial Conditions) The financial conditions of the credit will be established and determined by the BCB Board of Directors, taking into account the request of the MEFP and the degree of concessionality established by the MEFP through Ministerial Resolution."

SHOULD SAY:

"Article 6.- (Financial Conditions) The financial conditions of the credit will be established and determined by the BCB Board of Directors, taking into account the request of the MEFP and the degree of concessionality established by the MEFP through Ministerial Resolution, following the procedure established in the Appendix of this Regulation."

Article 2.- The modification of the Specific Regulation for the Granting of Credit Provided for in Law No. 317 will enter into force from the date of approval of this Resolution.

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

[Signatures]

Appendix PROCEDURE TO DEFINE THE DISCOUNT RATE AND THE DEGREE OF CONCESSIONALITY OF CREDITS ON CONCESSIONAL CONDITIONS WITHIN THE FRAMEWORK OF FINANCIAL LAWS OR OTHER SPECIFIC LAWS.

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 Bonds of the General Treasury of the Nation, corresponding to the term of the credit request. In case the obtained discount rate is not congruent, i.e., is not higher for longer terms (and vice versa) with the discount rates of credits approved in the last twelve months, an additional observation must be systematically added until this result is achieved.

Section 2.- (Degree of Concessionality) The degree of concessionality will be defined based on the Ministerial Resolution issued by the MEFP for this effect.

• In case 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 imax consistent with a minimum degree of concessionality established in the MEFP Resolution.

2. Take as the reference rate ref the yield of the International Reserves (ref = iRIN) of the last twelve (12) months.

3. The interest rate i* of the credit to be granted will be: • imax if ref > imax • iRIN if ref < imax Once the degree of concessionality consistent with ref is defined, the Board may consider scenarios that maintain the same degree of concessionality.

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

• 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.