Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 184/2018

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES MODIFICATIONS TO FINANCIAL CONDITIONS – EXCEPTIONAL LOAN UNDER LAWS NO. 742 AND NO. 840 TO THE NATIONAL FUND FOR REGIONAL DEVELOPMENT (FNDR) FOR Bs 3,180,000,000.-

VISTOS:

• 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. 742 Modifying the General State Budget – Management 2015 (PGE-2015) of September 30, 2015.
• Law No. 840 Modifying the General State Budget – Management 2016 (PGE-2016) of September 27, 2016.
• Law No. 1103 Modifying the General State Budget – Management 2018 (PGE-2018) of September 25, 2018.
• Board Resolution (B.R.) of the BCB No. 191/2015 of October 13, 2015.
• Board Resolution (B.R.) of the BCB No. 195/2015 of October 19, 2015.
• Board Resolution (B.R.) of the BCB No. 207/2016 of October 25, 2016.
• Board Resolution (B.R.) of the BCB No. 228/2016 of December 7, 2016.
• SANO Contract No. 350/2015 of October 22, 2015.
• Amending Contract SANO-DLBCI No. 108/2016 of December 7, 2016.
• Notes from the National Fund for Regional Development (FNDR) REF: DE-AL-MAB-ECY-9073-CAR/18 and DE-MAB-10065-CAR/18 received on November 28 and December 14, 2018, respectively.
• Note from the Ministry of Development Planning (MPD) REF: MPD/DGAJ/UAJ-NE 0319/2018, received on December 10, 2018.
• Report from the Monetary Operations Management (GOM) REF: BCB-GOM-SOSP-DCE-INF-2018-398 of December 17, 2018.

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Report from the Legal Affairs Management (GAL) REF: BCB-GAL-SANO-DLBCI-INF-2018-551 of December 18, 2018.

CONSIDERING:

That the Political Constitution of the State (CPE), approved by referendum on January 25, 2009, and promulgated on February 7, 2009, establishes in paragraph 4 of Article 316 that it is a function of the State to participate directly in the economy by incentivizing the production of economic and social goods and services to promote economic and social equity and drive development, avoiding oligopolistic control of the economy. In paragraph 10 of paragraph I of Article 158 and Article 322, it establishes that it is the attribute of the Plurinational Legislative Assembly to approve and guarantee the contracting of loans and public debt.

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 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. 742, in Article 9, Paragraph I, authorizes the Ministry of Development Planning to constitute a trust as Settlor, for an initial amount of Bs 3,180,000,000 (Three Thousand One Hundred Eighty Million 00/100 Bolivianos) with a source of external resources and exceptionally resources from the BCB, whose purpose is to grant loans to Autonomous Departmental Governments to finance local counterparts of infrastructure projects, public works, basic services, and productive activities that have external financing and are concurrent with the central level of the State; and that the resources exceptionally granted by the BCB will be restored in a priority manner by the trust, and the remaining balances must be transferred to the General Treasury of the Nation – TGN.

That within the framework of Paragraph IV, it exceptionally authorizes the BCB to grant a loan to the trust for an amount up to Bs 3,180,000,000 (Three Thousand One Hundred Eighty Million 00/100 Bolivianos), with the guarantee of the trust. For this purpose, the trust, represented by its trustee, is authorized to enter into the referred credit with the BCB, exempting them from the effects and scope of what is provided in Law No. 2042 of December 21, 1999, on Budgetary Administration, and Articles 22 and 23 of Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia.

That according to Paragraph VI, the Trust Contract and the Loan Contract signed with the BCB are exempt from the payment of notarization expenses.

That Law No. 840, in its Additional Provision Fifth, modifies paragraphs I, III, V, VI

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of Article 9 of Law No. 742, additionally facilitating access to resources for Autonomous Municipal Governments to finance the counterparts of their public investment projects concurrent with the central level of the State that have external or internal financing. That the interest rate of the loans to be granted to Autonomous Departmental Governments and Autonomous Municipal Governments will be updated based on the financial conditions of the loans to be obtained by the Ministry of Development Planning within the framework of the Policy for Financing Local Counterparts.

That in paragraph V of the aforementioned Law, it authorizes the Ministry of Economy and Public Finance, at the request of the trustee, to automatically debit from the fiscal checking accounts of Autonomous Departmental Governments and Autonomous Municipal Governments, when these do not comply with the obligations undertaken within the framework of the trust.

That according to paragraph VI of the aforementioned Law, the Trust Constitution Contract and the Loan Contract signed with the BCB, as well as their addenda, are exempt from the payment of notarization tariffs.

That Law No. 1103, in Article 6, authorizes the Central Bank of Bolivia to effect, upon prior request of the National Fund for Regional Development – FNDR and the Ministry of Development Planning - MPD, the modification of the financial conditions, with the exception of the interest rate, established in the Exceptional Loan Contract granted by the BCB to the Trust, represented by the FNDR, in its capacity as trustee, within the framework of Paragraph IV of Article 9 of Law No. 742 of September 30, 2015, for which the signing of the corresponding Amending Contracts is authorized.

That according to paragraph II of the aforementioned Law, the Trust Constitution Contract and the Loan Contract signed with the BCB, as well as their subsequent modifications, are exempt from the payment of notarization expenses.

That through B.R. No. 191/2015, the Board of Directors of the BCB approves the Specific Regulation for the Granting of Credit provided in Law No. 742.

That through B.R. No. 195/2015, the Board of Directors of the BCB approves the exceptional loan within the framework of Law No. 742 to the National Fund for Regional Development (FNDR) for Bs 3,180,000,000.-.

That through B.R. No. 207/2016, the Board of Directors of the BCB approves modifications to the Specific Regulation for the granting of the loan within the framework of Law No. 742.

That through B.R. No. 228/2016, the Board of Directors of the BCB approves modifications to B.R. No. 195/2015 within the framework of what is provided in Law No. 840, including Autonomous Municipal Governments as beneficiaries of the loan.

That SANO Contract No. 350/2015 has as its object to grant an exceptional loan, for an amount up to Bs 3,180,000,000.- (Three Thousand One Hundred Eighty Million 00/100 Bolivianos) that the BCB makes to the FNDR, so that the latter, by virtue of the Trust Constitution Contract, grants loans to Autonomous Departmental Governments to finance counterparts of public investment projects concurrent with the Central Level of the State that have external financing.

That through Amending Contract SANO-DLBCI No. 108/2016, Clause Fourth (Object), paragraph 4.1.; Clause Fifth (Use and Destination of Loan Resources); Clause Sixth (Loan Conditions) paragraph 6.7, items a) and c); Clause Eighth (Requirements for Disbursements); Clause Eleventh (Guarantee) paragraphs 11.1., 11.3. and 11.4.; and Clause Thirteenth (Obligations of the Parties) are modified.

That through note REF: DE-AL-MAB-ECY-9073-CAR/18, the FNDR sends the draft Amending Contract to SANO Contract No. 350/2015 for the Granting of Exceptional Loan within the framework of Law No. 742, for it to be reviewed and subsequently signed.

That through note REF: DE-MAB-10065-CAR/18, in compliance with Paragraph I of Article 6 of Law No. 1103, the FNDR requests the modification of the financial conditions of SANO Contract No. 350/2015, among which are: Modification of the term of SANO Contract No. 350/2015 to 16 years. Capital amortization, through constant capital payments and semiannual installments. Incorporation of a deadline for disbursement to December 31, 2019.

That through note REF: MPD/DGAJ/UAJ-NE 0319/2018, the MPD sends the draft Amending Contract to SANO Contract No. 350/2015 for its respective signing and attaches the supporting reports REF: GEF-PRE-JSZ-YRM-1032-INF/18 of November 12, 2018 issued by the FNDR; REF: MPD/VIPFE/DGGIP/UGIT-INF 1257/2018 of November 16, 2018, MPD/VIPFE/DGGIP/UGIT-INF 1414/2018 of December 3, 2018, MPD/DGAJ/UAJ-INF 0568/2018 of November 16, 2018 and MPD/DGAJ/UAJ-INF 0623/2018 of December 10, 2018, issued by the MPD.

That the Monetary Operations Management concludes in its report REF: BCB-GOM-SOSP-DCE-INF-2018-398, that the request for modification of the financial conditions of the loan falls within what is established in Law No. 1103 modifying the PGE – Management 2018. The modification extends the term for loan repayment from 7 to 16 years, with constant semiannual capital payments. It proposes the adaptation to semiannual payments of capital plus their respective interests and as payment dates each January 31 and July 31 due to the contracts established with Autonomous Departmental Governments and Autonomous Municipal Governments. It suggests the acceptance of the modification of the financial conditions prior to legal analysis and opinion.

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That the Legal Affairs Management concludes in its report REF: BCB-GAL-SANO-DLBCI-INF-2018-551 that the request for modification of Clause Sixth of SANO Contract No. 350/2015, presented by the FNDR and the MPD is legally appropriate, as it does not contravene current legal regulations.

Consequently, in accordance with the powers conferred by paragraph a) of Article 54 of Law No. 1670 and paragraph 1) of Article 11 of the BCB Statute, it corresponds to the Board of Directors of the Issuing Entity to approve the requested modifications and authorize the Acting President of the BCB to sign the Amending Contract to SANO Contract No. 350/2015.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve modifications to the financial conditions of SANO Contract No. 350/2015 modified by Amending Contract SANO – DLBCI No. 108/2016, under the following terms and conditions:

SAYS:

SIXTH. (LOAN CONDITIONS). In accordance with what is provided by paragraph IV of Article 9 of Law No. 742, modified by Additional Provision Fifth of Law No. 840, the conditions of the LOAN are as follows:

6.1. Loan Amount. The amount of the LOAN granted amounts to the sum of Bs. 3,180,000,000.- (Three Thousand One Hundred Eighty Million 00/100 Bolivianos).

6.2. Disbursement Currency. The LOAN will be disbursed by the LENDER in Bolivianos.

6.3. Term. The LOAN is granted for a term of seven (7) years, computable from the date of the first disbursement.

6.4. Current Interest. The amounts disbursed from the LOAN will accrue interest in favor of the LENDER of 1% (one percent) annually on balances, computable from the first disbursement.

In the event that the BORROWER makes advance payments, the LENDER will charge interest and capital in order of priority for the amounts pending payment.

Interest calculation will be carried out taking into account the number of calendar days elapsed from the disbursement or disbursements and will take into account a year of three hundred sixty (360) days.

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6.5. Penalty Interest. From the third year, in case of default, the BORROWER will pay additionally to the LENDER, the penalty interest in the manner and scale provided in Article 2 of Supreme Decree No. 28166 of May 16, 2005, and its modification carried out through Supreme Decree No. 530 of June 2, 2010.

6.6. Accreditation of LOAN Disbursement. Each disbursement will be accredited through the issuance of the corresponding accounting receipt and account statement issued by the BCB, to which the PARTIES grant full validity for any legal effect.

6.7. Capital Amortization and Interest Payment. The LOAN granted by the LENDER will be paid by the BORROWER as follows:

a) During the first two years, the TRUST will make partial payments to capital plus the respective interests of the LOAN to the extent that it receives payments from Autonomous Departmental Governments and Autonomous Municipal Governments.

b) From the third year, the BORROWER will pay the balance of the LOAN to capital and its respective interests in five equal annual installments until the conclusion of the LOAN term. If the payment date falls on a Saturday, Sunday, or holiday, the payment must be made on the first following business day.

c) According to the priority of resource restitution to the BCB established in item j) paragraph I of Article 9 of Law No. 742, modified by Additional Provision Fifth of Law No. 840, the BORROWER will proceed to pay the LOAN with all resources obtained and to be obtained from the TRUST within a maximum term of seven (7) years, stipulated in paragraph 6.3 of Clause Sixth of this Contract.

While there is a balance of the LOAN owed to the LENDER, the resources that could be incorporated into the TRUST to fulfill its object, the capital amortizations carried out by Autonomous Departmental Governments, Autonomous Municipal Governments, and the automatic debits carried out by the Ministry of Economy and Public Finance from the fiscal checking accounts of Autonomous Departmental Governments, Autonomous Municipal Governments, will be destined exclusively for the payment of the LOAN.

MUST SAY:

“SIXTH. (LOAN CONDITIONS). In accordance with what is provided by paragraph IV of Article 9 of Law No. 742, modified by Additional Provision

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Fifth of Law No. 840 and Article 6 of Law No. 1103, the conditions of the LOAN are as follows:

6.1. LOAN Amount. The amount of the LOAN granted amounts to the sum of Bs. 3,180,000,000.- (Three Thousand One Hundred Eighty Million 00/100 Bolivianos).

6.2. Disbursement Currency. The LOAN will be disbursed by the LENDER in Bolivianos.

6.3. Term. The LOAN is granted for a term of sixteen (16) years, computable from the date of the first disbursement. The BCB will establish the Payment Plan according to the terms agreed in this Amending Contract. The term considers the advance payments made by the LENDER in the first years of the credit.

6.4. Deadline for Disbursement. The deadline to carry out disbursements and therefore to request the resources of the LOAN will be December 31, 2019. The amount of the LOAN not disbursed after the expiration of the deadline will be automatically considered uncommitted from this Contract.

6.5. Current Interest. The amounts disbursed from the LOAN will accrue interest in favor of the LENDER of 1% (one percent) annually on balances, payable semiannually, from the signing of this contract modification.

In the event that the BORROWER makes advance payments, the LENDER will charge interest and capital in order of priority for the amounts pending payment.

Interest calculation will be carried out taking into account the number of calendar days elapsed from the disbursement or disbursements and will take into account a year of three hundred sixty (360) days.

6.6. Penalty Interest. In the event of default, the BORROWER will pay additionally to the LENDER, the penalty interest in the manner and scale provided in Article 2 of Supreme Decree No. 28166, of May 16, 2005, and its modification carried out through Supreme Decree No. 530, of June 2, 2010.

6.7. Accreditation of LOAN Disbursement. Each disbursement will be accredited through the issuance of the corresponding accounting receipt and account statement issued by the BCB, to which the PARTIES will grant full validity for any legal effect.

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6.8. Capital Amortization and Interest Payment. The LOAN granted by the LENDER will be paid by the BORROWER as follows:

a) The BORROWER will make payments to capital plus the respective interests of the LOAN through constant capital payments with interest on balances until the total payment of the LOAN, considering any advance payments that may have been made.

b) The LOAN will be amortized through the payment of semiannual installments, which will include capital and interest, each thirty-one (31) of January and thirty-one (31) of July. If such date falls on a Saturday, Sunday, or holiday, the payment must be made on the first following business day.

c) In the event that there is a remainder resulting from the installment paid on the dates established in the preceding item, this amount will be considered and recorded on the date, as an advance payment to capital as appropriate for Autonomous Departmental Governments and Autonomous Municipal Governments.

d) In the event that the BORROWER does not effect the corresponding payment on the dates indicated in item b), the calculation of interest will be carried out on the basis of accrued interest and will be applied as appropriate for Autonomous Departmental Governments and Autonomous Municipal Governments.

While there is a balance of the LOAN owed to the LENDER, the resources that could be incorporated into the TRUST to fulfill its object, the capital amortizations carried out by Autonomous Departmental Governments, Autonomous Municipal Governments, and the automatic debits carried out by the Ministry of Economy and Public Finance from the fiscal checking accounts of Autonomous Departmental Governments, Autonomous Municipal Governments, will be destined exclusively for the payment of the LOAN according to what is established in item a).

6.9 Automatic Debit Procedures. In the event that Autonomous Departmental Governments and Autonomous Municipal Governments incur in default with the BORROWER, the latter, within the framework of what is provided in Paragraph V of Article 9 of Law No. 742 modified by Additional Provision Fifth of Law 840 and what is established in the respective Loan Contracts signed with Autonomous Departmental Governments and Autonomous Municipal Governments, will manage the automatic debit of their accounts, to fulfill the obligations assumed with the BCB.”

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Article 2.- Authorize the President of the BCB to sign the amending contract with the National Fund for Regional Development (FNDR) under the terms of this Resolution.

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

La Paz, December 20, 2018

Pablo Ramos Sánchez Abraham Pérez Alandia Gabriel Herbas Camacho Ronald Polo Rivero Sergio Velarde Vera