Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 191/2015

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES THE SPECIFIC REGULATION FOR THE GRANTING OF THE LOAN PROVIDED FOR IN LAW NO. 742.

VISTOS:

• The Political Constitution of the State.
• Law No. 1670, of October 31, 1995, of the Central Bank of Bolivia (BCB).
• Law No. 742 of September 30, 2015 (Reformulated General Budget of the Nation 2015 Law 614), which authorizes the BCB to grant to the National Fund for Regional Development, an extraordinary credit of Bs3,180,000,000.- (Three Thousand One Hundred Eighty Million 00/100 Bolivianos), excepting the issuer from the application of articles 22 and 23 of Law No. 1670.
• The Report of the Monetary Operations Management BCB-GOM-SOSP-DCE-INF-2015-20 of October 6, 2015.
• The Report of the Legal Affairs Management BCB-GAL-SANO-INF-2015-421 of October 8, 2015.

CONSIDERING:

• That the Political Constitution of the State establishes in numeral 10 of article 158, that the Plurinational Legislative Assembly has the attribution to approve the contracting of loans that commit the general revenues of the State.
• That numeral 4 of article 316 of the Political Constitution of the State establishes that the function of the State in the economy consists in participating directly in the economy through the incentive and production of economic and social goods and services to promote economic and social equity and drive development, avoiding oligopolistic control of the economy.
• 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 article 9° (Local Counterpart Financing Policy) of Law No. 742 establishes that in order to facilitate access to resources for Autonomous Departmental Governments to finance the local counterparts of concurrent public investment projects with external financing, with the central level of the State, the Ministry of Development Planning is authorized to constitute a trust as Settlor, for an initial amount of Bs3,180,000,000.- (Three Thousand One Hundred Eighty Million 00/100 Bolivianos) with the following general characteristics:

a) Source: External resources and exceptionally resources from the Central Bank of Bolivia. b) Trustee: National Fund for Regional Development – FNDR. c) Purpose: Granting credits to Autonomous Departmental Governments to finance local counterparts of infrastructure projects, public works, basic services, and productive activities, which have external financing and are concurrent with the central level of the State. d) Term: Up to 20 years. e) Beneficiaries: Autonomous Departmental Governments. f) Beneficiaries will be responsible for the proper use of the credits received from the trust. g) The conditions and other administrative aspects of the trust will be established in the respective constitution contract. h) The operational procedures for granting credits to the trust beneficiaries, as well as the financial conditions of these credits and their modifications, will be determined by the National Fund for Regional Development – FNDR and approved by the Ministries of Development Planning, and of Economy and Public Finance, through a Biministerial Resolution. i) The credits granted by the trust must be repaid by the Autonomous Departmental Governments, under the financial conditions under which the external resources of the trust were managed.

That the aforementioned Law No. 742 in paragraph IV of article 9° exceptionally authorizes the Central Bank of Bolivia to grant a loan to the trust for an amount of up to Bs3,180,000,000 (Three Thousand One Hundred Eighty Million 00/100 Bolivianos) with the guarantee of the trust; and establishes that the resources exceptionally granted by the Central Bank of Bolivia will be restituted in a priority manner by the trust and the remaining balances must be transferred to the General Treasury of the Nation – TGN, for which the trust represented by its trustee is authorized to contract the referred credit with the Central Bank of Bolivia, excepting them from the effects and scope 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 Law No. 742 in paragraph VI of article 9° provides that the Trust Contract and the Loan Contract signed with the Central Bank of Bolivia are exempt from the payment of notarization expenses.

That the Report of the Monetary Operations Management BCB-GOM-SOSP-DCE-INF-2015-20 concludes that it is necessary to have a specific procedure for the granting of the exceptional credit to the Trust for the Financing of Resources to Autonomous Departmental Governments, and refers for the consideration of the Board of Directors a Draft Regulation that contemplates the technical needs and recommendations of the area, for the granting of the credit mentioned in Article 9 of Law No. 742.

That the Report of the Legal Affairs Management BCB-GAL-SANO-INF-2015-421 concludes that the Specific Regulation for the Concession of the Credit provided for in Law No. 742 proposed by the GOM according to report BCB-GOM-SOSP-INF-2015-20, is legally appropriate insofar as it does not contravene the current legal framework, being the competence of the Board of Directors of the BCB to consider its approval by two-thirds of the votes of all its members, in accordance with what is established in article 54 item o) 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 Granting of the Loan provided for in Law No. 742, which is attached and forms an integral part of this Resolution.

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

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

La Paz, October 13, 2015

Reynaldo Yujra Segales
Alvaro Rodriguez Rojas
Abraham Pérez Alandia

Sergio Velarde Vera
Ronald Polo Rivero

ANNEX

SPECIFIC REGULATION FOR THE GRANTING OF THE LOAN UNDER LAW NO. 742

CHAPTER I

PRELIMINARY PROVISIONS

Article 1.- (Object).- This Regulation aims to regulate the procedure for the granting of the loan provided for in paragraph IV of article 9 of Law No. 742 of Modifications to the General State Budget Management 2015, of September 30, 2015, by which the Central Bank of Bolivia (BCB) is exceptionally authorized to grant a loan of up to Bs3,180,000,000 (Three Thousand One Hundred Eighty Million 00/100 Bolivianos) to the National Fund for Regional Development (FNDR) in its capacity as Trustee of the Trust for the Financing of Resources to Autonomous Departmental Governments, excepting the Issuer from the scope of articles 22 and 23 of Law No. 1670 of October 31, 1995.

CHAPTER II

LOAN APPLICATION AND APPROVAL

Article 2.- (Loan Application).- For the approval of the loan by the BCB Board of Directors, the applicant must submit the following documentation:

1) Loan application addressed to the President of the BCB signed by the legal representative of the FNDR in its capacity as Trustee; which must contain:
a. Mention of the requested amount. b. Proposal of term and form of payment of capital and interest.
c. Proposal of form of disbursements.
d. Mention of the loan guarantee.

2) Legal documentation accrediting the legal personality of the FNDR.

3) Legalized copy of the designation of the legal representative of the FNDR in its capacity as Trustee, as well as a simple copy of their Identity Card.

4) Legalized copy of the Constitution Contract of the Trust for the Financing of Resources to Autonomous Departmental Governments, signed between the Ministry of Development Planning in its capacity as Settlor and the FNDR in its capacity as Trustee.

Article 3.- (Loan Guarantee).- In accordance with what is provided by paragraph IV of article 9 of Law No. 742, the guarantee of the loan granted by the BCB will be the Trust itself with all its assets present and future, which in an enumerative and non-limitative manner will be the following:

a) The balances of the loan amount granted of Bs3,180,000,000 (Three Thousand One Hundred Eighty Million 00/100 Bolivianos). b) The external resources managed by the Settlor within the framework of the Trust. c) Credit Contracts signed between the Trust and the Autonomous Departmental Governments. d) Capital and interest amortizations made by the Autonomous Departmental Governments to the Trust. e) The financial margin generated by the assets subject to the Trust. f) In general, any type of assets and rights that are acquired, received, or incorporated into the Trust's patrimony as a consequence of the realization of its purposes.

Article 4.- (Reports for Loan Approval).- Upon receipt of the application and documentation established in article 2 of this Regulation, prior to Board consideration, the following reports will be prepared:

a) Technical report from the Monetary Operations Management regarding financial conditions. b) Legal report from the Legal Affairs Management regarding compliance with regulations and presentation of documentation required for the granting of the loan. c) Other reports that may be required.

Article 5.- (Approval of Loan Application).- The BCB Board of Directors will consider the technical, legal, and other reports, and if appropriate, will approve the loan, with the favorable vote of at least two-thirds of its members present, issuing the corresponding Resolution. Likewise, it will instruct the preparation and authorize the signing of the loan contract by the President of the BCB, prior to review and approval of the contract model.

CHAPTER III

LOAN CONTRACT

Article 6.- (Financial Conditions).- The financial conditions of the loan will be established by the BCB Board of Directors, taking into account the FNDR's application in its capacity as Trustee of the Trust.

Article 7.- (Contract).- The financial conditions mentioned in article 6 of this Regulation, endorsed by the BCB Board of Directors, will be recorded in the respective

Central Bank of Bolivia

Board of Directors

// R.D. No. 191/2015

Loan Granting Contract to be signed between the BCB and the FNDR in its capacity as Trustee of the Trust, through a public document signed before the Notary Directorate of Government, of the Autonomous Departmental Government of La Paz. The notarization procedures of the referred Contract will be carried out by the BCB, with said procedure being exempt from the payment of notarization expenses by virtue of what is provided by paragraph VI of article 9 of Law No. 742.

Article 8.- (Conditions for Disbursements).-

Disbursements of the loan resources granted by the BCB in favor of the FNDR in its capacity as Trustee of the Trust will be made at the request of the Trustee as it documents to the BCB the signing of the respective credit contracts with the Autonomous Departmental Governments. Each disbursement will be made when the following requirements are met:

a) Disbursement request signed by the legal representative of the FNDR in its capacity as Trustee. b) BCB Board of Directors Resolution approving the granting of the Loan. c) Loan Granting Contract signed between the BCB and the FNDR. d) A specific account enabled at the BCB in Bolivianos in the name of the Trust. For this purpose, the FNDR must request the Ministry of Economy and Public Finance to open the mentioned account at the BCB. e) Legalized copy of the respective Credit Contract signed between the Trust and the Autonomous Departmental Government.

Article 9.- (Use and Destination of Loan Resources).-

The FNDR in its capacity as Trustee of the Trust will be responsible for the use and destination of the resources of the loan granted by the BCB in favor of the Trust, which must be destined by the Autonomous Departmental Governments to the financing of counterparts of public investment projects concurrent with the Central level of the State that have external financing.