Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 207/2016

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES MODIFICATIONS TO THE SPECIFIC REGULATION FOR THE GRANTING OF LOANS UNDER LAW NO. 742

VISTOS (VIEWED):

• Law No. 1670, dated October 31, 1995, of the Central Bank of Bolivia (BCB).
• Law No. 840 dated September 27, 2016, on Modifications to the General State Budget – Management 2016.
• BCB Board Resolution No. 191/2015 dated October 13, 2015.
• BCB Board Resolution No. 195/2015 dated October 19, 2015.
• SANO Contract No. 350/2015 dated October 22, 2015.
• Report from the Monetary Operations Management Department REF: BCB-GOM-SOSP-DCE-INF-2016-62 dated October 20, 2016.
• Report from the Legal Affairs Management Department REF: BCB-GAL-SANO-DLBCI-INF-2016-286 dated October 21, 2016.

CONSIDERING:

That Law No. 840, in its Fifth Additional Provision, modifies Paragraphs I, III, V, and VI of Article 9 of Law No. 742 of September 30, 2015, within the framework of which the Trust for Financing Policy of Local Counterparties was constituted, including Autonomous Municipal Governments as beneficiaries of resources to finance counterparties of public investment projects concurrent with the central level of the State that have external or internal financing.

That Board Resolution No. 191/2015 approves the “Specific Regulation for the Granting of the Loan provided for in Law No. 742.”

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

That SANO Contract No. 350/2015 grants an exceptional loan, for the amount of Bs 3,180,000,000 (Three Thousand One Hundred Eighty Million 00/100 Bolivianos) so that the FNDR grants credits to Autonomous Departmental Governments to finance counterparties

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of public investment projects concurrent with the Central Level of the State that have external financing.

That the Monetary Operations Management Department, through report REF: BCB-GOM-SOSP-DCE-INF-2016-62, concludes that it is necessary to adapt the specific regulation for the granting of the loan within the framework of Law No. 742 to the current legal framework, in accordance with what is established in Law No. 840 on Modifications to the General State Budget – 2016, and recommends to the Board of Directors consider the modification of the aforementioned Regulation that includes Autonomous Municipal Governments as beneficiaries of the resources granted by the BCB to the Trust administered by the FNDR.

That the Legal Affairs Management Department, through report REF: BCB-GAL-SANO-DLBCI-INF-2016-286, concludes that the proposal to modify the Specific Regulation for the Granting of Loans within the framework of Law No. 742 is legally appropriate, as it does not contravene the current legal framework.

That Article 11, numeral 29 of the BCB Statute, concordant with Article 54, subsection o) of Law No. 1670, establishes that the Board of Directors has the authority to approve, modify, and interpret the Statute and regulations by two-thirds of the votes of its members, without the need for any additional administrative act.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the modifications to the “Specific Regulation for the Granting of the Loan within the framework of Law No. 742,” as established in Law No. 840 of September 27, 2016, which forms an integral part of this Resolution as an annex.

Article 2.- This Regulation shall 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 25, 2016

Marcelo Zabalaga Estrada

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Sergio Velarde Vera

Ronald Polo Rivero

Luis Baudoin Olea

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ANNEX

SPECIFIC REGULATION FOR THE GRANTING OF THE LOAN UNDER LAWS NO. 742 AND NO. 840

CHAPTER I

PRELIMINARY PROVISIONS

Article 1.- (Object).- This Regulation aims to regulate the procedure for granting the loan provided for in paragraph IV of Article 9 of Law No. 742 on Modifications to the General State Budget Management 2015, dated September 30, 2015, and in the Fifth Additional Provision of Law No. 840 on Modifications to the General State Budget Management 2016, dated September 27, 2016, by which the Central Bank of Bolivia is exceptionally authorized to grant a loan to the trust of up to Bs 3,180,000,000.- (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 and Autonomous Municipal Governments, excluding the Issuing Entity 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 their capacity as Trustee, which must contain:

   a. Mention of the requested amount. b. Proposal for term and method of repayment of principal and interest. c. Proposal for method of disbursements. d. Mention of the loan guarantee.

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

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

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

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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 shall be the Trust itself with all its assets, present and future, which, in an illustrative and non-limiting manner, shall be the following:

a) The balances of the granted loan amount of Bs 3,180,000,000 (Three Thousand One Hundred Eighty Million 00/100 Bolivianos).

b) External resources managed by the Settlor within the framework of the Trust.

c) Credit Contracts signed between the Trust and Autonomous Departmental Governments and Autonomous Municipal Governments.

d) Principal and interest amortizations made by Autonomous Departmental Governments and Autonomous Municipal Governments to the Trust.

e) 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 carrying out 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 shall be prepared:

a) Technical report from the Monetary Operations Management Department regarding financial conditions.

b) Legal report from the Legal Affairs Management Department regarding compliance with regulations and presentation of documentation required for the granting of the loan.

c) Other reports as required.

Article 5.- (Approval of Loan Application).- The BCB Board of Directors will consider the technical, legal, and other reports, and if appropriate, approve the loan, with the favorable vote of at least two-thirds of its present members, 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 shall 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, shall be recorded in the respective

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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 Government Notary Directorate of the Autonomous Departmental Government of La Paz. The protocolization procedures for the aforementioned Contract shall be carried out by the BCB, with said procedure being exempt from the payment of protocolization expenses by virtue of what is provided by paragraph VI of Article 9 of Law No. 742 and the Fifth Additional Provision of Law No. 840.

Article 8.- (Conditions for Disbursements).- Disbursements of the resources of the loan granted by the BCB in favor of the FNDR in its capacity as Trustee of the Trust shall be made at the request of the Trustee as it documents to the BCB the signing of the respective credit contracts with Autonomous Departmental Governments and Autonomous Municipal Governments. Each disbursement shall be made when the following requirements are met:

a) Disbursement request signed by the legal representative of the FNDR in their capacity as Trustee.

b) BCB Board 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 aforementioned account at the BCB.

e) Legalized copy of the respective Credit Contract signed between the Trust and the Autonomous Departmental Government or Autonomous Municipal Government.

Article 9.- (Use and Destination of Loan Resources).- The FNDR in its capacity as Trustee of the Trust shall 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 Autonomous Departmental Governments and/or Autonomous Municipal Governments to the financing of counterparties of public investment projects concurrent with the Central level of the State that have external or internal financing.