Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 228/2016

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES MODIFICATIONS TO BOARD RESOLUTION NO. 195/2015 - EXCEPTIONAL LOAN UNDER LAW NO. 742 TO THE NATIONAL FUND FOR REGIONAL DEVELOPMENT (FND) FOR Bs3,180,000,000.-

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. 742 on Modifications to the General State Budget – Management 2015 (PGE-2015) of September 30, 2015.
• Law No. 840 on Modifications to the General State Budget – Management 2016 (PGE-2016) of September 27, 2016.
• The Board Resolution (B.R.) of the BCB No. 191/2015 of October 13, 2015.
• The Board Resolution (B.R.) of the BCB No. 195/2015 of October 19, 2015.
• The Board Resolution (B.R.) of the BCB No. 207/2016 of October 25, 2016.
• The SANO Contract No. 350/2015 of October 22, 2015.
• The Notes from the National Fund for Regional Development (FND) REF: DE-DAL-MAB-ECY-4866-CAR/2016 and DE-AL-MIT-5007-CAR/16, received on November 24 and December 1, 2016, respectively.
• The Report from the Monetary Operations Management (GOM) REF: BCB-GOM-SOSP-DCE-INF-2016-99 of December 1, 2016.
• The Report from the Legal Affairs Management (GAL) REF: BCB-GAL-SANO-DLBCI-INF-2016-337 of December 6, 2016.

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 its Article 316 that it is a function of the State to participate directly in the economy through the incentive and production of economic and social goods and services to promote economic and social equity, and to drive development, avoiding oligopolistic control of the economy. In paragraph 10 of paragraph I of Article 158 and of Article 322, it establishes that it is the attribution 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 the principal 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 its Article 9, Paragraph I, authorizes the Ministry of Development Planning 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 a source of external resources and exceptionally resources from the BCB, whose purpose is to grant 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; and that the resources exceptionally granted by the BCB will be repaid preferentially by the trust, and the remaining balances must be transferred to the General Treasury of the Nation – TGN.

That under Paragraph IV, it exceptionally authorizes the BCB to grant a loan to the trust for an amount up to Bs3,180,000,000 (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 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 credits to be granted to Autonomous Departmental Governments and Autonomous Municipal Governments will be updated based on the financial conditions of the credits to be obtained by the Ministry of Development Planning within the framework of the Local Counterpart Financing Policy.

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 current accounts of Autonomous Departmental Governments and Autonomous Municipal Governments, when they 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 through B.R. No. 191/2015, the Board of Directors of the BCB approves the Specific Regulation for the Granting of Credit provided for in Law No. 742.

That through B.R. No. 195/2015, the Board of Directors of the BCB approves the exceptional loan under Law No. 742 to the National Fund for Regional Development (FND) for Bs3,180,000,000.-.

That through B.R. No. 207/2016, the Board of Directors of the BCB approves the modifications to the specific regulation for the granting of the loan under Law No. 742.

That SANO Contract No. 350/2015 has the object of granting an exceptional loan, for an amount up to Bs3,180,000,000.- (Three Thousand One Hundred Eighty Million 00/100 Bolivianos) that the BCB makes to the FND, so that the latter, by virtue of the Trust Constitution Contract, grants credits to Autonomous Departmental Governments to finance the counterparts of public investment projects concurrent with the Central Level of the State that have external financing.

That through note REF: DE-DAL-MAB-ECY-4866-CAR/2016, the FND submits the draft Addendum for Modification of the Exceptional Loan Granting Contract – SANO No. 350/2015, for it to be reviewed and subsequently signed.

That through note REF: DE-DAL-MIT-5007-CAR/2016, the FND submits an original of the Addendum for Modification of the “Trust Contract signed between the Ministry of Development Planning and the FND” and requests that an Addendum to the Exceptional Loan Granting Contract SANO No. 350/2015 be signed.

That the Monetary Operations Management concludes in its report REF: BCB-GOM-SOSP-DCE-INF-2016-99, that the incorporation of Autonomous Municipal Governments does not imply modifications in the financial conditions of the loan approved and granted by the BCB, therefore its acceptance is suggested prior to legal opinion.

That the Legal Affairs Management concludes in its report REF: BCB-GAL-SANO-DLBCI-INF-2016-337 that the request made by the FND is legally appropriate, since it is framed within what is established by Additional Provision Fifth of Law No. 840 which modifies Article 9 of Law No. 742.

That Article 5 of the Specific Regulation for the Granting of the Loan under Laws No. 742 and No. 840 establishes that the Board of Directors of the BCB will consider the technical, legal, and other reports and, if applicable, approve the loan, with the favorable vote of at least two-thirds of its present members, issuing the corresponding Resolution. It will also 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.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve modifications to Article 1 of Board Resolution No. 195/2015 within the framework of what is provided in Additional Provision Fifth of Law No. 840 of September 27, 2016, under the following terms and conditions:

IT STATES:

Currency:	Bolivianos.
Total Credit Amount:	Bs3,180,000,000.- (Three Thousand One Hundred Eighty Million 00/100 Bolivianos).
Term:	7 years calculable from the first disbursement.
Interest Rate:	1.00% (one percent).
Payment Plan:	During the first two years, partial payments of the loan with its interests will be made as payments are received from Autonomous Departmental Governments. From the third year onwards, payments will be annual with fixed installments.
Amortization:	Constant.
Interest Payment:	Annual.
Guarantees:	Trust.

IT MUST STATE:

Currency:	Bolivianos.
Total Credit Amount:	Bs3,180,000,000.- (Three Thousand One Hundred Eighty Million 00/100 Bolivianos).
Term:	7 years calculable from the first disbursement.
Interest Rate:	1.00% (one percent).

Payment Plan:	During the first two years, partial payments of the loan with its interests will be made as payments are received from Autonomous Departmental Governments and/or Autonomous Municipal Governments. From the third year onwards, payments will be annual with fixed installments.
Amortization:	Constant.
Interest Payment:	Annual.
Guarantees:	Trust.

Article 2.- The Presidency and the General Management are in charge of the execution and compliance of this Resolution.

La Paz, December 7, 2016

Marcelo Zabala Estrada

Ronald Polo Rivero

Abraham Pérez Alandia

Luis Baudoin Olea