Circular No. 2.844

CIRCULAR N. 002844 ------------------ Discloses instructions for conducting interest rate auctions for credit operations by anticipated budget revenue (ARO). The Collegiate Board of the Central Bank of Brazil, in a session held on 30.09.98, having regard to the provisions of CMN Resolution No. 2.553, of 24.09.98, and article 33, paragraph 1, of Resolution No. 78, of 01.07.98, of the Federal Senate D E C I D E D: Art. 1 Establish a system for conducting auctions for contracting credit operations by anticipated budget revenue (ARO), which shall take effect from 07.10.98. Art. 2 The new ARO operations, the novations of maturing or matured operations, as well as any renegotiation of conditions of existing operations, are subject to the competitive process in question. Art. 3 The firm proposal for contracting an ARO operation may only be made by a financial institution that holds margin in relation to the limit set in Resolution No. 2.443, of 14.11.97, of the National Monetary Council, and must be accompanied by the documentation provided for in BCB Communiqué No. 6.304, of 07.08.98. Sole paragraph. Firm proposal is the irrevocable proposal that is submitted by the financial institution to this Institution for analysis for the purpose of compliance with the limits of Resolution No. 78, of 01.07.98, of the Federal Senate, in which the borrower's "aware" and "agreed" are stated. Art. 4 Proposals that charge other charges than the interest rate of the operation, which must necessarily be prefixed or indexed to the Basic Financial Rate - TBF, as well as present an interest rate higher than one and a half times the TBF in effect on the day of their submission, will not be accepted. Art. 5 Multiple banks with commercial and/or investment portfolios, investment banks, commercial banks and savings banks, whether or not holding margin in relation to the limit set in Resolution No. 2.443/97, may participate in the auction. Art. 6 The ARO operation may only be contracted after delivery to this institution of a declaration, signed by a representative of the financial institution and by the Head of the Executive Branch, that there is no reciprocity or special condition that represents additional cost to that expressed by the interest rate of the operation, in accordance with art. 33, paragraph 5 of Resolution No. 78/98. Art. 7 The Public Debt Department - DEDIP shall disclose the operational system of ARO auctions. Art. 8 This Circular enters into force on the date of its publication. Brasília, 07 October 1998 Paolo Enrico Maria Zaghen Director --------------------------------------------------------------------- Note: Retransmitted due to an inaccuracy in art. 3