Circular OPRAC 1 - 476. Financing to the Non-Financial Public Sector. Ordered Text

"1999 - Year of Export" CENTRAL BANK OF THE ARGENTINE REPUBLIC ____________________________________________________________________________ COMMUNICATION "A" 3054 I 23/12/99 ____________________________________________________________________________ TO FINANCIAL INSTITUTIONS: Ref.: Circular OPRAC 1 - 476 Financing to the non-financial public sector. Ordered text. We address you to inform you that this Institution has decided to establish new rules to which credit assistance to the non-financial public sector shall conform, the ordered text of which we send you in the Annex. Consequently, the pertinent provisions contained in Communications "A" 181 and 282 and their complements have been rendered without effect. We greet you very attentively. CENTRAL BANK OF THE ARGENTINE REPUBLIC Juan Carlos Isi Alfredo A. Besio Deputy Manager of Manager of Standards for Regulatory Regime Financial Institutions a/c Standards Management Attached to the Area of for Financial Institutions Economy and Finance ANNEX: 6 sheets

B.C.R.A.
ORDERED TEXT OF THE RULES ON FINANCING
TO THE NON-FINANCIAL PUBLIC SECTOR

-Index-

Section 1. Non-financial public sector.

1.1. Concept.

Section 2. Financial assistance.

2.1. Limitation.

2.2. Responsibility.

Section 3. Covered transactions.

3.1. Included concepts.

3.2. Exclusions.

Section 4. Exceptions.

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B.C.R.A.
FINANCING TO THE NON-FINANCIAL PUBLIC SECTOR
Section 1. Non-financial public sector.

1.1. Concept.

The non-financial public sector comprises the National Government and the provincial and municipal governments and the Government of the City of Buenos Aires, including the central administration, ministries, secretariats and their decentralized and autonomous agencies and other entities.

Mixed-economy companies are not covered by these provisions, and therefore shall be subject to the general treatment provided for companies of the non-financial private sector.

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B.C.R.A.
FINANCING TO THE NON-FINANCIAL PUBLIC SECTOR
Section 2. Financial assistance.

2.1. Limitation.

Financial institutions, including their subsidiaries and their branches or subsidiaries abroad, may not refinance or grant financial assistance to the non-financial public sector.

2.2. Responsibility.

Financial institutions must verify, for the purposes of applying these provisions and through the documentation they deem necessary to require, whether the client is included within the non-financial public sector.

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B.C.R.A. FINANCING TO THE NON-FINANCIAL PUBLIC SECTOR
Section 3. Covered transactions.

3.1. Covered transactions.

Transactions recorded in the following accounting items are covered:

3.1.1. Public and private securities.

3.1.2. Loans.

3.1.3. Other credits for financial intermediation.

Repo, forward, spot-to-settle and stock exchange repo and collateral transactions shall be included, insofar as the financial institution has already made the payment (or delivered the agreed consideration) and the delivery of the agreed consideration is pending (or the agreed cash payment has not been received), whatever the accounting registration method used.

3.1.4. Assets under financial lease.

3.1.5. Participations in other companies.

3.1.6. Sundry credits.

3.1.7. Debit order accounts:

3.1.7.1. Financial Institutions - Rediscounted documents.

3.1.8. Credit order accounts.

3.1.8.1. Granted credits (overdrafts, documentary credits and others).

3.1.8.2. Guarantees granted.

3.1.8.3. Guarantees granted on deferred payment checks.

3.1.8.4. Liabilities for foreign trade transactions.

In addition, the following transactions shall be considered:

3.1.9. Financing, in all its forms, granted by and/or through foreign banks over which the local entity exercises control under the terms provided in the rules on credit risk diversification and which are not subject to consolidated supervision, when they correspond to financing lines assigned to them by the local financial entity.

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Section 3. Covered transactions.

3.1.10. Financing, in all its forms, granted by the parent company or foreign bank that exercises control of the local financial entity under the terms provided in the rules on credit risk diversification, or by its branches in other countries, when they correspond to financing lines assigned to them by the local financial entity.

3.2. Excluded transactions.

3.2.1. Holding of national public securities.

3.2.2. Opening of import documentary credits.

3.2.3. Guarantees for the payment of local taxes in foreign trade transactions, provided that they only entail the assumption of a contingent liability.

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B.C.R.A. FINANCING TO THE NON-FINANCIAL PUBLIC SECTOR
Section 4. Exceptions.

The Central Bank will consider requests for exception to the limitation on granting financial assistance provided that the following requirements are met:

4.1. There is express authorization to incur the indebtedness and to pledge as collateral federal coparticipable resources and/or royalties from the exploitation of natural resources, with the following scope:

4.1.1. The provincial non-financial public sector must assign through transfer the resources from the federal coparticipation of national taxes, royalty funds and/or others of similar characteristics.

4.1.2. The municipal non-financial public sector must assign funds from the federal and/or provincial coparticipation of national taxes, for which it must instrument with the respective province the pertinent assignment of rights.

4.2. The loan agreements that are signed contain a clause that authorizes the designated financial agents to transfer to the accounts of the creditor intermediaries the amount pledged as collateral.

4.3. There is approval of the financing by the Ministry of Economy of the Nation.

4.4. Compliance is verified with the reporting regime that must be provided by the administrators of the loan portfolios of privatized public financial entities or those in the process of privatization or dissolution, of the respective jurisdiction, regarding debtors in irregular situation according to the criterion established in point 6.5.6.1. of the rules on "Classification of debtors".

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