CMN Resolution No. 2521 — Redefines rules and limits for public sector credit contingency via new wording of Art. 4 and addition of Art. 8 to Resolution No. 2,461 of 26.12.97

RESOLUTION NO. 002521

Redefines rules and limits for the contingency of credit to the public sector, through new wording of Art. 4 and addition of Art. 8 to Resolution No. 2,461, of 12.26.97.

THE CENTRAL BANK OF BRAZIL, in accordance with Art. 9 of Law No. 4,595, of 12.31.64, makes public that the MONETARY COUNCIL NATIONAL, in a session held on 07.07.98, considering the provisions of Art. 4, items VI and VIII, of the aforementioned Law,

RESOLVES:

Art. 1 The Art. 4 of Resolution No. 2,461, of 12.26.97, shall be in effect with the following wording:

"Art. 4. The following types of operations are excluded from the limitation determined in Art. 1 of this Resolution:

I - those approved by the Central Bank of Brazil until 11.12.97;

II - those approved by the credit committees of Caixa Econômica Federal until 11.12.97 with resources originating from the Severance Indemnity Fund and which have been approved by the Central Bank of Brazil until 07.08.98;

III - those that use resources from Protech and the Severance Indemnity Fund, the latter for Sanitation and Housing provided that the planned disbursements do not exceed R$800 million per year and that have been approved by the Central Bank of Brazil until 07.08.98;

IV - those approved by the credit committee of the National Bank for Economic and Social Development until 11.14.97 and which have been approved by the Central Bank of Brazil until 07.08.98;

V - new operations carried out by the National Bank for Economic and Social Development, up to the limit of R$600 million per year, provided they have been approved by the Central Bank of Brazil until 07.08.98;

VI - new operations carried out by Banco do Brasil S.A. and intended to finance programs for reducing personnel expenses and strengthening budgetary and financial management, up to the value of R$100 million provided they have been approved by the Central Bank of Brazil until 07.08.98;

VII - new operations carried out by Banco do Nordeste do Brasil S.A. and intended for financing of counterparty loans from the Inter-American Development Bank within the Tourism Development Program in the Northeast, up to the value of R$120 million;

VIII - new operations carried out by federal credit and development financial institutions or their subsidiaries, provided they constitute the transfer of resources from external loans contracted with international organizations;

IX - new operations carried out by federal credit and development financial institutions or their subsidiaries and which are included in the Popular Productive Credit Program, in which the final borrower is an individual, cooperative or association, and in which the State, the Federal District or the Municipality participates only as an intermediary;

X - those carried out by the National Bank for Economic and Social Development, with the direct or indirect administration of States, Federal District or Municipalities, with the express objective of anticipating revenues from the process of privatization of their companies, with authorization in a joint act of the Ministers of Finance and Planning and Budget, and provided that the resources obtained in this process are destined in their entirety to the write-off of debts already registered in CADIP; and

XI - guarantees, sureties and guarantees."

Art. 2 Resolution No. 2,461, of 12.26.97 is amended by adding an article 8, with the following wording, renumbering the others:

"Art. 8. It is prohibited to federal official financial institutions the carrying out of financial operations of any kind with the States and the Federal District, except when resulting from debt refinancing agreements with the Union and/or the Program for Incentive to the Reduction of the Public Sector in the Banking Activity (PROES)."

Art. 3 The Central Bank of Brazil is authorized to adopt the necessary measures to comply with the provisions of this Resolution.

Art. 4 This Resolution enters into force on the date of its publication, revoking Resolution No. 2,496, of May 7, 1998.

Brasília, July 8, 1998

Gustavo H. B. Franco
President