JPRF-F-2021-009 — Reforming the Deadline for Submission of Public Banking Budget Proformas for JPRF Approval

Financial Policy and Regulation Board Resolution No. JPRF-F-2021-009 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING:

That Article 77 of the Organic Code of Public Planning and Public Finances provides that: "Income and expenses belonging to Social Security, public banking, public companies, and decentralized autonomous governments are not considered part of the General State Budget";

That Article 101 of the Organic Code of Public Planning and Public Finances provides that the formulation of budget proformas for the public sector, including those of public banking, must strictly observe the technical standards, guidelines, classifiers, and catalogs issued by the governing body of the National System of Public Finances (SINFIP);

That, in accordance with what is prescribed in Article 112 of the Organic Code of Public Planning and Public Finances, the budget proformas of entities subject to said Code that are not included in the General State Budget will be approved in accordance with applicable legislation; once the budgets are approved, they will be sent for informational purposes to the governing body of public finances within 30 days following their approval. Public banking will also have the same obligation with respect to the National Assembly;

That Article 13 of the Organic Monetary and Financial Code, Book I, reformed by the Reformatory Law to the Organic Monetary and Financial Code for the defense of dollarization, published in the Official Register Supplement No. 443, of May 3, 2021, created the Financial Policy and Regulation Board as part of the Executive Function, responsible for the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care service policy and regulation;

That Article 14.1, number 14, letter a) of the Organic Monetary and Financial Code, Book I, establishes that the Financial Policy and Regulation Board must annually approve the budget of public sector financial entities, their reforms, as well as regulate their execution. And, in concordance with Article 13; Articles 14.1 number 9, 365, and 372 of the Organic Monetary and Financial Code ratify the competence of this collegiate body to issue budgetary guidelines for public banking;

That, with Executive Decree No. 7, of May 24, 2017, the Ministry of Economic Policy Coordination was merged with the Ministry of Finance, changing its name to the Ministry of Economy and Finance;

That, the Twenty-Ninth General Provision of the Organic Monetary and Financial Code provides that: "In existing legislation where mention is made of the 'Monetary and Financial Policy and Regulation Board', replace it with 'Financial Policy and Regulation Board';

That, in the Codification of Monetary, Financial, Securities, and Insurance Resolutions, Book I "Monetary and Financial System", Title II "National Financial System", Chapter XXXIII "On the Government and Administration of the Public Financial Sector" (previous Chapter XXXIV, renumbered pursuant to Resolution No. 647-2021-F, published in the Official Register No. 415 of March 22, 2021), Section III "On the Public Capital Financial Sector Budget", Subsection I "Budget Management Standards for Public Financial Sector Entities"; its Article 8 provides that the Monetary and Financial Policy and Regulation Board (current Financial Policy and Regulation Board) will define the guidelines, actions, and schedule for the preparation and presentation of the budget proforma of Public Financial Sector entities. The Ministry of Economic Policy Coordination (current Ministry of Economy and Finance) will act as the counterpart of Public Financial Sector entities in the process of preparation and presentation of the budget proforma and will issue a report on said proformas prior to submission to the current Financial Policy and Regulation Board;

That, the National Corporation of Popular and Solidarity Finance, CONAFIPS, and the Development Bank of Ecuador B.P., BDE, via letters Nos. CONAFIPS-CONAFIPS-2021-1864-OF and BDE-BDE-2021-0481-OF, respectively, sent to the Financial Policy and Regulation Board their budget proformas for the 2022 fiscal year approved by their respective boards of directors;

That, via letter No. JPRF-2021-0026-O, the Financial Policy and Regulation Board requested the Ministry of Economy and Finance to pronounce itself on the terms provided in Article 8 of Subsection I "Budget Management Standards for Public Financial Sector Entities", Section III "On the Public Capital Financial Sector Budget", Chapter XXXIII "On the Government and Administration of the Public Financial Sector", Book I "Monetary and Financial System", Title II "National Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions"; regarding the proformas sent by CONAFIPS and BDE, with the response still pending;

That, the First Transitional Provision of the Organic Law for Economic Development and Fiscal Sustainability after the Covid-19 Pandemic, published in the Official Register Supplement No. 587 of November 29, 2021, orders in its text: "FIRST TRANSITIONAL PROVISION.- In order to reach the technical and capital parameters necessary to grant low-cost, long-term credit to the agricultural and productive sectors, within sixty (60) days counted from the publication of this law in the Official Register, the competent instances will initiate the pertinent procedures to merge BANECUADOR EP and CORPORACIÓN FINANCIERA NACIONAL EP into a single entity to be called BANCO DE FOMENTO ECONÓMICO DEL ECUADOR.";

That, on October 12, 2021, the National Assembly installed the members of the Financial Policy and Regulation Board;

That, with Resolution No. JPRF-F-2021-003 of December 10, 2021, the Financial Policy and Regulation Board issued the Guidelines for the preparation of the budget proforma of Public Financial Entities for the year 2022, establishing in Transitional Provisions Second and Third the following: "SECOND.- The budget proformas must be delivered to the Financial Policy and Regulation Board, on this single occasion, until December 22, 2021, approved by the corresponding government and administration bodies. THIRD.- The budget proformas must be approved by the Financial Policy and Regulation Board, on this single occasion, until December 30, 2021;"

That, via letter No. CFN-B.P.-SGGI-2021-0071-O of December 22, 2021, the Acting General Manager of Institutional Management of the National Financial Corporation B.P., requested the Financial Policy and Regulation Board to grant an extension of eight calendar days to send the 2022 budget proforma approved by its Board of Directors, due to the significant institutional, political, and economic change implied by the merger process of BANECUADOR B.P. and CORPORACIÓN FINANCIERA NACIONAL B.P. and the commitment to consolidate and prepare the BANCO DE FOMENTO ECONÓMICO DEL ECUADOR, supported by the Creation of Opportunities Plan 2021-2025;

That, through letter No. BIESS-GGEN-2021-1666-OF of December 28, 2021, the General Manager of the Bank of the Ecuadorian Social Security Institute, requested the Financial Policy and Regulation Board to grant an extension of the deadline to present the Budget Proforma for the year 2022 until January 5, 2022, in attention to what was resolved by the Board of Directors of the Bank of the Ecuadorian Social Security Institute - BIESS -, in Article 3 of Resolution No. BIESS-DIR-RS-0022-0250-2021;

That, the technical secretary of the Financial Policy and Regulation Board via memorandum No. JPRF-SETEC-2021-0008-M of December 29, 2021, sent to the President of the JPRF the legal analysis regarding the reform of Resolution No. JPRF-F-2021-003, contained in the legal report No. JPRF-CJ-2021-0008 of December 29, 2021;

That, the Financial Policy and Regulation Board in an extraordinary session held by technological means, convened on December 27, 2021, on December 30, 2021, reviewed and approved the text of the following resolution; and,

In exercise of its functions, RESOLVES:

SOLE ARTICLE.- Substitute the Second and Third Transitional Provisions of Section XI "Guidelines for the preparation of the budget proforma of Public Financial Entities for the year 2022", of Chapter XXXIII "On the Government and Administration of the Public Financial Sector", Book I "Monetary and Financial System" of the Codification of Financial, Securities, and Insurance Resolutions, with the following:

"SECOND.- The budget proformas must be delivered to the Financial Policy and Regulation Board, on this single occasion, until January 7, 2022, approved by the corresponding government and administration bodies."

"THIRD.- The budget proformas must be approved by the Financial Policy and Regulation Board, on this single occasion, until January 17, 2022."

FINAL PROVISION.- This resolution will enter into force from the present date, without prejudice to its publication in the Official Register.

COMMUNICATE.- Given in the Metropolitan District of Quito, on December 30, 2021.

THE PRESIDENT, Mgs. María Paulina Vela Zambrano

The aforementioned resolution was processed and signed by Master María Paulina Vela Zambrano, President of the Financial Policy and Regulation Board, in the Metropolitan District of Quito, on December 30, 2021.- I CERTIFY.

TECHNICAL SECRETARY Dra. Nelly Arias Zavala