BANK OF THE REPUBLIC OF BURUNDI

STATUTES OF THE BANK OF THE REPUBLIC OF BURUNDI

Law No. 1/34 of December 2, 2008

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REPUBLIC OF BURUNDI OFFICE OF THE PRESIDENT

LAW NO. 1/34 OF DECEMBER 2, 2008 ESTABLISHING THE STATUTES OF THE BANK OF THE REPUBLIC OF BURUNDI.

THE PRESIDENT OF THE REPUBLIC

Having regard to the Constitution of the Republic of Burundi; Having regard to O.L.R.U No. 11/37 of March 6, 1962 concerning Foreign Exchange Control and External Trade; Having regard to Decree-Law No. 1/6 of April 4, 1981 revising the Penal Code; Having regard to Decree-Law No. 1/045 of July 9, 1993 establishing General Provisions of the Commercial Code; Having regard to the Law of June 29, 1962 maintaining in force in Burundi legislative and regulatory acts issued by the supervisory authority; Having reviewed Law No. 1/036 of July 7, 1993 modifying Law No. 1/01 of January 3, 1976 approving the Statutes of the Bank of the Republic of Burundi; Having regard to Law No. 1/002 of March 6, 1996 establishing the Code of Private and Public Companies; Having regard to Law No. 1/012 of November 29, 2002 regulating the exercise of insurance activities; Having regard to Law No. 1/017 of October 23, 2003 amending Decree-Law No. 038 of July 7, 1993 regulating Banks and Financial Institutions; Having regard to Law No. 1/07 of March 15, 2006 on Bankruptcy; The Council of Ministers having deliberated; The National Assembly and the Senate having adopted;

PROCLAIMS:

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TITLE I: GENERAL PROVISIONS

Article 1: Legal Status of the Bank of the Republic of Burundi.

The Bank of the Republic of Burundi, abbreviated as BRB and hereinafter referred to as "the Central Bank", is a national public institution endowed with legal personality and administrative and financial autonomy.

It is not subject to registration in the commercial register, nor to laws and regulations concerning public accounting and public procurement.

However, the Central Bank must adopt a regulation governing the sale and acquisition of goods and services subject to approval by the Minister responsible for finance, which must strictly respect the principles of transparency, equity, and rigor.

Furthermore, its organs must ensure strict compliance with this regulation.

Article 2: Relations with Third Parties.

The Central Bank is considered a merchant in its relations with third parties. To this end, it is authorized to enter into contracts and to sue or be sued in court. It is further subject to commercial legislation to the extent that such legislation does not contradict these Statutes.

The Central Bank has the capacity to acquire, construct, own, alienate, and administer movable and immovable property intended directly or indirectly for its operations, primarily for the welfare of its staff or for leasing.

Article 3: Seat of the Central Bank.

The seat of the Central Bank is established in Bujumbura. It may be transferred to any other locality in Burundi by a law proposed by the General Council.

The Central Bank may open branches in all localities of the country.

It may have correspondents and representatives both within Burundi and abroad.

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Article 4: Capital of the Bank.

The share capital consists of an endowment fully subscribed by the State of Burundi. It amounts to eleven billion Burundian francs (11,000,000,000 BIF) as of the date of entry into force of this law. It will be increased annually either by incorporation of the general reserve upon decision of the General Council, or by other State endowments, so that it represents at least 10% of the Central Bank's assets.

Article 5: Independence and Responsibility.

In pursuing its objectives and executing its missions, the Central Bank is independent and responsible in accordance with this law. The independence of the Central Bank is respected at all times in fulfilling its missions as defined in Article 7 of these Statutes, and no person or entity shall seek to influence the members of its decision-making organs.

The Central Bank is responsible before the President of the Republic. It regularly reports to him on the execution of its missions and submits reports on the economic and financial situation of the country.

TITLE II: OBJECTIVES AND MISSIONS.

CHAPTER I: GENERALITIES.

Article 6: Objectives of the Central Bank.

The Central Bank's primary objective is to ensure price stability.

Without prejudice to the aforementioned objective, the Central Bank contributes to financial system stability.

While prioritizing the two aforementioned objectives, the Central Bank also contributes to implementing economic policies conducive to macroeconomic stability and harmonious national development.

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Article 7: Missions of the Central Bank.

To achieve its objectives described in the preceding article, the Central Bank executes the following missions:

1. define and implement monetary policy;
2. define and implement the exchange rate regime;
3. hold and manage official foreign exchange reserves;
4. regulate and supervise banks, financial institutions, and microfinance institutions;
5. issue banknotes and coins;
6. promote a stable and sound financial system;
7. promote a reliable, efficient, and robust national payment system;
8. act as State's banker;
9. perform any other task provided for by this law;
10. perform any task entrusted to the Central Bank by other laws, subject to compatibility with its autonomy.

CHAPTER II: INSTRUMENTS

Article 8: Regulatory Power.

In areas falling under this law or other legislations, the Central Bank may adopt regulations, issue instructions, and make decisions.

The Central Bank's regulations have general scope and are binding in all their elements.

The Central Bank's instructions impose the obligation to act, or refrain from acting, in a certain manner and are imposed on one or more institutions or persons. The instructions and decisions of the Central Bank are binding in their elements for the persons to whom they are addressed.

The regulations issued by the Central Bank are published in the Official Journal and on its website, and enter into force on the date of this publication, or on any other subsequent date specified in the regulation.

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Article 9: Accounts.

The Central Bank may:

1. open cash and securities accounts in its books for banks, national and foreign financial institutions, microfinance institutions, insurance companies, social security funds, national and international financial institutions, health insurance funds, the Government, parastatal companies, State projects, foreign governments, and international organizations.
2. open and maintain cash and securities accounts with foreign central banks, foreign commercial banks, securities depositories, and international financial institutions.

The Management Committee determines the conditions for opening accounts in the Central Bank's books. The latter may charge fees for maintaining these accounts.

Article 10: Financial Operations of the Bank.

The Central Bank may in particular:

1. intervene in capital markets, either by purchasing or selling outright (spot and forward), or by taking and placing under repurchase agreements, or by lending or borrowing claims and negotiable instruments denominated in currency determined by the Bank. It may also purchase or sell precious metals.
2. conduct credit operations with banks, financial institutions, and other financial institutions based on appropriate collateral for loans.

The Central Bank may also conduct the following operations:

1. issue and repurchase its own debt instruments;
2. accept cash, securities, and precious metals in deposit, handle the collection of securities, and act on behalf of others in transactions involving securities and other financial instruments as well as precious metals;
3. conduct derivative operations;
4. conduct operations on foreign currencies, gold, or other precious metals;

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5. conduct operations for the placement and financial management of its foreign currency holdings and other external reserve components;
6. obtain credit abroad and, for this purpose, provide guarantees;
7. conduct operations related to regional or international monetary cooperation.

The General Council determines the types of instruments and operations that may be used in the Bank's financial operations, as well as the conditions under which such operations may be carried out.

Article 11: Security Interests in Favor of the Central Bank.

The Central Bank requires banks, financial or microfinance institutions, and any other persons benefiting from its support to provide guarantees, notably pledges on securities, commercial paper, precious metals, national currency, and foreign currencies held in accounts or cash. The assets subject to this pledge are automatically placed in the possession of the Bank.

The Central Bank holds a first-ranking privilege on these assets, prior to any other privilege.

The Central Bank's privilege retains its full effect even in cases of insolvency proceedings, seizure, or conciliation situations, provided that the pledge was constituted prior to the opening of these proceedings, or that the Central Bank was unaware of them at the time of the pledge's constitution.

Article 12: Realization of Security Interests.

In the event of non-performance by the Central Bank's counterparties of their obligations secured by a pledge, and notwithstanding insolvency proceedings, seizure, or any conciliation situation among the debtor's or pledgor's creditors, the Central Bank is authorized, without prior notice or judicial decision, to realize the pledged assets as promptly as possible.

Article 13: Subrogation.

The Central Bank is automatically subrogated to the rights of banks, financial institutions, and microfinance institutions on claims and other assets given to it as security.

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CHAPTER III: MONETARY POLICY.

Article 14: Formulation and Execution of Monetary Policy.

The Central Bank has exclusive responsibility for the formulation and execution of monetary policy, independently determining its intermediate monetary targets, instruments, and application methods.

Article 15: Reserve Requirements.

Within the framework of its monetary policy, the Central Bank may require banks to maintain a minimum amount of reserves in its books. This amount is calculated based on a uniform reserve coefficient applied to the engagement categories of all banks, as determined by it.

The Central Bank may decide to remunerate reserve requirements at the rate it sets.

The Central Bank may impose sanctions in case of non-compliance with these provisions.

Article 16: Money Market Regulation.

The Central Bank regulates money market operations and sets the criteria and eligibility conditions for different participants.

It may regulate and authorize the issuance of negotiable securities by any entity, as well as transactions involving these securities on the money market.

CHAPTER IV: EXCHANGE RATE REGIME.

Article 17: Exchange Rate Regime.

The Central Bank defines the exchange rate regime, issues foreign exchange regulations, and ensures their application. The exchange rate regime must be compatible with the Bank's primary objective as defined in Article 6.

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Article 18: Foreign Exchange Market.

The Central Bank may regulate the foreign exchange market and ensure its supervision and proper functioning.

CHAPTER V: HOLDING AND MANAGEMENT OF OFFICIAL FOREIGN EXCHANGE RESERVES.

Article 19: Official Foreign Exchange Reserves.

The Central Bank holds and manages Burundi's official foreign exchange reserves, determining their level and composition.

In its foreign exchange reserve management strategy, it applies the criteria of security, liquidity, and yield in that order of priority.

Article 20: Composition of Foreign Exchange Reserves.

Official foreign exchange reserves consist notably of the following elements:

• monetary gold;
• foreign currency notes and coins;
• foreign currency account holdings with overseas correspondents;
• foreign debt securities issued by reliable foreign issuers or international financial organizations;
• holdings in special drawing rights;
• foreign exchange position with the International Monetary Fund.

CHAPTER VI: PRUDENTIAL SUPERVISION.

Article 21: Regulation and Supervision.

The Central Bank is the body responsible for regulating banking activity, approving banks, financial institutions, and microfinance institutions, as well as supervising these institutions.

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To this end, it may impose recovery measures and take administrative sanctions against banks and other financial and microfinance institutions under the conditions specified by prevailing legislation and regulation.

Article 22: Supervisory Functions.

The Central Bank may conduct on-site inspections of banks, financial institutions, and microfinance institutions to examine accounts, books, documents, and other records enabling it to obtain information and take any other measures the Bank deems necessary.

Financial institutions are required to communicate all information to the Bank regarding their operations and financial situation.

The Central Bank may disseminate the information and data obtained under the preceding paragraph in aggregated form, ensuring protection of private information as stipulated in Article 69 of these Statutes.

Article 23: Exceptional Assistance.

In exceptional circumstances, the Bank may, according to terms and conditions it determines, provide financial assistance to a bank for a period not exceeding three months. This period may be extended provided that the total assistance duration does not exceed 180 days.

The Central Bank may only take such commitments in the following cases:

1. The beneficiary bank, deemed solvent by the Central Bank, provides adequate security and its financial assistance request is based on a temporary liquidity need;
2. The bank faces a situation constituting a threat to the entire financial system and presents a recovery plan deemed acceptable by the Central Bank. In this case, the Central Bank's support is subordinated to the issuance in its favor by the Minister responsible for finance of a written repayment guarantee.

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In all cases, the Central Bank may limit its support to a percentage of the guarantees constituted in its favor.

At such time as it deems appropriate, the Central Bank may inform the financial market of the existence and extent of assistance granted under this article to safeguard financial system stability.

CHAPTER VII: PAYMENT SYSTEMS.

Article 24: Role of the Central Bank.

The Central Bank promotes stability, security, and efficiency of Burundi's payment system. To this end, it may approve, regulate, and supervise payment, clearing, and securities settlement systems, as well as the issuance of electronic money.

The Central Bank is authorized to organize and manage these systems and to grant facilities to promote their stability, security, and efficiency.

CHAPTER VIII: MONETARY EMISSION.

Article 25: Currency Unit.

The currency unit of the Republic of Burundi is the Burundi Franc (BIF).

All monetary transactions taking place within the territory of the Republic of Burundi are expressed in Burundi francs, unless an exemption is granted by the Central Bank.

Article 26: Issuance of Banknotes and Coins.

The Central Bank exercises, within the territory of the Republic and on behalf of the State, the exclusive privilege of issuing banknotes and coins.

Only banknotes and coins issued by the Central Bank have legal tender status in Burundi. They possess unlimited discharge power.

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The Central Bank determines the face value, dimensions, weight, designs, security features, and other characteristics of banknotes and coins that are issued. These elements are published in the Official Journal, on the Central Bank's website, and in major media outlets.

The Central Bank ensures the regular supply of banknotes and coins to the country. To this end, it establishes and manages a reserve currency stock and formulates adequate circulation plans.

The total amount of banknotes and coins in circulation, constituting fiduciary money, is recorded as a liability in the Central Bank's financial statements. Said liability does not include banknotes and coins held in reserve stock.

Article 27: Withdrawal and Replacement of Currency.

The Central Bank may withdraw banknotes and coins from circulation. The withdrawn notes and coins may be exchanged with the Central Bank under conditions set by it. These conditions relate, among others, to the characteristics of these notes and coins and to the exchange deadline. They are published in accordance with paragraph 3 of Article 26.

After the aforementioned deadline, withdrawn banknotes and coins cease to have legal tender status.

The countervalue of withdrawn banknotes and coins not presented for exchange upon expiration of the fixed deadline is deducted from fiduciary money and allocated to a reserve account of the Central Bank. The General Council may decide to incorporate this reserve into the Bank's capital.

Article 28: Counterfeiting of Currency.

Any person who falsifies or counterfeits any banknote or coin having legal tender status, whether within Burundi's territory or abroad, possesses, transports, or circulates such notes or coins, manufactures, possesses, or transports any plate, paper, mold, or other object or substance intended for use in the falsification, counterfeiting, or alteration of such banknotes or coins, is sanctioned in accordance with the provisions provided by the Penal Code.

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Banknotes and coins suspected of being counterfeits by approved Banks, financial institutions, and other entities authorized to conduct operations in their fields of activity must be retained and immediately sent to the competent authorities.

The Central Bank seizes all banknotes suspected of being counterfeit or falsified and sues the holders of these notes.

Article 29: Unfit Currency.

Banknotes and coins unfit for circulation are withdrawn and destroyed by the Central Bank.

The Central Bank may accept exchanging, free of charge, mutilated banknotes and coins.

The Central Bank may refuse to exchange banknotes and coins if their designs are illegible, perforated, or if a large part of their surface has been lost. It may confiscate without compensation any banknote that has been altered, including notes on which writing, painting, superimposition, sealing, or adhesive materials have been applied, or that have been perforated.

Article 30: Right of Claim.

No opposition may be served on the Central Bank in cases of loss or theft of notes issued by the Central Bank.

CHAPTER IX: SERVICES TO THE STATE.

Article 31: State's Banker.

The Central Bank provides the services of State's banker under conditions determined by an agreement between it and the Minister responsible for finance.

Article 32: Issuance of Negotiable Securities.

The Central Bank may issue, on behalf and for the account of the State, negotiable securities on the money market. It defines, in mutual agreement with the Minister responsible for finance, the terms of issuance and trading of these securities.

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Article 33: Credit to the State.

The Central Bank does not grant direct or indirect advances either to the State or to any other administration or entity belonging to the State.

This provision does not apply to public banks, nor to other public establishments treated as private banks and other supervised private entities.

However, to ensure the proper functioning of the payment system, facilities may be granted during the day to all entities mentioned above, but they must be fully repaid by the close of that day. To this end, the Central Bank will take appropriate measures.

Notwithstanding the aforementioned provision, the Central Bank is authorized to acquire Treasury securities provided that such acquisitions are made on the secondary market at prevailing rates.

In exceptional circumstances, particularly in case of insufficiency in the secondary market, the Central Bank may, after submitting a detailed report on the State's treasury situation, purchase Treasury bonds issued by it provided that their maturity does not exceed 13 weeks.

Article 34: International Agreements and International Representation.

The Central Bank assists the Government in its relations with international financial institutions.

It may represent the Government both before these institutions and within international conferences. It participates in negotiating international payment, exchange, and clearing agreements and is responsible for their execution.

It concludes any technical arrangement relating to the practical modalities of implementing said agreements.

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TITLE III: GOVERNANCE, ADMINISTRATION AND PERSONNEL

Article 35: Organs of the Central Bank.

Direction, administration, and control of the Central Bank are ensured by the following organs:

• the General Council;
• the Management Committee;
• the Control Bodies.

CHAPTER I: OF THE GENERAL COUNCIL.

Article 36: Mission and Powers of the General Council.

The General Council is the supreme organ of the Bank. It determines its policy orientation. Without prejudice to other provisions of this law, the General Council has, in particular, the following powers:

1. adopt