Resolution 134/97 Approving the Foreign Exchange Operations Regulation

BOARD RESOLUTION NO. 134/97
SUBJECT: INTERNATIONAL AFFAIRS - APPROVES FOREIGN EXCHANGE OPERATIONS REGULATION.

HAVING SEEN:
Law 1670 of October 31, 1995.
Supreme Decree No. 24756 of July 31, 1997.
Report from the Legal Affairs Unit (U.A.JUR) No. 050/97.
Report from the Economic Policy Advisory No. 107/97.

CONSIDERING:
That it is necessary to regulate the currently valid foreign exchange operations.
That Law 1670, in its Article 19, establishes the functions that the Central Bank of Bolivia must assume regarding the exchange regime and the execution of exchange policy.
That in application of Law 1670, Supreme Decree No. 24756, in its Article 4, ratifies the authority of the Board of Directors of the Central Bank of Bolivia to regulate the functioning of the foreign exchange market and issue regulatory provisions regarding the country's exchange regime. That according to Report No. 050/97 from the Legal Affairs Unit, there is no legal impediment and the Board is authorized to approve the Foreign Exchange Operations Regulation. That Report No. 107/97 from the Economic Policy Advisory recommends the approval of the Foreign Exchange Operations Regulation.

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Therefore,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Approve the Foreign Exchange Operations Regulation consisting of 25 articles, which, as an annex, forms part of this Resolution.

Article 2.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

5.VIII.97
____________________ Juan Antonio Morales A.

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Armando Pinell S. Jaime Ponce G. Juan Medinacelli V.

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Fernando Campero P. Edgar Millares A.

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FOREIGN EXCHANGE OPERATIONS REGULATION

ON THE OBJECT AND SCOPE OF THE REGULATION
Article 1.- This regulation aims to standardize the procedures for determining the exchange rate of the boliviano and for the purchase and sale of foreign currency at the Central Bank of Bolivia.

ON THE EXCHANGE REGIME AND EXCHANGE POLICY
Article 2.- A regime of free convertibility is maintained, with a single, real, and flexible exchange rate.

Article 3.- The public sale of foreign currency by the Central Bank of Bolivia (BCB) will be carried out through a competitive bidding mechanism, known as the Bolsín.

Article 4.- The exchange policy aims to contribute to the stability of the purchasing power of the national currency and support the normal functioning of Bolivia's international payments.

ON THE MONETARY AND EXCHANGE POLICY COMMITTEE
Article 5.- The Monetary and Exchange Policy Committee (the Committee), established in the Statute of the BCB approved by Board Resolution No. 082/97 of February 20, 1997, will be responsible for recommending the adoption of decisions in exchange matters, ensuring their adequate coordination with monetary policy.

Article 6.- The Committee will also have the following functions:
a) Propose modifications to the exchange policy to the Board. b) Recommend to the President of the BCB the margin for the base quotation of the Bolsín on a weekly basis. c) Establish the amounts of foreign currency to be offered in each Bolsín session, based on the liquidity of the economy and the availability of international reserves. //4. B.R. No. 134/97 d) Define the frequency of Bolsín sessions. e) Determine the differential between the official exchange rate and the buy rate.

ON THE DETERMINATION OF THE OFFICIAL EXCHANGE RATE
Article 7.- The exchange rate will be determined with respect to the United States dollar.

Article 8.- The official exchange rate is defined as the minimum award price resulting from the Bolsín, if the foreign currency offered by the BCB for the session is fully exhausted in the public sale. In the event that there is a surplus of the offer, the official exchange rate will be the base quotation.

Article 9.- The buy exchange rate is defined as the result of subtracting the differential determined by the Committee from the official exchange rate.

Article 10.- The official exchange rate will enter into force the day after the Bolsín session and will remain in effect until the day of its next session.

ON THE PROCEDURE FOR PUBLIC SALE OF FOREIGN CURRENCY

Article 11.- The Bolsín will be administered by the International Affairs Management.

Article 12.- The BCB will make known to the public the volume of foreign currency offered for each Bolsín session.

Article 13.- Any natural or legal person may participate in the Bolsín, provided that they submit their request through a financial institution that maintains a current account at the BCB.

Article 14.- Requests to participate in the Bolsín session must be submitted in a sealed envelope, which must contain the form provided for this purpose by the BCB, detailing the amount of foreign currency requested, the proposed exchange rate, and general information about the applicant.
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Article 15.- The envelopes containing the proposals must be delivered to the offices of the General Secretariat of the BCB by 16:30 hours. The proposer, upon depositing the sealed envelope, will receive a numbered receipt.

Article 16.- The opening of envelopes will take place on the day of submission between 16:30 and 17:00 hours, in the offices of the International Affairs Management, in the presence of the Manager of International Affairs or the Sub-manager of International Operations, the Head of the Foreign Exchange Operations Department, and the representative of the General Secretariat in charge of receiving the proposals.

Article 17.- The President of the BCB will set the base quotation for each session, considering the recommendations of the Committee and based on the proposals received in the Bolsín, which will be reported to him by the Manager of International Affairs.

Article 18.- The base quotation will be communicated by the President of the BCB to the Manager of International Affairs. The International Affairs Management will proceed to award the foreign currency in descending order of price, provided that the price of the proposals is greater than or equal to the base quotation, until the offer is exhausted.
In the event that the amount of foreign currency offered by the BCB is insufficient to meet the proposals received at the same exchange rate, the foreign currency will be awarded under a pro-rata system. In this case, the bidder will be obliged to accept the award of partial amounts.

Article 19.- The awardee will receive the awarded amount of foreign currency at the price they offered, on the next business day following the Bolsín session, via credit to the corresponding current account at the BCB.

Article 20.- Rejected requests and the reason for rejection will be communicated to the applicants upon conclusion of the Bolsín session.

Article 21.- The results of each Bolsín session will be disseminated on the same day by the International Affairs Management.
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ON THE PROCEDURE FOR ALLOCATING FOREIGN CURRENCY TO THE NON-FINANCIAL PUBLIC SECTOR

Article 22.- Requests from the non-financial public sector must be directed to the BCB through the Ministry of Finance, attaching the "Foreign Currency Request" form issued by said Ministry.

Article 23.- Foreign currency requested by the public sector will be allocated at the official exchange rate in effect on the date of allocation.

ON THE PROCEDURE FOR PURCHASE OF FOREIGN CURRENCY

Article 24.- The BCB will purchase foreign currency from the public at the buy exchange rate, through operations with financial entities that maintain current accounts at the BCB.

ON PROCEDURAL MANUALS

Article 25.- The detailed procedures to be applied in the operations for the public sale of foreign currency, the allocation of foreign currency to the non-financial public sector, and the purchase of foreign currency must be contained in the Procedural Manuals of the International Affairs Management.
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