Financing to the Non-Financial Public Sector: Amendment to Communication "A" 4838 — BCRA — AR

2009 - Year of Tribute to Raúl SCALABRINI ORTIZ

CENTRAL BANK
OF THE ARGENTINE REPUBLIC

COMMUNICATION “A” 4926
25/03/2009

TO FINANCIAL INSTITUTIONS:

Ref.: Circular
OPRAC 1 - 623
LISOL 1 - 498
COPEX 1 - 271
OPASI 2 - 397

Financing to the non-financial public sector. Amendment to Communication "A" 4838.

We address you to inform you that this Institution adopted the following resolution:

1. Replace points 1., 1.1., 1.1.1., 1.1.2., the last paragraph of point 1.1, 1.2., 1.2.1., 1.2.2., 1.2.3., 1.2.4., 1.2.5., 1.2.6.,1.3., 1.3.1., 1.3.2., 1.4, 1.5, 2., 3., 4., 6., 7. and 8. of the resolution disseminated through Communication “A” 4838 with the following:

“1. Establish that, within the framework of the provisions of Section 4. of the rules on “Financing to the non-financial public sector”, the Central Bank of the Argentine Republic may authorize financial institutions to provide financial assistance to trusts and/or subscribe participation certificates and/or debt securities issued by public trusts or fiduciary funds, established by national law or decree of the National Executive Power, constituted or to be constituted. For this purpose, all of the following requirements must be met:

1.1. the aforementioned trust or fiduciary fund:

1.1.1. has as its purpose to finance the execution of infrastructure works and/or the acquisition of equipment and/or guarantee the payments of the financial assistance granted or the participation certificates and/or debt securities referred to in point 1. provided that the funds from the financing are applied to make capital investments that are declared as critical and/or of public interest by the competent authority, as they are necessary for the provision of public services, regardless of the public or private legal nature of the provider.

1.1.2. the recipient of those works, determined by the respective trust contracts and/or legal and regulatory provisions governing them, is the non-financial public sector, as trustee or final beneficiary of the proceeds from the liquidation of the trust.

CENTRAL BANK
OF THE ARGENTINE REPUBLIC

For the purposes of the declaration of criticality and/or public interest and the determination of the concepts that make up the assets of the trust patrimony, as provided in the preceding paragraphs, there must be a legal framework that, in general terms, defines the regulatory and control structure of the corresponding service -national law, provincial law, of the Autonomous City of Buenos Aires, municipal ordinance, according to the beneficiary jurisdiction of the trust or fiduciary fund- that designates the application authority with powers in matters of regulation, control, price setting, forms of financing, etc.

1.2. The constitutive instruments of the trust or fiduciary fund contemplate that:

1.2.1. the collection or integration of the items destined to the assets of the trust patrimony according to point 1.1.3. is made effective together with the liquidation of the other concepts that must be paid to receive the corresponding services, transferred directly to the fiduciary account without prior credit of such items in any other account of another ownership.

1.2.2. the effective liquidation -to the users or final recipients of the services- of the concepts that make up the assets of the trust patrimony in accordance with point 1.1.3., is not conditioned, under any concept, to the progress of the works and/or the prior acquisition of the equipment being financed.

1.2.3. in the case of trusts or fiduciary funds constituted under the regime of art. 19 of law 24.441, the placement of the participation certificates and/or debt securities in institutionalized securities markets of the country or abroad is provided for, within 365 days counted from the date of the provisional subscription of such instruments by the financial institution.

In the cases of trusts or fiduciary funds constituted prior to this resolution, this requirement must be observed for new issues of participation certificates and/or debt securities, and the pertinent modifications must be incorporated into the original trust contract or the provisions governing the fiduciary fund -when it does not contemplate it- so that this is provided for.

1.2.4. the flow of income computable for the purposes of point 1.3.2., destined to cancel the instruments issued by the trust, must not exceed the term of 10 years counted from the date of granting of the financial assistance or subscription of participation certificates or debt securities of trusts.

1.2.5. the financial institutions participating in the assistance granted or holders of participation certificates and/or debt securities referred to in point 1. of this regime, must have an assignment or pledge in their favor on the collection rights that constitute the assets of the trust patrimony. Such guarantee must be, at all times, at least 125% of the amount of the financial services pending payment corresponding to the assistance granted and/or holdings of participation certificates and/or debt securities referred to in point 1. of this regime.

1.2.6. the financial institution granting the assistance and/or holder of participation certificates and/or debt securities issued within the framework of the trusts or fiduciary funds referred to in point 1., in cases where it is depositary of the trustee's accounts, is authorized to debit directly from those accounts the funds necessary to cancel the obligations with the assignee of

the collection rights that guarantee the financial services of those instruments, in accordance with the provisions of point 1.2.5.

1.3. in the instrumenting of the assignment to the trustee of the concepts provided for in point 1.1.3. in favor of the trust, it is expressly established that:

1.3.1. the income to be applied to the cancellation of the collection rights assigned to the trust be received by the latter through direct transfer of the funds to the trust account by whoever has the status of administrator or person responsible for the corresponding collection, without prior crediting in any other account.

1.3.2. during the financing period or holding period of the participation certificates and/or debt securities by the intervening financial entity, the total collection rights projected as assets of the trust patrimony are not less than 125% of the amount of the financial services corresponding to the financial assistance granted or to the participation certificates and/or debt securities referred to in point 1. of this regime.

1.4. the income from the obligors for payment of the rights assigned to the trust or trust fund, considered individually, as of the date of constitution of the respective trust or trust fund, shall be computed for up to a participation no greater than 2.5% of the total amounts corresponding to the projected demand for the corresponding service.

In those service provisions in which there are companies that have the status of distributors, the rights assigned by the respective obligors for payment shall be computed without exceeding the individual participation percentage less than or equal to that established above.

1.5. it has a special report from an external auditor, registered in the Special Registry of the Banco Central de la República Argentina, regarding compliance with the conditions established in the preceding points. A conclusion must be provided on each of the requirements individually; the submission, by the financial entity, of reports that include statements regarding the lack of reviews of compliance with the requirements or that express non-compliance with them shall not be accepted.

2. Provide that, in the event that the trust or fiduciary fund belongs to the non-financial public sector of the provincial, municipal or Autonomous City of Buenos Aires jurisdictions, those jurisdictions must pledge as collateral the resources provided for in subparagraphs ii) and iii) of point 4.1.1.1 of Section 4. of the rules on “Financing to the non-financial public sector” - even in excess of the term established in said subparagraphs -, until reaching the sums necessary to cover all the income that the trust or fiduciary fund would receive while those works or equipment have not begun to be used economically - generating income to the trust through fees, tariffs, and other similar concepts - and in the proportion of the holding of the corresponding instrument with respect to the total assets of the trust patrimony.

3. Provide that the financial assistance granted or the holding by financial entities of participation certificates and/or debt securities issued by trusts or fiduciary funds under the provisions of point 1. of this regime shall not be subject to the general rules in force on “Credit Grading”.

4. Increase by 15 percentage points the individual limits for operations with the non-financial public sector provided for in point 7. of Communication “A” 3911 and amendments, and by 50 percentage points the global limit established therein, to the extent that said increase is applied to the financial assistance granted or to the holding of participation certificates and/or debt securities issued by trusts or fiduciary funds under the provisions of point 1. of this regime. For the purposes of calculating the aforementioned limits as well as the limit provided for in point 12. of that Communication, the financings referred to in point 1. of this regime shall be computed at 25% of their balance for all concepts.

6. Provide that, in the month prior to that in which the financial assistance is made or each subscription of participation certificates and/or debt securities of the trusts or fiduciary funds referred to in point 1. of this resolution, the financial entity must record an excess of minimum capital integration that exceeds at least the sum of the amount corresponding to that subscription plus its accumulated holding, as of that date, of such types of instruments.

Additionally, in the Business Plan and Projections submitted by the intervening financial entity, in compliance with the provisions of the information regime on that matter, in force at the time of the evaluation by the intervening financial entity, there must appear a projected monthly excess of minimum capital integration - individual position - for the reported periods of such magnitude that allows eventually absorbing the greater minimum capital requirement derived from the incorporation as “INC” referred to in point 7. of this regime. When the information corresponding to said projections refers to a half-year period, the projected computation to be considered must be proportional.

7. Incorporate into the expression “INC” (minimum capital increase for credit risk) provided for in point 3.1. of Section 3. of the rules on “Minimum Capital of Financial Institutions” the excesses for financial assistance granted or for holdings of participation certificates and/or debt securities of trusts or fiduciary funds referred to in point 1. of the resolution disseminated by Communication “A” 4838 (text as per point 1. of this resolution) computed in accordance with the following schedule, which shall operate as from the time the works or equipment that generate income for the trust or fiduciary fund through tariffs, rates, fees, and other similar concepts have begun to be used economically.

Computation of the holding as “INC” -in % thereof-	As from the
25	First month
50	Seventh month
100	Thirteenth month

8. Authorize, on a general basis, within the framework of the rules on “Pledge of Assets as Collateral” that national public securities -which have volatility reported by this Central Bank-, and/or the monetary regulation instruments of the Central Bank of the Argentine Republic be pledged as collateral by financial institutions in favor of this Institution by virtue of what is required by regulation for operations instrumented through the ALADI Reciprocal Payments and Credits Agreement, to the extent that they are linked to infrastructure works or equipment -which, in both cases, constitute capital investments- referred to in point 1. of this resolution as regards the type of work and/or equipment, regardless of the form in which their execution or acquisition and their financing are instrumented, and therefore, in accordance with the rules currently in force on the matter, they are subject to the limit provided for in point 3.1.1. of the aforementioned regulations.”

2. Incorporate as point 1.1.3. to the resolution disseminated by Communication “A” 4838 the following:

“1.1.3. have a trust asset consisting of income and/or collection rights from tariffs, rates, fees, specific charges or similar concepts, previously established by competent authority, the application of which has been ordered by national, provincial, of the Autonomous City of Buenos Aires law, or municipal ordinance. For this purpose, the pertinent fiduciary assignment of the corresponding income and/or collection rights to the trust or fiduciary fund must be instrumented, which must be freely available to the trustee and not subject to any lien, in accordance with the legislation previously mentioned, except as provided in point 1.2.5.”

We send you in annex the updated text on Financing to the Non-Financial Public Sector, made known in due course by Communication “A” 4838.

In due course, we will send you the pages of the ordered texts that need to be updated.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Darío C. Stefanelli
Issuance Manager of Rules
José I. Rutman
Deputy General Manager of Rules

ANNEX

B.C.R.A.
FINANCING TO THE NON-FINANCIAL PUBLIC SECTOR
(updated text of Communication “A” 4838)
Annex to
Com. “A”
4926

1. Establish that, within the framework of the provisions of Section 4. of the rules on “Financing to the non-financial public sector”, the Central Bank of the Argentine Republic may authorize financial institutions to grant financial assistance to trusts and/or subscribe participation certificates and/or debt securities issued by public trusts or fiduciary funds, established by national law or decree of the National Executive Power, constituted or to be constituted. For this purpose, all of the following requirements must be met:

1.1. the aforementioned trust or fiduciary fund:

1.1.1. have as its object to finance the execution of infrastructure works and/or the acquisition of equipment and/or guarantee the payments of the financial assistance granted or the participation certificates and/or debt securities referred to in point 1. provided that the funds from the financing are applied to make capital investments that are declared critical and/or of public interest by the competent authority, as they are necessary for the provision of public services, regardless of the public or private legal nature of the provider.

1.1.2. the recipient of those works, determined by the respective trust contracts and/or legal and regulatory provisions governing them, be the non-financial public sector, as trustee or final beneficiary of the proceeds from the liquidation of the trust.

1.1.3. have a trust asset consisting of income and/or collection rights from tariffs, rates, fees, specific charges or similar concepts, previously established by competent authority, the application of which has been ordered by national, provincial, of the Autonomous City of Buenos Aires law, or municipal ordinance. For this purpose, the pertinent fiduciary assignment of the corresponding income and/or collection rights to the trust or fiduciary fund must be instrumented, which must be freely available to the trustee and not subject to any lien, in accordance with the legislation previously mentioned, except as provided in point 1.2.5.

For the purposes of the declaration of criticality and/or public interest and of the determination of the items that make up the assets of the trust patrimony, as provided in the preceding paragraphs, there must be a legal framework that, in general terms, defines the regulatory and control structure of the corresponding service -national, provincial, Autonomous City of Buenos Aires law, municipal ordinance, according to the beneficiary jurisdiction of the trust or fiduciary fund- that designates the enforcement authority with powers in matters of regulation, control, price setting, forms of financing, etc.

1.2. The instruments constituting the trust or fiduciary fund provide that:

1.2.1. the collection or contribution of the items destined for the assets of the trust patrimony according to point 1.1.3. is made effective together with the settlement of the other items that must be paid to receive the corresponding services transferred directly to the fiduciary account without prior crediting of such items in any other account of another ownership.

1.2.2. the effective settlement -to the users or final recipients of the services- of
the items that make up the assets of the trust patrimony in accordance with point 1.1.3., is not conditioned, under any concept, on the progress of the works and/or the prior acquisition of the equipment being financed.

In the cases of trusts or fiduciary funds constituted prior to this resolution, this requirement must be observed for new issues of participation certificates and/or debt securities, and the pertinent amendments must be incorporated into the original trust contract or into the provisions governing the fiduciary fund - when it does not contemplate it- so that this is provided for.

1.2.4. the flow of income computable for the purposes of point 1.3.2., destined to cancel the instruments issued by the trust, must not exceed a term of 10 years counted from the date of granting of the financial assistance or subscription of participation certificates or debt securities of trusts.

1.2.5. the financial entities participating in the assistance granted or holders of participation certificates and/or debt securities referred to in point 1. of this regime, must have an assignment or pledge in their favor over the collection rights that constitute the assets of the trust patrimony. Such guarantee must be, at all times, at least 125% of the amount of the financial services pending payment corresponding to the assistance granted and/or holdings of participation certificates and/or debt securities referred to in point 1. of this regime.

1.2.6. the financial entity granting the assistance and/or holder of participation certificates and/or debt securities issued within the framework of the trusts or fiduciary funds referred to in point 1., in cases where it is the depositary of the trustee's accounts, is authorized to debit directly from those accounts the funds necessary to cancel the obligations with the assignee of the collection rights that guarantee the financial services of those instruments, in accordance with the provisions of point 1.2.5.

1.3. in the instrumenting of the assignment to the trustee of the items provided for in point 1.1.3. in favor of the trust, it is expressly established that:

1.3.1. the income to be applied to the cancellation of the collection rights assigned to the trust is received by the latter through direct transfer of the funds to the fiduciary account by whoever has the status of administrator or person responsible for the corresponding collection, without prior crediting in any other account.

1.3.2. during the period of financing or holding of the participation certificates and/or debt securities by the participating financial entity, the total of the collection rights projected as assets of the trust patrimony are not less than 125% of the amount of the financial services corresponding to the

financial assistance granted or to the participation certificates and/or debt securities referred to in point 1. of this regime.

1.4. the income from the obligors for the payment of the rights assigned to the trust or fiduciary fund, considered individually, as of the date of constitution of the respective trust or fiduciary fund, shall be computed for up to a participation no greater than 2.5% of the total of the amounts corresponding to the projected demand of the corresponding service.

In those service provisions in which there are companies that have the status of distributors, the rights assigned by the respective obligors shall be computed without exceeding the individual participation percentage less than or equal to that established above.

1.5. it has a special report from an external auditor, registered in the Special Registry of the Central Bank of the Argentine Republic, regarding compliance with the conditions established in the preceding points. A conclusion must be provided on each of the requirements individually, and the presentation by the financial entity of reports that include statements regarding the lack of reviews of compliance with the requirements or that express non-compliance with them shall not be admitted.

1.6. the provisions of points 4.1.2. and 4.1.3. of Section 4. of the rules on “Financing to the non-financial public sector”.

2. Provide that, in the event that the trust or fiduciary fund belongs to the non-financial public sector of the provincial, municipal or Autonomous City of Buenos Aires jurisdictions, those jurisdictions must pledge as collateral the resources provided for in subparagraphs ii) and iii) of point 4.1.1.1 of Section 4. of the rules on “Financing to the non-financial public sector” -even in excess of the term established in said subparagraphs-, until reaching the sums necessary to cover all of the income that the trust or fiduciary fund would receive while those works or equipment have not begun to be used economically -generating income for the trust through rates, fees, and other similar concepts- and in the proportion of the holding of the corresponding instrument with respect to the total assets of the trust patrimony.

3. Provide that the financial assistance granted or the holding by financial entities of participation certificates and/or debt securities issued by trusts or fiduciary funds under the framework established in point 1. of this regime shall not be subject to the general rules in force on “Credit Grading”.

4. Increase by 15 percentage points the individual limits for operations with the non-financial public sector provided for in point 7. of Communication “A” 3911 and amendments, and by 50 percentage points the global limit established therein, to the extent that said increase is applied to the financial assistance granted or to the holding of participation certificates and/or debt securities issued by trusts or fiduciary funds under the framework established in point 1. of this regime. For the purposes of calculating the aforementioned limits as well as the limit provided for in point 12. of that Communication, the financings referred to in point 1. of this regime shall be computed at 25% of their balance for all purposes.

Increase by one time the limits established regarding risk concentration -points
2.2.1. and 2.2.2. of Annex II of Communication “A” 2140-, setting them at 4 times and 6 times,
respectively, the computable equity of the entity as of the last day of the month prior to the corresponding month, when the excesses over the limits provided for generally in said regulations originate as a consequence of the application of the provisions referred to in point 1. of this resolution.

Additionally, in the Business Plan and Projections submitted by the intervening financial entity, in compliance with the provisions of the reporting regime in that matter, in force at the time of the evaluation by the intervening financial entity, a projected monthly excess of minimum capital integration -individual position- must appear for the reported periods of such magnitude that it allows eventually absorbing the greater minimum capital requirement derived from the incorporation as “INC” referred to in point 7. of this regime. When the information corresponding to said projections refers to a half-year period, the projected computation to be considered must be proportional.

7. Incorporate within the expression “INC” (increase in minimum capital for credit risk) provided for in point 3.1. of Section 3. of the rules on “Minimum capital of financial entities” the excesses for financial assistance granted or for holdings of participation certificates and/or debt securities of trusts or fiduciary funds referred to in point 1. of the resolution disseminated through Communication “A” 4838 (text according to point 1. of this resolution) computed in accordance with the following schedule, which shall operate from the time the works or equipment that generate income for the trust or fiduciary fund through tariffs, rates, fees, and other similar concepts have begun to be used economically.

Computation of the holding as “INC” -in % thereof-	As from the
25	First month
50	Seventh month
100	Thirteenth month

8. Authorize, on a general basis, within the framework of the rules on “Pledge of assets as collateral” that national public securities -which have volatility reported by this Central Bank-, and/or the monetary regulation instruments of the Central Bank of the Argentine Republic be pledged as collateral by financial entities in favor of this Institution by virtue of what is required by regulations for operations instrumented through the ALADI Reciprocal Payments and Credits Agreement, to the extent that they are linked to infrastructure works or equipment -which, in both cases, constitute capital investments- referred to in point 1. of this resolution as regards the type of work and/or equipment, regardless of the form in which their execution or acquisition is instrumented

CENTRAL BANK OF THE ARGENTINE REPUBLIC

and its financing, so that, in accordance with the rules currently in force on the matter, they are covered by the limit provided for in point 3.1.1. of the aforementioned regulations.

9. Increase by 50 percentage points the limit provided for in point 4.1. of Section 4. of the rules on “Relationship for fixed assets and other concepts” to the extent that the immobilization of the asset originates from the holding of national public securities and/or monetary regulation instruments of the Central Bank of the Argentine Republic pledged as collateral within the framework of the operations referred to in point 8. above.

10. Establish that the provisions contained in points 3. to 7. and 9. of this resolution must be observed by financial institutions on an individual and consolidated basis, except for the provisions of the second paragraph of point 6. of this resolution, which must be complied with on an individual basis.

11. Admit the coverage of guarantees for import operations processed under the ALADI agreement, within the framework of the provisions of point 8. of this resolution, for at least 100% of the corresponding amount, to the extent that the financial institution authorizes the Central Bank of the Argentine Republic to debit on a daily basis from its demand account in United States dollars and, if necessary, to debit from its current account in pesos or, if the available balances in the aforementioned accounts are insufficient, that it authorizes the liquidation in the secondary market of its holdings of public securities -which have volatility reported by this Central Bank-, and/or monetary regulation instruments, deposited in the “Central de registración y liquidación de pasivos públicos y fideicomisos financieros” (CRyL) to cover the guarantee shortfall, through their pledge, which may occur due to price variation of public securities quoted in institutionalized markets or due to the applicable exchange rate, it being possible to release and reinstate the excess guarantee when it exceeds 105% of the guaranteed amount.

12. Replace the second paragraph of point 1.1. of the rules on “Financing to the non-financial public sector” with the following:

“It also includes trusts and fiduciary funds whose trustee or beneficiary of the proceeds from the liquidation of the trust, determined by the respective contracts or provisions governing them, belongs to the non-financial public sector.”