2008 - Year of the Teaching of Sciences

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION “A” 4798
02/05/2008

TO THE FINANCIAL INSTITUTIONS:

Ref.: Circular
OPRAC 1 - 613

"Financing to the Non-Financial Public Sector". Amendments.

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

“1. Replace point 1.1. of Section 1. of the rules on "Financing to the Non-Financial Public Sector" with the following:

“1.1. Concept.

The non-financial public sector comprises the National Government and the provincial and municipal governments and the Autonomous City of Buenos Aires, including the central administration, ministries, secretariats and their decentralized and autonomous agencies, and other entities controlled by them.

It also comprises the trusts and fiduciary funds whose beneficiary, determined by the respective contracts or provisions governing them, belongs to the non-financial public sector.”

2. Replace Section 4. of the rules on "Financing to the Non-Financial Public Sector" with the one attached as Annex to this communication.”

Lastly, we send you in annex the pages that, in replacement of those previously provided, must be replaced in the consolidated text of the rules of reference.

Likewise, it is recalled that on the page of this Institution www.bcra.gov.ar, accessing "regulations" ("consolidated texts"), you will find the amendments made with texts highlighted in special characters (strikethrough and bold).

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
Section 4. Exceptions.

4.1. The Central Bank will consider requests for exception to the limitation on granting financial assistance provided that the following requirements are met:

4.1.1. There is express authorization by the competent authority in the matter to incur the indebtedness and to pledge as guarantee an amount that, at a minimum, covers the principal, interest and accessories of the financing:

4.1.1.1. Resources of the jurisdiction and/or royalties from the exploitation of natural resources, and/or assimilable income with the following scope:

i) The national non-financial public sector must pledge through assignment the resources from taxes, fees or contributions corresponding to it, or up to 15% of the collection rights of invoices issued or to be issued -within the term of 36 months counted from the date of granting of the credit assistance- to consumers of services by companies providing services to the public (companies that supply electricity, gas, telephone, water, etc.), provided that it is a set of invoices that represents a quantity not less than 1.000 clients -directly or indirectly-, without the collection rights of each consumer exceeding 5% of the total amount assigned.

ii) The provincial non-financial public sector must pledge through assignment the resources from the federal co-participation of national taxes, royalty funds and/or others of similar characteristics and/or from the collection of its own taxes, or up to 15% of the collection rights of invoices issued or to be issued -within the term of 36 months counted from the date of granting of the credit assistance- to consumers of services by companies providing services to the public (companies that supply electricity, gas, telephone, water, etc.), provided that it is a set of invoices that represents a quantity not less than 1.000 clients -directly or indirectly-, without the collection rights of each consumer exceeding 5% of the total amount assigned.

iii) The municipal non-financial public sector must pledge through assignment funds from the federal co-participation of national and/or provincial taxes or from taxes, fees or contributions corresponding to the jurisdiction, or up to 15% of the collection rights of invoices issued or to be issued -within the term of 36 months counted from the date of granting of the credit assistance- to consumers of services by companies providing services to the public (companies that supply electricity, gas, telephone, water, etc.), provided that it is a set of invoices that represents a quantity not less than 1.000 clients -directly or indirectly-, without the collection rights of each consumer exceeding 5% of the total amount assigned.

iv) When the financing to the non-financial public sector does not exceed 18 months of contractual term, the assignment of rights may be instrumented as guarantee for up to 15% of the income from services -invoiced or to be invoiced whose collection is expected to be made effective within the aforementioned term- that form part of the main, normal and habitual activity of the applicant for the credit assistance, for whose provision the payment of fees or similar concepts is required.

B.C.R.A.
FINANCING TO THE NON-FINANCIAL PUBLIC SECTOR
Section 4. Exceptions.

The set of these resources must come from a quantity not less than 1.000 obligors to payment -directly or indirectly-, without the collection rights of each obligor exceeding 5% of the total amount assigned and the funds disbursed must not exceed 100% of the average of the income obtained during the two years prior to the last day of the month immediately preceding the date of its granting corresponding to the concepts set forth above.

For the purposes of determining the number of clients and the concentration of invoicing provided in the preceding paragraphs, sales to clients that are distributors of the services acquired shall be considered as invoicing made indirectly.

In the cases that apply, the loan agreements that are signed must contain a clause that authorizes the financial agents that are designated or collecting entities to make the direct transfer to the accounts of the creditor intermediaries of the amount assigned as collateral.

4.1.1.2. Collateral of fixed-term deposit certificates issued by the lending entity in the same currency as the credit assistance, under the conditions provided for in point 3.1.3. of the rules on “Guarantees”.

The pledged certificates may have a maturity equal to or earlier than the credit operation. In the latter case, the collateral must provide for the right of the financial entity to exercise the option of automatic renewal of the time deposit or to retain the relevant funds.

4.1.1.3. Collateral of national public securities or monetary regulation instruments of the Central Bank of the Argentine Republic, under the conditions provided for in points 1.1.5. and 3.1.5. of the rules on “Guarantees”, to the extent that they are denominated in the same currency.

The collateral must provide for the right of the financial entity to retain the proceeds of the instruments when they have a maturity earlier than that of the financing, as well as the replenishment of the guarantee when the required loan-to-value margins are reduced as a consequence of the variation in the market value of the pledged instruments.

In all cases, there must be the corresponding budgetary assignment of the guarantee through a general budget law or a specific law or equivalent rule, as applicable, in accordance with the nature of the asset subject to the guarantee and, in the particular case of entities or companies of the non-financial public sector not covered by the indicated requirement - based on the nature of their income -, for the assignment as collateral of such resources they must have the authorization of their board of directors or equivalent authority with decision-making powers regarding their indebtedness.

4.1.2. There is express approval of the financing or intervention in its analysis by the Ministry of Economy and Production of the Nation, as applicable, in accordance with the legal, regulatory or procedural rules that said State agency must observe in the matter.

B.C.R.A.
FINANCING TO THE NON-FINANCIAL PUBLIC SECTOR
Section 4. Exceptions.

4.1.3. Compliance with the reporting regimes on the following is concurrently verified:

4.1.3.1. Debtors in irregular situation according to the criterion established in point 6.5.6.1. of the rules on “Debtor classification” by the administrators of the credit portfolios of public financial entities privatized or in the process of privatization or dissolution of the respective jurisdiction.

4.1.3.2. Loans to the non-financial public sector according to the “Centralized SIStem of information requirements of the Deputy Management of Monetary and Financial Statistics” under the task identified as SISCEN-0011, by the financial entities that grant the assistance, including the entities that may eventually be assignees as a result of secondary negotiations.

B.C.R.A.
FINANCING TO THE NON-FINANCIAL PUBLIC SECTOR
Section 1. Non-financial public sector.

1.1. Concept.

The non-financial public sector comprises the National Government and the provincial and municipal governments and the Autonomous City of Buenos Aires, including the central administration, ministries, secretariats and their decentralized and autonomous agencies, and other entities controlled by them.

It also comprises trusts and fiduciary funds whose beneficiary, determined by the respective contracts or provisions governing them, belongs to the non-financial public sector.

1.2. Exclusions.

Mixed-economy companies are not covered by these provisions, so they will be subject to the general treatment provided for private non-financial sector companies.

1.3. Other exclusions.

1.3.1. State Companies.

The Central Bank of the Argentine Republic may grant State Companies governed in accordance with Law 20.705 the general treatment provided for private non-financial sector persons, for all purposes of the rules applicable in that matter, provided that they comply with the following requirements:

a) Not require to develop their activity resources from the state budget - national, municipal, provincial, or of the Autonomous City of Buenos Aires - as transfers, capital contributions - except those corresponding to incorporation as a company - or repayable financial assistance destined to cover expenses and/or investments of their normal and usual course of business, with the sole exception of those that could have been contemplated in the Budgets corresponding to fiscal years 2001 and 2002.

b) Technical and professional independence of their managerial staff for the implementation of corporate policies.

c) Market their goods and/or services at market prices.

d) Have fixed assets whose use in the activity is not subject to any conditioning by their shareholders.

e) Not distribute dividends among their shareholders.

f) All the above conditions must have been verified - uninterruptedly - during at least the ten years immediately preceding the date of granting the financial assistance.

B.C.R.A.
ORIGIN OF THE PROVISIONS INCLUDED IN THE ORDERED TEXT OF THE RULES ON “FINANCING TO THE NON-FINANCIAL PUBLIC SECTOR”

ORDERED TEXT ORIGINATING RULE
Section Point Paragraph Com. Annex Point Paragraph
Observations
1.1. “A” 3054 sole 1.1. According to Com. “A” 4798
1.2. “A” 3054
1.
1.3. “A” 4527 According to Com. “A” 4581.
2.1. “A” 3054 sole 2.1.
2.
2.2. “A” 3054 sole 2.2.
3.1. “A” 3054 sole 3.1.
3.
3.2. “A” 3054 sole 3.2.
4.
4.1. “A” 3054 sole According to Com. “A” 3144, 3548,
3911 , 4718, and “A 4798