Instruction No. 6: Eligible Bills for Refinancing Operations at the Central Bank of Congo

BANQUE CENTRALE DU CONGO
THE GOVERNOR
INSTRUCTION No. 6
Modification No.
(To Credit Institutions)
Effective date: 27 MAY 2009
Concerns: Eligible bills for refinancing operations at the Central Bank of Congo.

Article 1.
Approved Credit Institutions are required to provide in advance to the Central Bank of Congo, Credit and Financial Markets Department, the dossiers of economic agents benefiting from bank loans and for which bills can be presented for the settlement of refinancing operations at the Central Bank of Congo, according to the proportion fixed in the annex to this instruction.

The dossier to be communicated to the Central Bank of Congo includes the following elements:

• the information sheet, for both the company and its management;
• the following forms from the Congolese General Accounting Plan (PCGC):
  A. For first-category economic agents subject to general provisions:
  1. the balance sheet certified as true as of December 31;
  2. the simplified income statement certified as true as of December 31;
     B. For second-category economic agents subject to simplified provisions:
  3. the balance sheet certified as true as of December 31;
  4. the simplified income statement certified as true as of December 31;
     C. For third-category economic agents subject to reduced provisions:
  5. the income and expenditure statement;
  6. the position statement.

Article 3.
The financial statements to be communicated to the Central Bank of Congo must be accompanied:

• by the analysis sheet of the economic agent's financial statements, particularly on the following points: financial autonomy; repayment capacity, profitability and general liquidity;
• by the opinions and considerations of the credit institution regarding the economic agent, mainly concerning the management, organization and future prospects of the company.

Article 4.
The transmission of the information stated in Articles 2 and 3 to the Central Bank of Congo is carried out annually, within six months following the end of the accounting period.

Article 5.
Paragraph 1.
Based on the financial statements of the beneficiaries of bank loans, the Central Bank of Congo proceeds notably to the analysis of the risks of Credit Institutions according to Annex 1 and establishes the list of economic agents whose bills are eligible for refinancing.

Only the bills of economic agents whose ratios of financial autonomy, repayment capacity, profitability and general liquidity are deemed satisfactory, and for which bank loans have been declared in advance to the Risk and Balance Sheet Central Office, are accepted as collateral for money market operations.

Paragraph 3.
In the assessment of bills eligible for refinancing, account is also taken of guarantees, blacklisting, possible payment incidents that occurred during the last three years, as well as the signatures of economic agents subject to banking or judicial bans.

Article 6.
This Instruction enters into force on the date of its signature and cancels all previous provisions contrary to it.

Made in Kinshasa, on 27 MAY 2009

J-C. MASANGU MULONGO
Governor

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27 MAY 2009

Financial debts (loans and financial debts)
16: long-term loans and debts

• 17: medium-term loans and debts including part payable in less than one year
• 13: net result to be distributed
• 40: suppliers
• 41: customers and advances and deposits received
• 42: staff
• 43: State
• 44: owners and associates
• 45: affiliated companies
• 46: various creditors
• 50: loans in less than one year
• 53: bills and warrants to pay
• banks (overdrafts)

Global self-financing capacity (Gross self-financing margin) 85: net result before contribution

• 68: depreciation and provisions

• 78: reversals on depreciation and provisions

The required standard for this ratio must be less than or equal to 4.

III. Profitability Ratio
It measures the company's performance by the ratio between the net result of the year and turnover excluding taxes. It is defined as follows:
83 Net operating result
70 Sale of goods

The profitability ratio must be positive.

IV. General Liquidity Ratio
It allows assessing the company's bankruptcy risks based on elements of its operations. It is defined by the ratio between current assets (available values and circulating values) and current liabilities.

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27 MAY 2009

1. Current Assets
   A) Available Values
   56: banks and financial institutions

• 57: cash

B) Circulating Values
30: merchandise

• 31: materials and supplies
• 32: commercial packaging
• 33: semi-finished products
• 34: finished products
• 35: work in progress
• 36: stocks outside
• 279: part of medium-term loans and other receivables to be collected in less than one year
• 40: suppliers, advances and deposits paid
• 41: customers
• 42: staff
• 43: State
• 44: owners and associates
• 45: affiliated companies
• 46: various debtors
• 51: loans in less than one year
• 52: short-term securities
• 54: bills and warrants to receive
• 55: checks and coupons to collect

2. Current Liabilities
   13: net result to be distributed

• 40: suppliers
• 41: customers (advances and deposits)
• 42: staff
• 43: State
• 44: owners and associates
• 45: affiliated companies
• 46: various creditors
• 50: loans in less than one year
• 53: bills and warrants to pay
• 56: banks (overdrafts)
• 179: part of long and medium-term loan to be paid in one month.

The minimum standard must be greater than 1.

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27 MAY 2009

B. Quotation System
The conclusions of the examination of the quotation file are recorded in the form of a code allowing for a quick reading of the Central Bank of Congo's assessment. It is composed of two elements: the rating and the category.

The rating is in the first position of the grid and indicates the quality of the signature. The A rating is an excellence rating, attributed to credit beneficiaries deserving the best assessment from the Central Bank of Congo. The B rating is attributed to credit beneficiaries:

• for non-compliance with one of the four ratios and whose financial situation calls for some improvements;
• having satisfied the two ratios of profitability and repayment capacity and whose growth prospects are reassuring.
  The C rating is attributed to credit beneficiaries whose agreements have been suspended following a banking ban, notably blacklisting or judicial ban, and those whose agreements have expired and have not been subject to a new examination. The D rating is attributed to credit beneficiaries who have not satisfied the criteria of the Central Bank of Congo.

The category constitutes the second element of the grid and takes into account payment incidents and/or blacklisting through three (3) categories:

• category 0 is retained for the case of non-existence of payment incidents;
• category 1 symbolizes the occurrence of one (1) payment incident;
• category P is attributed when more than one (1) payment incident is recorded over the last three years.

Thus, the display A 0 designates a company - a beneficiary of bank credit who respects all eligibility criteria without any particular condition and has not recorded any payment incidents.

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27 MAY 2009 CONTINUED, PAGE

C. Pledge Proportion of Bills and Private Securities
The pledge value of bills and private securities corresponds to their nominal amount reduced by the discount below:

1. Bills and securities issued by companies benefiting from State guarantee

   • Rating A 0 and A 1: 10%
   • Rating B 0 and B 1: 20%

2. Bills and securities issued by companies not benefiting from State guarantee

   • Rating A 0 and A 1: 15%
   • Rating B 0 and B 1: 25%