Law No. 118/AN/11/6th Session Amending the Statutes of the Central Bank of Djibouti

R E P U B L I Q U E D E D J I B O U T I UNITE-EGALITE-PAIX

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PRESIDENCE DE LA REPUBLIQUE

Law No. 118/AN/11/6th Session Amending the Statutes of the Central Bank of Djibouti.

THE NATIONAL ASSEMBLY HAS ADOPTED THE PRESIDENT OF THE REPUBLIC PROMULGATES THE LAW WHOSE CONTENT FOLLOWS

SEEING the Constitution of September 15, 1992; SEEING Law No. 191/AN/86/1st Session of February 3, 1986, relating to commercial companies; SEEING Law No. 196/AN/02/4th Session of December 29, 2002, on money laundering, confiscation, and international cooperation regarding proceeds of crime; SEEING Law No. 117/AN/11/6th Session establishing, organizing, and governing financial cooperatives; SEEING Law No. 91/AN/05/5th Session of January 16, 2005, approving the statutes of the Central Bank of Djibouti; SEEING Law No. 92/AN/05/5th Session of January 16, 2005, relating to the opening, activity, and control of credit institutions; SEEING Law No. 179/AN/07/5th Session of May 16, 2007, regulating microfinance activities on the territory of the Republic of Djibouti; SEEING Decree No. 2008-0083/PRE of March 26, 2008, appointing the Prime Minister; SEEING Decree No. 2008-0084/PRE of March 27, 2008, appointing members of the Government; SEEING the amended Decree No. 2002-0133/PR/MEF establishing the Djibouti Economic Development Fund; SEEING Decree No. 97-142/PR/MJAM relating to the organization of the profession and the professional status of statutory auditors of companies;

The Council of Ministers heard in its session of December 14, 2010.

Article 1: Object

This law fixes the legal statutes of the National Bank of Djibouti, now called the Central Bank of Djibouti, hereinafter referred to as "the Central Bank," determines the extent of its mission, and establishes its mode of administration and control.

TITLE I: GENERAL PROVISIONS

Article 2: Definition and Legal Capacity

The Central Bank is a public establishment endowed with legal personality and administrative and financial autonomy. It has the capacity to contract, acquire property, own or possess it, dispose of it, and sue in court.

Article 3: Status as a Merchant

The Central Bank is deemed a merchant in its relations with third parties. It is governed by the provisions of commercial legislation to the extent that it is not derogated from by the laws and statutes specific to it. It is not subject to registration in the commercial register, nor to the rules and regulations concerning public accounting. It follows the ordinary rules of commercial accounting.

Article 4: Monetary Unit

The monetary unit of the Republic of Djibouti is the Djiboutian franc, hereinafter referred to as "the franc." It is expressed in abbreviated form using the initials FDJ placed after the number indicating the number of monetary units.

Article 5: Capital

The capital of the Central Bank, fully subscribed by the State, is fixed at 400 million francs. It may be increased either by the incorporation of reserves by resolution of the Board of Directors, or by a new endowment fully subscribed by the State and fixed by decree.

Article 6: Registered Office

The headquarters of the Central Bank is in Djibouti City. It may have correspondents in any country where it deems necessary.

TITLE II: ATTRIBUTIONS AND OPERATIONS

Chapter I: General Attributions

Article 7: General Mission

The Central Bank has the general mission of ensuring the stability of the national currency and the proper functioning of the banking and financial system.

Article 8: Other Assistance

The Central Bank lends its assistance to the implementation of the State's economic policy. In this context, it may propose to the Government any measure likely to exert a favorable action on the economic and social development of the country.

It is charged with producing the country's balance of payments statistics. To this end, it may enter directly into contact with administrations and public services, public and private enterprises, and any natural or legal person exercising an activity in the Republic of Djibouti to obtain all documents and information necessary for it.

It is also authorized to solicit diplomatic missions and international or foreign organizations represented on the territory of the Republic of Djibouti.

It may take all regulatory and legal measures to sanction failures to comply with the obligations of the preceding paragraphs.

Article 9: Communication of Information to the Central Bank

The Central Bank may request approved financial institutions to communicate all documents and information necessary for it to exercise its functions.

In the event of communication of false information or infractions regarding the regulation of information communication to the Central Bank, it is empowered to apply the penalties determined by the provisions of the laws in force against the establishments and institutions concerned.

CHAPTER II: On the Issuance and Monetary Circulation

Article 10: Issuance Privilege

The Central Bank alone exercises the privilege of issuing banknotes and metallic coins in francs.

Article 11: Value of the Franc

The value of the franc and its parity with any other foreign currency remain fixed in accordance with the regulations in force on the date of these statutes.

They may be modified by decisions taken in the Council of Ministers.

Article 12: Discharge Power and Legal Tender

Banknotes issued by the Central Bank and denominated in francs have, within the Republic, unlimited discharge power up to their face value.

The discharge power of coins is limited for each of their types to one hundred times their unit face value. However, coins must be received without limitation by the Central Bank and any public treasury or establishment.

The franc alone has legal tender on the territory of the Republic: all transactions and obligations having their causes, effects, or counter-values therein will be expressed whenever they give rise to payment or evaluation, and any act, title, or instrument intended to attest to them or allow their execution will be drafted in the same manner.

Article 13: Monetary Mass and Its Surveillance

The Central Bank monitors the evolution of the monetary mass, bank credits, and foreign exchange operations. It strives to adapt their global volume to the needs of the economy and the interest of the State and the currency in international relations.

The Central Bank establishes a detailed monthly statement of the monetary mass, fiduciary circulation, and their counter-values.

Article 14: Maintenance of Fiduciary Circulation

The Central Bank establishes reserves of banknotes and coins necessary for the maintenance of fiduciary circulation, and for adapting its volume and nature to the needs of the economy.

The Central Bank operates the destruction of monetary signs that have become materially unfit for circulation under the control and responsibility of the Governor and the National Treasurer, who jointly draw up a report and serve a copy to the Minister of Finance.

Article 15: Withdrawal and Exchange

The issuance, withdrawal, or exchange of a specific type of banknotes or coins can only be decided by the Council of Ministers, which fixes the conditions and modalities, by decree, without however impairing the fiduciary value of the exchanged types.

Article 16: Dissemination of Information

The Central Bank ensures the dissemination of all information or provisions likely to prevent or stop damage that may be caused to holders by any criminal act brought to its knowledge.

Article 17: Stolen, Lost, or Mutilated Banknotes

No opposition may be served on the Central Bank in the event of loss or theft of banknotes and coins issued by it.

The reimbursement of a mutilated or deteriorated banknote is granted when the cut bears the indices and recognizable signs determined by the Central Bank.

Article 18: Counterfeiting of Banknotes and Coins

Counterfeiting, falsification, introduction, use, sale, peddling, and distribution of counterfeit banknotes and coins are sanctioned by the penal provisions in force.

Furthermore, the Central Bank may constitute itself a civil party in all proceedings relating to infractions to banking and monetary legislation.

Article 19: Convertibility of the Franc

The Central Bank guarantees and ensures, without limitation, the conversion of banknotes and coins having legal tender on the territory of the Republic into one or more convertible foreign currencies of its choice.

Article 20: Guarantee of Issuance

To constitute the guarantee provided for in the previous article, the Council of Ministers, on the proposal of the Board of Directors, determines the values that may be held by the Central Bank in investments or representation of the counter-value in US dollars of banknotes issued in Djiboutian francs.

These values may consist of:

• gold in bars or coins;
• convertible foreign currencies;
• contributions to the International Monetary Fund and special drawing rights acquired therein;
• claims denominated in convertible foreign currencies, payable abroad and guaranteed by a foreign state or an international institution;
• claims denominated in convertible foreign currencies payable abroad on a notoriously solvent establishment and payable on demand and short term.

The constitution of any other value can only be authorized by the Council of Ministers within the limits of fifteen percent of the amount of banknotes in circulation and for a period not exceeding one month.

CHAPTER III - On the Relationship with the National Treasury

Article 21: Current Account of the National Treasury

The Central Bank is the financial agent of the State for all its cash and banking operations. It keeps free of charge in its books the current account of the National Treasury.

It performs all management operations, without remuneration other than its expenses, and makes all its counters available to it for the issuance and service of any loan.

It manages, in addition, the portfolios of securities belonging to the State.

It may pursue, on its own behalf, the collection or payment of all values.

Upon request of the Ministry of Finance, the Central Bank may open other accounts of the State governed by special provisions.

The credit balances referred to in the preceding paragraphs do not bear interest.

The Central Bank may, under conditions it determines, open and keep the current accounts of local authorities and public establishments, other central banks, and international organizations. These accounts may in no case present a debit balance.

Article 22: Overdraft and Credit to the National Treasury

The Central Bank may not grant an overdraft or any other type of credit to the National Treasury.

Article 23: State Guarantee

The State may grant its guarantee to the Central Bank for such amount as will be fixed by a decree taken in the Council of Ministers, each time this guarantee is required for the needs of financing resulting either from an international convention, or from a loan or an engagement previously approved by it.

Article 24: Management of the Foreign Exchange Stabilization Fund

The Central Bank centralizes the management of official foreign exchange reserves, including special drawing rights, as well as the reserve position at the International Monetary Fund.

It ensures the management of the total amount of the coverage deposit guaranteeing the free convertibility into US dollars of banknotes and coins denominated in francs.

It constitutes, by deduction from the interest produced by the deposit in US dollars, a guarantee fund intended to preserve the national currency, called the Foreign Exchange Stabilization Fund.

This fund will be endowed up to 20% of the amount of fiduciary circulation.

Article 25: Implementation of the Foreign Exchange Stabilization Fund

To accomplish its mission, the Central Bank monitors the foreign exchange and gold markets.

It may intervene in these markets by way of purchase or sale of francs in order to maintain the parity of the latter.

These interventions are financed from the amount of sums allocated to the foreign exchange stabilization fund referred to in the previous article.

When these sums prove insufficient to maintain the value of the franc, it seizes the Council of Ministers of the recommendations it deems necessary.

Article 26: Supplementary Guarantee

The State may, upon the request of the Central Bank, constitute any supplementary guarantee it deems useful in addition to that which is imposed on the Central Bank in accordance with the currently in force legislative and regulatory provisions.

Article 27: Issuance of Bonds

The Central Bank may issue bonds denominated in francs but which must be subscribed and paid in US dollars or in foreign currency convertible into US dollars, without the capital represented by this issuance ever exceeding thirty percent (30%) of that of the Central Bank. The bonds will be freely negotiable.

CHAPTER IV - On Relations with Natural or Legal Persons Other than Financial Institutions

Article 28: Prohibited Operations

The Central Bank performs no direct current account, loan, deposit, or placement operations for the benefit of natural or legal persons other than banks and financial institutions, with the exception of those to be defined in the following article.

Article 29: Authorized Deposits

The Central Bank may receive and manage as deposits the consignments and sequestrations provided for by law and in particular:

• the amount of sureties required of contractors by the regulation of public markets when they are attributed in cash;
• and under the same condition, the amount of judicial sureties, those legally required for the exercise of a profession or a specific trade or for obtaining an administrative permit, and that of any surety, real offer, legal, judicial, or conventional sequestration;
• the amount of sums held by clerks, notaries, bailiffs, lawyers, or ministerial or public officers for the account of their clients or a third party, in connection with the exercise of their profession.

The law regulates the amount and fate of the interests to which these deposits may give rise.

Article 30: Non-Prohibited Operations

The Central Bank may furthermore:

• proceed to financing, mobilization, rediscount on any commercial instrument, credit operations, or public or private credit titles for all or part of their amount and under such conditions and guarantees it deems necessary;
• receive and manage all free funds of the National Treasury, local authorities and public establishments, national or mixed-economy companies, and any group participating in a public service and those resulting from a convention, treaty, or international organization to which the Republic of Djibouti has adhered or ratified;
• receive any other funds and values on deposit but only for a duration of more than two years and with remuneration for the depositor.

CHAPTER V - On Relations with Financial Institutions

Article 31: On-site Control of Financial Institutions

The Central Bank performs the supervision of financial institutions. To this end, it issues their approval, conducts document and on-site controls of any establishment, and enacts any regulation necessary for its supervision mission.

Article 32: Their Regulation

The Central Bank takes and ensures the application of decisions required to regulate the activities of financial institutions within the framework of the legislative and regulatory provisions in force.

Article 33: List of Approved Establishments

A list of financial institutions authorized to exercise activities on the national territory is drawn up at the headquarters of the Central Bank.

Islamic banks, specialized financial institutions, microfinance institutions, and any enterprise trading in foreign currency having legal tender, gold, or precious metals, in any form whatsoever, or professing to finance loans or credit operations or to lend them assistance, whatever their duration or modality, are assimilated to these establishments.

Article 34: Other Measures

1- The Central Bank facilitates the operations necessary for the regular functioning of financial institutions, notably by facilitating settlements and fund movements operated by entry, and by constantly keeping at their disposal the liquidity to which they may legally have right.

2- When the financial equilibrium of one of these establishments appears seriously compromised and likely thereby to lead to its bankruptcy or to impair its credit or that of the nation, the Central Bank may prescribe any conservatory measure it deems useful.

The Professional Association of Credit Institutions of Djibouti provided for in banking regulation, convenes the Board of Directors and collects its opinion on the nature of the decisions to propose to the Council of Ministers to stop the danger or prevent it.

Article 35: Money Laundering

Money laundering is a crime sanctioned by the penal device in force.

To this end, the Central Bank, within the framework of its mission of surveillance and regulation of the national banking and financial system, is empowered to take all measures it deems necessary.

TITLE III: ADMINISTRATION AND DIRECTION

Article 36: Different Bodies

The bodies of administration and direction of the Central Bank are respectively:

• the Board of Directors named the "Board";
• the Governor;

CHAPTER I: On the Board

Article 37: Composition

The Board is composed of the Governor and six administrators appointed by decree among personalities having competence in monetary, financial, and economic matters.

Administrators are designated for four years; their mandate may be renewed.

Board members must possess Djiboutian nationality, enjoy their civil and political rights, and not have been convicted of a afflictive or infamous penalty.

The mandate of councilor is incompatible with the legislative mandate and the quality of member of the Government.

The mandate of councilor is unpaid.

Article 38: Meetings and Deliberations

The Board meets at least once every three months upon convocation of the Governor. The meeting cannot take place if the quorum fixed at four is not reached.

Convocation is of right when three members of the Board request it.

Deliberations are taken by a majority of votes expressed. In case of a tie, the voice of the president is decisive.

Councilors cannot be represented at Board meetings; however, they may delegate another councilor to represent them.

Article 39: Attributions

The Board has the most extensive powers, notably:

• it defines the general policy of the Central Bank and controls its management;
• it monitors the evolution of the monetary mass and its counter-values, and defines the obligations that monetary policy may lead to impose on credit institutions;
• it ensures the general administration of the Central Bank and establishes the norms and general conditions of its operations;
• it deliberates on the major orientations of the personnel management policy of the Central Bank;
• it rules on real estate acquisitions and alienations as well as on the use of the Central Bank's own funds;
• it approves the balance sheet and decides on the allocation of the Central Bank's operating results;
• it approves the annual report that the Governor addresses on behalf of the Central Bank to the President of the Republic;
• it authorizes the investment program;
• it adopts each year the provisional and supplementary budgets of the Central Bank;
• it determines the characteristics of monetary signs and submits to the Council of Ministers the projects for their creation, issuance, as well as their withdrawal or exchange;
• it adopts the internal regulations of the Central Bank;
• it deliberates, at the initiative of the Governor, on any treaty and convention.

Article 40: Register of Deliberations

A report is drawn up for each Board meeting. It is signed by the Governor and transcribed on the Board's register of deliberations.

Article 41: Documents Communicated to It

The Board receives annually communication of the balance sheet, operating account, inventory of the Central Bank, and the report of external auditors.

It likewise hears the Governor in their respective reports, asks them for any necessary clarification, and expresses the wishes it deems useful regarding the management of the Central Bank.

CHAPTER II: Attributions of the Governor

Article 42: Nomination and Duration of Mandate

The Governor is appointed by decree of the President of the Republic taken in the Council of Ministers for a duration of 5 years renewable once. His mandate may not be terminated early unless he becomes incapable of exercising his functions or in case of serious fault.

Article 43: Incompatibility of the Function with Other Functions

The function of Governor is incompatible with a legislative mandate and any government office.

Article 44: Role and Powers

• The Governor assumes the direction and current administration of the affairs of the Central Bank. He exercises all powers not devolved to the Board of Directors.

• He convenes and presides over Board meetings and sets the agenda. He ensures the execution of Board decisions.

• He represents the Central Bank vis-à-vis third parties; he alone signs, on behalf of the Central Bank, the exercise reports, balance sheets, income statements, and the annual report of the Central Bank.

• He ensures the direction of the current affairs of the Central Bank.

• He organizes the services of the Central Bank and defines their tasks.

• Under the conditions provided for by the personnel statute, he recruits, appoints, and dismisses the agents of the Central Bank.

• The Governor authenticates with his signature the banknotes issued by the Central Bank.

• He signs on behalf of the Central Bank all treaties and conventions legally formed.

Article 45: Delegation of Powers

He may delegate all or part of his powers to the executives of the Central Bank.

In the event of absence or temporary impediment, his replacement is ensured by the Direction of the Central Bank.

TITLE IV: ANNUAL ACCOUNTS AND PUBLICATIONS

Article 46: Monthly Situation

The Central Bank establishes a monthly situation of the monetary mass, fiduciary circulation, and their counter-values.

It publishes annually a report on the activities of the Central Bank.

It publishes annually the balance sheet, the operating account, and the report of the external auditors.

It publishes annually the annual report addressed by the Governor to the President of the Republic.

TITLE V: FINAL PROVISIONS

Article 47: Repeal

The provisions of the previous statutes of the Central Bank of Djibouti are repealed to the extent that they are contrary to the present law.

Article 48: Entry into Force

The present law will be executed as the law of the State. It enters into force on the day of its publication in the Official Journal.

Done in Djibouti, on December 14, 2010.

The President of the Republic, [Signature]

The Secretary General of the Government, [Signature]

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