RESOLUTION No. JPRM-2021-004-M

THE MONETARY AND REGULATORY POLICY BOARD

CONSIDERING:

That, the Constitution of the Republic of Ecuador, in its article 226, prescribes that public servants and persons acting by virtue of a state power shall exercise only the competencies and faculties attributed to them in the Constitution and the Law;

That, article 227 ibidem, states that the Public Administration constitutes a service to the community that is governed by the principles of effectiveness, efficiency, quality, hierarchy, coordination, planning, among others;

That, through the Organic Law Reforming the Organic Monetary and Financial Code for the Defense of Dollarization, published in the First Supplement of the Official Register No. 443, of May 3, 2021, the Organic Monetary and Financial Code was reformed;

That, article 47.1 of the Organic Monetary and Financial Code, as reformed, creates the Monetary and Regulatory Policy Board, as part of the Executive Function, responsible for the formulation of monetary policy, the highest governing body of the Central Bank of Ecuador, and determines its composition;

That, article 47.6 of the same Code, regarding the functions of the Monetary and Regulatory Policy Board, among others, establishes: “1. Formulate policy in the monetary field and observe its application, by the Central Bank of Ecuador, to preserve the integrity and sustainability of the dollarization monetary system and the financial system, in accordance with the provisions of this Code; (...) 26. Those others conferred by law (...)”;

That, numeral 1 of article 53.1 of the Code ibidem states that the Central Bank of Ecuador, to achieve its objective, shall “(...) 1. Collect, compile, analyze, extract, prepare and publish on the website and/or by any other means, with the periodicity determined by the Monetary and Regulatory Policy Board, the following information: the figures corresponding to monetary, financial, credit and exchange indicators; the macroeconomic synthesis statistics of the country; interest rates; authorized payment systems and authorized institutions to operate; statistics of payment systems and means; and, additional information required by the Monetary and Regulatory Policy Board (...)”;

That, Transitory Provision Fiftieth Fourth, added to the Organic Monetary and Financial Code by the aforementioned Reforming Law, prescribes: “The resolutions contained in the Codification of Monetary, Financial, Securities and Insurance Resolutions of the Monetary and Financial Policy and Regulation Board and the norms issued by the control bodies, will remain in force until the Monetary and Regulatory Policy Board and the Financial Policy and Regulation Board decide what corresponds, within the scope of their competencies”;

That, numeral II “Interest on external credits” of article 30 of the Regulation for the application of the Internal Tax Regime Law, states: “Interest paid on external credits, acquired for the business activity, up to the rate authorized by the Central Bank of Ecuador, will be deductible, provided that these and their payments are registered with the Central Bank of Ecuador, and that they meet the other conditions established in the law”;

That, it is necessary for the Monetary and Regulatory Policy Board to approve the monetary regulations contained in the Codification of Monetary, Financial, Securities and Insurance Resolutions, issued by the former Monetary and Financial Policy and Regulation Board, which is currently in force, with the purpose of incorporating these provisions into the monetary regulations of the Monetary and Regulatory Policy Board, prior to the analysis of the pertinence of each norm and provision, in a disaggregated manner;

That, it is necessary to adapt the regulatory norms applicable to the registration of external credits, with the purpose of fostering the simplification of procedures, even more so in the health crisis situation, in which the use of electronic means as a communication channel between public institutions and citizens must prevail. Likewise, it is necessary to avoid distortions that could affect natural and legal persons regarding the registration of external credits with the Central Bank of Ecuador, and to rationalize their application in accordance with current regulations;

That, in an extraordinary session of the Monetary and Regulatory Policy Board on November 16, 2021, the proposal for reform contained in Memorandum No. BCE-BCE-2021-0194-M of November 4, 2021, and its scope contained in Memorandum No. BCE-BCE-2021-0198-M of November 10, 2021, sent by the General Manager of the Central Bank of Ecuador to the President of the Monetary and Regulatory Policy Board, as well as the Technical Report No. BCE-SGSERV-059/DNSP-698-2021 of October 26, 2021, and the Legal Report No. BCE-CGJ-057-2021 of October 29, 2021, were reviewed; and,

In exercise of its functions and in accordance with article 47.7 of the Organic Monetary and Financial Code, the Monetary and Regulatory Policy Board resolves to issue:

REGULATION ON THE REGISTRATION OF EXTERNAL CREDITS TO THE PRIVATE SECTOR

Art. 1.- An external credit shall be understood as the operation in which the creditor delivers monetary resources or goods to the debtor, who commits to payment under the financial conditions agreed upon between the debtor and creditor.

External credits are agreed upon by natural or legal persons domiciled in Ecuador, as debtors, with financial entities, head offices, non-financial entities, and other residents outside the national territory, as creditors.

Primary issuance of bonds in international markets by legal persons domiciled in Ecuador is also considered an external credit.

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Own financing (capital), through contributions, issuance or alienation of shares and other financial instruments that are economically equivalent, shall not be considered an external credit.

Art. 2.- The Central Bank of Ecuador shall register credits that imply the disbursement of monetary resources and/or acquisition and importation of goods, when such operations are for a term equal to or greater than 180 days.

The Central Bank of Ecuador shall also register payments made for the amortization of previously registered external credits.

Overdrafts in current accounts are not subject to registration.

Art. 3.- For the registration of an external credit, the debtor must present to the Central Bank of Ecuador the following:

1. The form determined for this effect by the Central Bank of Ecuador, which shall contain information related to the destination of the credit (working capital, monetary disbursements for payment of imports, payment of obligations, renewal, novation, acquisition and importation of goods), the financial conditions of the indebtedness and the relationship between debtor and creditor; as well as, the other conditions that the Central Bank of Ecuador considers necessary, among them, those related to the debtor's obligation to comply with norms on prevention, detection and eradication of money laundering and financing of crimes;

2. Document from the Ecuadorian financial entity certifying the entry of funds into Ecuador and crediting of the money into the debtor's account, in the case of credits with monetary disbursements.

When the resources have financed foreign trade operations of goods, a copy of the Customs Import Declaration, in the name of the debtor, must be presented; and,

3. Copy of the sworn statement submitted before the Public Notary, in which the debtor declares personally the tax, civil and criminal responsibility regarding the authenticity and truthfulness of the information detailed in the credit registration application form.

Art. 4.- The Central Bank of Ecuador shall register external credits in the currency in which they are contracted, provided that the payment term of such obligations is valid on the date of registration.

Art. 5.- The Central Bank of Ecuador shall enable the Internal Revenue Service to access the information system available for the registration of external credits; so that, the tax authority, within the scope of its competence, carries out the reviews it deems necessary.

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MONETARY AND REGULATORY POLICY BOARD

RESOLUTION No. JPRM-2021-004-M

Art. 6.- It corresponds to the debtor who registers the external credit and its payments, the veracity of all the information recorded in the forms and other documents submitted to the Central Bank of Ecuador, for this purpose.

GENERAL PROVISION.- The Monetary and Regulatory Policy Board recognizes the provisions contained in Subsection II: “External Credits to the Private Sector”, of Section IV: “Regime of Foreign Capital”, of Chapter XIV: “Of Currencies”, of Title I: “Monetary System”, of the Codification of Monetary, Financial, Securities and Insurance Resolutions, issued by the former Monetary and Financial Policy and Regulation Board, as part of the monetary regulations on which it corresponds to resolve.

REPEALING PROVISION.- Subsection II: “External Credits to the Private Sector”, of Section IV: “Regime of Foreign Capital”, of Chapter XIV: “Of Currencies”, of Title I: “Monetary System”, of the Codification of Monetary, Financial, Securities and Insurance Resolutions, issued by the former Monetary and Financial Policy and Regulation Board, is expressly repealed.

TRANSITORY PROVISION.- The Central Bank of Ecuador, within thirty (30) days, shall issue the corresponding administrative regulations and implement the necessary mechanisms, in accordance with the provisions of this resolution.

FINAL PROVISION.- This resolution shall enter into force from the present date, without prejudice to its publication in the Official Register.

Its publication on the institutional website of the Central Bank of Ecuador is entrusted to the Document Management and Archive Directorate.

COMMUNICATE.- Given in the Metropolitan District of Quito, on November 16, 2021.

THE PRESIDENT

Signature

DR. TATIANA MARIBEL RODRÍGUEZ CERÓN

The aforementioned resolution was signed by Doctor Tatiana Rodríguez – President of the Monetary and Regulatory Policy Board, in the Metropolitan District of Quito on November 16, 2021.- I CERTIFY.

ADMINISTRATIVE SECRETARY

Signature

AB. MARÍA ALEXANDRA GUERRERO DEL POZO