Resolution 004/98

BOARD RESOLUTION NO. 004/98 SUBJECT: FINANCIAL SYSTEM - APPROVES TRANSFER OF THE IDB LOAN 830/SF-BO TO THE BOLIVIAN NATIONAL FINANCIAL CORPORATION S.A.M. (NAFIBO).

HAVING REVIEWED: The Law 1670 of October 31, 1995. The Statute of the Central Bank of Bolivia, approved by Board Resolution No. 082/97 of February 20, 1997. The IDB Loan Agreement 830/SF-BO, signed between the Republic of Bolivia and the Inter-American Development Bank (IDB) on March 30, 1990, and its Amending Contracts of September 24, 1991, and April 4, 1997, respectively. The Subsidiary Agreement signed between the Republic of Bolivia and the Central Bank of Bolivia (BCB) on August 30, 1990. The Note from the Legal Advisory Office ALEG No. 369/97 of December 24, 1997. The Report from the Financial System Management SEL No. 03/98 of January 5, 1998.

CONSIDERING: That the collection of external resources by the Republic has fulfilled the purpose of contributing to the promotion of economic growth in the country. That it is necessary to continue the financial intermediation activity of development resources for the benefit of the national productive sector, providing this activity with institutional independence and management autonomy.

//2. B.D. No. 004/98 That Article 85 of Law 1670 establishes that the Board of Directors of the Central Bank of Bolivia (BCB) will determine the dates and amounts for the transfer of assets generated by resources administered by the former Development Management of the Issuing Institute, in favor of NAFIBO, agreeing with it the value and form of payment. That the IDB Credit Program 830/SF-BO, arising from the Loan Agreement signed between the Republic of Bolivia and the Inter-American Development Bank (IDB) on March 30, 1990, was transferred to the BCB through a Subsidiary Agreement of August 30, 1990, so that in its capacity as Executive Agency it would administer the resources of the credit component of the Program, channeling resources in favor of the private productive sector of the national economy. That by Amending Contract II, signed between the Republic of Bolivia and the IDB on April 4, 1997, both parties agreed to substitute the BCB with NAFIBO as the Executive Agency for the credit component of the Program. That in the opinion of the Bank's Legal Advisory, there are no observations for the Board to approve the signing of the Subsidiary Transfer Agreement, in accordance with the attribution conferred by Article 14, paragraph p) of the BCB Statute. That the Report from the Financial System Management SEL No. 03/98 recommends the approval of the draft Subsidiary Transfer Agreement prepared by the BCB, NAFIBO, and the Ministry of Finance on behalf of the Republic, to implement the transfer of resources from the IDB Loan 830/SF-BO and to absorb losses due to exchange rate differences in the portfolio transfer.

THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Approve the transfer of the IDB Program 830/SF-BO in favor of the Bolivian National Financial Corporation S.A.M., under the following terms:

Modalities: a) Transfer to NAFIBO of the available resources with the equivalent external obligation, which as of December 31, 1997, amount to US$17,868,106.27, for the amount resulting on the effective date of its transfer. b) Assignment to the General Treasury of the Nation, representing the Republic, of the outstanding portfolio with the equivalent external obligation, as well as all its rights, privileges, and guarantees. By mandate of the Republic, in accordance with the Subsidiary Transfer Agreement to be signed, this portfolio is simultaneously delivered to NAFIBO for its administration, which as of December 31, 1997, amounts to the equivalent of US$4,288,043.75, for the amount resulting on the effective date of its transfer.

Interests: Accrued interests in favor of the Program as of the date of portfolio assignment are recognized, which will be deposited in the BCB by NAFIBO on the dates of their respective collections.

Treatment of the Non-Performing Portfolio: In consideration that the non-performing portfolio of the IDB Program 830/SF-BO was included in the claim for receivables presented by the BCB to the Intendencies of the Entities in Liquidation, the administration of said portfolio will remain under the responsibility of the BCB in its capacity as Financial Agent of the Government. Recoveries from this portfolio will be transferred to the General Treasury (TGN). Amounts not recovered until the completion of the liquidation processes will be written off against the provisions made.

Article 2.- Authorize the application of the Reserve constituted through Board Resolution No. 174/97, to cover the losses generated in the IDB Program 830/SF-BO, for the amount determined on the date of signing the Subsidiary Transfer Agreement, as well as to absorb losses due to exchange rate differences in the portfolio transfer.

Article 3.- Authorize the President of the BCB to sign the Subsidiary Transfer Agreement of the IDB Program 830/SF-BO with the Ministry of Finance and the Bolivian National Financial Corporation S.A.M.

//4. B.D. No. 004/98

Article 4.- Instruct the Bank's Administration to proceed with the corresponding actions to conclude the obligations of the BCB with the Republic and the IDB, related to the administration and execution of the IDB Program 830/SF-BO.

Article 5.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

13.I.98

---

Juan Antonio Morales A.

---

Armando Pinell S. Jaime Ponce G.

---

Juan Medinacelli V. Juan Pablo Zegarra A.