Resolution 006/2002: Interest Rate Adjustment for Loans to NAFIBO SAM

BOARD RESOLUTION NO. 006/2002
SUBJECT: FINANCIAL ENTITIES MANAGEMENT –
APPROVES INTEREST RATE ADJUSTMENT
OF THE LOAN WITH RESOURCES FROM
SECTORAL PROGRAM II LOAN NO.
8865719 PRIVATE SECTOR AND PROGRAM BV
– C2 OF $36.6 MILLION TO NAFIBO SAM.

SEEN:
Law No. 1670 of October 31, 1995.
Board Resolution No. 11/99 of March 2, 1999.
Board Resolution No. 113/99 of December 21, 1999.
Note D.M.H. Off. No. 455/2001 from the Ministry of Finance dated December 27, 2001.
Note PRES. E. No. 376/2001 from the Central Bank of Bolivia dated December 31, 2001.
Report from the Financial Entities Management GEF No. 04/2002 of January 2, 2002.
Report from the Legal Affairs Management SANO No. 004/2002 of January 4, 2002.
Note from the International Operations Management GOI-I-N° 003/2002 of January 4, 2002.

CONSIDERING:
That the collection of external resources by the Republic has fulfilled the purpose of contributing to the promotion of the country's economic growth.

//2. B.D. No. 006/2002
That it is necessary to continue the financial intermediation activity of development resources for the benefit of the national productive sector, seeking to achieve better financial conditions.
That Board Resolution No. 011/99 approves the transfer of availability of the Sectoral Program II Loan No. 88 65 719 and No. BV-C2 in favor of the Bolivian National Financial Company S.A.M., under the modality of loan on behalf and mandate of the Republic up to the sum of $35 million for a term of 15 years, including 3 years of grace for capital amortization, at a fixed rate of 7.15% annual on balances. That Board Resolution No. 113/99 approves the transfer of availability of the Sectoral Program II Loan No. 88 65 719 and No. BV-C2 in favor of the Bolivian National Financial Company S.A.M., under the modality of loan on behalf and mandate of the Republic up to the sum of $1.6 million, for a term of 15 years, including 3 years of grace for capital amortization, at a rate of 7.15% annual on balances. That the note from the Ministry of Finance D.M.H. Off. No. 455/2001 requests the President of the Institution to proceed with the readjustment of the interest on the loan coming from the two lines for a total of $36.6 million, by two percentage points (2%), to enter into effect from January 1, 2002, justifying this request based on the communication from NAFIBO SAM, which informs that Banco Bisa S.A. would be prepaying all outstanding credits for approximately $10 million, due to the high interest rate, as well as the request from the Eastern Agricultural and Livestock Chamber (CAO) to reduce the aforementioned interest rate. That the interest rate of the $36.6 million loan with resources from the Sectoral II and BV-C2 lines reaches 12.15% or 13.15% annual, being higher than the interest rate charged for loans with FERE resources, which approximately reaches the borrower at 10.75% annual. That report GEF No. 04/2002 recommends the approval of the request from the Ministry of Finance to proceed with the reduction of the interest on the loans from the Sectoral II and BV-C2 lines by two percentage points (2%) from January 1, 2002. That Report SANO No. 004/2001 concludes by indicating that with the powers indicated in Law 1670 there is no legal impediment for the Board of Directors of the BCB to consider a readjustment in the interest rate of the loan granted to NAFIBO SAM on behalf of the Republic.

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That internal communication GOI-I-N° 003/2002 states that the Sectoral II and BV-C2 Development Credit Programs have entered the HIPC II scope with total forgiveness of their external balances of 5.916 million yen and 8.9 million euros respectively, although the financial conditions for repayment of the BCB to the Republic remain unchanged.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:
Article 1.- Authorize the readjustment from January 1, 2002, of the interest rate of the loan granted by the BCB to NAFIBO SAM on behalf of the Republic from the Sectoral Program II Loan No. 88 65 719 and No. BV-C2, from 7.15% to a variable interest rate calculated on the 6-month LIBOR rate prevailing on the last day of the month prior to the due date of each loan amortization installment, applicable until the conclusion of the loan, plus 3%.
In this way, the fixed nature of the interest rate stated in Article 1 of Board Resolutions 11/99 and 113/99 is modified.
Article 2.- Authorize the President of the BCB to sign modifying clauses to Article 7 of the clauses dated March 11, 1999 and December 23, 1999 respectively, with the Ministry of Finance and the Bolivian National Financial Company SAM.
Article 3.- The Presidency and the General Management are in charge of the execution and compliance with this Resolution.
La Paz, January 8, 2002

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Juan Antonio Morales A.

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Armando Pinell S. Juan Medinaceli V.

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Armando Méndez M. Roberto Camacho S.

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Javier Comboni S.