Resolution 023/2011

BOARD RESOLUTION NO. 023/2011 SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES THE REGULATION FOR THE GRANTING OF CREDIT TO STRATEGIC NATIONAL PUBLIC ENTERPRISES WITHIN THE FRAMEWORK OF THE GENERAL STATE BUDGET – MANAGEMENT YEARS 2010 AND 2011.

HAVING SEEN: The Political Constitution of the State. The General State Budget for the 2010 management year, approved within the framework of numeral 10 of paragraph I of article 158 of the Political Constitution of the State (GSE-2010). Law No. 50, of October 9, 2010, which approves modifications to GSE-2010. Law No. 62, of November 28, 2010, on the General State Budget - Management 2011 (GSE-2011). Law No. 1670, of October 31, 1995, of the Central Bank of Bolivia (BCB). The Statute of the BCB approved by Board Resolution No. 128/2005, of October 21, 2005, and its subsequent modifications. The Report from the Monetary Operations Management BCB-GOM-SOSP-DCE-INF-2011-2 of February 22, 2011. The Report from the Legal Affairs Management BCB-GAL-SANO-INF-2011-52 of February 22, 2011.

CONSIDERING: That the Political Constitution of the State establishes in numeral 10 of article 158 that the Plurinational Legislative Assembly has the attribute to approve the contracting of loans that commit the general revenues of the State.

That article 322 of the Political Constitution of the State provides that the Plurinational Legislative Assembly will authorize the contracting of public debt when it is demonstrated that there is the capacity to generate income to cover the principal and interest, and when the most advantageous conditions in terms of rates, terms, amounts, and other circumstances are technically justified. Public debt will not include obligations that have not been expressly authorized and guaranteed by the Plurinational Legislative Assembly.

That through article 41 of GSE-2010, the BCB is authorized to grant an extraordinary credit under concessional conditions up to the equivalent of $US1,000,000,000.00 (One billion 00/100 United States dollars), in favor of Strategic National Public Enterprises, with the exclusive objective of financing productive investment projects within the framework of the country's food and energy security; for this effect, the BCB is exempted from the application of articles 22 and 23 of Law No. 1670.

That articles 22 and 23 of Law No. 1670 determine that the BCB cannot grant credits to the Public Sector or incur contingent liabilities in its favor, except in favor of the General Treasury (TGN) to attend to urgent needs derived from declared public calamities, internal or international unrest by Supreme Decree, and to attend to temporary liquidity needs, within the limits of the monetary program; these operations will be documented in all cases through negotiable public debt securities issued by the National Treasury.

That Law No. 50, within the framework of article 41 of GSE-2010, authorizes in its articles 8, 9, and 10, the granting of credits to the National Electricity Company (ENDE), the San Buenaventura Sugar Company (EASBA), and the Bolivian Hydrocarbon Industrialization Company (EBIH), to which effect, through its article 19, it frees these companies from the application of articles 33 and 35 of Law No. 2042, regarding the mandatory registration with the Vice Ministry of Treasury and Public Credit of the start of borrowing operations, and the borrowing limits; for these effects, Law No. 50 exempts the BCB from the application of articles 22 and 23 of Law No. 1670.

That article 14 of Law No. 62 extends the validity of articles 9 and 19 of Law No. 50 for the contracting and execution of credits under concessional conditions, while through its article 13 it modifies the amount of the credit to ENDE and authorizes the granting of a credit in favor of the Bolivian Mining Corporation (COMIBOL); for this effect, the BCB is exempted from the application of articles 22 and 23 of Law No. 1670.

That to comply with these provisions, it is necessary to have specific regulations that allow the BCB to operationalize the granting of the credits authorized in GSE-2010, Law No. 50, and Law No. 62, establishing the requirements, conditions, and procedure to be followed both for the credit requests made by the EPNEs and for their approval and signing of the respective contract.

That through Report BCB-GOM-SOSP-DCE-INF-2011-2, the Monetary Operations Management recommends the approval of the Regulation for the Granting of Extraordinary Credits to Strategic National Public Enterprises, considering the aspects detailed in the present report.

That through Report BCB-GAL-SANO-INF-2011-52, the Legal Affairs Management concludes that the draft Regulation for the Granting of Credit to Strategic National Public Enterprises within the framework of the General State Budget – Management Years 2010 and 2011 is legally procedent, as it does not contravene the current legal framework, being within the competence of the BCB Board to consider its approval.

That the BCB Board, in its capacity as the Highest Authority of the Institution, is responsible for defining its policies, specialized regulations of general application, and internal rules, and is empowered to issue norms and adopt general decisions that may be necessary for the fulfillment of the functions, competencies, and powers assigned by Law to the Issuing Entity, as established in articles 44 and 54 item o) of Law No. 1670 and articles 9, 11, and 24 of the BCB Statute.

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

Article 1.- Approve the Regulation for the Granting of Credit to Strategic National Public Enterprises within the framework of the General State Budget Management Years 2010 and 2011, which, as an annex, forms an integral part of this Resolution.

Article 2.- This Regulation shall enter into force from the date of its approval.

Article 3.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, February 22, 2011

---

Marcelo Zabalaga Estrada

---

Ernesto Yáñez Aguilar Rolando Marín Ibáñez

---

Hugo Dorado Araníbar Gustavo Blacutt Alcalá Rafael Boyán Téllez

//4. R.D. N° 023/2011 REGULATION FOR THE GRANTING OF CREDIT TO STRATEGIC NATIONAL PUBLIC ENTERPRISES WITHIN THE FRAMEWORK OF THE GENERAL STATE BUDGET - MANAGEMENT 2010 AND 2011

CHAPTER I PRELIMINARY PROVISIONS

Article 1.- (Object) The present Regulation aims to regulate the granting of credits by the Central Bank of Bolivia (BCB) in favor of Strategic National Public Enterprises (EPNE), within the framework of what is provided in the General State Budget Management 2010, reformed by Law No. 50, of October 9, 2010, and the 2011 Budget approved by Law No. 62, of November 28, 2010.

CHAPTER II CREDIT REQUEST

Article 2.- (Credit request of the EPNE) I. For the consideration and approval of the credit request, the EPNE must submit the following documentation:

1. Written request addressed to the President of the BCB and signed by the highest authority or legal representative of the EPNE, indicating the legal framework supporting the credit request, which must contain:

a) Requested amount, b) Proposal for term and form of payment of principal and interest, c) Proposal for disbursement schedule and payment plan, d) Guarantees offered.

2. Documents demonstrating the Legal Status of the EPNE.

3. Document accrediting Legal Representation for the signing of the credit contract.

4. Ministerial Resolution from the lead sector Ministry, which must contain:

a) Justification that the use and destination of the credit resources are of national priority within the framework of the National Development Plan and that future cash flows will be used for the payment of the credit;

//5. R.D. N° 023/2011

b) Technical feasibility report of the project; c) Economic-financial evaluation that justifies and ensures the repayment capacity of the credit. d) Commitment of the Ministry to authorize disbursement requests directed to the BCB by the EPNE and to monitor the execution of the credit resources.

5. Administrative Resolution issued by the Board or highest decision-making body of the EPNE, through which the Investment Plan and the disbursement schedule of the credit resources are approved, with a breakdown of expenses in national currency and expenses in foreign currency.

6. Communication of the Investment Plan to the Ministries of Economy and Public Finance, Development Planning, and the lead sector Ministry.

7. Accreditation of the Registration of the Credit Resources in the General State Budget.

Article 3.- (Repayment Capacity) The EPNE must have and demonstrate the capacity to commit a sufficient flow of resources, either from the parent or corporate company, to back the payment of its obligations, regardless of the project's cash flows.

Article 4.- (Guarantees) The credit guarantee shall be constituted by negotiable debt titles issued by the National Treasury (TGN) in favor of the BCB, which cover the payments of principal and interest. The Titles must be managed by the lead sector Ministry. These Titles must be presented at the time of signing the contract.

Article 5.- (Reports for Approval) Upon receipt of the request and the documentation established in article 2 of this regulation, prior to the consideration by the Board, the President of the BCB will request the following reports:

a) Technical report on the impact of said credit on the monetary program, to the Economic Policy Advisory (APEC). b) Technical report on financial conditions to the Monetary Operations Management (GOM).

//6. R.D. N° 023/2011 c) Legal report regarding compliance with regulations and submission of documentation required for the granting of the credit. d) Other areas of the BCB, as required.

Article 6.- (Approval of the credit request) The BCB Board, considering the technical and legal reports, will consider the credit request and, if applicable, approve it, by a favorable vote of two-thirds of its members present at the Board meeting, issuing the corresponding Resolution.

Likewise, it will instruct the preparation and subsequent signing of the contract by the President of the BCB, prior to review and approval by the Board.

CHAPTER III CREDIT CONTRACT

Article 7.- (Financial Conditions) The financial conditions of the credit will be established and determined by the BCB Board, taking into account the requests of the EPNE and the degree of concessionality established by the Ministry of Economy and Public Finance (MEFP) through Ministerial Resolution.

Article 8.- (Contract) The conditions of the credit approved by the BCB Board will be recorded in the contract to be signed in a public document. The protocolization procedures of the Contract will be carried out by the BCB, and the expenses required for these procedures will be covered by the EPNE.

Article 9.- (Conditions for Disbursements) The disbursements of the public credit resources granted will be made only when the following are available:

a) The BCB Board Resolution approving the granting of the Credit and the Public Credit Contract. b) Authorization from the lead sector Ministry. This authorization must be sent for each disbursement. c) A specific account enabled in Bolivianos at the BCB. For this effect, the EPNE must request the Ministry of Economy and Public Finance to open the mentioned account at the BCB.

//7. R.D. N° 023/2011 d) In case the Investment Plan or the disbursement schedule is subject to modification, the EPNE must accredit the corresponding approval by its Board and the communication to the Ministries of Development Planning, Ministry of Economy and Public Finance, and the lead sector Ministry.

Article 10.- (Use and Destination of Credit Resources) The use and destination of the resources of the granted credit is the exclusive responsibility of the EPNE. The supervision and control of the use and destination of the granted credit resources is the exclusive responsibility of the lead sector Ministry. -.-