Resolution 046/2012 Approving Regulations for the Purchase of Gold for International Reserves

BOARD RESOLUTION NO. 046/2012 SUBJECT: INTERNATIONAL OPERATIONS MANAGEMENT – APPROVES REGULATIONS FOR THE PURCHASE OF GOLD DESTINED FOR INTERNATIONAL RESERVES.

HAVING SEEN: The Political Constitution of the State approved by referendum on January 25, 2009, and published on February 7, 2009. Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB). Law No. 175 of October 11, 2011, which provides for the purchase of gold by the BCB destined for international reserves. Supreme Decree No. 1167 of March 14, 2012, which regulates Law No. 175 of October 11, 2011. The Regulation for the Administration of International Reserves approved by Board Resolution No. 163/2011 of December 20, 2011. The Report from the International Operations Management BCB-GOI-SRES-INF-2012-7 of April 10, 2012. The Report from the Legal Affairs Management BCB-GAL-SANO-INF-2012-112 of April 16, 2012.

CONSIDERING:

That Article 328 of the Political Constitution of the State establishes as one of the attributes of the Central Bank of Bolivia (BCB), in coordination with the economic policy determined by the Executive Branch, the administration of international reserves, constituted by various internationally accepted assets, including gold.

That Law 1670 of October 31, 1995 provides that the BCB will administer and manage its international reserves in the manner it considers most appropriate for the fulfillment of its object and functions and for their adequate safeguarding and security.

That Law No. 175 of October 11, 2011, authorizes the BCB to purchase gold bars from State Mining Enterprises and from the Commercialization Center of Miners of the Mining Cooperatives Ltd. (COMERMIN), which will be destined to the increase of international gold reserves.

That Supreme Decree No. 1167 establishes the conditions, requirements, and mechanisms for the purchase of gold by the BCB from State Mining Enterprises.

That the Regulation for the Administration of International Reserves in its Article 8 establishes that gold purchase or sale operations will be authorized by the Board through an express resolution.

That the Report from the International Operations Management BCB-GOI-SRES-INF-2012-7 recommends approving a Regulation for the purchase of gold.

That according to the Report from the Legal Affairs Management BCB-GAL-SANO-INF-2012-112, the Regulation does not contravene the current legal framework and that in accordance with the attribute conferred by Article 54, subsection o) of Law No. 1670, the Board is empowered to approve, modify, and interpret the BCB's regulations.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA,

RESOLVES:

Article 1.- Approve the Regulation for the purchase of gold from State Mining Enterprises, which forms an integral part of this Resolution as an annex.

Article 2.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, April 17, 2012

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Marcelo Zabalaga Estrada

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Ernesto Yáñez Aguilar Rolando Marín Ibáñez

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Hugo Dorado Araníbar Gustavo Blacutt Alcalá

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ANNEX REGULATION FOR THE PURCHASE OF GOLD FROM STATE MINING ENTERPRISES DESTINED FOR INTERNATIONAL RESERVES

CHAPTER I GENERAL PROVISIONS

Article 1.- (Object) The present Regulation aims to establish the characteristics, conditions, and procedures for the purchase of gold bars destined for international reserves.

Article 2.- (Legal framework and scope of application) The present Regulation has as its legal framework Law No. 1670 of October 31, 1995, Law No. 175 of October 11, 2011, and Supreme Decree No. 1167 of March 14, 2012, and applies to the purchases of gold bars by the Central Bank of Bolivia (BCB) from State Mining Enterprises (EMIES).

Article 3.- (Characteristics of gold bars) The BCB will purchase gold with the following characteristics: a) Cast into bars b) Weight of each bar between 5 to 10 kilograms c) Minimum purity percentage of each bar of 90%. d) Each bar must have an identification seal of the EMIES and a serial number. e) Accredited laboratory certificate.

Article 4.- (Guarantee granted by the BCB) The EMIES will deliver the gold to the BCB according to the specified characteristics and procedures defined in this Regulation and in the General Management Circular issued for this effect, against which the BCB will grant the EMIES a guarantee of 80% on the minimum purity percentage established in the previous Article 3, considering the gold price established in the BCB's Quotation Table on the day of gold delivery and the exchange rate for purchasing bolivianos against the US dollar. The resulting amount will be credited to the EMIES' bank account on the same date of gold delivery. The received gold bars will remain in custody in BCB vaults until their final disposition according to what is provided in this Regulation.

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Article 5.- (Determination of purity percentage) The BCB will hire an internationally certified company to carry out the process of sampling and determination of the purity percentage of each gold bar; this process will begin on the same day of the receipt of the gold, according to what is established in the BCB General Management Circular.

Article 6.- (Purchase of gold) The BCB will make payment for the purchase of the EMIES' gold in bolivianos, deducting the amount granted in the guarantee established in the previous Article 4, by credit to the bank account established by the EMIES, upon receipt of the following documents: a) Results of the gold purity grade by the contracted company (scanned document sent by email). b) Legal invoice issued by the EMIES. c) Credit Notes (NOCRES) issued by the Ministry of Economy and Public Finance. If any of the 3 documents is not presented, the BCB cannot make the corresponding payment.

Article 7.- (Purchase value of gold) The International Operations Management of the BCB will determine the purchase value of gold considering the gold purity percentage and the BCB's Quotation Table corresponding to the day of receipt of the purity analysis (via email). The resulting amount in US dollars will be converted to bolivianos at the purchase exchange rate of the same date, and the effective Value Added Tax (VAT) rate will be applied to this amount.

Article 8.- (Gold with lower purity percentage) If the result of the purity analysis carried out by the contracted company establishes a percentage lower than that delivered as a guarantee, according to what is provided in Article 4 of this Regulation, the BCB will automatically and irrevocably debit the missing amount from all EMIES accounts in the BCB and in the financial system. The EMIES must deliver the corresponding Legal Invoice on the same day of the operation, according to what is established in the previous Article 7.

Article 9.- (Purchase volumes)

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The BCB Board will establish semi-annually the maximum purchase volumes of gold from the EMIES.

Article 10.- (Contract Subscription) The EMIES, prior to gold purchase operations, must sign a gold bar purchase-sale contract prepared by the BCB with the Issuing Entity, in which it unconditionally adheres to comply with everything established in this Regulation, the BCB General Management Circular, and any subsequent modifications defined in these norms.

Article 11.- (Operational procedures) The operational procedures regarding the receipt of gold, its custody, the taking and distribution of samples, error margins, and others, will be executed by the International Operations Management and authorized by Circular of the BCB General Management.

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