Resolution 066/2001

BOARD RESOLUTION NO. 066/2001 SUBJECT: ECONOMIC POLICY ADVISORY – EXCEPTIONAL APPROVAL OF REPURCHASE OPERATIONS WITH FERE BONDS.

HAVING REVIEWED: Law No. 1670 of October 31, 1995. Law 2196 of the Special Fund for Economic Reactivation (FERE) of May 2, 2001. Supreme Decree No. 26195, regulating Law 2196 of May 24, 2001. The Regulation of Repurchase Operations, approved by Board Resolution of the BCB No. 083/2000 of November 21, 2000. The request from the Undersecretariat of Financial Affairs, of the Ministry of Finance, contained in note VAF-DGSF-314-01 of June 5, 2001. The Report from the Legal Affairs Management SANO 011/2001 of June 22, 2001. The Report from the Economic Policy Advisory No. 017/2001 of July 2, 2001.

CONSIDERING: That through note VAF-DGSF-314-01, the Undersecretariat of Financial Affairs requested the BCB to approve the eligibility of FERE bonds to be issued by the Bolivian National Financial Corporation SAM (NAFIBO), to support the success of the FERE program.

That Article 6 of Law No. 1670 empowers the Central Bank of Bolivia to execute monetary policy and regulate the quantity of money and the volume of credit, according to its monetary program, being able to issue, place, and acquire securities and carry out other open market operations, such as repurchase operations, for this purpose.

That Article 22 of Law No. 1670 establishes that the Central Bank of Bolivia may not grant credit to the Public Sector nor incur contingent liabilities in its favor; and that it may do so exceptionally in favor of the National Treasury with the favorable vote of two-thirds of the members present in a meeting of its Board of Directors, in the cases qualified by this Law.

That Article 3 of Law 2196 authorizes NAFIBO S.A.M. to issue the so-called "FERE bonds".

That NAFIBO has an AA- risk rating granted by Duff and Phelps.

That the Report from the Economic Policy Advisory No. 017/2001 recommends that the Board of Directors of the Central Bank of Bolivia consider the execution of repurchase operations with FERE bonds as exceptional operations, whose modalities must be established in a specific Regulation.

That to make these operations feasible, it is necessary to sign a contract with NAFIBO and with the General Treasury of the Nation (TGN) that guarantees the payment at maturity of the FERE bonds issued by NAFIBO, which could remain in the possession of the Central Bank.

That according to the current Regulation of Repurchase Operations, only securities issued by the BCB and the TGN can be reported in the BCB, so it corresponds to approve a specific regulation for FERE bonds.

That the Legal Report SANO 011/2001 states that it corresponds to the Board of Directors of the BCB to consider the request from the Undersecretariat of Financial Affairs.

That Article 54, paragraph d) of Law 1670 empowers the Board of Directors of the BCB to issue the norms for Open Market Operations.

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

Article 1.- Exceptionally authorize the execution of repurchase operations with FERE bonds at the Central Bank of Bolivia 180 days after their issuance, according to a specific Regulation that will be approved by the Board of Directors of the BCB.

Article 2.- Authorize the President of the BCB to sign with the Minister of Finance and with the President of NAFIBO the contracts that guarantee the payment at maturity of the FERE bonds that could remain in the possession of the BCB, as a result of the repurchase operations, with the purpose of complying with Article 22 of Law 1670.

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

La Paz, July 3, 2001

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Juan Antonio Morales A.

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Armando Pinell S. Jaime Ponce G.

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Juan Medinaceli V. Armando Méndez M.