Resolution 091/99 Approving Direct Administration Criteria for International Reserves (Benchmark) for the October-December 1999 Quarter

BOARD RESOLUTION NO. 091/99 SUBJECT: INTERNATIONAL AFFAIRS - APPROVES THE CRITERIA FOR DIRECT ADMINISTRATION OF INTERNATIONAL RESERVES (BENCHMARK) FOR THE QUARTER OCTOBER-DECEMBER 1999.

HAVING VIEWED: Law No. 1670 of October 31, 1995, Chapter II, regarding the functions of the BCB with respect to International Reserves. The Regulation for the Administration of International Reserves, approved by Board Resolution No. 090/99 of October 12, 1999. Report GOI No. 019/99 from the International Operations Management of October 15, 1999. Report GAL No. 054/99 from the Legal Affairs Management of October 15, 1999.

CONSIDERING: That the new Regulation for the Administration of International Reserves provides, starting from the year 2000, for the definition of an annual investment policy for international reserves at the beginning of each management period. That until the annual investment policy is approved, it is necessary to establish the Benchmark for the period comprising the months of October to December 1999, presented by the International Affairs Management and approved by the Reserve Administration Committee in its meeting on October 7, 1999.

//2. B.R. No. 091/99 That the International Operations Management in its Report GOI No. 019/99 recommends maintaining the Benchmarks and average limits of the previous quarter, with the exception of the quarterly average limit for banknotes and coins. That according to Report GAL No. 054/99 from the Legal Affairs Management, it is within the authority of the Board of Directors to approve the Benchmark corresponding to the period from October to December 1999.

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

Article 1.- Approve the criteria for direct administration of international reserves (Benchmark), for the period comprising the months of October to December 1999, in the following terms:

Banknotes and Coins: Quarterly average of up to US$ 100,000,000.- in vault and funds in custody. Special Drawing Rights (SDRs): Quarterly average of up to SDRs 27,000,000.-, deposited in the International Monetary Fund. Working Capital (Without banknotes): The target rate will be 90% of the average market rate for overnight dollar deposits, plus one basis point for every million dollars of excess over a level of 10 million dollars of working capital. Investment Capital: Time Deposits: The target rate will be the result of the average LIBID rate for three months (LIBOR for three months minus 0.125%).

//3. B.R. No. 091/99 Fixed Income Instruments: The target rate will be the J.P. Morgan index for government bonds of the U.S. Treasury with a maturity of 1 to 3 years. Gold Investments: The target rate will be the average rate of 3-month gold deposits. Limit of the average duration for Investment Capital: Up to 720 days.

Article 2.- These direct administration criteria will apply to all international reserves of the Central Bank of Bolivia, excluding those of Delegated Administration and the global portfolio of the BCB. These criteria will be evaluated and reviewed upon conclusion of the established three-month period, based on the Report that the International Operations Management must present for consideration by the Board of Directors, prior approval by the International Reserve Administration Committee.

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

La Paz, October 19, 1999

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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.