Resolution 096/98 Approving Policy for Collecting Portfolio Ceded to BCB by BIDESA in Liquidation

RESOLUTION OF THE BOARD OF DIRECTORS NO. 096/98 SUBJECT: MANAGEMENT OF THE FINANCIAL SYSTEM - APPROVES POLICY FOR THE COLLECTION OF THE PORTFOLIO CEDED TO THE BCB BY BIDESA IN LIQUIDATION.

VIEWED: Law No. 1670 of October 31, 1995. The Liquidity Loan Contract with Guarantee of Cession of Credits signed between the Central Bank of Bolivia and the International Development Bank S.A. on November 18, 1997. The Account Reconciliation Act at the end of the administration of the portfolio ceded to the Central Bank of Bolivia, signed by the Liquidating Administrator of BIDESA and the BCB on June 10, 1998. The Board of Directors Resolution of the BCB No. 065/98 of July 7, 1998. The Note SB/IDL Document 32852 from the Superintendence of Banks and Financial Entities dated July 30, 1998, and the Regulation of said supervisory entity No. 31/96 of April 30, 1996.

//2. R.D. No. 096/98 The Note IL-BIN CRED.ING. 1423/98 from the Liquidating Intendancy of BIDESA to its borrowers, dated August 14, 1998. The Note OF.SAC-9798 addressed to the BCB by the Roda Services Company on October 2, 1998, as well as other verbal claims from the borrowers of BIDESA in liquidation. The Report from the Financial System Management No. SEL-DEL-252/98 of October 12, 1998. The Report from the Legal Advisory No. 352/98 of October 7, 1998.

CONSIDERING: That in application of Article 39 of Law 1670, through a liquidity loan contract of November 18, 1997, the Central Bank of Bolivia agreed with the International Development Bank (BIDESA) currently in liquidation, to pay said credit with the cession of a portfolio that was delivered by the BCB to the same banking entity for its administration. That as an emergency arising from the forced liquidation of BIDESA, ordered by the Superintendence of Banks and Financial Entities by Resolution SB No. 143/97 of December 12, 1997, through an Act of Reconciliation of June 10, 1998, the BCB received from the Liquidating Intendancy of the aforementioned financial entity the account rendering and documentation of the ceded portfolio. That in Point Three of the aforementioned Act, the obligation of the BCB to return in favor of BIDESA in liquidation the pending balances of recovery of the portfolio is established, after the Central Bank of Bolivia recovers the amounts owed, interest, and expenses incurred for the concept of the liquidity loan. That Article 5 of Board of Directors Resolution No. 065/98 of July 7, 1998, authorizes the forgiveness of penal interest to borrowers who partially or totally amortize their obligation to the BCB, with the purpose of incentivizing the recovery of the portfolio ceded by BIDESA. That through note SB/IDL Document 33852 of July 30, 1998, the Superintendence of Banks and Financial Entities determined the application of its Resolution No. 31/96 of April 30, 1996, for the collection of the credit portfolio of BIDESA in liquidation.

//3 R.D. No. 096/98 That in application of the aforementioned provision, the Liquidating Intendancy has granted incentives to accelerate the recovery of credits granted by BIDESA, a treatment also invoked by the borrowers involved in the portfolio ceded to the BCB. That the Financial System Management in its report SEL.DEL. No. 252/98, recommends to the Board of Directors of the BCB to homologate the portfolio collection treatment that the Liquidating Intendancy of BIDESA is employing, for the recovery of credits ceded to the BCB, for two reasons: the first, because BIDESA in liquidation has expectant rights on the portfolio balances, after the Central Bank of Bolivia recovers the amounts corresponding to the liquidity loan, and the second, because this treatment will allow the BCB to accelerate recoveries from borrowers. That in the opinion of the Legal Advisory, pursuant to subsection j) of Article 54 of Law 1670, the Board of Directors has the authority to set and modify the interest rates of the credits it grants, taking into account market rates for similar operations, as well as to establish their other terms and conditions.

THEREFORE THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES: Article 1.- Modify Article 5 of the Board of Directors Resolution of the Central Bank of Bolivia No. 065/98 of July 7, 1998, in the following terms: SAYS: Article 5.- Authorize the forgiveness of penal interest to borrowers who partially or totally amortize their obligation to the BCB, with the purpose of incentivizing the recovery of the portfolio ceded by BIDESA to the BCB.

//4 R.D. No. 096/98 SHOULD SAY: “Article 5.- The recovery of the portfolio ceded to the BCB by the International Development Bank S.A. in liquidation, will follow the same collection policies established by the Resolution of the Superintendence of Banks and Financial Entities No. 31/96 of April 30, 1996, applicable to BIDESA in liquidation by instruction of note SB/IDL Document 33852 of July 30, 1998, which forms part of this Resolution as an annex.”

Article 2.- Starting from the month of February 1999, the Administration of the BCB is authorized to apply the policies and incentives determined by the Superintendence of Banks and Financial Entities for the recovery of the credit portfolio of BIDESA in liquidation. Article 3.- The Presidency and the General Management are in charge of the execution and compliance of this Resolution.

La Paz, October 13, 1998

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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.