Resolution 116/2001 Approving the Housing Promotion Unit (UFV) Regulations

RESOLUTION OF THE BOARD OF DIRECTORS NO. 116/2001 SUBJECT: ECONOMIC POLICY ADVISORY – APPROVES THE REGULATIONS OF THE HOUSING PROMOTION UNIT

HAVING VIEWED:
The Supreme Decree 26390 of November 8, 2001.
The Report of the Economic Policy Advisory APEC-INEP No. 037/2001 of November 19, 2001.
The Report of the Legal Affairs Management SANO No. 061/2001 of November 20, 2001.

CONSIDERING:
That through Supreme Decree 26390, the creation of the Housing Promotion Unit (UFV) with a value maintenance clause to an index to be established by the Central Bank of Bolivia (BCB) on the basis of the Consumer Price Index (CPI) calculated and published by the National Institute of Statistics is provided for.

That the Report of the Economic Policy Advisory No. 037/2001 recommends approving the calculation methodology of the Housing Promotion Unit (UFV).

That the Report of the Legal Affairs Management SANO No. 061/2001 states that it corresponds to the Board of Directors of the BCB to consider the approval of the Draft Regulations of the Housing Promotion Unit (UFV).

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

RESOLVES:

Article 1. Approve the Regulations of the Housing Promotion Unit (UFV) which forms part of the annex to this Resolution.

Article 2. The UFV data published by the BCB are final and will not be revised.

Article 3. This Resolution will enter into force as of December 7, 2001.

Article 4. The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, November 20, 2001

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Juan Antonio Morales A.

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Armando Pinell S. Juan Medinaceli V.

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Roberto Camacho S. Javier Comboni S.

ANNEX
REGULATIONS OF THE HOUSING PROMOTION UNIT (UFV)

CHAPTER I
GENERAL PROVISIONS

Article 1. (Object)
The present Regulations have the object of establishing and regulating the daily calculation method of the Housing Promotion Unit (UFV), as well as establishing the obligations and responsibilities in its elaboration and dissemination.

Article 2. (Housing Promotion Unit)
The UFV is a reference index of the daily evolution of prices.

Article 3. (Responsible for the elaboration of the UFV)
The Economic Policy Advisory of the Central Bank of Bolivia (APEC) will be responsible for the elaboration of the UFV, based on the information of the Consumer Price Index (CPI) calculated and published by the National Institute of Statistics (INE).

Article 4. (Periodicity and Publication)
The UFV will have a daily periodicity and will be disseminated by the BCB with the same frequency.

Article 5. (Definitions)
For the purposes of these regulations, the following definitions are established:
a) Twelve-month inflation: Variation of the CPI of a given month with respect to the CPI corresponding to the same month of the previous year. b) Annualized twelve-month inflation: Price variation corresponding to one month, calculated from the twelve-month inflation, as established in the Annex of the Regulations.

CHAPTER II
CALCULATION METHODOLOGY

Article 6. (Base day of the UFV)
The base day of the UFV will be December 7, 2001. On that date, the index will be equal to one.

Article 7. (Calculation methodology)
For the calculation of the UFV, the UFV of the previous day multiplied by an update factor will be used, whose calculation will be carried out as follows:

The update factor, to calculate the UFV corresponding to the first six days of each month, is defined as the "n" root of one plus the annualized twelve-month inflation corresponding to two months ago. Where "n" is the number of calendar days that the month for which the UFV is being calculated has.

The update factor, for the calculation of the UFV from the seventh day of each month, is defined as the "n" root of one plus the annualized twelve-month inflation corresponding to the immediate previous month. Where "n" is the number of calendar days that the month for which the UFV is being calculated has.

The detailed calculation methodology is contained in the Appendix of these Regulations.

Article 8. (Number of decimals)
The UFV will be disseminated with 5 decimals.

APPENDIX

CALCULATION METHODOLOGY OF THE HOUSING PROMOTION UNIT (UFV) The methodology for the calculation of the UFV is as follows:

With the data of the monthly CPI published by the INE, the twelve-month inflation (p_12 months) is calculated:

p_12 months_t = (IPC_t / IPC_(t-12 months)) - 1

where p_12 months_t is the twelve-month inflation corresponding to month t.

Based on the twelve-month inflation, the annualized twelve-month inflation (p_m) is obtained:

p_m_t = (1 + p_12 months_t)^(1/12) - 1

where p_m_t is the annualized twelve-month inflation corresponding to month t.

From the first to the sixth day of each month, the calculation of the UFV for a day "d" (UFVd) will use the data of the previous day (UFVd-1) multiplied by the "n" root of one plus the annualized twelve-month inflation of two months ago (p_m_(t-2)). Where "n" is the number of calendar days of the month to which day "d" corresponds (equal to 28, 29, 30 or 31). This is:

UFVd = UFVd-1 * (1 + p_m_(t-2))^(1/n)

Between the seventh day and the last day of the month, the calculation of the UFV for a day "d" (UFVd) will use the data of the previous day (UFVd-1) multiplied by the "n" root of one plus the annualized twelve-month inflation of the immediate previous month (p_m_(t-1)). Where "n" is the number of calendar days of the month to which day "d" corresponds (equal to 28, 29, 30 or 31). This is:

UFVd = UFVd-1 * (1 + p_m_(t-1))^(1/n)

The value of the UFV of the base day will be equal to 1.