Resolution 131/2005

RESOLUTION OF THE BOARD OF DIRECTORS NO. 131/2005

SUBJECT: FINANCIAL ENTITIES – AUTHORIZES THE SIGNING OF THE MODIFICATIONS TO THE SUBSIDIARY AGREEMENTS BETWEEN THE REPUBLIC AND THE BCB AND BETWEEN THE BCB AND NAFIBO S.A.M. FOR THE RESOURCES OF THE IDB PROGRAM 939/SF-BO CHANNELLED TO NAFIBO S.A.M.

HAVING SEEN:

Law No. 1670 of October 31, 1995

Board of Directors Resolution No. 128/2005 which approves the Statute of the Central Bank of Bolivia.

The IDB Loan Contract 939/SF-BO signed between the Republic and the Inter-American Development Bank on August 8, 1995.

The Third Amending Agreement to the Subsidiary Agreement of June 13, 2003 signed between the Republic and the Central Bank of Bolivia

The Third Amending Agreement to the Subsidiary Agreement of October 30, 2003 signed between the Central Bank of Bolivia and the Bolivian National Financial Company S.A.M.

The note from the Vice Ministry of Treasury and Public Credit DGCP 05 – 016 DDE 1126/05 of September 6, 2005.

The Report from the Financial Entities Management of the BCB GEF SRRA No. 341/2005 of October 14, 2005.

The Report from the Legal Affairs Management of the BCB SANO No. 211/2005 of October 7, 2005.

CONSIDERING:

That Article 11, numeral 34) of the Statute of the Central Bank of Bolivia, indicates as an attribution of the Board of Directors the approval of national and international technical cooperation agreements that the BCB receives or grants.

That the IDB Loan Contract 939/SF-BO signed between the Republic and the Inter-American Development Bank designates the Central Bank of Bolivia as the Executive Agency of the Loan.

That through the Subsidiary Agreement of November 28, 1996 signed between the Republic and the Central Bank of Bolivia in clause "NOVENA, On Commissions, second paragraph", it mentions: 0.25% (zero point twenty-five percent) on debtor balances administered by the Bolivian National Financial Company SAM, which will form part of the interest rate to be paid by said entity, according to clause 3.02 of the Amending Agreement.

That through the Subsidiary Agreement of October 10, 1997 signed between the Central Bank of Bolivia and NAFIBO SAM in its eighth clause, it defines the Interest Rate for NAFIBO payments to the BCB.

That through the Third Amending Agreement to the Subsidiary Agreement of the IDB Loan 939/SF-BO of June 13, 2003 signed between the Republic and the BCB, Clause Nine.- On Commissions of the BCB and the Interest Rate for NAFIBO SAM, numeral 9.1 is modified.

That through the Third Amending Agreement to the IDB 939/SF-BO Financing Subsidiary Agreement of October 30, 2003, signed between the BCB and NAFIBO SAM, Clause Eight.- On Commissions of the BCB and the Interest Rate for NAFIBO SAM, numeral 8.1 is modified.

That the Vice Ministry of Treasury and Public Credit of the Ministry of Finance through note D.G.C.P. 05-016 D.D.E. 1126/05 submits the project of the Fifth Amending Agreement to the Subsidiary Agreement defining a new interest rate for NAFIBO SAM.

That Report GEF. SRRA No. 341/2005, from the Financial Entities Management establishes that the modifications proposed by the Vice Ministry of Treasury and Public Credit of the Ministry of Finance will not affect or modify the conditions established for the Issuing Entity as the Executive Agency of the IDB loan 939/SF-BO, recommending that the signing of the Fifth Amending Agreement to the Subsidiary Agreement and the fourth amending agreement to the subsidiary agreement that will subsequently be signed with NAFIBO SAM be facilitated.

That Report SANO No. 211/2005 from the Legal Affairs Management considers that the project of the Fifth Amending Agreement to the IDB 939/SF-BO loan Subsidiary Agreement, submitted by the Ministry of Finance has no observations, so there is no legal impediment for the Board of Directors to consider and approve the mentioned project for subsequent signing by the President of the BCB.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Authorize the President of the Central Bank of Bolivia to sign the Amending Agreement to the Subsidiary Agreement Republic - Central Bank of Bolivia of October 15, 2003 (CLAUSE NINE) and the Financing Subsidiary Agreement Central Bank of Bolivia - NAFIBO S.A.M. of October 30, 2003 (CLAUSE EIGHT).

Article 2.- Modify clause NINE numeral 9.1 item b) and clause EIGHT item b) of the Subsidiary Agreements Republic- BCB and BCB - NAFIBO SAM respectively according to the following wording:

"0.25% (Zero point twenty-five percent) on debtor balances administered by NAFIBO SAM, which will form part of the interest rate to be paid by said entity to the BCB, which will be equal to the single and variable rate equal to the Reference Rate (TRE), which in no moment may be lower than the floor rate of 2.7% (Two point seven percent) annually. Rate that will be valid from September 1, 2005".

Article 3.- Complete clause Six (On the responsibilities of the BCB) of the BCB – NAFIBO SAM Subsidiary Agreement with the following:

"6.9 The BCB obliges NAFIBO SAM to communicate the reduction of the interest rate, to the Financial Entities, through the signing of Amendments to loan contracts. For future operations, NAFIBO SAM must orient its actions towards channeling and creating markets, intervening in those activities in which private banking does not participate and/or have been identified as priorities in national development, so that it generates a series of products, introducing in its internal policies the possibility of setting interest rates by the auction modality, which responds to market variability, avoiding the problems originated by fixed rates".

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

La Paz, October 21, 2005

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Juan Antonio Morales A.

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Enrique Ackermann A. Fernando Paz B.

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Jaime Apt B.