Resolution 144/2002 Approving the Foreign Exchange Operations Regulation

BOARD RESOLUTION NO. 144/2002 SUBJECT: INTERNATIONAL OPERATIONS MANAGEMENT – APPROVES FOREIGN EXCHANGE OPERATIONS REGULATION.

HAVING REVIEWED: Law 1670 of October 31, 1995. The Statute of the Central Bank of Bolivia, approved by Board Resolution No. 128/2001 of December 13, 2001. The Foreign Exchange Operations Regulation approved by Board Resolution No. 134/97 of August 5, 1997. Minutes No. 23/02 of the Monetary and Exchange Policy Committee of December 9, 2002. The Report from the International Operations Management (GOI) No. 014/2002 of December 10, 2002. The Report from the Legal Affairs Management (SANO) No. 280/2002 of December 13, 2002.

CONSIDERING: That Law 1670, in Article 19, establishes the functions that the Central Bank of Bolivia must assume regarding the exchange regime and the execution of exchange policy. That the Statute of the Issuing Entity determines that it corresponds to the President of the BCB to administer the exchange policy in accordance with Law 1670, the cited Statute, and the corresponding Regulation. It also establishes the powers and functions of the Monetary and Exchange Policy Committee.

That the Report from the International Operations Management GOI No. 014/2002 recommends modifying the current Foreign Exchange Operations Regulation to optimize the processes for the allocation and sale of foreign currency. That the Monetary and Exchange Policy Committee, in its meeting on December 9, 2002, reviewed and approved the proposal for a new Regulation prepared by the International Operations Management, and recommended its presentation to the Institution's Board of Directors.

That, according to the Report from the Legal Affairs Management SANO No. 280/2002, in accordance with the attribution conferred by article 54, subsection o) of Law 1670, the Board is empowered to approve, modify, and interpret the BCB regulations without the need for any additional administrative act.

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

Article 1.- Approve the new Foreign Exchange Operations Regulation, which, as an annex, forms part of this Resolution.

Article 2.- The Foreign Exchange Operations Regulation will enter into force as of January 2, 2003.

Article 3.- Repeal, as of January 2, 2003, Board Resolution No. 134/97 of August 5, 1997, and all provisions contrary to this Regulation.

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

La Paz, December 20, 2002

---

Juan Antonio Morales A.

---

Juan Medinaceli V. Armando Méndez M.

---

Enrique Ackermann A.

ANNEX FOREIGN EXCHANGE OPERATIONS REGULATION

CHAPTER I OBJECT

Article 1.- (Object and Scope) The present Regulation aims to regulate the procedures for determining the exchange rate of the Boliviano and for the purchase and sale of foreign currency at the Central Bank of Bolivia (BCB).

CHAPTER II EXCHANGE REGIME AND EXCHANGE POLICY

Article 2.- (Exchange Regime) A regime of free convertibility is maintained, with a single, real, and flexible exchange rate.

Article 3.- (Object of Exchange Policy) The exchange policy aims to contribute to the stability of the purchasing power of the national currency and to support the normal functioning of the country's international payments.

CHAPTER III SALE AND PURCHASE OF FOREIGN CURRENCY

Article 4.- (Sale of Foreign Currency) The BCB will sell foreign currency to the private sector through a competitive allocation mechanism, called the Bolsín. The sale of foreign currency to the public sector will be carried out exclusively through the Ministry of Finance and will be assigned at the official selling exchange rate in effect on the date of the operation.

Article 5.- (Purchase of Foreign Currency) The BCB will purchase foreign currency from the public and private sectors at the buying exchange rate, crediting Bolivianos to accounts that the entities maintain at the Issuing Institute.

CHAPTER IV MONETARY AND EXCHANGE POLICY COMMITTEE

Article 6.- (Powers of the Monetary and Exchange Policy Committee) The Monetary and Exchange Policy Committee (the Committee), constituted in accordance with the BCB Statute, will have the following functions: a) Recommend to the Board the adoption of decisions on exchange matters, ensuring their adequate coordination with monetary policy. b) Propose to the Board modifications to the exchange policy. c) Establish the weekly variation range of the base quotation of the Bolsín. d) Periodically establish the amount of foreign currency to be offered in each Bolsín session, based on the availability of the BCB's international reserves. e) Determine the differential between the selling and buying exchange rates.

CHAPTER V DETERMINATION OF THE EXCHANGE RATE

Article 7.- (Reference Currency for the Exchange Rate) The exchange rate will be determined in relation to the United States dollar.

Article 8.- (Official Selling Exchange Rate) The official selling exchange rate is defined as the minimum allocation price resulting from the Bolsín, if in the public sale the foreign currency offered for the session is exhausted. In the event that there is a surplus from the offer, the official selling exchange rate will be the base quotation.

Article 9.- (Buying Exchange Rate) The buying exchange rate is defined as that resulting from subtracting the differential determined by the Committee from the official selling exchange rate.

Article 10.- (Validity of the Exchange Rate) The selling and buying exchange rates will enter into force the day after the Bolsín session and will govern until the day of the next session.

CHAPTER VI SALE OF FOREIGN CURRENCY THROUGH THE BOLSÍN

Article 11.- (Administration of the Bolsín) The Bolsín will be administered by the International Operations Management of the BCB.

Article 12.- (Frequency of Bolsín Sessions) Bolsín sessions will be held on all business days.

Article 13.- (Participants in the Bolsín) Financial entities that maintain a current and reserve account at the BCB may participate in the Bolsín. This participation will be on their own account or on behalf of third parties.

Article 14.- (Submission of Requests) Requests to participate in the Bolsín session will be submitted through the means determined by the General Management of the BCB, detailing the amount of foreign currency requested, with a minimum amount of US$ 100,000.00 (One hundred thousand 00/100 United States dollars) and in multiples of that same amount, the proposed exchange rate, and general information about the applicant.

Article 15.- (Deadline Hour) Proposals must be submitted to the BCB by 15:00 hours. Any modification to the deadline hour will be communicated to the financial entities by the General Management of the BCB.

Article 16.- (Base Quotation) The Manager of International Operations will inform the President of the BCB of the proposals received in the Bolsín, who will set the base quotation for each session considering the decisions of the Committee.

Article 17.- (Allocation of Foreign Currency in the Bolsín) The base quotation will be communicated by the President of the BCB to the Manager of International Operations, who will instruct that the allocation of foreign currency proceed in descending order of price, provided that the price of the proposals is greater than or equal to the base quotation, until the offer is exhausted. In the event that the amount of foreign currency offered is not sufficient to meet the proposals received at the same exchange rate, the foreign currency will be allocated under the pro-rata system. In this case, the financial entity is obligated to accept the allocation of partial amounts.

Article 18.- (Rejection of Requests) Rejected requests and the reason for rejection will be communicated to the financial entities at the conclusion of the Bolsín session.

Article 19.- (Delivery of Foreign Currency) On the same date of the Bolsín session, the national currency current and reserve account of the financial entity will be debited, and on the next business day, the allocated foreign currency will be delivered by crediting its current and reserve account in foreign currency.

Article 20.- (Lack of Provision of Funds) In the event that the financial entity does not have the necessary national currency resources in its current and reserve account by 15:30 hours on the date of the Bolsín session, its request will be rejected, and it will be suspended from participating in Bolsín sessions for five (5) business days.

Article 21.- (Dissemination of Bolsín Results) The results of each Bolsín session will be disseminated on the same day via the BCB website and news agencies. -- o --