Resolution 145/2007 Approving the New Internal Regulation for Operations under the ALADI Reciprocal Payments and Credits Convention

BOARD RESOLUTION NO. 145/2007
SUBJECT: INTERNATIONAL OPERATIONS MANAGEMENT – APPROVES NEW INTERNAL REGULATION FOR OPERATIONS THROUGH THE ALADI RECIPROCAL PAYMENTS AND CREDITS CONVENTION.

HAVING SEEN:
Law No. 1670 of October 31, 1995.
The Statute of the Central Bank of Bolivia (BCB) approved by Board Resolution No. 128/2005 of October 21, 2005.
The current Reciprocal Payments and Credits Convention between the Central Banks of the member countries of ALADI and the Dominican Republic, as well as its Regulation.
Board Resolution No. 066/2006 of August 22, 2006, which approves the Internal Regulation for operations through the ALADI Reciprocal Payments and Credits Convention and its modifications. Report from the International Operations Management (GOI) No. 015/2007 of October 30, 2007. Report from the Legal Affairs Management (SANO) No. 284/2007 of November 5, 2007.

CONSIDERING:
That pursuant to Article 54, subsection o) of Law No. 1670 and Article 11, numeral 29) of the BCB Statute, the Board is authorized to approve, interpret, and modify the Statute and Regulations of the Institution by a two-thirds vote of all its members, without the need for any additional administrative act.

That Report GOI No. 015/2007 from the International Operations Management evaluates the Internal Regulation for operations through the ALADI Reciprocal Credits and Payments Convention, recommending the approval of a new Regulation.

That Report SANO No. 284/2007 from the Legal Affairs Management states that there is no legal impediment for the Board to authorize the approval of the new Internal Regulation for operations through the ALADI Reciprocal Credits and Payments Convention.

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

Article 1.- Approve the new Internal Regulation for operations through the ALADI Reciprocal Credits and Payments Convention, which is attached and forms part of this Resolution.

Article 2.- The new Internal Regulation for operations through the ALADI Reciprocal Credits and Payments Convention shall enter into force on January 2, 2008.

Article 3.- From the entry into force of the new Internal Regulation for operations through the ALADI Reciprocal Credits and Payments Convention, Board Resolution No. 066/2006 of August 22, 2006, is hereby repealed.

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

La Paz, November 27, 2007

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Raúl Garrón Claure

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Gustavo Blacutt Alcalá Hugo Dorado Araníbar

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Rolando Marín Ibáñez Ernesto Yáñez Aguilar

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Osvaldo Nina Baltazar

ANNEX
INTERNAL REGULATION FOR OPERATIONS THROUGH THE ALADI RECIPROCAL PAYMENTS AND CREDITS CONVENTION

CHAPTER I
OBJECT AND DEFINITIONS

Article 1.- (Object)
This Regulation aims to standardize the procedures for channeling payments through the Reciprocal Payments and Credits Convention of the Latin American Integration Association (ALADI), by financial entities authorized as Authorized Institutions.

Article 2.- (Definitions)
For the purposes of this Regulation, the following definitions are established:
Bank: Central Bank of Bolivia.
Central Bank(s): Central banks that are signatories to the Convention.
Convention: Provisions contained in the Reciprocal Payments and Credits Convention, its Regulation, and the Resolutions of the ALADI Council.
Authorized Institution(s): Financial entities expressly authorized by the Bank to channel payments through the Convention.
Foreign Authorized Institutions: Financial institutions resident in each of the countries of the central banks, which are expressly authorized by them to channel payments through the Convention. Instruments: Payment modalities designated as admissible to be channeled through the Convention in this Internal Regulation. Accounting Equity: Equity reported by the Superintendence of Banks and Financial Entities.

CHAPTER II
USE OF THE ALADI RECIPROCAL PAYMENTS AND CREDITS CONVENTION

Article 3.- (Voluntary Nature)
The use of the Convention mechanism for foreign trade operations with member countries is voluntary.

Article 4.- (Direct Channeling)
Authorized Institutions, in accordance with this Regulation and adhering to internationally accepted banking practices, may issue, endorse, and receive the Instruments indicated in Article 7 and channel them directly through the Convention via Foreign Authorized Institutions.

Reimbursements and/or payments made by the Bank to Authorized Institutions may be made in Bolivianos or United States Dollars.

CHAPTER III
PAYMENTS

Article 5.- (Admissible Payments)
Payments corresponding to trade in goods and their related services may be channeled through the Convention, provided that the origin of the traded merchandise corresponds to countries that are members of the Convention.

Article 6.- (Prohibited Payments)
The channeling through the Convention of payments for operations corresponding to services other than those indicated in Article 5, capital movements, and other pure financial operations involving fund transfers not related to a trade operation, will not be admitted.

Additionally, Authorized Institutions are prohibited from making the following payments for operations:
a) Commercial triangulation, understood as exports of merchandise originating from a member country of the Convention destined for another country of the Convention, by a seller resident in a third country that is also a member of the Convention. b) Discounting of payment Instruments derived from commercial operations.

CHAPTER IV
INSTRUMENTS

Article 7.- (Admissible Instruments)
The following Instruments will be admitted for channeling under the Convention, which must correspond to trade in goods operations with Bolivia and be limited to the characteristics, conditions, and other requirements contemplated in this Regulation:
a) Letters of Credit and/or Documentary Credits. b) Payment Orders for trade in goods operations. c) Bills of Exchange corresponding to endorsed commercial operations. d) Promissory Notes issued or endorsed, derived from commercial operations.

Article 8.- (Prohibited Instruments)
Letters of credit and/or documentary credits with red clauses, revolving, standby, or those that contemplate financing for the importer for a period longer than that established for payment to the exporter, may not be processed through the Convention.

Article 9.- (Underlying Commercial Operation)
It is the responsibility of Authorized Institutions to verify, prior to the issuance of an admissible Instrument, that it originates from the commercial transaction indicated in said document.

CHAPTER V
RESPONSIBILITY OF AUTHORIZED INSTITUTIONS

Article 10.- (Authorization as an Authorized Institution)
Financial entities must meet the following requirements to be authorized as Authorized Institutions:
a) Maintain the equity sufficiency required by Law. b) Be up to date with obligations to the Bank. c) Not have incurred fines from the Superintendence of Banks and Financial Entities (SBEF) for deficiencies in legal reserves for two consecutive biweekly periods in the last two months. d) Not have a liquidity credit from the Bank, in accordance with Article 36 of Law 1670. e) Have a tenure as a financial entity of 12 months. f) Not have been intervened by the SBEF for forced sale. g) Sign the Operation Contract within the ALADI Reciprocal Payments and Credits Convention, which will represent the unconditional adherence of the Authorized Institution to the norms of this Regulation.

Article 11.- (Prohibition of Re-shipping and Re-export of Merchandise)
Merchandise channeled through the Convention that enters a Customs Warehouse and/or Free Zone may not be re-shipped or re-exported to third countries.

Article 12.- (Payment of Issued and/or Endorsed Instruments)
Authorized Institutions that are suspended or lose such status will continue to be responsible for payment to the Bank of Instruments issued and/or endorsed prior to the date of suspension.

Article 13.- (Controversies)
Controversies that may arise between Authorized Institutions and Foreign Authorized Institutions regarding the issuance, endorsement, notification, and payment of instruments will be resolved directly between them. Therefore, the Bank assumes no responsibility whatsoever for any controversy that may arise between them, their clients, or third parties, or between Authorized Institutions and a foreign central bank.

Article 14.- (Debit Agreement)
Reimbursements and/or payments made by the Bank to Authorized Institutions are conditioned upon compliance with this Regulation and registration in the System of Assumed Future Commitments (SICOF).

CHAPTER VI
OBLIGATIONS OF AUTHORIZED INSTITUTIONS

Article 15.- (Authorization to the Bank)
Authorized Institutions, by signing the Operation Contract, will irrevocably and generally instruct and authorize the automatic debit from the current and reserve accounts they maintain at the Bank of the amounts intended to cover all their obligations.

Article 16.- (Payment of Instruments)
Authorized Institutions will pay the Bank the amount of the instruments they issue and/or endorse through the Convention, on the date of debit that the foreign Central Bank sends to the Bank.

Article 17.- (Payment of SICAP/ALADI Commissions and Other Expenses)
Authorized Institutions will pay the Bank the SICAP/ALADI commissions for import and export operations, plus related expenses, determined annually in the Bank's Service Tariff.

Article 18.- (Insufficiency of Funds)
The Authorized Institution that does not cover its obligations with the Bank will pay interest calculated on the basis of the unpaid amount, at the interest rate of the Convention for ALADI operations plus four percentage points (400 basis points), calculated from the date of debit to the date of payment.

Article 19.- (Debit for Inadmissible Operations)
When operations are processed through the Convention in violation of Articles 5, 6, 7, and 8, the Bank will debit the total amount of said operations from the current and reserve account of the Authorized Institution, which will be restored when the violation is regularized, without prejudice to what is established in Article 24.

Article 20.- (Debit for Excess in Debt and Term Limits)
When Authorized Institutions issue and/or endorse instruments that represent obligations exceeding the limits established in Articles 22 and 23, the Bank will debit the amount exceeding said limits, replenishing these funds when the limit is regularized, without prejudice to what is established in Article 24.

Article 21.- (Debit for Non-existence of Commercial Operation)
Operations issued by Authorized Institutions must be backed by the documents detailed in the General Management Circular. Furthermore, upon request by the Bank, Authorized Institutions must provide additional documentation proving the existence of a commercial operation. Otherwise, the total amount of the operation will be debited from the current and reserve account of the Authorized Institution.

CHAPTER VII
LIMITS ON ISSUANCE AND/OR ENDORSEMENT OF INSTRUMENTS

Article 22.- (Maximum Debt Limit)
The maximum limit of the value of payment Instruments issued and pending payment by Authorized Institutions may not exceed ten percent (10%) of their Accounting Equity reported monthly to the Bank by the Superintendence of Banks and Financial Entities.

Article 23.- (Maximum Term)
The maximum term of Instruments issued and/or endorsed by Authorized Institutions will adhere to the following table:

Credit Risk Rating (Long-Term)	Moody's Latin America	Fitch Ratings	Maximum Term of Instruments
Aaa, Aa1, Aa2, Aa3	AAA, AA+, AA, AA-	5 years
A1	A+	3 years
A2	A	2 years
A3	A-	1 year
Baa1, Baa2, Baa3	BBB+, BBB, BBB-	6 months

When an Authorized Institution has ratings from both Rating Agencies, the lower rating will be considered.
Credit risk ratings will be updated at the Bank whenever the Rating Agencies issue the rating for each of the Authorized Institutions.

CHAPTER VIII
SANCTIONS FOR NON-COMPLIANCE WITH THE REGULATION

Article 24.- (Sanctions)
Non-compliance by an Authorized Institution with any provision of this Regulation in an annual period will result in the following sanctions:

a) For the first time, a written warning. b) The second time, temporary suspension for 3 months. c) The third time, definitive suspension if it re-offends with non-compliance with this Regulation.

Article 25.- (Loss of Right to Reimbursement)
If an export Instrument is processed through the Convention in violation of the provisions of this Regulation, the Authorized Institution will not have the right to request reimbursement.

Article 26.- (Prohibition to Issue and/or Endorse or Receive Instruments)
An Authorized Institution is prohibited from issuing or endorsing Import Instruments and receiving Export Instruments in the following cases:
a) When it is suspended according to subsections b) and c) of Article 24 of this Regulation. b) When the Board of the Bank expressly defines its suspension to operate in the Convention through a Resolution.

Article 27.- (Portfolio Transfer)
In the case of definitive suspension according to subsection c) of Article 24 or subsection b) of Article 26 of this Regulation, the Authorized Institution must transfer to the Bank the total of the pending collection portfolio originated in operations through the Convention, within the timeframes and conditions fixed by the Board of the Bank through an express Resolution.

CHAPTER IX
OPERATIONAL PROCEDURES

Article 29.- (Operational Procedures)
The General Management of the Bank, through an express Circular, will regulate the operational procedures of operations under the ALADI Reciprocal Payments and Credits Convention.
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