Resolution 150/2003 - Extension of Deadline for FONDESIF to Present Proposal for Cancellation of Obligations with BCB and Forgiveness of Penal Interest

RESOLUTION OF THE BOARD OF DIRECTORS NO. 150/2003

SUBJECT: MANAGEMENT OF FINANCIAL ENTITIES – EXTENSION OF DEADLINE FOR PRESENTATION OF PROPOSAL FOR CANCELLATION OF OBLIGATIONS OF FONDESIF WITH THE BCB AND FORGIVENESS OF PENAL INTEREST.

VIEWING:

Law 1670 of October 31, 1995.

Board of Directors Resolution No. 156/95 of December 12, 1995.

Board of Directors Resolution No. 123/97 of July 8, 1997.

The Loan Contract signed on March 11, 1996, between the Central Bank of Bolivia, the National Secretariat of Finance, and the Financial System Development Fund and Support for the Productive Sector – FONDESIF.

The Loan Contract signed on December 30, 1997, between the Central Bank of Bolivia and the Financial System Development Fund and Support for the Productive Sector – FONDESIF.

The Minutes of the Board of Directors Meetings of the Central Bank of Bolivia 009/2003 and 013/2003 of March 25, 2003, and May 6, 2003, respectively.

Board of Directors Resolution No. 077/2003 of July 8, 2003.

The note from the Financial System Development Fund and Support for the Productive Sector (FONDESIF) FSF-DFFI-E-2788/2003 of December 11, 2003.

The Report GEF-SOPI No. 356/2003 from the Management of Financial Entities of December 16, 2003.

The Report from the Legal Affairs Management SANO No. 249/2003 of December 16, 2003.

The complementary report from the Legal Affairs Management SANO No. 251/2003 of December 17, 2003.

CONSIDERING:

That the contract signed on March 11, 1996, between the Central Bank of Bolivia, the National Secretariat of Finance, and FONDESIF, arising from Board of Directors Resolution No. 156/95, establishes equal and consecutive annual amortizations to capital, plus accrued interest to be paid to the BCB at the expiration of each year.

That the contract signed on December 30, 1997, between the Central Bank of Bolivia and FONDESIF, arising from Board of Directors Resolution No. 123/97, establishes equal and consecutive semi-annual amortizations to capital plus unpaid interest, to be paid to the BCB at the expiration of each semester.

That through Minutes of the BCB Board of Directors Meeting 009/2003 and 013/2003, the BCB Board of Directors expanded twice the deadline for FONDESIF to present its proposal for the restructuring of credits granted with BCB own resources and the IDA Line 1925/BO, whose deadline expired on June 30, 2003.

That FONDESIF, through note FSF-DFFI.E.2788/2003, due to changes in the regulations governing the operation of this entity, requests from the BCB an additional period of 180 days for the presentation of a proposal for the cancellation of obligations with the Issuing Entity, the cancellation of accrued interest from both credits as of December 30, 2003, the payment of costs arising from the administration of the IDA Line 1925/BO, and the forgiveness of penal interest on the credit granted with BCB resources.

That Report GEF-SOPI 356/2003 from the Management of Financial Entities recommends considering the extension of the deadline so that FONDESIF can present a restructuring proposal in order to regularize its obligations with the Issuing Entity. Likewise, the Management of Financial Entities considers it prudent that the addendum to the contract for the credit with resources from the IDA Line 1925/BO include the Ministry of Finance as a joint guarantor.

That the Legal Affairs Management establishes that there is no legal impediment for the BCB Board of Directors to consider the request for extension of the deadline and the request for forgiveness of the corresponding penal interest for the financing of the IDA Line 1925/BO under what is stated in Article 54, paragraphs a) and j) of Law 1670.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Grant an irrevocable deadline of up to 180 days from December 29, 2003, for FONDESIF to present to the Issuing Entity a proposal for the restructuring of credits granted with BCB own resources and the IDA Line 1925/BO.

Article 2.- Accept FONDESIF's proposal for the cancellation of accrued interest from both credits amounting to $316,621.57 and the payment of costs arising from the administration of the IDA Line 1925/BO amounting to $63,656.96, until the restructuring mentioned in Article 1 of this Resolution is agreed upon.

Article 3.- Forgive penal interest amounting to $1,556,350.73 corresponding to the period from March 29, 2003, to December 30, 2003, of the credit granted with own resources of the Central Bank of Bolivia.

Article 4.- Authorize the President of the BCB to sign the necessary Addenda to the current contracts, which allow for the implementation of what is established in the preceding articles.

Article 5.- Instruct the BCB Administration to communicate to FONDESIF that within a period of 180 days, it must present the restructuring proposal for the credits granted with BCB own resources and the IDA Line 1925/BO, with the participation of the Ministry of Finance, in order to resolve the payment method for the two credits and the pending obligation regarding the administration of the trust.

Article 6.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, December 17, 2003.

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Juan Antonio Morales A.

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Juan Medinaceli V. Enrique Ackermann A.

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José Luis Evia V. Fernando Paz B.

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Jaime Apt B.