Resolution CMN No. 171 - Authorization for Private and Official Banks to Perform Credit Operations by Anticipation of Budgetary Revenue for States and Municipalities

RESOLUTION NO. 000171

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the NATIONAL MONETARY COUNCIL, in a session held on January 21, 1971, having regard to the provisions of Article 4, item VI of the aforementioned Law and Resolution No. 92, of November 27, 1970, of the Federal Senate,

RESOLVES:

I - To authorize private banks, whose capital and free reserves are equal to or greater than Cr$30,000,000.00 (thirty million cruzeiros), and official banks, to carry out credit operations, by anticipation of budgetary revenue, for States and Municipalities, subject to the following conditions:

a) maximum term of 12 (twelve) months, the maturity of the contract and, consequently, the total settlement of the loan, not exceeding 30 (thirty) days from the end of the fiscal year in which the operation was carried out;

b) the total value of credit operations by anticipation of revenue, "outstanding", including those authorized by this Resolution, may not exceed 25% of the current budgetary revenue to be realized in the fiscal year;

c) obtaining adequate guarantees, especially when backed by agreements or conventions for the collection of taxes;

d) the monthly expenditure of the State or Municipality with the total or partial settlement of the anticipation of revenue operations, comprising principal and accessories, may not exceed 5% (five percent) of the current revenue of the fiscal year.

II - Within a maximum period of 5 (five) days, counted from the date of approval of the operation, the Banking Establishment shall send to the Central Bank a copy of the signed credit contract.

III - The granting of aval or guarantee by financial institutions, on titles or contracts of any nature, of responsibility of the States, Municipalities and their respective foundations or entities of the indirect administration, maintained by budgetary appropriations, when these appropriations represent more than 50% of the revenue of these entities or foundations, is subject to prior approval by the National Monetary Council.

IV - The Central Bank of Brazil shall issue the complementary instructions necessary for the execution of this Resolution.

V - The provisions of Resolution No. 101, of October 23, 1968, of the Central Bank of Brazil, remain in force.

VI - This Resolution enters into force on the date of its publication.

Rio de Janeiro-GB, January 22, 1971

CENTRAL BANK OF BRAZIL

Ernane Galvêas
President