Resolution CMN No. 2827 — Consolidates and redefines rules for credit contingency to the public sector

RESOLUTION NO. 2827

Consolidates and redefines the rules for the contingency of credit to the public sector.

The CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the MONETARY POLICY COUNCIL, in a session held on March 29, 2001, considering the provisions of Article 4, items VI and VIII, of the aforementioned law, Laws No. 4,728, of July 14, 1965, and No. 6,385, of December 7, 1976, Decree-Laws No. 1,986, of December 28, 1982, and No. 2,285, of July 23, 1986, Articles 28 of Decree-Law No. 73, of November 21, 1966, Article 4 of Decree-Law No. 261, of February 28, 1967, and Articles 15 and 40 of Law No. 6,435, of July 15, 1977,

RESOLVES:

Article 1. Limit the amount of credit operations of each financial institution and other institutions authorized to operate by the Central Bank of Brazil with bodies and entities of the public sector to 45% (forty-five percent) of Reference Equity (RE), in accordance with the regulations in force.

Paragraph 1. For the purposes of this Resolution, understand:

I - by bodies and entities of the public sector:

a) direct administration of the Union, states, Federal District, and municipalities;

b) autarchies and foundations established or maintained, directly or indirectly, by the Union, states, Federal District, and municipalities;

c) non-financial public companies and mixed-capital societies, their subsidiaries, and other companies controlled, directly or indirectly, by the Union, states, Federal District, and municipalities, including companies with exclusive object; and

d) other bodies or entities of the powers of the Union, states, Federal District, and municipalities.

II - by credit operation:

a) loans and financing;

b) leasing operations;

c) definitive acquisition or carried out through committed resale operations of securities issued by states, the Federal District, or municipalities, as well as by the bodies and entities of the public sector mentioned in paragraph 1, item I, letter c, excluding the definitive acquisition of shares of mixed-capital societies;

d) the granting of guarantees of any nature; and

e) any and all operations that result, directly or indirectly, in the granting of credit and/or raising of resources of any nature, including the use of financial derivatives.

Paragraph 2. Credit operations that are the responsibility of or have formal, integral, and joint guarantee of the National Treasury are not subject to the limit established in the caput.

Article 2. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil subject to the preparation of consolidated financial statements in accordance with Resolution No. 2,723, of May 31, 2000, with the wording given by Resolution No. 2,743, of June 28, 2000, must calculate the limit referred to in the previous article in a consolidated manner.

Article 3. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil may request the earmarking of a portion of RE for exclusive application in credit operations with bodies and entities of the public sector, which will be deducted from RE for the purpose of calculating all operational limits, including that provided for in Article 1 of this Resolution.

Paragraph 1. For the exercise of the option provided for in the caput, financial institutions and other institutions authorized to operate by the Central Bank of Brazil must request prior authorization from the Central Bank of Brazil.

Paragraph 2. The outstanding balance of the credit operations mentioned in this article does not form the basis for the calculation of Required Net Equity (RNE), as provided for in the Annex IV Regulation to Resolution No. 2,099, of August 17, 1994, with the wording given by Resolution No. 2,692, of February 24, 2000.

Article 4. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil may contract new credit operations with states, the Federal District, and municipalities, as well as with their autarchies, foundations, and dependent state-owned companies, provided that the following limits and conditions are observed cumulatively:

I - the global amount of credit operations, as defined in Article 1, cannot, in each financial year, exceed 18% (eighteen percent) of Real Net Revenue, observing the limit of 8% (eight percent) of Real Net Revenue for budget revenue anticipation operations - ARO;

II - the maximum annual expenditure with amortizations, interest, and other charges of all credit operations, already contracted and to be contracted, including those originating from renegotiated or installment debts, plus the due, overdue, and unpaid amount, cannot exceed 13% (thirteen percent) of Real Net Revenue;

III - the total debt balance cannot exceed a value equivalent to 1.7 (one and seven tenths) of the annual Real Net Revenue for 2001, decreasing this ratio by 0.1 (one tenth) per year, until reaching a value equivalent to the annual Real Net Revenue; and

IV - Positive Primary Result calculated over the previous twelve months.

Paragraph 1. The Central Bank of Brazil is tasked with publishing the methodology to be used for the calculation of the Primary Result and Real Net Revenue.

Paragraph 2. For the purpose of verifying compliance with the limit referred to in the caput, item II:

I - the arithmetic mean of the percentage ratios between debt service and Real Net Revenue will be calculated for a five-year period, including the year in which the request is presented, which must cumulatively meet the following conditions:

a) be less than 13% (thirteen percent); and

b) present percentage ratios with a non-increasing trend, in the event that the average is greater than 10% (ten percent) of Real Net Revenue;

II - Real Net Revenue will be projected by applying an annual rate equivalent to the potential growth rate of Gross Domestic Product - GDP, published by the Central Bank of Brazil.

Paragraph 3. Operations provided for in Fiscal Adjustment Programs signed between states and the National Treasury Secretariat, as an integral part of refinancing contracts signed with the Union, under Law No. 9,496, of September 11, 1997, as well as those that replace them, provided they are limited to the global amount provided for, are examined according to the rules of the aforementioned Program.

Paragraph 4. The provisions of item IV of the caput do not apply to credit operations carried out by municipalities with financial institutions and other institutions authorized to operate by the Central Bank of Brazil, using resources from the National Bank for Economic and Social Development - BNDES/Program for the Modernization of Tax Administration - PMAT, intended exclusively for the implementation of investment programs in tax modernization.

Paragraph 5. The provisions of the previous paragraph apply only to operations approved by BNDES and submitted for analysis by the Central Bank of Brazil until December 31, 2001.

Article 5. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil may only contract new credit operations with non-financial public companies and mixed-capital societies, not dependent, controlled directly or indirectly by states, the Federal District, and municipalities, if the controlling entity observes the limits and conditions defined in the previous article.

Paragraph 1. In the event that the controller is a state or Federal District and has signed a refinancing agreement with the Union, under Law No. 9,496, of September 11, 1997, the analysis of limits will be carried out according to the criteria of the respective fiscal adjustment programs signed by the public entity with the National Treasury Secretariat;

Paragraph 2. The following operations are exempt from compliance with the provisions of the caput:

I - financing of projects linked to international bids, with a financing clause provided for in the Bid Notice;

II - with securities, provided that the primary issuance observed the applicable norms established by the Securities and Exchange Commission.

Article 6. For the purpose of carrying out new credit operations, under this Resolution, financial institutions and other institutions authorized to operate by the Central Bank of Brazil must be within the operational limits established by the regulations in force.

Sole Paragraph. The provisions of the caput do not apply to credit operations that are the responsibility of or have formal, integral, and joint guarantee of the National Treasury and that present funding and application structures linked and identical, with respect to term and interest rate.

Article 7. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil are prohibited from:

I - carrying out credit operations with bodies and entities of the public sector that are delinquent with financial institutions and other institutions authorized to operate by the Central Bank of Brazil;

II - contracting new operations with bodies and entities of the public sector if they have registration pending in the Public Sector Operations Registration System - CADIP;

III - receiving, in any modality of credit operations, as principal or accessory guarantee, promissory notes, trade acceptances, bills of exchange, or other instruments of the kind, as well as letters of credit, guarantees, and sureties of direct or indirect responsibility of bodies and entities of the public sector, corresponding to commitments assumed with suppliers, construction contractors, or service providers; and

IV - carrying out any type of operation that implies the transfer, under any title, of direct or indirect responsibility for the payment of the debt to bodies or entities of the public sector.

Paragraph 1. The prohibition provided for in item III does not apply to operations contracted by public companies or by mixed-capital societies controlled directly or indirectly by the Union, states, Federal District, and municipalities, nor to operations formally and exclusively guaranteed by trade or service provision acceptances drawn against the entities defined in letter "c" of item I of paragraph 1 of Article 1 of this Resolution.

Paragraph 2. A body or entity of the public sector is considered delinquent if it has a debt, total or partially due, for a period exceeding thirty days.

Article 8. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil that present, on the date of entry into force of this Resolution, an excess in relation to the limit fixed in Article 1:

I - are allowed to maintain current credit operations, including scheduled disbursements, provided that the charges incident on these operations are paid on their respective due dates;

II - are permitted the option provided for in Article 3, provided that they remain within the operational limits provided for in the legislation in force;

III - are prohibited from carrying out new credit operations with bodies and entities of the public sector until the ratio referred to in the caput reaches a percentage equal to or lower than 45% (forty-five percent);

IV - are prohibited from carrying out credit acquisition operations, with or without co-obligation, whose borrower is a body or entity of the public sector;

V - are prohibited from assigning credits with co-obligation, whose borrower is a body or entity of the public sector.

Sole Paragraph. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil that fail to comply with the provisions of this article are subject to the penalties provided for in Article 10.

Article 9. The global value of new credit operations carried out under this Resolution will be up to R$1,000,000,000.00 (one billion reais).

Paragraph 1. The following credit operations of financial institutions and other institutions authorized to operate by the Central Bank of Brazil are not included in the global value:

I - contracted with the entities mentioned in letter "c" of item I of paragraph 1 of Article 1 of this Resolution:

a) formally and exclusively guaranteed by trade or service provision acceptances, issued by the credit beneficiary itself;

b) export support operations; and

c) financing of projects linked to international bids, with a financing clause provided for in the Bid Notice.

II - formally and exclusively guaranteed by trade or service provision acceptances, drawn against the entities mentioned in letter "c" of item I of paragraph 1 of Article 1 of this Resolution, although they must be computed for the purpose of the limit provided for in Article 1;

III - contracted with municipalities using BNDES/PMAT resources, intended exclusively for the implementation of investment programs in tax modernization;

IV - operations described in Article 1, paragraph 1, item II, letter "c", of this Resolution.

Paragraph 2. The limit defined in the caput includes operations registered in the Public Sector Operations Registration System - CADIP, in accordance with Resolution No. 2,784, of November 18, 2000, in the same order of registration.

Article 10. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil that contract credit operations in disagreement with the provisions of this Resolution must pay to the Central Bank of Brazil, by the fifth business day following notification of the irregularity, the value corresponding to the irregularly contracted credit, updated by the respective contractual rate until the date of payment, regardless of other administrative measures.

Paragraph 1. In the case of new credit contracting or maturity of charges that infringe the limit established in Article 1, the value corresponding to the excess must be paid.

Paragraph 2. The value paid to the Bank Reserves account will not be subject to any remuneration, remaining unavailable and unchanged for a period equivalent to that during which the irregularity remains.

Paragraph 3. The institution that does not have a Bank Reserves account must sign an agreement with a financial institution for this purpose, in accordance with the regulations in force, and such agreement cannot be denounced by any of the parties without prior authorization from the Central Bank of Brazil.

Article 11. The contracting of new credit operations, in accordance with the provisions of this Resolution, depends on prior authorization from the Central Bank of Brazil, which is responsible for publishing the eligibility criteria.

Paragraph 1. The provisions of the caput do not apply to the operations described in Article 5, paragraph 2, item II, of this Resolution.

Paragraph 2. The Central Bank of Brazil will make available, monthly, via the Central Bank Information System - SISBACEN, the accumulated value of the authorized credit operations referred to in Article 9.

Article 12. The Public Sector Operations Registration System - CADIP is maintained.

Article 13. The Central Bank of Brazil is authorized to adopt the measures and issue the norms necessary for the compliance with the provisions of this Resolution.

Article 14. This Resolution enters into force on the date of its publication.

Article 15. Resolutions No. 2,653, of September 23, 1999, No. 2,668, of November 25, 1999, No. 2,727, of June 8, 2000, No. 2,784, of October 18, 2000, No. 2,800 of December 6, 2000, and No. 2,807 of December 21, 2000 are repealed.

Brasilia, March 30, 2001

Arminio Fraga Neto
President