Resolution JPRM-2023-007-G Approving the Audited Financial Statements of the Central Bank of Ecuador for the Period January 1 to December 31, 2022

MONETARY POLICY AND REGULATION BOARD

Republic of Ecuador

THE MONETARY POLICY AND REGULATION BOARD

CONSIDERING:

That, Article 226 of the Constitution of the Republic of Ecuador stipulates that public servants and persons acting under state authority shall exercise only the competencies and powers attributed to them in the Constitution and the Law;

That, Article 227 of the same instrument states that Public Administration constitutes a service to the community governed by the principles of effectiveness, efficiency, quality, hierarchy, coordination, planning, among others;

That, the first paragraph of Article 303 of the Constitution of the Republic determines that the formulation of monetary, credit, exchange, and financial policies is the exclusive authority of the Executive Branch and shall be implemented through the Central Bank of Ecuador;

That, Article 30 of the Organic Monetary and Financial Code states: "The net results of the Central Bank of Ecuador shall be determined based on the financial statements prepared in accordance with internationally recognized accounting standards applicable to the institution, which must include the opinion of an independent external auditor. (...)";

That, Article 31 of the aforementioned Code determines: *"The Monetary Policy and Regulation Board shall review and approve the annual financial statements provided they comply with the accounting policies and procedures of the Central Bank of Ecuador, which must be based on recognized international accounting standards.

Within three (3) months following the close of its fiscal year, the Central Bank of Ecuador shall present to the entity in charge of public finances and to the National Assembly the financial statements approved by the Monetary Policy and Regulation Board, signed by the General Manager, the accountant, and audited by the external auditor.

Within a period of thirty (30) days from the certification of the annual financial statements by the external audit, the Central Bank of Ecuador must publish the financial statements, the notes to said financial statements, and the opinion issued by the external auditor.

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MONETARY POLICY AND REGULATION BOARD

Republic of Ecuador

The Central Bank of Ecuador must publish the monthly financial statements within fifteen (15) days following the closing date of each month. It must submit copies of said balances to the entity in charge of public finances.";

That, Article 33 of the same instrument prescribes: *"Within the general balance sheet of the Central Bank of Ecuador, the following systems are created:

First System: The liabilities of this System shall record the national monetary species minted by the Central Bank of Ecuador that are in circulation, the Central Bank Titles (TBC) referred to in Article 126 of this Code, any other direct obligations with the public, and the deposits of other deposit societies, which include: private banks, mutualist banks, savings and credit cooperatives, public banks with demand deposits. These liabilities must be covered one hundred percent by the assets of the international reserve.

Second System: The liabilities of this System shall record the deposits of other financial entities, including the National Financial Corporation B.P., the Bank of the Ecuadorian Social Security Institute, other financial entities of the public sector, and financial intermediaries that do not capture demand deposits from the public. These liabilities shall be covered with the residual reserve assets once the First System is covered and must be equivalent to one hundred percent of the liabilities in this system.

Third System: The liabilities of this System shall record the deposits of the Non-Financial Public Sector (NFPS), duly authorized private legal entities, at the Central Bank of Ecuador, and transfers through the Payment System pending settlement, as well as the external debt specific to the Central Bank of Ecuador. These liabilities must be covered one hundred percent by the assets of the international reserve, once the second system has been fully covered.

Fourth System: Records the remaining accounts of the assets and liabilities of the Central Bank of Ecuador, including equity and results accounts. Once the Third System is covered, its remainder shall be added to the assets covering this System.

The liabilities of a system of lower priority cannot be honored with the assets of preceding systems.

The Monetary Policy and Regulation Board shall determine and publish the methodology for the distribution of assets and liabilities of each of the systems. The publication of the

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MONETARY POLICY AND REGULATION BOARD

Republic of Ecuador

general balance sheet of the Central Bank of Ecuador, classified into the four systems, shall be carried out on a monthly basis.";

That, Article 47.1 of the Organic Monetary and Financial Code created the Monetary Policy and Regulation Board as part of the Executive Branch, responsible for the formulation of monetary policy, the highest governing body of the Central Bank of Ecuador, and determines its composition;

That, numeral 17 of Article 47.6 aforementioned, regarding the functions of the Monetary Policy and Regulation Board, establishes: "(...) 17. Review and approve the annual financial statements of the Central Bank of Ecuador (...)";

That, by Resolution No. JPRM-2022-006-G, dated February 11, 2022, the Monetary Policy and Regulation Board issued the "Standard for the Contracting of External Auditors of the Central Bank of Ecuador";

That, by Resolution No. JPRM-2022-012-G, dated March 28, 2022, the Monetary Policy and Regulation Board resolved to reform the "Standard for the Contracting of External Auditors of the Central Bank of Ecuador" issued by Resolution No. JPRM-2022-006-G, dated February 11, 2022";

That, by Resolution No. JPRM-2022-014-G, dated April 11, 2022, the Monetary Policy and Regulation Board appointed the company KRESTON AUDIT SERVICES ECUADOR CIA. LTDA. to perform the external audit of the Central Bank of Ecuador for the economic years 2021, 2022, and 2023;

That, the company KRESTON AUDIT SERVICES ECUADOR CIA. LTDA., through letter No. KRESTON/0023/2023, dated March 22, 2023, issued the opinion on the reasonableness of the financial statements of the Central Bank of Ecuador, for the period from January 1 to December 31, 2022, with their respective notes;

That, Article 9 of Resolution No. JPRM-2021-006-A, dated December 17, 2021, which contains the "Regulation of the Audit Committee of the Central Bank of Ecuador", in its pertinent part, as a function of the Audit Committee regarding the financial statements, establishes "(...) d) Review the financial statements of the Central Bank of Ecuador, prior to their presentation to the approving body (...)";

That, as recorded in Extraordinary Session Act No. 008-2023, dated March 23, 2023, the Audit Committee reviewed the opinion on the reasonableness of the financial

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MONETARY POLICY AND REGULATION BOARD

Republic of Ecuador

statements of the Central Bank of Ecuador issued by the external audit firm, for the period from January 1 to December 31, 2022, with their respective notes;

That, the Monetary Policy and Regulation Board, in an extraordinary session held in person on March 24, 2023, reviewed the pronouncement of the Audit Committee related to the opinion on the reasonableness of the financial statements of the Central Bank of Ecuador, for the period from January 1 to December 31, 2022, with their respective notes; likewise, it reviewed the request for approval of the financial statements and the resolution proposals sent via memorandum No. BCE-BCE-2023-0068-M by the General Manager of the Central Bank of Ecuador to the President of the Monetary Policy and Regulation Board; and the legal report No. BCE-CGJ-022-2023, dated March 23, 2023; and,

In exercise of its functions and in accordance with Article 47.7 of the Organic Monetary and Financial Code, the Monetary Policy and Regulation Board:

RESOLVES

Article 1.- Approve the Audited Financial Statements of the Central Bank of Ecuador, for the period from January 1 to December 31, 2022, with their respective notes.

Article 2.- Order the Central Bank of Ecuador to publish the audited and approved financial statements, for the period from January 1 to December 31, 2022, as well as the notes to said financial statements and the opinion issued by the external auditor, on the institutional website.

FINAL PROVISION.- This resolution shall enter into force from its issuance, without prejudice to its publication in the Official Register.

The publication of this resolution on the institutional website is entrusted to the Document Management and Archive Directorate of the Central Bank of Ecuador.

COMMUNICATE. - Given in the Metropolitan District of Quito, on March 24, 2023

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MONETARY POLICY AND REGULATION BOARD

Republic of Ecuador

THE PRESIDENT

(Signature)
Dr. TATIANA MARIBEL RODRÍGUEZ CERÓN

The aforementioned resolution was signed by Dr. Tatiana Maribel Rodríguez Cerón - President of the Monetary Policy and Regulation Board, in the Metropolitan District of Quito, on March 24, 2023.- I CERTIFY.

ADMINISTRATIVE SECRETARY

(Signature)
Attorney MARÍA ALEXANDRA GUERRERO DEL POZO