Resolution No. JPRF-G-2022-016 Approves the 2022 Budget of the National Financial Corporation

THE FINANCIAL POLICY AND REGULATION BOARD
CONSIDERING:
That, Article 226 of the Constitution of the Republic of Ecuador prescribes 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 280 of the Constitution of the Republic defines the National Development Plan as the instrument to which public policies, programs, and projects, as well as the programming and execution of the State budget, shall be subject; That, the second clause of Article 70 ibid., regarding the National System of Public Finances, states: “All entities, institutions, and organisms included in Articles 225, 297, and 315 of the Constitution of the Republic shall be subject to the SINFIP, under the terms provided in this code, without prejudice to the autonomous management faculty of administrative, economic, financial, budgetary, and organizational order that the Constitution or laws establish for certain entities”; That, Article 109 of the Organic Code of Planning and Public Finances orders that the budgets of the entities and organisms indicated in that legal body shall enter into force and be mandatory from January 1 of each year. That, Article 101 ut supra, provides: “In the formulation of budget drafts for the public sector, including those of public companies, decentralized autonomous governments, public banking, and social security, the technical norms, guidelines, classifiers, and catalogs issued by the governing body of the SINFIP shall be observed obligatorily”; That, through Article 13 of the Organic Monetary and Financial Code, Book 1, the Financial Policy and Regulation Board was created as part of the Executive Function, as a legal person of public law, with administrative, financial, and operational autonomy, responsible for the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care service policy and regulation; and its composition was determined; That, Article 14.1, numeral 14, literal a) of the Organic Monetary and Financial Code establishes as a function of the Financial Policy and Regulation Board to annually approve the budget of the entities of the public financial sector, its reforms, as well as regulate its execution; That, the first transitional provision of the Organic Law for Economic Development and Fiscal Sustainability mandates “In order to achieve the technical and capital parameters necessary to grant low-cost, long-term credit to the agricultural and productive sectors, within sixty (60) days counted from the publication of this law in the Official Register, the competent instances will initiate the pertinent procedures to merge BANECUADOR EP [sic] and the CORPORACIÓN FINANCIERA NACIONAL EP [sic] into a single entity called BANCO DE FOMENTO ECONÓMICO DEL ECUADOR”.

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That, in the Codification of Monetary, Financial, Securities, and Insurance Resolutions, Book I "Monetary and Financial System", Title II "National Financial System", Chapter XXXIII "On the Government and Administration of the Public Financial Sector", Section III "On the Public Financial Sector Capital Budget", Subsection I, the Budget Management Norms for Entities of the Public Financial Sector are found; That, Chapter XXXIII "On the Government and Administration of the Public Financial Sector", Section III "On the Public Financial Sector Capital Budget", Subsection I, was renumbered by Article 2 of Resolution of the Monetary and Financial Policy Board No. 647, published in Official Register 415 of March 22, 2021; That, on September 27, 2021, the Ministry of Economy and Finance issued the guidelines for the programming and formulation of the General State Budget corresponding to the 2022 fiscal year and the Quadrennial Budget Programming 2022-2025. Within that instrument, section 4.2.2. develops the guidelines for public banking budgets; That, through resolution No. JPRF-F-2021-003 of December 10, 2021, the Financial Policy and Regulation Board, based on the guidelines issued by the Governing Body of Public Finances, issued the guidelines for the preparation of the budget draft for Public Financial Entities for the year 2022; That, on December 27, 2021, the General Management of Institutional Management, with memorandum No. CFN-B.P.-SGGI-2021-0434-M, brought to the knowledge of the Board of Directors of the National Financial Corporation B.P. the budget draft for the year 2022; That, on December 29, 2021, with resolution No. DIR-081-2021 of December 29, 2021, the Board of Directors of the National Financial Corporation B.P. approved the budget draft and through office No. CFN-B.P.-SGGI-2021-0074-O of December 30, 2021, its submission to this collegiate body was proceeded with; That, through resolution No. JPRF-F-2021-009 of December 30, 2021, the schedule for the presentation and approval of budget drafts for the current year was modified, in accordance with the Second and Third Transitional Provisions of Section XI “Guidelines for the preparation of the budget draft of Public Financial Entities for the year 2022”, of Chapter XXXIII "On the Government and Administration of the Public Financial Sector", Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions; That, on January 06, 2022, through office No. JPRF-JPRF-2022-0003-O, the Financial Policy and Regulation Board requested the pronouncement of the Ministry of Economy and Finance within the approval procedure of the budget draft of the National Financial Corporation B.P. for the 2022 economic year.

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That, the Ministry of Economy and Finance, through the Vice Minister of Economy, responded to the request mentioned in the immediately preceding consideration, with office No. MEF-VE-2022-0006-O of January 11, 2022, and informs the following: “…this State portfolio puts before your consideration REPORT No. MEF-CESFM-2022-003 on “Analysis of the Budget Draft of the National Financial Corporation - CFN B.P., corresponding to the 2022 economic year”, prepared and presented by the Strategic Coordination of the Monetary Financial Sector of this Ministry through Memorandum No. MEF-CFM-2022-0003-M of January 10, 2022, where the approval of the Budget Draft of the National Financial Corporation – CFN B.P. corresponding to the economic year 2022 is recommended, in concordance with the favorable vote issued by the MEF in the Extraordinary Session of the Board of Directors of the CFN B.P. of December 29, 2021.”; That, the Technical Secretary of the Financial Policy and Regulation Board through memorandum No. JPRF-SETEC-2022-0006-M of January 12, 2022, sends to the President of the JPRF the technical and legal analyses that support the pertinence of this resolution, contained in reports No. JPRF-CT-2022-00011 and No. JPRF-CJ-2022-0006 of January 12, 2022, respectively; That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means convened on January 12, 2022, and carried out through video conference on January 13, 2022, learned of the budget of the National Financial Corporation B.P. for the economic year 2022; and, In exercise of its functions, RESOLVES:
SINGLE ARTICLE.- Approve the budget of the National Financial Corporation B.P., corresponding to the economic year 2022, which shall be valid from January 01, 2022, according to the attached annex, which forms an integral part of this resolution. GENERAL PROVISIONS:
FIRST.- The legal representative of the National Financial Corporation B.P. shall be in charge, within the framework of the Law, of the execution of the budget.
SECOND.- It is ordered that the National Financial Corporation B.P. submit the approved budget for the economic year 2022 to the Ministry of Economy and Finance and to the National Assembly within a term of 30 days, counted from the issuance of this resolution, in compliance with what is provided in Articles 112 of the Organic Code of Planning and Public Finances and 94 of the General Regulation to the Organic Code of Planning and Public Finances.

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TRANSITIONAL PROVISION: In case there has been any budgetary movement or impact directly related to the operability of the National Financial Corporation B.P. in the days prior to the issuance of this resolution, these movements must be regularized during the first month of budget execution of the 2022 fiscal year. Such movements and regularizations shall not affect the total amount of the Institutional Budget sent for approval to the Financial Policy and Regulation Board. FINAL PROVISION.- This resolution shall enter into force from the date of its issuance, without prejudice to its publication in the Official Register. Publish this resolution on the website of the Financial Policy and Regulation Board, within a maximum term of two days from its issuance. NOTIFY.- Given in the Metropolitan District of Quito, on January 13, 2022. THE PRESIDENT, Mgs. María Paulina Vela Zambrano The resolution above was processed and signed by Master María Paulina Vela Zambrano, President of the Financial Policy and Regulation Board, in the Metropolitan District of Quito, on January 13, 2022.- I CERTIFY. TECHNICAL SECRETARY Dr. Nelly Arias Zavala

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Annex
NATIONAL FINANCIAL CORPORATION (CFN B.P.)
2022 BUDGET DRAFT
In millions of USD
Source: CFN B.P.
ORDINARY BUDGET EXECUTION
2019
EXECUTION
2020
DRAFT
2021
EXECUTION
OCTOBER 2021
EXECUTION
PROJECTED TO
DECEMBER 2021
DRAFT
2022
ABSOLUTE VARIATION
% VARIATION
DRAFT
2021 VS
DRAFT
2022
Income 165.85 133.18 166.55 132.97 157.36 140.57 -25.98 -15.60% Interest on Loans 125.19 108.45 134.28 105.62 129.77 103.29 -30.98 -23.07% Interest on Stock Financing Program
5.76 5.28 3.81 3.38 3.72 2.02 -1.80 -47.12%
Interest on sale of CPGs at term 0.33 0.30 6.52 3.33 4.42 7.42 0.91 13.94% Interest on Investments 27.20 15.06 12.09 18.45 16.88 25.93 13.84 114.47% Interest foreign trade 4.49 1.98 8.40 0.22 0.23 0.02 -8.38 -99.79% Stock Intermediation Commissions 0.00 0.00 0.09 0.00 -0.09 -100.00% Interest third-party allocation and sale installment goods
1.59 0.94 0.24 0.94 1.10 0.65 0.40 164.33%
Fiducia Commissions 1.28 1.17 1.12 1.02 1.24 1.24 0.12 10.75% Expenses 92.20 88.95 110.45 68.63 84.82 103.71 -6.74 -6.10% Interest external credit 7.67 8.60 11.31 6.15 8.25 7.65 -3.65 -32.32% Interest investment certificates 50.38 48.35 44.07 36.78 42.19 50.05 5.97 13.55% Commissions paid 0.66 1.44 7.74 0.64 1.32 1.35 -6.39 -82.51% Personnel Expenses 20.42 19.17 20.73 17.02 21.60 18.61 -2.11 -10.20% Current Expenses 7.33 5.49 14.41 3.69 5.66 13.53 -0.88 -6.09% Taxes and contributions 5.47 5.25 5.83 4.10 5.28 5.32 -0.51 -8.75% Fixed asset investments normal business 0.27 0.65 6.36 0.25 0.51 7.19 0.83 13.06%
I. Surplus / (Deficit) Ordinary 73.66 44.23 56.10 64.34 72.54 36.86 -19.24 -34.30%
EXTRAORDINARY BUDGET
Income 10.86 11.19 5.32 10.28 10.24 1.71 -3.61 -67.77% Sale of adjudicated goods 8.43 7.76 2.32 2.06 2.14 0.42 -1.90 -81.73% Other income 2.43 3.43 3.00 8.21 8.10 1.29 -1.71 -56.97% Expenses 4.01 6.96 5.19 2.93 4.11 3.20 -1.99 -38.31% Various receivables (scraping) 3.29 0.87 1.69 0.24 0.54 1.20 -0.49 -28.87% Extraordinary expenses 0.73 6.09 3.50 2.69 3.57 2.00 -1.50 -42.86%
II. Surplus / (Deficit) Extraordinary 6.85 4.23 0.13 7.34 6.13 - 1.49 -1.62 -1217.71%
Surplus / (Deficit) Admin. Execution 80.51 48.46 56.23 71.68 78.67 35.37 -20.86 -37.10% POLICY BUDGET Income 4,180.42 4,323.40 4,195.80 3,188.66 3,727.74 5,410.60 1,214.80 28.95% Portfolio recovery 324.82 232.74 268.12 195.77 234.64 220.30 -47.81 -17.83% Factoring recovery 114.82 70.38 110.31 38.07 34.18 0.00 -110.31 -100.00% Recovery and sale of investments 160.30 380.37 156.11 584.77 730.75 552.05 395.94 253.62% Sale of CPGs at term 20.78 24.19 16.91 10.75 13.83 12.55 -4.36 -25.78% Bond recovery 552.39 156.00 151.50 128.00 151.50 23.50 -128.00 -84.49% Subsidiary Profits 23.11 5.15 5.07 4.05 4.05 0.30 -4.77 -94.09% Sale of Shares and Participations 0.00 839.73 839.73 External credit 79.73 204.47 291.93 10.00 10.00 123.00 -168.93 -57.87% Investment certificate collection 2,820.57 3,109.04 2,984.43 1,991.02 2,319.47 3,368.38 383.95 12.87% Government capitalization funds 0.00 3.10 8.29 8.29 Available funds (Initial) 83.89 141.06 211.43 226.22 226.22 262.49 51.06 24.15% Expenses 4,119.87 4,145.65 4,011.14 3,000.66 3,543.92 4,247.13 235.99 5.88% Granting of loans 622.83 198.63 486.92 108.60 122.12 330.00 -156.92 -32.23% Factoring disbursements 68.88 150.00 46.50 49.89 0.00 -150.00 -100.00% Stock financing program 40.04 16.78 25.00 0.00 0.00 20.00 -5.00 -20.00% Profit Payment 23.24 5.50 5.07 0.00 -5.07 -100.00% CPGs Ministry 18.14 10.03 6.23 4.66 7.68 0.00 -6.23 -100.00% External credit debt service 55.11 50.20 44.83 38.21 43.24 15.57 -29.26 -65.27% Investment certificate debt service 3,047.14 3,265.54 3,177.10 1,939.67 2,319.00 3,442.56 265.46 8.36% Government bonds 200.00 203.88 203.88 180.00 180.00 National Guarantee Fund 0.00 20.00 30.00 -30.00 -100.00% Venture Capital Fund 3.36 0.01 16.00 0.00 -16.00 Treasury investments 110.03 510.09 70.00 659.13 798.11 259.00 189.00 270.00%
III. Surplus / (Deficit) Policy 60.54 177.76 184.66 188.00 183.81 1,163.47 978.81 530.07%
IV. Global Surplus / (Deficit) I+II+III 141.06 226.22 240.89 259.68 262.49 1,198.84 957.95 397.67%
Total Budgetary Income 4,357.13 4,467.78 4,367.67 3,331.91 3,895.34 5,552.88 1,185.21 27.14% Total Budgetary Expenses 4,216.08 4,241.56 4,126.78 3,072.22 3,632.85 4,354.04 227.26 5.51% NATIONAL FINANCIAL CORPORATION B.P.
BUDGET REFORM ECONOMIC YEAR 2020
In USD millions dollars