PROVISIONAL MEASURE NO 2.023-50, DE April 20, 2000.

Establishes objectivating mechanisms encourage a reduction in the presence of the state public sector in banking financial activity, has on the privatization of financial institutions, and gives other arrangements.

THE PRESIDENT OF THE REPUBLIC, in the use of the attribution that confers you the art. 62 of the Constitution, adopts the following Interim Measure, with force of law:

Art. 1º The reduction in the presence of the state public sector in banking financial activity will be encouraged by the mechanisms set forth in this Provisional Measure, and by standards downloaded by the National Monetary Council, within the framework of its competence, preferably upon privatization, extinction, or transformation into foster agency, from financial institutions under Federation Unit-share control.

§ 1º The extinction of financial institutions to which the caput of this article may be referred to may give themselves through processes of incorporation, merger, fission or any other form of legally admitted societal reorganization.

§ 2º The National Monetary Council will regulate the operation of the foreseen foster agencies in this article.

§ 3º At the promotion agencies is provided for the provision of guarantees, the use of the institute of the fiduciary disposal in warranty and of industrial and commercial credit ballots, and the collection of charges in the molds practiced by financial institutions.

§ 4º Applies to the agencies of fomenting the provisions of Law No. 6,024 of March 13, 1974.

Art. 2º The adoption of the appropriate measures to each specific case shall give the Union sole discretion, upon request of the respective controller, met with the conditions set out in this Interim Measure.

Art. 3º For the purposes of this Provisional Measure, may the Union, at its sole discretion:

I-acquire control of the financial institution, exclusively for privatizing it or extinguish;

II-financing the extinction or transformation of financial institution in non-financial when carried out by its respective controller, including those submitted to special regimes ;

III-funding the prerequisites for the privatization of the financial institution ;

IV-acquire contractual claims that the financial institution detain against its controller and entities by this controlled and refinance the credits thus acquired ;

V-in exceptional character and met to the conditions specified in art. 7º, to partially fund the financial institution's sanitation program, which will necessarily contemplate its capitalization and changes in its management process capable of ensuring its professionalization ;

VI-provide guarantee for funding granted by the Central Bank of Brazil ;

VI-funding the creation of promotion agencies for Federation Units that firm contracts of financing or refinancing arising from this Provisional Measure.

§ 1º The adoption of the measures provided for in this article will be made of the authorizations that are made required in the law of the respective Federation Unit.

§ 2º The credits of which deals with the inciso IV of this article those existing on March 31, 1996, increased the contractual interest pro rata die up to the date of the acquisition in accordance with the financial conditions and charges provided for in the original contracts.

§ 3º The refinancing of which deals with the inciso IV of this article will be preceded by the assumption, by the Unit of the Federation, of the debts of responsibility of the entities by it controlled.

Art. 4º The funding of the prior adjustments required for the privatization of the financial institution, of which it treats the inciso III of the previous article, granted by the Union or the Central Bank of Brazil, restricts itself to cases where there is:

I-legislative authorization of the Federation Unit to:

a) privatization, within a period agreed with the Union, of the respective financial institution

b) the use of the proceeds from privatisation in the payment of the financing or refinancing that treat the incisos III and IV of the previous article or, at the discretion of the Union, of other debt to this one ;

c) when it is the case, the offer in warranty of the shares of its property in the capital of the financial institution to be privatized ; or

II-the dispossession in favor of the Union of shares of the social capital of the financial institution, in form of Decree-law No. 2,321 of February 25, 1987.

Art. 5º The funding for this Provisional Measure, when granted by the Union, will be paid in until three hundred and sixty monthly and successive instalments, calculated on the basis of Table Price, winning the first thirty days after the signing of the contract and the following in equal day of the subsequent months observed the following conditions:

I-interest calculated and debited monthly, at the minimum rate of six per cent per year, on the balance previously updated debtor ;

II-monetary update calculated and debited monthly, based on the variation in the General Index of Prices-Internal Availability (IGP-DI), released by the Getúlio Vargas Foundation, or other index that comes to replace it.

§ 1º The corresponding obligations in the service of financing granted by the Union, in accordance with of this Provisional Measure, will be able to be computed jointly with the obligations on refinancing of debts provided for by Law No. 9,496 of September 11, 1997, specifically for the purposes of implementing the maximum commitment limit of the Real-RLR Net Revenue referred to in art. 5º of the citation Act.

§ 2º Cessa the application of the provisions of the preceding paragraph if, eighteen months of the date of the signature of the refinancing contract as referred to in Law No. 9,496 of 1997, hold the Federation Unit the control of any financial institution.

§ 3º The provisions of the preceding Paragraph apply only to resources intended for institutions which continue controlled by the Federation Unit.

§ 4º To comply with the provisions of this article, the Union will be able to hire with federal public institution financial agent services for celebration, monitoring and control of financing contracts or refinancing, the remuneration of which will be borne by the Federation Units.

Art. 6º The Central Bank of Brazil, in the financing it grants, for the purposes of which it treats this Provisional Measure, may:

I-rely exclusively on the Union guarantee ;

II-accept, as collateral, securities or rights relating to operations of responsibility of the National Treasure or entity of the indirect Federal Public Administration.

Single Paragraph. Except in cases where the guarantees that it treats the inciso II of this article are represented by securities of federal public debt, negotiated in competitive auctions, the nominal value of such guarantees should exceed in at least the hundred the guaranteed amount.

Art. 7º In the hypotheses of the incisos III and V of the art. 3º, when there are no shareholder control transfers, or, detaining the Federation Unit most of the social capital in more than one financial institution, remain some financial institution under its control, the participation of the Union and the Central bank of Brazil shall not be able to exceed fifty per cent of the necessary resources, and the Federation Unit shall adopt, among others, the following measures, involving, together or in isolation, resources in amount at least equivalent to that of Union participation:

I-early discharge of debts of the controller and entities by this controlled together with finance institution ;

II-assumption of financial institution debts to third parties, existing on March 31 of 1996 and recorded in balance sheet, including liabilities of an actuarial or labor nature ;

III-capitalizing of the financial institution.

Single Paragraph. The funding of which treats the inciso V of the art. 3º percent depends, yet, on favorable demonstrations by the Brazilian Central Bank, until December 5, 1997, on the state's proposal for the fulfillment of the willing caput.

Art. 8º Where the participation of the Union is exclusively due to the use of the provision in the inciso IV of the art. 3º, the acquisition of the claims shall be conditional upon the competent legislative authorization for the privatization or extinction of the financial institution or its processing into non-financial institution, restrained of this article.

Single Paragraph. In case the financial institution holder of the credit does not have its shareholder control transferred nor is it extinguished, or transformed into non-financial institution, the refinancing contract should provide for the delivery, by the Federation Unit, of privatizable assets, accepted by the Union, in amount equivalent to, at a minimum, fifty per cent of the total refunded, for purposes of further amortization.

Art. 9º In the cases that they treat art. 7º and the unique paragraph of art. 8º, the adoption of the measures authorized in this Provisional Measure will still depend on the decision of the National Monetary Council, which will be given in view of:

I-approval, by the Central Bank of Brazil, of sanitation project of the financial institution that necessarily include your capitalization and changes in your management system capable of ensuring your professionalization ;

II-Opinion favorable from the Office of the Ministry of Finance's Office of the Ministry of Finance as to the compatibility of the fiscal position of the controlling State with the effort required by the financial institution's sanitation project.

Art. 10. The Union will pay for the acquisitions of control and credits and grant the financing of which it treats art. 3º with National Treasury securities or upon securitization of the obligations, rescue and interest set forth in act of the Minister of State of the Farm, heard the Ministry of Planning, Budget and Management.

Single Paragraph. The National Treasury securities issued pursuant to the caput of this article, when held by financial institutions, may be exchanged for issuance securities of the Central Bank of Brazil, under conditions to be established by the Council National Monetary.

Art. 11. For the purpose of the provisions of paragraph "b" of the inciso I of art. 4º, the disposal of the financial institution will return to the National Treasury, in up to five business days, the values received in current currency or in federal public debt securities.

Single Paragraph. Securities and credits not understood in the caput of this article, admitted as a means of payment of the disposal of the financial institution, should be replaced, by the disposal, by federal public debt securities, for the purpose of re-passing the National Treasure.

Art. 12. In the hypothesis of the inciso II of the art. 4º, the net result of the privatization of the financial institution shall be used by the Union in the total or partial discharge of the financing or refinancing granted on the basis of this Provisional Measure.

Art. 13. It may be exercised by legal person, at the discretion of the Central Bank of Brazil, the management of financial institutions which have their control acquired in the form of art. 3º, inciso I, as well as those who have their actions misappropriated, as per the provisions of Decree-Law No. 2,321 of 1987.

Art. 14. The financing or refinancing granted on the basis of this Provisional Measure should rely on adequate guarantees or contragaranties, which will necessarily include the linking of own revenue and the resources of which they treat the arts. 155, 157 and 159, inciso I, letter "a", and inciso II, of the Constitution, as well, when it is the case, actions representative of the financial institution's controlling shareholder.

Art. 15. The financing or refinancing contracts for which this Provisional Measure is to be expected to provide, in addition to the guarantees and contragaranties referred to in the previous article:

I-be the National Treasury authorized to draw, in case of inadimpletion, against the accounts depository banking of the own revenue and resources of which it treats the previous article, the amount of unpaid values, with the legal and contractual additions ;

II-that their payments arising will not be subject to limits set forth in law, resolution or regulation after it is concluded

III-which, in the hypothesis of non-transfer of the stock control of the institution or non- processing in non-financial institution, at least fifty per cent of the dividends by it to the controller will be used for the amortization of the financial obligations provided for in the contract.

Art. 16. The Union's sole discretion, may be received goods, rights and shares owned by Federation Units in dation in payment of the debts contracted in the form of this Provisional Measure.

Single Paragraph. The goods, rights and shares will be accepted at market price ; when there is no market price, the price will be established on the basis of valuation carried out by three independent consultants hired by the parties.

Art. 17. Occurring impunctuality in the payment of financing or refinancing that treats this Provisional Measure, the Unit of the debtor Federation will pay, from the maturity of the obligation, financial charges equivalent to the average cost of caption of the National Treasury, increased from one per cent to the month, incidents over the amount in arrears, without prejudice to the other legal or contractual inaction.

Art. 18. The financing or refinancing contracts arising from this Provisional Measure are to be concluded by June 30, 2000, with the exception of the relative to the inciso V of the art. 3º, whose term of celebration has run out on March 31, 1998.

Single Paragraph. The financing or refinancing pertaining to the inciso I of the art. 3º shall be granted only to the States to conclude, by June 20, 2000, to the Central Bank of Brazil, under the conditions by this determined, management commitment of the financial institution, which shall apply until the date of signature of the respective contract.

Art. 19. Noted the provisions of the following article, the privatization of financial institutions that have their control acquired on the basis of this Provisional Measure, of those who have their shares misappropriated, as per the provisions of Decree-Law No. 2,321, of 1987, and of other financial institutions included in the National Desestatisation Program, will be made upon public offer, assured equal conditions to all competitors.

Art. 20. The privatization or capitalization programmes provided for in this Provisional Measure will be able to contemplate the participation of employees of the financial institutions subject to

Art. 21. The temporary special administration scheme to which they are submitted state financial institutions may be extended, by up to one hundred and eighty days, in addition to the time limits laid down in Decree-Law No. 2,321 of 1987, if the respective Unit of the Federation has firmed, with the Federal Government, protocol for the implementation of the measures provided for in this Provisional Measure, or if the financial institution is in the process of privatization, duly adjusted with the Central Bank of the Brazil.

Single Paragraph. The extension referred to in the caput of this article may be made for up to five hundred days, if the respective Federation Unit has firmed, with the Union or with federal financial institutions, contract of the loan for sanitation of state financial institution, within the framework of the Restructuring Support Program and the Fiscal Adjustment of States.

Art. 22. In the process of reducing state public sector participation in banking financial activity, the Union will be able to authorize federal financial institutions to take on the liabilities held to the public by financial institutions state.

§ 1º The Union shall ensure to the federal financial institution that it assumes the liabilities to the public to equalization of the existing difference between the value received from the state financial institution as a result of the operation and the value to be paid to the Central Bank of Brazil for the resources obtained in line of specific financing to support the liabilities assumed.

§ 2º The Union's claims arising from the application of the provisions of the preceding paragraph shall be liability of the controller, by virtue of the provisions of the Laws No^s 6,024, March 13, 1974, 6,404, December 15, 1976, and 9,447, of March 14, 1997, and may the Union refinance the debt under Law No. 9,496, of 1997.

§ 3º The equalization of which treats § 1º will observe the foreseen in art. 10.

Art. 23. Law No. 9,496 of 1997 passes vigorously with the following changes:

" Art. 1º It shall be the Union, within the framework of the Restructuring Support Programme and the Fiscal Adjustment of States, authorized, until May 31, 2000, to:

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II-take over the loans taken by the States and the Federal District together with the Economic Box Federal, with amparo in resolution No. 70 of December 5, 1995, of the Federal Senate, as well as, at the sole discretion of the Federal Executive Power, other debts whose refinancing by the Union under this Act has been authorized by the Senate Federal until June 30, 1999 ;

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IV-take over the furnished public debt issued by states and the Federal District, after 13 million December 1995, for payment of judicial precatories, in the terms of art. 33 of the Act of Transitional Constitutional Provisions ;

V-refinance the claims arising from the assumption to which the incisos I and IV refer together with credits titled by the Union against the Federation Units, these at the sole discretion of the Ministry of Finance ;

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§ 2º It will not be covered by the assumption to which the incisos I, II and IV are referred to, nor by the refinancing to which the inciso V refers:

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d) the furnished debt in power of the issuer itself, even if by means of a fund of liquidity, or that has been placed on the market after December 31, 1998.

§ 3º The operations authorized in this article shall bind to the establishment, by the Units of Federation, of Restructuring and Fiscal Adjustment Program, agreed with the Federal Government.

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§ 5º Atendides to the requirements of the preceding paragraph, may the Minister of State of the Farm, to to enable the effective assumption referred to in the inciso I, of this article, to authorize the conclusion of contracts of promise of assumption of the said obligations.

§ 6º The credit corresponding to the assumption referred to in inciso II, in the part relating to funds of contingencies of state banks, constituted under the programme of reduction in the presence of the state public sector in banking financial activity, may, at the discretion of the Minister of State of the Finance, be incorporated into the debtor balance of the debt restructuring contracts, concluded under the Act, when the use of the resources deposited in the respective funds.

§ 7º The eventual difference between the assumption referred to in the preceding paragraph and the balance presented in the respective funds may, at the discretion of the Minister of State of the Finance, be incorporated, in up to twelve months, with remuneration up to the date of incorporation by the change in the average rate adjusted in the daily funding ascertained in the System Special Liquidation and Custody (SELIC) disclosed by the Central Bank of Brazil, to the Dever Saldo of debt restructuring contracts concluded under this Act. " (NR)

" Art. 3º ....................................................................................................................................

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§ 1º To ascertain the refunded value relating to the furnished debt, with the exception of the said in the inciso IV of the art. 1º, the basic financial conditions set out in the caput will be able to retroact by September 30, 1997.

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§ 6º The non-establishment of the Program within the period fixed in the refinancing contracts, or the adhering to the targets and commitments set out therein, will entail, while not established the Program or during the period in which it lasts for the non-compliance, as the case may be, without prejudice to the other commisation paced in the contracts of refinance, the replacement of the financial charges mentioned in this article by the average cost of caption of the federal furnished debt, plus one percent, and the rise in four percentage points of the established commitment based on on art. 5º.

§ 7º The application of the provisions of the preceding paragraph, with regard to the disfulfilment of the targets and commitments set out in the Programme, can be reviewed by the Minister of State of the Farm, in view of the state-founded justification.

§ 8º The amount pertaining to benefits accrued between the date of signing of the contract of refinancing and that of its effectiveness may be parceled in up to thirty-six monthly and consecutive instalments, by the Constant-SAC Amortization System, with charges equivalent to the SELIC fee, winning the first on the first due date of the benefits of the refinancing contract that occur after the effectiveness of the contract and the other ones, on the same subsequent dates, limited the last instalment to November 30, 2002.

§ 9º The benefits referred to in the preceding paragraph are not subject to the limit of commitment to which refers to art. 5º.

§ 10. The possibility of parceliing that it treats § 8º only applies to contracts that have been signed up to December 31, 1998. " (NR)

" Art. 6º For the purposes of application of the limit set in art. 5º, may be deducted from the limit ascertained the expenditure effectively held in the previous month by the refunded, corresponding to the services of the following obligations:

VII-debt of which treats incisos I and II, from indirect Administration entities, which is formally taken over by the state until December 31, 1997 ;

VIII-of state financial institutions to with the Central Bank of Brazil, which are formally taken over by the state until July 15, 1998.

§ 3º The commitment limit set in the form of this article, starting from 1º June of 1999, it will be maintained until the posterated values in the form of the preceding paragraph are fully settled.

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" Art. 7º-A. Payment of the remaining debtor balance on November 30, 1998 in the graphical accounts opened under the terms of the refinancing contracts concluded upon the ampairing of this Act, at the discretion of the Ministry of Finance, may be extended to November 30 of 2000, by staying the Union authorized, in this act, to charge, on that parcel, charges equivalent to the average cost of caption of the domestic furnished debt of the Federal Government.

§ 1º At the discretion of the Ministry of Finance, the remaining debtor balance of the graphic account of which it treats the caput can be parceled in up to thirty-six monthly and consecutive instalments, by the Constant-SAC Amortization System, with charges equivalent to the SELIC fee, winning the first on the first due date of the benefits of the refinancing contract that occurs after formalization of the parcelial provided for in this paragraph and the remaining ones, on subsequent dates, limited to last instalment on November 30, 2002.

§ 2º The resources generated by the disposal of the goods, rights and actions delivered by the Units of Federation to the Union for the purposes of extraordinary amortization of the refinancing contracts concluded in the form of this Act shall be, necessarily, intended for the amortization or settlement of the parceliment provided for in the preceding paragraph

§ 3º The benefits referred to in § 1º are not subject to the limit of commitment to which refers to art. 5º.

§ 4º The provisions of this Article shall not preclude sanctions arising from the discompliance of any other contractually anticipated obligations. " (NR)

" Art. 7º-B. It applies to the value corresponding to the extraordinary amortization (graphic account) generated on the occasion of the effectiveness of the contract on the refinancing of the debt referred to in the inciso IV of the art. 1º, observed the percentage and conditions already set out in the refinancing contracts concluded with each Federation Unit, the provisions of the previous article. " (NR)

Single Paragraph. The financial effects arising from the provisions of § 3º of the art. 6º of Law No. 9,496, 1997, with the essay given by this Provisional Measure, will be able to retroact up to 1º June 1999.

Art. 24. It is the Union authorized to take the burden arising from the reduction in charges provided for in the contracts it secured, concluded by October 30, 1997 under the Restructuring Support Programme and the Fiscal Adjustment of States.

Art. 25. It is the Union authorized to equalize the cumulative gap, since October 30, 1997, between the average caption costs used in the composition of the financial charges adjusted in the contracts concluded, by the States, with institutions federal public financial, under the Restructuring Support Program to the Fiscal Adjustment of States, authorized by the National Monetary Council, and the average cost of caption of the contracting institution in the month of reference.

Art. 26. It is the Union authorized to hand over resources to states, their Municipalities, and the Federal District, respected as a limit for transfers the balance of budget allocations specifically intended for purpose.

Single Paragraph. Act of the State Ministers of the Finance and Planning, Budget and Management will establish the limits, criteria, deadlines and the other conditions for the delivery of the resources to States, their Municipalities, and the Federal District, and must be firmed in advance the respective term of accession.

Art. 27. It shall be extended, until December 30, 1999, the time limit provided for in paragraph "b" of the inciso IV of the art. 3º of Law No. 9,846 of October 26, 1999.

Art. 28. The Executive Power shall regulate the provisions of this Provisional Measure.

Art. 29. The acts practiced on the basis of the Provisional Measure No. 1.983-49, of April 6, 2000, shall be convalidated.

Art. 30. This Provisional Measure comes into force on the date of its publication.

Art. 31. Provisional Measier No 1.983-49 of April 6, 2000 is hereby repealed.

Brasilia, April 20, 2000 ; 179º of the Independence and 112º of the Republic.

Fernando Henrique Cardoso

Amaury Guilherme Bier

Martus Tavares

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