I get to know that the Federal Senate has approved, and I, Garibaldi Alves Filho, President, in the terms of the art. 48, inciso XXVIII, of the Internal Rules, promulgated the following

R E S O L U Ç Ã ° 5, DE 2008

Authorizes the State of São Paulo to hire external credit operation, with guarantee from the Union, to the Inter-American Development Bank (BID), in the amount of up to US$ 10,000,000.00 (ten million U.S. dollars), from principal, for partial financing of the Competitiveness Strengthening Program of the Companies Located in Productive Arrangements of the State of São Paulo.

The Federal Senate resolves:

Art. 1º It is the State of São Paulo authorized to hire external credit operation, with guarantee from the Union, with the Inter-American Development Bank (BID), in the value of up to US$ 10,000,000.00 (ten million U.S. dollars).

Single paragraph. The advent resources of the external credit operation referred to in the caput are intended for the partial financing of the Competitiveness Strengthening Program of the Companies Located in Productive Arrangements of the State of São Paulo.

Art. 2º The credit operation referred to in the art. 1º should be carried out in the following conditions:

I-value of the loan: up to US$ 10,000,000.00 (ten million U.S. dollars);

II-value of the counterpart: US$ 10,000,000.00 (ten million U.S. dollars);

III-disbursement: in up to 3 (three) years;

IV-amortization: in 34 (thirty-four) semi-annual and consecutive installments, of values as much as possible equals, winning in the days 15 of the months of June and December, being the first approximately 3 (three) years and 6 (six) months counted from the contract signing date, and the last around 20 (twenty) years of that date of signing;

V-interest: required semester and due on the days June 15 and december each year, calculated on the periodic debtor balance of the loan, at an annual rate for each quarter comprised of the (a) rate of interest Libor quarterly to U.S. dollar, b) more (or less) a cost margin related to the loans that finance the loans modality Libor, c) plus the net value of any cost / profit generated by operations to mitigate the fluctuations of Libor and d) plus the margin for loans from the ordinary capital;

VI-credit commission: required semester on the same dates of the payment of interest and calculated based on the rate of up to 0.75% a.a. (seventy-five hundrths per cent a year) on the undisbursed balance of the loan, coming into force 60 (sixty) days after the signing of the contract, it is stated in the General Standards of the Loan Agreement, Art. 3.02. It is to be pointed out that, in accordance with Clause 2.05 of the Special Provisions of the minuta of the Loan Agreement, the Mutuary, at first, will pay Commission of Credit of 0.25% a.a. (twenty five hundrths per cent per cent per annum), and this percentage may be modified semi-annually by the Bank without which, under no circumstances, it may exceed the target percentage of 0.75% a.a. (seventy-five hunduths per cent per year);

VII-resources for inspection and supervision general: during the disbursement period, no funding resources will be set aside for the fulfilment of general inspection and supervision expenses, unless the Bank establishes otherwise during such period, being that in no case, to meet the said expenditures in a given semester, may be earmarked for resources greater than 1% (one per cent) of the financing, divided by the number of semesters understood in the original disbursement term.

Paragraph single. Up to the date of the first disbursement of the loan, the borrower will be able to exercise option to change the interest rate based on Libor by an adjustable interest rate?, as per the BID's catch-up cost for qualified loans.

Art. 3º It is the authorized Union to grant guarantee to the State of São Paulo in the credit operation external referred to in this Resolution.

Single paragraph. The authorisation provided in the caput is conditional on the State of São Paulo, in advance of the signing of the contractual instruments, to satisfy the following demands:

I-comply with all the preconditions to the realization of the first disbursement, conditions those appearing in Section 4.01 of the General Standards and Section 3.02 of the negotiated minuta of the Loan Agreement (sheets 639/666), waiting for the Ministry of Finance, to avoid the unnecessary payment of commissions of commitment, to check compliance with these conditionalities, including upon prior manifestation of the BID;

II-include the Program which will be partially financed by the loan in the State's Multiannual Plan for the period 2008/2011; and

III-formalize the respective contract of contragarantia.

Art. 4º The authorization granted by this Resolution is to be exercised within the maximum period of 540 (five hundred and forty) days, counted from its publication.

Art. 5º This Resolution goes into effect on the date of its publication.

Federal Senate, on March 6, 2008.

Senator Garibaldi Alves Filho

President of the Federal Senate