Why Article 364 Of The Constitution Is Regulated And Other Provisions On Debt

Original Language Title: Por la cual se reglamenta el artículo 364 de la Constitución y se dictan otras disposiciones en materia de endeudamiento

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now for only USD$20 per month, or Get a Day Pass for only USD$4.99.
LAW 358
1997 (January 30)
Official Gazette No. 42973 of February 4, 1997
Whereby Article 364 of the Constitution is regulated and other provisions on debt | || Effective Notes Summary

ARTICLE 1o. In accordance with Article 364 of the Constitution, the indebtedness of local authorities can not exceed their ability to pay.
For the purposes of this Act, the term ability to pay the minimum flow that allows dutifully operational savings to service debt every year, leaving a surplus to finance investments. Effective Notes

Article 2.
. It is presumed to exist when ability to pay interest on the debt at the time of holding a new credit operation, do not exceed forty percent (40%) of operational savings.
The territorial entity to record levels less than or equal to the limit stated in this article, not borrowing authorizations required other than those provided in existing laws indebtedness.
PARÁGRAFO. The operational savings will be the result of subtracting the current revenues, operating expenses and transfers paid by local authorities. Considering the current income tax, non-tax, royalties and monetary compensation actually received, domestic transfers, holdings in the nation's income, balance resources and financial returns. For these purposes, wages, fees, benefits and social security contributions to be considered as operating costs but budgeted capital expenditures as they are.
For purposes of this article means interest on debt interest paid during the term plus caused during this, including the new loan.
The public credit operations covered by this Act shall be used only to finance investment expenditure. Excepted from the above short-term loans, debt refinancing existing or acquired for compensation of personnel reduction processes plant.

For the purposes of this paragraph means investment which is defined by that in the Organic Statute of the budget. Effective Notes

ARTICLE 3. For the calculation of current income, they are deducted, assets, investments and returns of local authorities, to support the current securitization processes.
These processes must be approved by the Ministry of Finance and Public Credit who apply as appropriate, the provisions relating to the issuance of public debt of local authorities.

ARTICLE 4. Effective Notes

Legislation Previous

The 5th ITEM. Effective Notes

Legislation Previous

ARTICLE 6o. No territorial entity may, without authorization from the Ministry of Finance and Public Credit, hiring new public credit operations when interest / relationship operational savings exceed 60% or the balance ratio of debt / current revenue exceeds 80%. For this purpose, contingent liabilities from operations of public credit is calculated as a percentage of its value, in accordance with the procedures established in the laws and regulations in force. Editor's Notes

ARTICLE 7. The operational savings and current income of this Act will be made based on the budget executions supported in public accounting of the previous year, with a corresponding to the inflation target set by the Bank of the Republic to the effect adjustment I presented. Effective Notes

Article 8. Without prejudice to the provisions of the special rules, the National Government will establish the rules for determining the payment capacity of decentralized entities of local authorities. To this end, the Government will consider, among other criteria, the characteristics of each type of entity, its object's own activities and the overall composition of your income and expenses.
The implementation of the rules established by the Government and the adoption of decisions and necessary corrections will be competition of the boards of the decentralized entities and other relevant bodies in local authorities.

Article 9. Performance plans are fiscal adjustment programs, financial and administrative designed to restore economic and financial strength of the entity. And they must ensure the maintenance of ability to pay and improving debt indicators of the respective local authorities.
These performance plans should include measures to rationalize spending and strengthening own income.
The local authorities must send quarterly corresponding to the evolution of performance plans the Ministry of Finance and Public Credit Directorate General of Taxation Support (DAF) who assess compliance of these plans information. Entities who violate this measure shall be subject to appropriate sanctions.
Public corporations and the comptrollers of the territorial authorities shall monitor compliance with performance plans. The Comptroller General of the Republic may coordinate and control the exercise of this function with the comptroller of the territorial order.
PARÁGRAFO. Performance plans remain in effect until the territorial entity records a level of interest / less than or equal to 40% operational savings.

Article 10. Failure of performance plans entail the suspension of all new borrowing by the local authority.
In this event, when a new administration required to hold public credit operations, you must obtain authorization from the Ministry of Finance and Public Credit. To this end, the local authority may request the renegotiation of the performance agreement, in any case committing to implementation.
The Banking Superintendency may impose sanctions on those financial institutions that grant loans to local authorities without observing the provisions of this Article.

ARTICLE 11. The local authorities may only pledge the revenues or income to be allocated necessarily certain services, activities or sectors identified by law, when the credit is guaranteed by pledging intended solely to finance investment for providing the same services, activities or sectors that income be allocated or corresponding revenue. The pledge shall not exceed the amounts allocated to each sector investment during the term of the loan.

ARTICLE 12. To support the achievement of the objectives of this Act, and in accordance with the spirit and needs of fiscal decentralization, the Government will establish a credit registration system of local authorities, as well as the guarantees issued by such entities. For purposes of the administration of the registration system, including obtaining and consolidating information, the Government may establish responsibilities head of financial institutions, local authorities or other state agencies.
public entities in the exercise of their duties, request information from local authorities on the status of their debt, must adjust these requirements to the methodology contained in this law.

ARTICLE 14. The holding of public credit operations in violation of the borrowing limits set out in this Act and the failure to supply information enshrined in the ninth items twelfth and thirteenth constitute a disciplinary offense and will result in the application of the sanctions provided for in the regulations. Effective Notes

ARTICLE 15. The National Government will establish as a transition period two years for those entities that the effect of this Act exceed the interest relations / operational savings of 60% and balance of the debt / current revenue of 80%.
During the first year after the entry into force of this Act, the net debt of these entities may not be increased above 60% of the variation of the consumer price index (CPI) projected by the Bank of the Republic for the respective term.
For the second year, its net debt may not increase more than the equivalent of 40% of the variation of the same CPI. If there are to overcome these growths entities must request authorization to national government debt.

ARTICLE 16. The National Government at the time of submitting draft budget law and debt law must demonstrate their ability to pay before the honorable Congress. The Government will demonstrate the above capacity through analysis and projections, among others, fiscal accounts of the government and the balance relations and debt service / GDP for both internal and external indebtedness, as well as the balance and service external debt / exports. Effective Notes

ARTICLE 17. The authorizations referred to in this Act shall not exonerate the local authorities of compliance with the requirements of current regulations for holding internal and external operations of public credit.

Article 18. This Law governs from the date of its publication and repeals provisions that are contrary.
The President of the Senate of the Republic,
The Secretary General of the Senate of the Republic,
The President of the Chamber of Representatives,
The Secretary General of the Chamber of Representatives, DIEGO VIVAS

Published and executed Given in Bogota, DC, on January 30, 1997

Ernesto Samper Pizano The Interior Minister Horacio Serpa Uribe

Finance Minister and Public Credit, José Antonio Ocampo Gaviria

Related Laws