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

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358 OF 1997

(January 30)

Official Journal No. 42,973, February 4, 1997

By which article 364 of the Constitution is regulated and other provisions on indebtedness are dictated

Vigency Notes Summary

THE CONGRESS OF COLOMBIA,

DECRETA:

ARTICLE 1o. In accordance with the provisions of Article 364 of the Political Constitution, the indebtedness of territorial entities may not exceed their ability to pay.

For the purposes of this Law, the minimum flow of operational savings that allows the debt service to be fulfilled in all the years, leaving a remnant to finance investments, is understood as a payment capacity.

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ARTICLE 2o. It is presumed that there is a capacity for payment when the interest of the debt at the time of a new credit operation does not exceed 40 percent (40%) of the operational savings.

The territorial entity that registers debt levels below or equal to the limit indicated in this article will not require debt authorizations other than those provided in the current laws.

PARAGRAFO. Operational savings will result from subtracting current revenue, operating expenses, and transfers paid by territorial entities. Current income is tax, non-tax, royalty and monetary compensation effectively received, national transfers, interest in the income of the nation, resources of the balance sheet and financial returns. For these purposes, salaries, fees, social benefits and social security contributions shall be considered as operating expenses even if they are budgeted as investment expenses.

For the purposes of this article, interest paid during the term plus those caused during the period, including those of the new credit, is understood by interest of the debt.

The public credit operations covered by this Law should only be used to finance investment expenses. This is the exception of the short-term loans, the refinancing of current debt, or those acquired for personnel compensation in plant reduction processes.

For the purposes of this paragraph, investment is defined as what is defined in the Organic Statute of the Budget.

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ARTICLE 3o. For the calculation of current income, the assets, investments and income of the territorial entities will be deducted, which will support the existing securitization processes.

These processes must be authorized by the Ministry of Finance and Public Credit, who will apply the provisions regarding the issuance of public debt securities of the territorial entities.

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ARTICLE 4o. 114 of Law 795 of 2003 >

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ARTICLE 5o. 114 of Act 795 of 2003 >

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ARTICLE 6o. No territorial entity may, without authorization from the Ministry of Finance and Public Credit, contract new public credit operations when its interest/operating savings ratio exceeds the 60% or its balance of the current debt/income exceeds 80%. For these purposes, the contingent obligations arising from public credit operations shall be computed by a percentage of their value, in accordance with the procedures laid down in the laws and regulations in force.

Editor Notes
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ARTICLE 7o. The calculation of the operational savings and current income of this Law shall be made on the basis of the budgetary executions supported in the public accounting for the year immediately The Bank of the Republic of the Republic of Korea (Banco de la República) has an adjustment corresponding to the inflation target set by the Bank of the Republic

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ARTICLE 8. Without prejudice to the provisions of the special rules, the National Government will establish the rules for determining the payment capacity of the decentralized entities of the territorial entities. For this purpose, the Government shall take into account, among other criteria, the characteristics of each type of entity, the activities of its object and the general composition of its revenue and expenditure.

The execution of the rules established by the Government and the adoption of the necessary decisions and corrective actions shall be the responsibility of the boards of the decentralized entities and of the other competent bodies in the entities territorial.

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ARTICLE 9o. The performance plans are fiscal, financial, and administrative adjustment programs aimed at restoring the entity's economic and financial strength. And they will have to guarantee the maintenance of the payment capacity and the improvement of the debt indicators of the respective territorial entities.

These performance plans should include measures to rationalize spending and strengthen own revenues.

The territorial entities will have to send quarterly the information corresponding to the evolution of the performance plans to the Ministry of Finance and Public Credit Directorate General of Fiscal Support (DAF) who will evaluate the performance of the such plans. Entities that fail to comply with this measure will be subject to the relevant sanctions.

The public corporations and the contralories of the territorial entities will have to monitor the performance plans. The Comptroller General of the Republic may coordinate and control the exercise of this function with the contralories of the territorial order.

PARAGRAFO. The performance plans remain in place until the territorial entity registers an operational interest/savings level of less than or equal to 40%.

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ARTICLE 10. Failure to comply with the performance plans will result in the suspension of all new indebtedness by the territorial entity.

In this event, when a new administration requires public credit operations, it must obtain authorization from the Ministry of Finance and Public Credit. For this purpose, the territorial entity may request the renegotiation of the performance agreement, in any case committing to the execution of the performance agreement.

The Banking Superintendency may impose sanctions on financial institutions that grant loans to territorial entities without observing the provisions of this article.

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ARTICLE 11. Territorial entities may only be able to pay for the income or income that is to be assigned to certain services, activities or sectors indicated by the law, when the credit that it is guaranteed by means of a pledge to finance investment for the provision of the same services, activities or sectors to which the corresponding income or income is to be allocated. The pignoration may not exceed the amounts allocated to each investment sector during the lifetime of the credit.

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ARTICLE 12. To support the achievement of the objectives of this Law, and in accordance with the spirit and needs of fiscal decentralization, the National Government will establish a registration system. the credit of the territorial entities, as well as the guarantees granted by those entities. For the purposes of the administration of the registration system, including obtaining and consolidating information, the National Government may establish responsibilities in the head of financial institutions, territorial or other entities. state bodies.

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ARTICLE 13. Public entities that, in the exercise of their functions, request information from the territorial entities on the state of their indebtedness, shall adjust these requirements to the methodology contained in this law.

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ARTICLE 14. The holding of public credit operations in violation of the debt limits set forth in this Law and the omission of the provision of information enshrined in articles ninth tenth second, and tenth third will constitute disciplinary failure and result in the application of the penalties provided for in the provisions in force.

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ARTICLE 15. The National Government will establish as a transitional period two years, for those entities that as the effect of this Law exceed the interest/operating savings of 60% and the balance of the 80% of current debt/income.

During the first year, as of the entry into force of this Law, the net debt of these entities will not be increased above 60% of the variation of the consumer price index (CPI) projected by the Bank of the Republic for the Effective.

For the second year, your net debt may not increase more than the equivalent of 40% of the variation of the same CPI. If they are to exceed these increases, the entities must apply for debt authorizations to the National Government.

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ARTICLE 16. The National Government at the time of filing the bills of budget and debt law must demonstrate its ability to pay before the honorable Congress of the Republic. The government will demonstrate the above capacity through the analysis and projections, among others, of the government's fiscal accounts and the balance and service of the debt/GDP for both domestic and external indebtedness, as well as the balance and service of the external/export debt.

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ARTICLE 17. The authorizations referred to in this Law do not exonerate the territorial entities of the fulfilment of the requirements laid down in the rules in force for the conclusion of operations of internal and external public credit.

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ARTICLE 18. This Law governs from the date of its publication and repeals any provisions that are contrary to it.

The President of the Honorable Senate of the Republic,

LUIS FERNANDO LONDONO CAPURRO.

The Secretary General of the Honorable Senate of the Republic,

PEDRO PUMAREJO VEGA.

The President of the Honorable House of Representatives,

GIOVANNI LAMBOGLIA MAZILLI.

The Secretary General of the Honorable House of Representatives,

DIEGO VIVAS TAFUR.

Publish and Execute

Dada en Santafe de Bogota, D.C., a 30 de enero de 1997

ERNESTO SAMPER PIZANO

The Minister of the Interior,

HORACIO SERPA URIBE

The Minister of Finance and Public Credit,

JOSE ANTONIO OCAMPO GAVIRIA

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