Member Article

This Law regulates the process of public indebtedness in order to assure that the financial necessities of the Government and its payment obligations are satisfied at a lower cost, assuring the capacity of payment of the country. The Public Debt is conceived as the faculty of the State or its institutions to obtain financial resources or not, with reimbursable character, from foreign or domestic creditors. Powers of the State, Municipalities, Councils and governments of the Atlantic Autonomous Regions, as well as institutions subordinated to the Presidency of the Republic (except the Central Bank governed by its Statutory Law) are subject to this Law. The Law designates the Ministry of Treasury and Public Credit as the organism in charge of directing the formulation of a Public Debt National Strategy and to annually formulate a Policy of Public Indebtedness that will be part of the Annual General Budget Law of the Republic. This Ministry is also authorized to issue debt to comply with definitive judicial sentences that have not been included in the Republic’s General Budget. The decentralized governmental entities, enterprises of the State, banks and financial institutions of the State and Municipalities will be able to contract short term debts under the responsibility of their maximum authorities and the contracts will have to fulfil all the corresponding legal requirements. The other institutions of the public sector will be able to contract short term debts only in order to finance expenses whose payment are foreseen in the General Budget Law of the corresponding year in which they are contracted. All the institutions subject to the Law that require a medium or long term Public Credit, will have to ask for authorization to the Ministry of Treasury and Public Credit who will have to verify that the terms and conditions of the new indebtedness are compatible with the National Strategy of Debt and the Policy of Public Indebtedness. The decentralized governmental entities, banks and financial institutions of the State, enterprises of the State and Municipalities are authorized to contract them directly and to grant guarantee or pledges on assets, national or municipal revenue; the other institutions will have to make it through the Ministry of Treasury and Public Credit. The Ministry of Treasury and Public Credit and the decentralized governmental entities that may be liable with their own patrimony whenever its Statutory Law allows them, can issue avals, guarantees endorsement, personal surety or other obligations that constitute contingent liabilities. The State will be able to issue avals, guarantees endorsement, personal surety or other obligations that constitute contingent liabilities in favour of public sector institutions. The State will be also able to issue endorsement, guarantees in favour of natural or artificial persons of the private sector, through credits or obligations that fortify the economic and social development of the country complying with the legal requirements that this Law establishes.