Paraguay—Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding

Asunción, July 16, 2004

Mr. Rodrigo de Rato
Managing Director
International Monetary Fund
Washington, D.C.

Dear Mr. de Rato:

1. The attached Supplement to the Memorandum of Economic and Financial Policies describes the economic program and objectives of the Government of Paraguay for the remainder of 2004. Except as modified by the Supplement, we remain fully committed to achieving the objectives of the program outlined in the original Memorandum of Economic and Financial Policies, dated December 5, 2003.

2. A key goal of the program is to set the stage for medium-term fiscal consolidation. To this end, Congress approved in June 2004 the Administrative Reorganization and Fiscal Adjustment Law, a performance criterion for end-May 2004 under the Stand-By Arrangement. We are committed to implementing necessary measures to compensate for elements of the law weakened by the Congress. On this basis, we request a waiver for the approval of the law, which was approved beyond the end-May performance criterion deadline, and without all of the components originally contemplated.

3. Nine of the eleven quantitative performance criteria under the Stand-By Arrangement were met for end-March 2004. Three applicable structural performance criteria, related to application of international accounting standards and annual external audits of the central bank, the full application of the public procurement law, and fuel price adjustment, were observed.

4. The continuous performance criterion for no new external arrears was not observed, due to new arrears accumulated by cement company INC, but they have since been cleared. New procedures to avoid arrears set up earlier in the year were effective in eliminating new arrears of the central government, and these procedure will be extended to other public entities to avoid future problems there. The ceiling on the central government wage bill was also missed by a small margin, but there were savings in other areas of current expenditure. On this basis, we request waivers for the missed continuous performance criterion on no new external arrears and for the missed wage bill ceiling.

5. We request that the third review be delayed and be based on end-August targets, rather than end-June, with the fourth and fifth reviews combined and evaluated based on end-December targets, and that access under the arrangement be rephased accordingly. We have agreed on remaining targets for August 2004 and December 2004. All December 2004 targets are performance criteria except for the targets on the central government overall balance, which is an indicative target; the performance criterion will be set at the time of the third review. We request that the performance criterion on the approval of the Public Banking Reform Law be modified from end July to end-October because of legislative delays. In contrast, we request that the structural benchmark on the approval of the new Customs Code be end-July 2004. We are making good progress on the audits of public enterprises (ANDE, ESSAP, and COPACO). However, for some public enterprises and the Social Security Institute (IPS), the audits will take longer than originally envisaged. We therefore request a modification of the end-September performance criteria on the audits of Petropar, INC, Conatel, ANNP, Dinac, and the Social Security Institute to postpone the completion of the audits to end-December.

We hope to maintain a close policy dialogue with the Fund and stand ready to take additional measures, as necessary, to achieve the objectives of the program.

Sincerely yours,

Supplement to the Memorandum of Economic and Financial Policies

A. Introduction and Recent Developments

1. Progress has been made in implementing the economic program that has been supported by a Stand-By Arrangement from the IMF since December 2003 (Tables 1 and 2). This supplementary memorandum of economic and financial policies (SMEFP) describes recent developments and outlines plans for the remainder of 2004. Except as modified in this memorandum, the objectives, policies, targets, and commitments of the economic program remain as described in the original MEFP dated December 5, 2003.

2. A late season drought in some regions has tempered the growth outlook for 2004. GDP rose by an estimated 2½ percent in 2003, as a strong agricultural harvest—particularly in soy—compensated for weak domestic demand during the first half of the year. For this year, the nonagricultural economy is expected to accelerate its growth from 0 percent to near 3 percent, but the drought will leave agricultural output flat. Revenue from agricultural exports will remain strong, however, due to high commodity prices.

3. Inflation has dropped sharply and the guaraní has strengthened. Strong export earnings, a weaker dollar internationally, and a reversal of capital outflows has produced a rise in the guaraní against the dollar of 4 percent since end-December 2003. The Central Bank has intervened actively to moderate the appreciation, contributing to a rise in international reserves of US$90 million to US$1,073 million as of June 17. Banking system deposits have also continued to rise strongly, up over 7 percent so far this year. Annual CPI inflation has dropped from 9.3 percent in December to 5.5 percent in June. Seasonal factors will produce a slight recovery of inflation to 4-5 percent—still well below our earlier objective of 8 percent. With inflation under control and GDP growth subdued, the balance of risks to the macroeconomic outlook has shifted toward the downside.

B. Fiscal Policy

4. Fiscal policy is in line with the program. The end-March performance criteria on the central government and consolidated public sector balances were met. Expenditures in the first quarter were broadly as anticipated, though there was a small deviation from the program ceiling on the wage bill. Transfer payments were slightly below program due to savings from the early implementation of the public sector Pension Reform Law. Tax collections have been above projections and are expected to improve further as excise tax arrears from the state-owned oil company, Petropar, are cleared. Once the Administrative Reorganization and Fiscal Adjustment Law is implemented, tax revenues should increase further. Together, the improvements in tax efficiency (with some help from the early effects of the Fiscal Adjustment Law) will produce a substantial cushion for this year's target for the fiscal outturn. Part of this cushion will be used to boost capital spending in key areas (particularly in development projects financed by multilateral organizations). In order to maintain tight control on public spending, the Ministry of Finance is consolidating all supplementary budget requests into one bill, with strict limits on its overall size. The government will keep the Fund informed on the content of the supplementary budget request, and the increase in capital spending will be closely monitored to assure that the fiscal objectives are maintained.

5. The Administrative Reorganization and Fiscal Adjustment Law has been approved by Congress. The June 25, 2004 approval was slightly delayed beyond the May 31, 2004 performance criterion date. The version approved differs in several respects from the version originally sent to Congress: (i) The corporate income tax is lowered to 20 percent in the first year, rather than to 10 percent; (ii) The vehicles tax (patente fiscal) is limited to two years and only levied on luxury vehicles; (iii) The financial transactions tax is eliminated after three years; (iv) The VAT is not extended to agriculture and education; (v) A new agricultural income tax was introduced on medium and large farms; (vi) The profits tax is not extended to cooperatives and narrowed for educational institutions; (vii) Certain severe penalties for cross-controls on tax payments were eased; and (viii) The earmarking of 3.5 percent of tax revenues to the tax authorities was eliminated. Together, these measures would reduce the eventual maximum yield of the law from over 2½ percent of GDP to less than 1½ percent of GDP. The government never intended to apply the law at maximum rates, so the actual expected yield has fallen only slightly, from 1.5 percent of GDP to 1.3 percent of GDP. Due to the phase-in of the new personal income tax and the staged elimination of tax loopholes, the short-term yield of the law is also reduced significantly, from 1½ percent of GDP to ½ percent of GDP. However, the law retains many of its main features, including a substantial broadening of the VAT and corporate income taxes, introduction of a new personal income tax, and the extension of a more effective tax regime to large farmers. Final passage of the law was a prior action for the review.

6. To compensate for weakened features of the Fiscal Adjustment Law, the government will implement a series of compensatory measures to further boost revenue and strengthen tax administration. On tax administration, the government will reprogram budget allocations and use support from an IDB technical assistance loan to increase funding for the tax authorities in 2004 (prior action for the review) and submit to Congress a sharply higher budget request for 2005 to compensate for the loss of the 3.5 percent earmarking. The Undersecretariat for Taxation has presented a strategic plan which will, among other objectives, increase computerization, restructure the organization, and boost training for staff (prior action for the review). Additional revenues will be raised from an increase in excise taxes on tobacco and cigarettes to their legal maximum. Further gains in revenue from tax administration will be realized by the full application of a cross-checking system for large taxpayers and an acceleration of legal enforcement actions. The government is prepared to use its legal authority to begin the reduction in certain taxes in 2006 (rather than 2005) while starting the reduction in exemptions immediately. Together, these revenue measures should boost annual revenue in 2005-06 by over ½ percent of GDP. A temporary tax on windfall soybean export revenue was introduced earlier in 2004 to compensate for delays in the law, and will be lifted with implementation of the law. Finally, the government will prepare legislation to address the remaining weaknesses in the Fiscal Adjustment Law for submission to Congress in 2005.

7. The outturn in public enterprises has been better than expected. The appreciation of the guaraní has played an important role in this improvement, as several firms have a large dollar cost component in their activities. A high-level control committee set up by the government to monitor public enterprise operations has helped instill greater financial discipline. New management in the cement firm, INC, has also contributed. Diesel fuel prices were raised by 8 percent in April, ahead of the July date for a price adjustment agreed in the program. This increase will fully compensate for cost increases in Petropar at current world oil prices, but it may fall short of what is needed to allow the firm to eliminate payments arrears to suppliers and to the tax authorities. Moreover, continued high world oil prices may require further measures later in the year.

8. Performance criteria for the fiscal balance will be set for end-August consistent with the original fiscal objective as follows: central government balance G/.430 billion and consolidated government balance G/. 500 billion. The wage bill ceiling will be modified slightly from its original path to accommodate a wage increase for security services already granted by Congress and permit a small increase in the wage bill for teachers. The end-August wage bill ceiling would be G/. 1791 billion. For end-December, the consolidated public sector balance PC is G/.130 billion and the wage bill ceiling PC is G/. 2980 billion. The indicative fiscal targets of the program remain unchanged for end-June, end-September, and end-December, with performance criteria for end-December for the central government balance to be set at the time of the third review.

9. The government has worked to reduce payments arrears ahead of the schedule contemplated in the program. The PCs on overall external arrears, official bilateral arrears, and the short-term contracting of debt were all met, as was the one on domestic floating debt. By end-March arrears to Paris Club creditors have been cleared, with the exception of a few cases where technical problems existed. However, the continuous performance criterion on no new accumulation of arrears was not met due to new arrears by the public enterprises INC and Petropar. The remaining stock of arrears of INC and Petropar have been cleared and those of the government to bilateral creditors will be cleared shortly.¹ Clearance of new bilateral arrears by the cement company INC is a prior action for the review. Petropar arrears to suppliers have also been reduced substantially. The government is committed to accelerating discussions to resolve disputed claims. In particular, a law will be submitted to Congress (prior actions for the review) to begin the process of regularizing disputed arrears on a loan to the public electricity company, ANDE. Principal and regular interest arrears to Banque Worms have been cleared and the authorities have initiated negotiations with the French government on penalty interest due. The government is committed to regularizing penalty interest arrears as a prior action for the review. Domestic arrears have also been reduced, though there have been difficulties in fully identifying outstanding arrears and in completing the restructuring of domestic bonds agreed in November 2003. All bonds presented for restructuring by June 15 will be exchanged and interest arrears on all exchanged bonds will be cleared as a prior action for the review. The government has established an escrow account in the Central Bank where funds are deposited for bond not yet presented for exchange.

10. The debt and arrears indicative targets for end-December will be converted into performance criteria, while end-August targets will be set consistent with the original indicative targets, except for the PC on official bilateral arrears, which will be set at zero for the end-August date.

C. Monetary and Exchange Rate Policy

11. Performance criteria for end-March have been met with wide margins. The growth rate of currency issue was somewhat higher than programmed, but by end-May, it had dropped below programmed levels. Sharply higher international reserves were absorbed by a combination of increased Central Bank notes (letras) and by excess reserves deposited by the banking system in the Central Bank. Interest rates on letras have fallen, but remain high in real terms.

12. New performance criteria will be set for end-August and end-December. The reserves target will be adjusted upwards to lock-in the gains in reserves already achieved and further net inflows expected for the remainder of the year, while permitting modest Central Bank sales of foreign exchange should there be a sharp turnaround in capital flows. The new net domestic assets (NDA) performance criteria will also be set allowing for growth in currency issue slightly higher than in the original program to take into account the increased demand for money. The new performance criteria are specified in the following table:

For end-December, an adjustor will be incorporated into the target to adjust reserves upwards (and NDA downwards) if additional multilateral program disbursements are received. In the event of a major negative external shock, the targets could be reconsidered at the time of the third review.

D. Structural Policies

13. Progress on the structural reform agenda has been good. In the area of public sector reforms, the new Customs Code was approved by Congress on June 30, 2004. The Public Procurement Law is now being applied at all levels of government, improving the efficiency and transparency of the contracting process, but additional training is needed for users of the system. The Central Bank is on track to complete its external audit by end-June, and will report its results in both Paraguay and international accounting standards. The BCP is also developing a restructuring plan (with technical assistance from the Fund) and the new plan will be approved by end-July, with implementation to begin immediately thereafter. Reform efforts continue in tax administration, with technical assistance from the Fund and IDB, and financing from the IDB. Key public sector institutions are undertaking external audits. While most should be completed by end-September, a few may require until end-2004.

14. Financial sector reforms are advancing. In the coming months, banks are required to submit their adjustment plans to meet the tighter provisioning requirements of the new Resolutions 8 approved last November. The deposit guarantee fund established in the Bank Resolution Law will also begin to operate before the end of the year. Comprehensive banking sector legislation is also being prepared for submission to Congress shortly. The Public Banking Law to reform the National Development Bank (BNF) and other public lending institutions is currently in Congress, and approval is expected by end-October. The supervisory body for cooperatives, INCOOP, has begun to develop mechanisms for financial supervision and control of cooperatives, slated to begin in 2005.

Technical Memorandum of Understanding

This memorandum presents definitions of the quantitative targets specified in the Memorandum of Economic and Financial Policies, and updates the original Technical Memorandum of Understanding approved on December 15, 2003². Remaining targets are set for August 2004 and December 2004. All December 2004 targets are performance criteria except for the targets on the central government overall balance, which will be set at the time of the third review.

A. Monetary Targets

1. Performance Criterion on Net International Reserves of the Central Bank of Paraguay (BCP)

For monitoring purposes, net international reserves (NIR) of the BCP are defined as the U.S. dollar value of gross foreign assets in foreign currencies minus gross liabilities in foreign currencies. Data will be provided by the BCP to the Fund with a lag of not more than five days past the test date.

Gross foreign assets are defined consistent with SDDS and include all foreign currency-denominated claims of BCP, including monetary gold, holdings of SDRs, the reserve position in the IMF, and foreign currency in the form of cash, deposits abroad, and Paraguay's net cash balance within the Latin America Trade Clearing System (ALADI). Excluded from gross foreign assets are participations in international financial institutions (including Corporación Andina de Fomento (CAF), IDB, IBRD, Asociación Internacional de Fomento, and Banco de Desarrollo del Caribe), the holdings of nonconvertible currencies, and holdings of precious metals other than gold. Gross foreign liabilities are all foreign currency denominated BCP liabilities of contracted maturity up to and including one year plus the use of Fund credit. Non-U.S. dollar denominated foreign assets and liabilities will be converted into U.S. dollars at the market exchange rates of the respective currencies as of September 30, 2003.

NIR targets will be adjusted upward (downward) for any increase (decrease) in reserve requirement deposits (encaje) associated with foreign currency deposits in commercial banks, compared to the following levels: August 31, 2004: US$269 million; and December 31, 2004: US$269 million.

For end-December, NIR targets will also be adjusted upward by the corresponding amount up to no more than US$40 million for any program disbursements.

2. Performance Criterion on Net Domestic Assets

Net domestic assets (NDA) of the BCP are defined as the difference between currency issue (provided by the BCP) and the net international reserves (NIR) of the BCP, both measured on the basis of end-of-period data. Data will be provided to the Fund by the BCP with a lag of not more than five days past the test date.

For the purpose of NDA calculation, NIR will be converted into guaraníes at an accounting exchange rate of G 6,280/US$. The ceiling on NDA will be adjusted upward (downward) by the equivalent in guaraníes of the downward (upward) adjustments made to the floor on the NIR of the BCP as described above.

B. Fiscal Targets

3. Performance Criterion on the Overall Balance of the Central Administration (Financing Side)

For the purposes of the program, the overall balance of the central administration (CA) is measured as the sum of the CA's: (i) net external financing; (ii) the change in net credit to the central government from the banking system, excluding government bonds; (iii) the change in the stock of government bonds; and (iv) net financing from all other sources to the government, including by the private sector, asset sales; (v) the change in domestic floating debt (deuda flotante) as defined below; and(vi) a registry float. Items denominated in foreign currency will be converted into guaraníes at the average exchange rate for each month.

Net external financing is defined as central government's foreign borrowing, including bonds issued abroad, less amortization payments (including debt prepayments) of foreign debt. Net credit from the financial system is defined as the change in net credit to government, as reported in the monetary accounts of the BCP, excluding government bonds. The change in the stock of government bonds will be defined net of valuation changes as reported by the Ministry of Finance. Net change in arrears is defined as net increase in arrears between the beginning and the end of the period. Domestic floating debt is defined as the difference between accrued expenditure (gastos obligados) and payments transferred (gastos transferidos). The registry float is defined as all net payments executed by the Treasury of the CA and payments units but not yet cashed or registered in the accounts of the financial system. External arrears are as reported by the Ministry of Finance's SIGADE system. Data will be provided to the Fund by the Ministry of Finance with a lag of not more than three weeks past the test date.

4. Performance Criterion on the Wage Bill of the Central Administration

For the purposes of the program, the central administration includes the executive, judicial and legislative branches. The wage bill is defined as the accrued remuneration to all central administrations employees (servicios personales), including overtime and effective social contributions (budget line items 100-199), as reported in by the Ministry of Finance's monthly Situación Financiera de la Administración Central. Data will be provided to the Fund by the Ministry of Finance with a lag of not more than three weeks past the test date.

5. Performance Criterion on the Overall Balance of the Public Sector (Financing Side)

For the purposes of the program, the consolidated public sector comprises: (i) the CA as defined above; (ii) the social security institutes, the provincial governments, autonomous decentralized agencies, and the nonfinancial public enterprises;³ and (iii) the Central Bank of Paraguay (BCP).

The public sector's overall balance is measured as the sum of: (i) net external financing; (ii) the change in net domestic credit to public sector from the financial system, excluding government bonds; (iii) the change in the stock of government bonds; (iv) financing of the quasi-fiscal balance of the BCP; and (v) other net financing of the nonfinancial public sector by the private sector, including net increase in the stock of floating debt, external arrears, and asset sales. Items denominated in foreign currency will be converted into guaraníes at the average exchange rate for each month.

Net external financing of the public sector is defined as all external disbursements less amortizations paid of the entities of the public sector as defined above, including any debt of the financial public sector guaranteed by the Republic of Paraguay or the BCP. The change in net credit is defined as the net flow of gross domestic credit (excluding treasury bonds) plus use of deposits by the nonfinancial public sector (excluding the BCP) in the domestic financial system. The change in the stock of government bonds is defined as the net change in public bonded debt held by the financial system (excluding the BCP) and the private sector. It is measured net of valuation changes. Domestic floating debt of the public sector is defined as the difference between accrued expenditure (gastos obligados) and payments transferred (gastos transferidos) with the private sector. It will be measured as the central government floating debt net of debts with the rest of the public sector as defined herein. External debt arrears are defined as principal and interest not paid by the due date of debt guaranteed by the Republic of Paraguay or the BCP as reported by the Ministry of Finance's SIGADE plus the net change in arrears to foreign suppliers of the consolidated public sector. The financing of the quasi-fiscal balance of the BCP is measured as the negative of all administrative and financial revenues minus costs (including costs of monetary policy and interest on BCP external debt), and net capital transfers to other financial institutions, as reported by the BCP. Data will be provided to the Fund by the Ministry of Finance with a lag of not more than three weeks past the test date.

C. Public Debt and Arrears Targets

6. Performance Criterion on Contracting or Guaranteeing of New Nonconcessional External Debt by the Nonfinancial Public Sector

The nonfinancial public sector (NFPS) is defined as the consolidated public sector (as defined above) excluding the Central Bank of Paraguay. The limit applies to the contracting or guaranteeing by the NFPS of net new nonconcessional external debt with an original maturity of more than one year, including commitments contracted or guaranteed for which value has not been received.⁴ For program purposes, a debt is concessional if it includes a grant element of at least 35 percent on the basis of currency-specific discount rates based on the OECD commercial interest reference rates (CIRR).⁵ Excluded from the limits are credits extended by the IMF and balance of payments support loans extended by multilateral and bilateral creditors. Data will be provided by the Ministry of Finance to the Fund with a lag of not more than 30 days from the test date.

The concessionality of loans in currency baskets will be assessed on the basis of U.S. dollar interest rate tables. For loans with interest rates based on the internal policy of the creditors, the relevant interest rate to define concessionality will be the interest rate for each creditor at the time of the commitment. Loans or portions of loans extended in the context of a debt rescheduling or a debt reduction operation will be excluded from the ceiling.

7. Performance Criterion on Short-Term External Debt of the Nonfinancial Public Sector

As a continuous performance criterion, the NFPS will neither contract nor guarantee any short-term external debt during the program period. Short-term debt is defined as debt with a contractual maturity of one year or less. Excluded are normal import-related credits, reserve liabilities of the BCP, forward contracts, swaps, and other futures market contracts. The public enterprises will provide the necessary information to the Ministry of Finance, which will provide the data to the Fund, with a lag of not more than 30 days from the test date.

8. Performance Criteria on External Payments Arrears of the Public Sector

The NFPS, excluding PETROPAR, will accumulate no new external arrears during the program period. It will maintain zero arrears with the World Bank and IDB throughout the program period. In addition, existing arrears will be reduced according to the following performance criterion:

The stock of external arrears of the NFPS, will be calculated based on the schedule of external payments obligations reported by SIGADE. The arrears of PETROPAR will be included in the stock targets shown in the table. Data on external arrears will be reconciled with the relevant creditors, and any necessary adjustments will be incorporated in these targets as they occur. For the purposes of this performance criterion, an arrear will be defined as a payment which has not been made within 30 days after falling due. In addition, the public enterprises will report to the Ministry of Finance and the BCP arrears on any external debt that is not recorded under SIGADE. The same 30-day grace period will be applied to all external payments of public enterprises, except where explicit agreements exist with creditors on an extended grace period (as the case for some of PETROPAR's external providers). The Ministry of Finance will provide the final data on the stock of public sector external arrears to the Fund, with a lag of not more than 30 days from the test date.

In addition, the government is engaged in good faith efforts to resolve overdue claims in dispute, and will attempt to negotiate and resolve these as soon as possible. For the purposes of the program, debt service due by ANDE to Germany's KFW (known as loan numbers 9736 and 9737), yet to be legalized by Congress, will be considered claims in dispute. In the meantime, the government will make every effort to speed up their approval in Congress and transact the payment. Arrears to the South African agency D. B. Pty limited for almost $22,000 will not be included in the above target unless the appropriate creditor is located. The government will continue searching for the creditor.

9. Performance Criterion on Central Government Floating Debt

During the program period, floating debt will be reduced according to the schedule below. The Ministry of Finance will provide the data to the Fund, with a lag of not more than three weeks from the test date.

Floating debt is defined as the difference between 'gasto obligado' and 'gasto transferido' of the central administration. Gasto obligado is as defined in Article 22 of Law No. 1535 (Financial Administration Law). The commitment to make expenditure (gasto obligado), for the purposes of the program, will originate at the point at which the relevant unit of the line ministry or public entity of the central administration receives the claim or bill, provided the expenditure in question has a budget appropiation or has been authorized by the Treasury. Disputed bills (where there may be questions of legality or amounts) will not be included until the dispute has been resolved.

Gasto transferido is defined as the full payment of the commitment (where the payment process is outlined in Article 37 of Law No. 1535). For the purposes of the program, the payment is assumed to be made at the point that the Treasury of the Ministry of Finance makes the order to transfer the funds to the payee's bank account.

For the case of domestic bonds, any amount placed in a special escrow account available for use by the BCP (or the payment agent) for transferring to bondholders will be considered a 'gasto transferido.' If owners of old bonds eligible for an exchange according to the terms of Law No. 2336 on public debt restructuring have not voluntarily submitted the bonds for exchange, the amount of principal and interest payments due but not paid under the new terms is considered a 'gasto obligado.' The amount of principal and interest payments due but not paid under the old terms is not considered a 'gasto obligado.' The difference between what is due to bondholders implied by the new terms, and the amount in the escrow account will be considered part of floating debt.

The Treasury Department of the Ministry of Finance will provide the data to the Fund, including an explanation of the amounts and status of any disputed floating debt, as well as the amounts in the escrow account for domestic bonded debt. This information will be provided no more than 3 weeks after the test date.

D. Reporting

Monitoring the program requires accurate and timely data. All information on performance criteria, indicative targets, and balance of payments support loans will be reported to Fund staff within the timeframes prescribed above. Debt stocks and associated flows broken down by both creditor and debtor types and maturity will be provided on a quarterly basis.

The Ministry of Finance will be responsible for gathering data on a monthly basis from all the institutions that comprise the consolidated public sector, including the incorporated enterprises (Sociedades Anónimas) COPACO and ESSAP. It will compile this information according to the standard format of the Ministry of Finance's monthly financial situation report (Situación Financiera). The data will be supplied to the Fund and published on the Ministry of Finance's external website within 30 days of each test date. In addition, specific public sector institutions (IPS, ANDE, COPACO, ESSAP, Petropar, INC and Conatel, ANNP, Dinac) will be required to provide to the Fund and publish on the internet monthly cash flow statements and the full external audit reports of their accounts beginning no later than June 30, 2004.