Decree 444 of March 21, 2020 – Fund for the Mitigation of Emergencies (Fondo de Mitigación de Emergencias)

Given the national state of sanitary emergency declared by Colombia’s President, Colombia’s National Government, acting through the Ministry of Finance and Public Credit (“MFPC”), issued Decree 444 of 2020 (“Decree 444”) on March 21, 2020. Decree 444 created the Fund for the Mitigation of Emergencies (Fondo de Mitigación de Emergencias; “FOME”, as per its acronym in Spanish). FOME was created as a fund managed by the MFPC’s Directorship of Public Credit (Dirección de Crédito Público y del Tesoro Nacional). Amid the actual sanitary emergency global context, FOME’s key objectives are (i) to tend to lack of resources in the public health administration, (ii) to address the adverse effects caused on productive activities, and (iii) to support the national economy in creating suitable conditions for the preservation of economic growth and employment levels.

FOME will be funded with resources derived from: (i) loans granted by the Savings and Stabilization Fund (Fondo de Ahorro y Estabilización) (such loans may consist of a maximum amount corresponding to 80% of the available resources of such fund); (ii) loans granted by the Territorial Entities National Pension Fund (Fondo Nacional de Pensiones de las Entidades Territoriales); (iii) resources previously designated from Colombia’s National General Budget; (iv) financial returns obtained from the administration of its resources; and (v) any other resources that may be allocated to the FOME by the National Government.

FOME’s resources may be used, generally, to resolve the sanitary crisis or to impede the aggravation of its effects in the national territory and, specifically:

• To provide funds to public entities included in Colombia’s National General Budget, if required.
• To pay the expenses caused by the performance of any agreement executed to fulfill FOME’s objectives. Any contract executed for the use of FOME’s resources will be governed by private law.
• To perform operations aimed to temporarily provide liquidity to the financial sector.
• To provide direct financing to private, public or semi-public companies that carry out activities of national interest.
• To provide liquidity to the Nation, only if the state of emergency affects the ordinary sources of liquidity.

Finally, Decree 444 of 2020 authorized the National Government to use resources available in the FOME to invest in equity or debt instruments issued by companies that (i) provide services of national interest and that (ii) have been seriously affected by the declared state of sanitary emergency, regardless if they are private, public or semi-public companies. The MFPC will evaluate and perform such investments taking into consideration the specific social and economic needs caused by the national sanitary emergency situation, in spite of their expected financial results.

Please do not hesitate to contact us, should you have any additional doubt in respect of the contents and scope of Decree 444 of 2020.