FONDO NACIONAL DE FINANCIAMIENTO FORESTAL

As previously mentioned, FONAFIFO is administered by a Board of Directors, which is constituted by five members (two representatives from the private sector and three from the public sector); their appointment is for a two-year period.

FONAFIFO’s operation is carried out by an Executing Unit, which is constituted by an Executive Director and five Operating Departments: Environmental Services Department, Credit Department, Administrative Department, Legal Department and the Resource Management Department.

Currently, FONAFIFO performs its functions and operations through a trust facility. Under this mechanism, the Trustor — FONAFIFO — conveys the ownership of its assets and rights to the Trustee, who should aim them to achieve a licit and predetermined purpose, as it is set forth in the incorporation papers, for the benefit of a third party known as the beneficiary, who in this case shall be the small and medium forest producers.

Trust Fund

At present, FONAFIFO, through the Banco Nacional de Costa Rica (BNCR, acronym in Spanish), manages the following Trusts:

Trust Fund 340-BANCO NACIONAL

This Trust was created with all the assets, liabilities and net-worth derived from the final settlement of Trust # 178 between the cited bank and the Trust Fund resulting from the agreement between the Government of Costa Rica and the United States Agency for International Development (USAID), pursuant to loan “AID - 515- T- 032”, signed on September 15, 1979 and ratified by Costa Rica's Legislative Assembly through Law # 6544, dated March 6, 1981.

According to the Trust Agreement, "the purpose of this Trust is to grant loans to the region’s small and medium producers, based on the mutual agreement of the parties stated during the execution of the Trust, according to the national priorities and the requirements set forth by the special credit committee (now, the Board of Directors), and pursuant to the guidelines provided in the Credit Regulations."

Trust Fund 550 - BANCO NACIONAL Forestry Fund

This Trust Fund was rooted on the derogated Forest Law No. 7174, in its Articles 21, 22 and 24, which indicated that the Trust’s resources are derived from 30% out of the 80% of the forestry tax revenues and from 30% from the legacies and donations accepted by the Forestry Fund; and an equal percentage on the revenues resulting from the issuance of forestry bonds already approved or that might be issued in the future and at the disposal of the Forestry General Executive Division’s Trust. The immediate purpose of this Trust is to grant credits to profit and non-profit legally constituted organizations, wherein, at least, 70% of the members are small and medium producers who are eligible under the conditions established by Credit Regulations.

Trust Fund 551- FONAFIFO- BANCO NACIONAL

This Trust was created through Regulation # 32 of the Law No. 7216 of the Ordinary and Extraordinary National Budget for fiscal year 1991, thereby authorizing the Ministerio de Recursos Naturales, Energía y Minas (Ministry of Environment and Energy) to create the Fondo Nacional de Financiamiento Forestal.

In addition, Trust Fund 551-Banco Nacional includes an addendum to the contract, which is legally based on the following agreements and documents:

• The Technical and Financial Cooperation Agreement entered into by the Government of Finland, through its International Cooperation Agency (FINNIDA) and the Government of Costa Rica, through the Ministry of Natural Resources, Energy and Mines (MINAE, acronym in Spanish).

The immediate purpose of this Trust is to constitute a forestry financing fund to provide credit to individuals and/or legally constituted profit and non-profit corporations, whose capital stock is mainly national and that comply with the conditions stated by the Trust’s Credit Regulations.

Trust 544- FONAFIFO-BANCO NACIONAL

This Trust is based on Article 49 of the prevailing Forest Law # 7575. The Trust administers the resources derived from 40% of the forestry tax and the resources for the Environmental Services Payment, as well as other resources received by FONAFIFO, in accordance with Article 47 of the abovementioned Forest Law.

The resources management of this FONAFIFO Trust is made according to the following objectives:

• Financing of forest and reforestation processes, agroforestry systems, the recovery of deforested areas and technological changes for the exploitation and industrialization of forest resources to benefit the small and medium producers through credit or other mechanisms to improve forest management, intervened or not.

• Fundraising for the Environmental Services Payment derived from forests, forest plantations and other activities required for the strengthening of the development of the natural resources sector. The funds thereby obtained will be registered in a sub-account called “Environmental Services”, as well as all related activities.

• Grant endorsements for financial transactions that complement the resources required for the execution of those programs the Fondo Nacional de Financiamiento Forestal shall execute.

• Others that may be agreed upon by the Trustee and Trustor.

The Trust Funds operated by FONAFIFO are incorporated to the Fund’s Organizational Structuree

FONAFIFO

ORGANIZATIONAL STRUCTURE