Creation of FOME to Meet the Needs of Resources 

Emergency Mitigation Fund (FOME, per its acronym in Spanish) is a fund without legal status of the Ministry of Finance and Public Credit and will aim, within the framework of Decree 417 of 2020, to meet the needs of resources for health care, the adverse effects generated on the productive activity and the need for the economy to continue providing conditions that maintain employment and growth.


The resources of FOME will come from the following sources: 1) the resources of the Savings and Stabilization Fund, 2) the resources of the Territorial Pension Fund, 3) the resources allocated in the General Budget of the Nation, 4) the financial returns generated by the administration of the resources, 5) the others determined by the National Government.
Likewise, FOME resources will be used for the following cases:


  1. •  Address the additional needs of resources generated by the entities that are part of the General Budget of the Nation.
  2. •  Pay the costs generated by the execution of the instruments and/or contracts entered into for the fulfillment of the object of FOME.
  3. •  Carry out operations of transitory liquidity support to the financial sector through the temporary transfer of term deposit securities, among others.
  4. •  Invest in capital or debt instruments issued by private, public or mixed companies which perform activities of national interest. In this case, they also include shares with special conditions for participation, dividends and/or purchases, among others.
  5. •  Provide financing to private, public or mixed enterprises that carry out activities of national interest.
  6. •  Provide liquidity to the Nation in case the effects of the emergency extend to ordinary sources of liquidity.

In relation to the liquidity support operations mentioned in point 2, they refer to the deposits made by the General Directorate of Public Credit and National Treasury, with FOME resources, to the first and second floor state banks. These deposits shall be made in Colombian legal currency and the term shall be up to 12 months. This support will only be provided to meet the social and economic needs of the business sector.


Regarding point 3 concerning with transitional liquidity support operations for the financial sector, in order to avert the crisis or prevent the extension of the effects of the emergency under Decree 417 of 2020, securities representing commercial, housing, consumer and/or financial leasing portfolios issued by a credit institution shall be admitted as eligible collateral.


Finally, it should be noted that the Ministry of Finance and Public Credit has the power to provide the financing referred to in points 4 and 5 above. In addition, the Ministry may also grant interest rate subsidies, guarantees, among others.


 



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