Commonwealth Consolidated Acts

EXPORT FINANCE AND INSURANCE CORPORATION ACT 1991 - SECT 66A

Purpose of section

  (1)   The purpose of this section is to provide for the Commonwealth to assume the risk associated with DIFF loans. A DIFF loan is a loan with the following characteristics:

  (a)   the loan was made under this Act, the Australian Trade and Investment Commission Act 1985 or the Export Finance and Insurance Corporation Act 1974 before the commencement of this section; and

  (b)   the borrower's liability in relation to the loan has not been fully discharged before the commencement of this section; and

  (c)   either:

  (i)   the loan funds included money made available by the Commonwealth as part of an overseas aid project (as defined in subsection   7(2)); or

  (ii)   the loan was made in conjunction with a grant of aid by the Commonwealth, or a Commonwealth instrumentality, as part of such an overseas aid project.

Note:   The abbreviation "DIFF" stands for "Development Import Finance Facility".

Commonwealth assumption of risk on DIFF loans

  (2)   If, after the commencement of this section, there is a default in payment of an amount due under a DIFF loan:

  (a)   the Commonwealth must pay to EFIC an amount equal to the default amount; and

  (b)   the Commonwealth must indemnify EFIC for:

  (i)   any other loss (including damages) suffered by EFIC because of the default; and

  (ii)   any costs incurred by EFIC in attempting to recover the default amount; and

  (c)   if EFIC recovers the whole or part of the default amount or a loss or cost referred to in paragraph   (b), EFIC must pay to the Commonwealth an amount equal to the amount recovered.

Note:   The obligation in paragraph   (b) applies whether or not the Commonwealth's liability has been replaced as mentioned in subsection   (4).

Commonwealth may instead direct EFIC to borrow money

  (3)   The Minister may, on behalf of the Commonwealth, direct EFIC to seek approval under section   59 to borrow an amount equal to an amount payable by the Commonwealth under subsection   (2).

Commonwealth liability if it directs EFIC to borrow money

  (4)   If:

  (a)   the Minister gives EFIC a direction under subsection   (3) to borrow an amount; and

  (b)   the Finance Minister approves the borrowing under section   59;

the Commonwealth's liability under subsection   (2) is replaced by a liability to pay to EFIC the amount needed to discharge the borrowing by EFIC and to pay all costs (including interest) incurred by EFIC in connection with the borrowing.

EFIC to make payment to Commonwealth

  (5)   EFIC must pay $40,000,000 from its reserves to the Commonwealth.

EFIC may also have to pay Commonwealth a proportion of DIFF loan risk premiums

  (6)   The Finance Minister may direct EFIC to pay to the Commonwealth a specified amount representing part of the risk premiums paid in relation to the DIFF loans. The amount must not exceed what is necessary to give the Commonwealth an appropriate proportion of the risk premiums.

Commonwealth to pay EFIC a fee for administering DIFF loans

  (7)   The Commonwealth is liable to pay to EFIC an administration fee in respect of EFIC's costs in administering the DIFF loans after the commencement of this section. The amount of the administration fee, and how and when it is to be paid, are to be as directed by the Finance Minister.

Commonwealth and EFIC may set off amounts owed

  (8)   Amounts that the Commonwealth and EFIC owe to each other under this section may be set off.

Directions under this section

  (9)   A direction under this section is to be in writing.