19. Government loan guarantees

Subject to the provisions of this Act, the Minister shall have the sole authority for the issuance and management of loan guarantees including the collection of loan guarantee fees on behalf of the Government in respect of obligations of a Provincial Council, local authority, State owned enterprise or any other entity:

The issuance of loan guarantees in respect of obligations of any other entity other than Provincial

Where the borrower is deemed to be in financial difficulty based on the credit risk assessment, the guarantee shall not be issued.

Prior to submitting the issuance of a loan guarantee to the Cabinet of Ministers for approval, the Office shall assess and price the credit risk to the Government from such guarantee and recommend the risk mitigation mechanism including guarantee fees.

The result of the risk assessment, the method used in the assessment and the proposed risk mitigation mechanism shall be submitted to the Cabinet of Ministers for its approval.

Each loan guarantee shall be supported by relevant legal documentation executed by the borrower which includes provisions that agree to among others to repay any amount paid under the guarantee if called with interest as may be prescribed and to fully disclose any information requested by the Office.

In the event that the borrower neglects or fails to make good on its obligations under the loan guarantee agreement, the Minister shall have the right to pursue any action necessary to recover from the borrower any money owed to the Government under such loan guarantee agreement.