PUBLIC FINANCE MANAGEMENT: SUBSIDIARY LEGISLATION

PUBLIC FINANCE MANAGEMENT: SUBSIDIARY LEGISLATION

PUBLIC FINANCE MANAGEMENT (DEBT AND AID MANAGEMENT) REGULATIONS

ARRANGEMENT OF REGULATIONS

    REGULATION

    1.    Citation

    2.    Preparation of the debt management strategy

    3.    Preparation of the annual borrowing plan

    4.    Subsidiary loans

    5.    Duty to account for subsidiary loans

    6.    Repayment of subsidiary loans

    7.    Issuance of guarantee

    8.    Submission of reports

    9.    Treatment of accounts payable

    10.    Accounting for foreign gains and losses

    11.    Donations and grants

G.N. 55/2023

PUBLIC FINANCE MANAGEMENT (DEBT AND AID MANAGEMENT) REGULATIONS

under s. 115

1.    Citation

    These Regulations may be cited as the Public Finance Management (Debt and Aid Management) Regulations.

2.    Preparation of the debt management strategy

    (1) The Secretary to the Treasury shall, in consultation with relevant stakeholders, facilitate all activities for the preparation of the debt management strategy.

    (2) The Secretary to the Treasury may—

    (a)    organize key stakeholder consultations to inform the debt management strategy;

    (b)    carry out detailed public debt analysis and identify critical success factors and challenges;

    (c)    assess past public debt performance and identify key strategies for sustainable public debt management; and

    (d)    assess and identify priority areas which may justify debt financing.

    (3) The Secretary to the Treasury shall, at the beginning of every financial year, include the activities provided for in subregulation (2) in the annual work plan.

3.    Preparation of the annual borrowing plan

    (1) The Secretary to the Treasury shall—

    (a)    analyze the annual revenue and expenditure projections to identify funding gaps;

    (b)    identify the most cost-effective and efficient external resources to bridge the funding gap; and

    (c)    prepare and submit the annual borrowing plan to the Minister, by end February, in each financial year.

    (2) The Secretary to the Treasury shall, at the beginning of every’ financial year, include the activities in subregulation (1) in the annual work plan.

4.    Subsidiary loans

    Where the Minister decides to on-lend, the Secretary to the Treasury shall—

    (a)    carry out a due diligence of the intended recipient of the subsidiary loan by—

        (i)    assessing the feasibility, viability and public interest of the proposed project for which the subsidiary loan is required;

        (ii)    assessing the capacity of the recipient to properly apply the funds, account for them and repay the loan to the Government;

        (iii)    assessing the terms of the principal loan and synchronizing the subsidiary loan accordingly; and

        (iv)    identifying and proposing critical strategies to be implemented to ensure that risks and challenges associated with both the principal and subsidiary loans are mitigated;

    (b)    negotiate the terms and conditions of the subsidiary loan agreements; and

    (c)    prepare a term sheet setting out the on-lending details which shall, together with the signed subsidiary loan agreement, be recorded in the debt recording and management system.

5.    Duty to account for subsidiary loans

    (1) The Secretary to the Treasury shall account for amounts which are on-lent under a subsidiary loan agreement.

    (2) A recipient of a subsidiary loan shall—

    (a)    keep records of all receipts and payments under a subsidiary loan agreement; and

    (b)    submit to the Accountant General reports on all receipts and payments under the subsidiary loan.

6.    Repayment of subsidiary loans

    (1) The Secretary to the Treasury shall, when a payment under a subsidiary loan is due, prepare a payment notice and serve it on a recipient of a subsidiary loan.

    (2) A copy of the notice of repayment under subregulation (1) shall be submitted to the Accountant General for record purposes.

    (3) A payment made by a recipient of a subsidiary loan shall be recorded in the debt recording and management system.

    (4) The Secretary to the Treasury shall, as soon as reasonably possible, notify the Accountant General of receipt of any payment from a recipient of a subsidiary loan.

7.    Issuance of guarantee

    (1) Where a person, body corporate, organization or statutory body seeks to obtain a loan guaranteed by Government, the person, body corporate, organization or statutory body shall apply for a loan guarantee.

    (2) The application under subregulation (1) shall be accompanied by—

    (a)    a board resolution approving the intention to seek a loan guaranteed by Government;

    (b)    a detailed project proposal replete with its objectives and justification for the involvement of the Government;

    (c)    term sheet setting out the terms and conditions of the loan, including the proposed repayment schedule and liquidation model;

    (d)    audited financial statements for the immediate past five financial years; and

    (e)    letters from at least two immediate previous creditors of the applicant stating the performance of the applicant from the date of borrowing to the debt of full repayment.

    (3) The Secretary to the Treasury shall, upon receipt of an application for a loan guarantee, assess—

    (a)    if the proposed project, or…