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Guarantee of Loans Act

Published: 1977

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Guarantee of Loans (CAP. 196 1



Arrangement of Sections

1. Short title.
2. Interpretation.
3. Power of Minister to guarantee loans by Lending

4. Limit on amount of guarantee.
5. Restriction on borrowing powers of a person so far as

guarantee outstanding.
6. Powers exercisable by Minister in event or prospect of

default by a person.
7. Person to repay to Government sums paid under

8. Regulations.


(30th December, 197 7 .) 2811977.

1. This Act may be cited as the Guarantee of Loans short title.

2. In this Act- Interpretation.

"borrowing" includes the undertaking to discharge any
pecuniary obligation contracted by any person;


2 CAP. 196) Guarantee of Loans

"Lending Agency" means any International Financial
Organisation or any bank, insurance company or
other source of financing;

'6 Minister" means the minister responsible for finance.

Power of
Minister to

3. ( 1 ) Subject to this Act, the Government may in
guarantee loans such manner and on such terms and subject to such condi-
by Lending tions as may be agreed between it and a Lending Agency-

(a) guarantee the discharge by a person of his
obligations under any agreement which may be entered
into by that person with a Lending Agency in respect
of any borrowing by that person;

(b) undertake such other obligation as may be
agreed between the Government and a Lending Agency
in relation to or pursuant to any such agreement.

(2) A guarantee or undertaking given under this section
shall be given in writing in the name of the Government
and any guarantee or undertaking given under this section
may be signed on behalf of the Government by the Minister
or by any person authorised in writing by the Minister in
that behalf.

Limit on amount
of guarantee.

4. (1) Guarantees in respect of any borrowing by a
person under the provisions of section 3(1) shall not, in the
gggregate, exceed the sum of five mill& dollars.

(2) Where any sum is issued for fulfilling such a
guarantee the Minister shall, as soon as possible after the
end of each financial year beginning with that in which the
sum is issued and ending with that in which all liability in
respect of the principal sum and in respect of interest thereon
is finally discharged, lay before Parliament a statement
relating to such sum.

Restriction on 5 . So long as the Government is liable under any
powers of a guarantee or other undertaking given in exercise of the powers
person long as conferred by section 3(1) in respect of any borrowing by a
outstanding. person, that person shall not, without the consent of the

Minister, exercise any power to borrow possessed by him
except in the ordinary course of business and for a period
not exceeding twelve months.


Guarantee of Loans (CAP. 196 3

6. (1) Where in the opinion of the Minister there is
by reasonable cause to believe- Minister in event

or prospect of
(a) that a person is likely to fail or be unable to default by a

discharge any of his obligations under an agreement con- per"""
cluded by him with the Lending Agency in respect of
any borrowing: and

(6) that the Government is or may become liable
under an agreement or other undertaking given by it
in respect of such obligation,

the Minister may give or authorise any other person to give
such directions in writing to the person liable as may from
time to time be necessary or desirable to ensure that such
arrangements are made by that person as will enable him
to discharge his obligations under such agreement, or under
this Act, and that person shall comply with such directions.

(2) Where any sum becomes payable by the Govern-
ment pursuant to a guarantee or undertaking given in exer-
cise of the powers conferred by section 3, that sum shall be
charged on the Consolidated Fund and the Minister shall
direct payment to issue out of the Consolidated Fund.

7. Where any sum is paid out of the Consolidated P,"pvdpnzpn",~
Fund in respect of any liability incurred by the Government ,,,, paid under
under a guarantee or other undertaking given in exercise guarantee.
of the powers conferred by section 3(1) in respect of any bor-
rowing by a person, that person shall repay such sum
(together with interest thereon at such rate as the Minister
may prescribe) to the Consolidated Fund in such manner
and at such time as the Minister may direct.

8. The Minister may make regulations for the pur- Re~lat ions .
pose of giving effect to the provisions of this Act, and in
particular for prescribing anything by this Act required to
be prescribed.