The President may guarantee any individual, corporation, partnership, or other juridical entity doing business in the United States (excluding United States Government agencies other than the Federal Financing Bank) against political and credit risks of nonpayment arising out of their financing of credit sales of defense articles, defense services, and design and construction services to friendly countries and international organizations. Fees shall be charged for such guaranties.
The President may sell to any individual, corporation, partnership, or other juridical entity (excluding United States Government agencies other than the Federal Financing Bank) promissory notes issued by friendly countries and international organizations as evidence of their obligations to make repayments to the United States on account of credit sales financed under section 2763 of this title, and may guarantee payment thereof.
Funds obligated under this section before December 16, 1980, which constitute a single reserve for the payment of claims under guaranties issued under this section shall remain available for expenditure for the purposes of this section on and after that date. That single reserve may, on and after August 8, 1985, be referred to as the “Guaranty Reserve Fund”. Funds provided for necessary expenses to carry out the provisions of section 2763 of this title and of section 2311 of this title may be used to pay claims on the Guaranty Reserve Fund to the extent that funds in the Guaranty Reserve Fund are inadequate for that purpose. For purposes of any provision in this chapter or any other Act relating to a prohibition or limitation on the availability of funds under this chapter, whenever a guaranty is issued under this section, the principal amount of the loan so guaranteed shall be deemed to be funds made available for use under this chapter. Any guaranties issued hereunder shall be backed by the full faith and credit of the United States.
(Pub. L. 90–629, ch. 2, §24, Oct. 22, 1968, 82 Stat. 1324; Pub. L. 93–189, §25(4), Dec. 17, 1973, 87 Stat. 730; Pub. L. 93–559, §45(a)(3), (4), Dec. 30, 1974, 88 Stat. 1814; Pub. L. 96–533, title I, §§104(a), 105(b)(3), Dec. 16, 1980, 94 Stat. 3132, 3134; Pub. L. 99–83, title I, §106(b), (c), Aug. 8, 1985, 99 Stat. 196; Pub. L. 100–71, title I, July 11, 1987, 101 Stat. 409.)
This chapter, referred to in subsec. (c), was in the original “this Act”, meaning Pub. L. 90–629, Oct. 22, 1968, 82 Stat. 1321, which is classified principally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 2751 of this title and Tables.
1987—Subsec. (c). Pub. L. 100–71, which directed that the second par. be struck out and a new one-sentence par. be inserted, was executed to reflect the probable intent of Congress by substituting the new sentence for the third sentence which read as follows: “Funds authorized to be appropriated by section 2771(a) of this title to carry out this chapter which are allocated for credits at market rates of interest may be used to pay claims under such guarantees to the extent funds in the Guaranty Reserve Fund are inadequate for that purpose.”
1985—Subsec. (c). Pub. L. 99–83 inserted provisions authorizing the single reserve to be termed the “Guaranty Reserve Fund”, and substituted provisions relating to payment of claims under guarantees, for provisions relating to report to Congress respecting any payment of claims reducing the single reserve.
1980—Subsec. (a). Pub. L. 96–533, §105(b)(3), substituted “defense articles, defense services, and design and construction services” for “defense articles and defense services”.
Subsec. (c). Pub. L. 96–533, §104(a), substituted provisions making funds obligated before Dec. 16, 1980 available for expenditure after such date for payment of guaranteed claims, requiring the President to report to Congress the reduction of the single reserve below $750,000,000 with recommendation for an appropriations authorization of additional funds and deeming the principal amount of a guaranteed loan to be funds made available for use under this chapter for purposes of any limitation on availability of funds for prior provisions for obligation of available funds in an amount equal to 10 per centum of principal amount of contractual liability related to a guaranty under this section, making such funds a single reserve for payment of guaranteed claims, and providing for transfer of any funds deobligated during any current fiscal year to the general fund of the Treasury.
1974—Subsecs. (a), (b). Pub. L. 93–559, §45(a)(3), inserted “other than the Federal Financing Bank” in parenthetical text.
Subsec. (c). Pub. L. 93–559, §45(a)(4), substituted “10” for “25” in two places.
1973—Subsec. (c). Pub. L. 93–189 substituted “to carry out this chapter” for “pursuant to section 2771 of this title” and inserted “principal amount of” before “contractual liability” wherever appearing.
Amendment by Pub. L. 99–83 effective Oct. 1, 1985, see section 1301 of Pub. L. 99–83, set out as a note under section 2151–1 of this title.
Section 45(b) of Pub. L. 93–559 provided that: “The amendment made by paragraph (4) of subsection (a) [amending this section] shall take effect on July 1, 1974. Obligations initially charged against appropriations made available for purposes authorized by section 31(a) of the Foreign Military Sales Act [section 2771(a) of this title] after June 30, 1974, and prior to the enactment of this section [Dec. 30, 1974] in an amount equal to 25 per centum of the principal amount of contractual liability related to guaranties issued pursuant to section 24(a) of that Act [subsec. (a) of this section] shall be adjusted to reflect such amendment with proper credit to the appropriations made available in the fiscal year 1975 to carry out that Act [this chapter].”
Functions of President under this section delegated to Secretary of Defense, with Secretary of Defense required to consult with Secretary of State and Secretary of the Treasury in implementing delegated functions, by section 1(f) of Ex. Ord. No. 11958, Jan. 18, 1977, 42 F.R. 4311, as amended, set out as a note under section 2751 of this title.
Pub. L. 102–145, §118, as added by Pub. L. 102–266, §102, Apr. 1, 1992, 106 Stat. 93, provided that the authority and conditions provided under the heading “Foreign Military Sales Debt Reform” in H.R. 2621, One Hundred Second Congress, 1st session, as passed by the House of Representatives on June 19, 1991, shall be applicable to funds appropriated by Pub. L. 102–145 (and are hereby enacted) in lieu of the authority and conditions provided under the heading “Foreign Military Sales Debt Reform” in Pub. L. 101–513 [set out below]. Provisions under the heading “Foreign Military Sales Debt Reform” in H.R. 2621, as referred to above, provided that: “Subsection (b) under the heading ‘Foreign Military Sales Debt Reform’ in the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1988 [Pub. L. 100–202, §101(e) [title III, §301], set out below], is hereby repealed.”
Pub. L. 101–513, title III, Nov. 5, 1990, 104 Stat. 1999, provided that: “Funds made available by the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1988 [Pub. L. 100–202, §101(e) [title III], set out below], for obligation and expenditure after October 1, 1988, subject to a Presidential budget request, under the heading ‘Foreign Military Sales Debt Reform’, subsection (b) ‘Interest Rate Reduction’ shall be available, subject to the same conditions and provisos, only after October 1, 1991.” Similar provisions were contained in the following prior appropriation acts:
Pub. L. 101–167, title III, Nov. 21, 1989, 103 Stat. 1214.
Pub. L. 100–461, title III, Oct. 1, 1988, 102 Stat. 2268–18.
Pub. L. 100–202, §101(e) [title III], Dec. 22, 1987, 101 Stat. 1329–131, 1329–148, as amended by Pub. L. 101–167, title III, Nov. 21, 1989, 103 Stat. 1214; Pub. L. 102–145, §118, as added by Pub. L. 102–266, §102, Apr. 1, 1992, 106 Stat. 93, provided in part that:
“[(b) Repealed. Pub. L. 102–145, §118, as added by Pub. L. 102–266, §102, Apr. 1, 1992, 106 Stat. 93.]
“(2) In conjunction with any interest rate reduction pursuant to the authority provided in paragraph (b) of this heading, the President shall require the country to commit in writing that within two years of the effective date of the interest rate reduction it will be no more than ninety days in arrears on the repayment of principal and interest on all loans for which the interest rate is thus reduced and will remain no more than ninety days in arrears for the remaining life of all such loans. None of the funds provided pursuant to the Arms Export Control Act [22 U.S.C. 2751 et seq.] or chapter 2 of part II of the Foreign Assistance Act [22 U.S.C. 2311 et seq.] shall be made available to any country during any period in which it fails to comply with such commitment.