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Amendment to Line of Credit, RPPL 8-24 2011

PALAU

RPPL NO. 8-24
(Intro. As House Bill No. 8-109-8, HD1, SD2, CD1)

AN ACT

To amend Section 504(s) of Title 40 of the Palau National Code, as amended by RPPL No. 7-53 and RPPL No. 8-9, the Line of Credit; and for other related purposes.

THE PEOPLE OF PALAU REPRESENTED IN THE OLBIIL ERA KELULAU DO ENACT AS FOLLOWS:

Section 1. Amendments. Section 504(s) of Title 40 of the Palau National Code, as amended by RPPL No. 7-53 and RPPL No. 8-9, is hereby amended as follows:

A(s) Line of Credit. In addition to the authority granted above, and not in lieu thereof, the President is hereby authorized to negotiate for, execute all documents relating to, and obtain a revolving line of credit for no more than three (3) years with a Lender in the maximum amount of $3,000,000.00, at a reasonable interest rate, on the following conditions:

(1) The President is authorized to seek a line of credit from any Lender able to advance the funds on the terms and conditions set forth herein in the maximum amount of $3,000,000 for a term not more than three (3) years, and may seek the line of credit from the National Development Bank of Palau.

(2) Funds drawn down from such a revolving line of credit shall be used solely as a source of cash to supplement cash flow for a given fiscal year and in particular shall be drawn for a timely disbursement of the following expenditures only:

(A) State block grants;

(B) The National Scholarship Fund;

(C) The purchase of goods or services authorized under specific grants(s), the provisions of which require reimbursement of such expenditures from the grantor to the Republic of Palau; and/or

(D) The payment of all current and past due lawful debts owed to local vendors that are subject to gross revenues tax under Chapter 12 of 40 PNC.

(3) To the extent funds drawn down from the revolving line of credit are expended pursuant to subsection (s)(2)(c) above, they shall be repaid to the Lender for the specific purpose of paying down the balance of the revolving line of credit, within 30 daysof the date that the reimbursement is received from or on behalf of the grantor, by the Republic of Palau for each reimbursable expenditure made. All repayments are authorized and appropriated for the sole purpose of paying off any amount owed on the revolving line of credit, and the source of such repayments shall be the grant reimbursements received.

(4) For the payments of all draw downs from such a line of credit, including interest and related costs, the following shall apply:

(A) Where the terms of the loan agreement state that the draw down from the line of credit is to be repaid before the end of the same fiscal year as the signing of the loan agreement then the loan shall be paid back in full by the end of the fiscal year so that the amount owed on the line of credit is $0 as of the close of business on September 30 of the fiscal year of the signing of the loan agreement.

(B) Where the terms of the loan agreement state that the draw down from the line of credit is to be repaid beyond the end of the fiscal year in which it is signed then all payments of the loan shall be Acurrent@ so that there is no overdue balance to the Lender as of the close of business on September 30 of each year.

(C) In all cases where the terms of the loan agreement state that the draw down from the line of credit is to be repaid beyond the end of the fiscal year in which it is signed the loan must be completely paid back within three (3) fiscal years of the signing of the loan agreement so that the amount owed on the line of credit is $0 as of the close of business on September 30 of the third fiscal year after which the loan agreement is signed.

(5) Payments to the Lender, which are not reimbursable under the terms of grants, including principal, interest and related costs of obtaining or extending the line of credit, are hereby authorized and appropriated and shall be paid by local revenues.

(6) For the purpose of effective use of a line of credit authorized under this Section and to assure timely repayment of the funds drawn from such a revolving line of credit, the Minister of Finance shall report to the Olbiil Era Kelulau for every draw down on the line of credit.(7) For all funds received by the national government from a draw down on the Line of Credit the following shall apply:

(a) The funds received are hereby appropriated pursuant to the amount specified in the annual fiscal year appropriation enacted by the Olbiil Era Kelulau for the sole purpose of making up for any shortfall in the cash flow in a fiscal year in relation to an expenditure specified in subsection 504(s)(2).

(b) A draw down on the Line of Credit shall not cause an increase in the overall budget for the fiscal year that the draw down on the Line of Credit was entered into.@

Section 2. Effective Date. This Act will take effect upon its approval by the President or upon its becoming law without such approval, except as otherwise provided by law.

PASSED: February 04, 2011

Approved this 10th day of February , 2011.

/s/
His Excellency Johnson Toribiong
President, Republic of Palau