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(1) Subject to this Act, the Minister may issue a guarantee on behalf of Government in respect of the obligation of a local government authority, public corporation or other entity if, considering the debt management objectives and the debt management strategy of the Government, the Minister is satisfied that

(a) it is in the public interest to issue the guarantee; and

(b) the beneficiary of the guarantee has the ability to

(i) repay the underlying loan; and

(ii) fulfill all payment and other obligations under the underlying loan and under the guarantee and related agreements.

(2) The Public Debt Management Office shall, before the issuance of a government guarantee under subsection (1), assess the local government authority, public corporation or other entity to ascertain the fiscal risk of that local government authority, public corporation or other entity to the Government in respect of that guarantee.

(3) The result of the risk assessment and the method used in the assessment shall be submitted to the Minister in written form.

(4) A government guarantee is subject to prior approval by Parliament.

(5) Unless otherwise determined by Parliament, a beneficiary of a government guarantee shall

(a) pay a guarantee fee determined by the Minister, in consultation with the Director responsible for the Public Debt Management Office, to cover the credit risk of Government upon the signing of the guarantee; and

(b) reimburse or pay in a manner directed by the Minister, the

(i) moneys paid by Government to honour the guarantee where the beneficiary defaults and the Government is required to honor an obligation under the guarantee;

(ii) expenses incurred by Government in relation to the guarantee; and

(iii) interest on all moneys paid by Government to honour the guarantee.

(6) The Minister shall pay into the Consolidated Fund guarantee fees received under paragraphs (a) and (b) of subsection (5).

(7) A government guarantee shall be supported by appropriate legal documentation executed by the beneficiary of the guarantee indemnifying Government for any amount paid by Government under the guarantee.

(8) Where a beneficiary of a government guarantee neglects or fails to honour the obligations of that beneficiary under the loan agreement to the creditor or make good an indemnity to Government, the Minister shall

(a) proceed to enforce the rights of Government under the indemnity, and

(b) pursue any action necessary to recover from the beneficiary, moneys owed to Government under the guarantee agreement and indemnity together with interest at the prevailing market rate.

(9) The moneys recovered by Government under subsection (8) shall be paid into the Consolidated Fund.

(10) A letter of intent, letter of comfort or similar letter, or an approval by Government of a borrowing to be undertaken by another entity shall not constitute a government guarantee or any other form of legal undertaking of Government.

(11) Any amount due to be paid by Government under a guarantee issued under this Act shall be charged on and paid out of the Consolidated Fund without further appropriation.