Export Finance and Insurance Corporation Act 1991
Determination Under Section 67(1)
EXPLANATORY STATEMENT
Subsection 67(1) of the Export Finance and Insurance Corporation Act 1991 (“the EFIC Act’) gives the responsible Minister (the Minister for Trade) the authority to determine in writing principles according to which the Commonwealth will pay to EFIC a subsidy in respect of contracts entered into, guarantees given, or loans made by EFIC in relation to eligible export transactions.
The Determination revokes all existing Ministerial determinations made under subsection 67(1) of the EFIC Act and provides for a new regime under which subsidy is to be paid by the Commonwealth to the Export Finance and Insurance Corporation (EFIC).
The Australian Government examined EFIC’s funding arrangements in 2006 and determined that the subsidy relating to the payment by the Commonwealth to EFIC in respect of Loan Arrangement and Management (LAM) Fees incurred by EFIC under the previous determination was no longer necessary or appropriate.
This Determination provides that the Commonwealth will compensate EFIC by way of a subsidy for any excess of interest paid over interest received on loans provided by EFIC and interest rate make-up amounts on indemnities and guarantees provided by EFIC in conformity with the minimum fixed interest rates prescribed by the OECD Arrangements on Officially Supported Export Credits (OECD Arrangement). In doing so, the Determination allows EFIC to be subsidised for complying with the Australian Government’s international obligations as a participant to the OECD Arrangement. The Determination reflects that part of the existing subsidy arrangement which the review did not recommend removing.
Consultation was undertaken with the Department of Foreign Affairs and Trade, the Treasury and the Department of Finance and Administration.
The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.