ACT No. XXII of 2017 AN ACT to provide for the governance aspects, high level policy objectives and institutional arrangement for prudent management of the Government's debt, cash position, and liquidity and reserve funds and to provide for matters connected therewith or ancillary thereto.

I assent.

(L.S.)

DOLORES CRISTINA

Acting President

19 th July, 2017

ACT No. XXII of 2017

AN ACT to provide for the governance aspects, high level policy

objectives and institutional arrangement for prudent management of

the Government's debt, cash position, and liquidity and reserve funds

and to provide for matters connected therewith or ancillary thereto.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same, as follows:-

Part I

Preliminary

(1) The short title of this Act is the Government

Borrowing and Management of Public Debt Act, 2017.

(2) This Act shall come into force on such date as the Minister

responsible for finance may by notice in the Gazette establish, and

different dates may be so established for different provisions or

different purposes of this Act.

In this Act, unless the context otherwise requires

Interpretation.

"Accountant General" means the Accountant General of the

Government of Malta;

"auction" means a public invitation for submission of sealed

bids or through electronic submissions for stock or securities issued

by the Government of Malta, in such manner as the Minister may

direct;

"buyback" means the purchase of the Government of Malta debt

security by the Government of Malta in the open market;

"Central Government Debt" refers to the debt of the Central

Government but excludes Extra Budgetary Units;

"Central Securities Depository" has the same meaning as is

assigned to it by article 2 of the Financial Markets Act;

"claims", in respect of Government securities and any debt

instruments, include both the principal repayment and the interest due

if any on the said securities and any debt instruments;

"Committee" means the Public Debt Management Advisory

Committee established by article 68;

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority Act; Cap. 330.

"Consolidated Fund" has the same meaning as is assigned to it

by article 102 of the Constitution of Malta;

"Constitution" means Constitution of Malta;

"conversions and switches" mean an exchange of one security

for another security at any time;

"credit line" means a commitment made in advance by a credit

institution to grant on demand to the Government of Malta up to a

prescribed amount and subject to agreed terms and conditions;

"debt instrument" means a non-negotiable government debt

instruments including Retail Savings Bonds of the Government of

Malta issued under this Act or any Act of Parliament for defining and

registering the indebtedness of the Government of Malta to lenders;

"debt security" means negotiable government debt security

including T-Bills, Stocks, Registered Stocks and other negotiable debt

securities issued under this Act or any Act of Parliament for defining

and registering the indebtedness of the Government of Malta to

lenders;

"deficit" means an excess of Government expenditure over

revenue;

"Directorate" means

the

Debt

Management

Directorate

established by article 64;

"exceptional circumstances" has the same meaning as in the

Fiscal Responsibility Act;

"Government" means the Government of Malta unless

otherwise specified;

"Government General Account" includes all the accounts held

in the name of Government of Malta but excludes departmental

accounts held with the Central Bank of Malta;

"holder", in relation to any debt security means any natural or

legal person in whose name or names the debt security is entered or

registered in the register. In relation to any debt instruments, holder

means any natural person in whose name or names the debt

instrument is entered or registered in the register;

"loan" means the raising of money: by the issue and sale of

"registered stock" or "stock" or other debt security with a maturity of

more than one year issued by the Government of Malta, by the issue

of debt instrument, and by entering into any bilateral agreement

between the Government of Malta and the Government of any other

country, multilateral institutions, or from any local banks, or with any

international or foreign organisation, fund or other institution;

"Malta" has the same meaning assigned to it by article 124 of

the Constitution of Malta;

"Minister" means the Minister responsible for finance;

"offering circular" means a circular to be issued by the Treasury

Department to announce the issuance of debt securities with maturity

above one year and to specify amongst others the sum of money to be

raised, the mode or modes of raising such debt securities; the coupon

interest payable on these securities; the date or dates when the interest

on the securities shall be payable; the settlement date; the date of

redemption of the debt security and the governing law;

"pre-financing" means the procedure in which the Government

of Malta floats a second stock in order to pay off the first stock at the

maturity date;

"prepayment" means paying an outstanding loan of the central

government prior to its maturity, including the repayment of a loan,

and to repurchase or exchange of securities of the Government of

Malta from the open market;

"public debt" has the same meaning as is assigned to it by article

106 of the Constitution of Malta;

"public entity" refers to any Government Foundation, Statutory

entity and other organisation in which the Government holds 51 per

cent in ownership or over which the Government has effective control

or where 51 per cent or over of its income comes from public monies

or from monies it receives by virtue of any law;

"publication" means that the Accountant General may make use

of any media available to disseminate the information to the market

including but not limited to the Treasury Department website, the

Gazette and the stock exchange;

"Register" means the Treasury Department's Register of holders

of stock, other government debt securities and debt instruments as

maintained in accordance with article 31;

"registered stock" or "stock" means Government of Malta stock

with maturity exceeding one year issued under the provisions of this

Act and whose nominal value is registered in the name of the owner

in the register;

"Registrar" means the Treasury Department or the Treasury

Department's designated Registrar;

"Resolution Committee" means the Committee established

within the Malta Financial Services Authority through the Malta

Financial Services Authority Act and which is responsible for the Cap. 330.

resolution of credit institutions and investment firms;

"sinking fund" means a sinking fund established in terms of

article 58;

"Treasury bill" means a short-term debt security with a maturity

of one year or less issued typically at a discount from face value.

Part II

Scope

The scope of the Act covers the governance aspects, high

level policy objectives and institutional arrangement for prudent

management of the Government's debt, cash position, and liquidity

and reserve funds.

Part III

Government Debt Management Operations

The Government may borrow money, both in Malta and

outside Malta in any currency and in such manner as provided by or

under

(a)

this Act; and

(b) any other Act of Parliament that expressly

authorises the borrowing of money for any purpose mentioned

in the Act and up to such amount or amounts as may be

authorised by the said Act.

The authority to borrow money for or on behalf of the

Government shall vest solely in the Minister by entering into loan

agreements, line of credit agreements, issuing securities or creating

any other debt instruments, either in local and any foreign currency.

For the purpose of raising funds the Minister is hereby

authorised to borrow on such terms and conditions as the said

Minister may approve.

The primary objectives of public debt management shall

be

(a)

to ensure that the financing needs of the

Government including its debt service payment obligations are

met in a timely manner;

(b) funds are raised in a prudent and cost effective

manner that seeks to achieve the lowest possible medium to

long-term borrowing costs consistent with an acceptable level

of risk; and

(c)

to support the development and functioning of the

domestic financial market.

The Minister may borrow funds both in Malta and outside

Malta pursuant to article 18, for the following purposes only

(a)

to finance the deficit;

(b) to maintain an adequate level of liquidity in the

General Government Bank Account in accordance with article

55;

(c)

to form sinking funds against loans of the Republic

of Malta in accordance with article 58 and to acquire securities

already issued and securities issued under this Act in

accordance with article 58;

(d) to finance lending operations by the Government

which will be subject to specific acts authorizing such lending

in accordance with article 53;

(e)

to raise a sum of money not exceeding 2% of the

maximum amount that can be borrowed for that year, to finance

on-lending operations of small amounts for the benefit of the

Maltese economy and society;

(f)

to fulfil the obligations generating from Government

guarantees called;

(g)

to refinance prepayments of central Government

debt;

(h)

to pre-finance future borrowing requirements;

(i)

to directly protect the economy of Malta;

(j)

to handle financial or natural or environmental

catastrophes or for any other national emergency as approved by

Parliament;

(k) to refinance outstanding loans which are due for

redemption during the relevant year;

(l)

to meet monetary liquidity requirements connected

with cash flows as part of cash management;

(m) to effect portfolio changes as and when required in

line with Government's debt management policies; and

(n) to finance any other expenditure as the Minister may

authorise from time to time.

(1) The Minister may, in pursuance of the Recovery and

Resolution Regulations made under the Malta Financial Services

Authority Act

(a)

further to a recommendation by the competent

authority in consultation with the Resolution Committee, raise a

sum of money by way of loan for the purpose of providing

precautionary recapitalisation measures in favour of credit

institutions in view of preserving financial stability; or

(b) further to a resolution action taken by the Resolution

Committee in consultation with the competent authority, raise a

sum of money by way of loan for the purpose of providing

public backstop measures; or

(c)

in close cooperation with the Resolution Committee,

raise a sum of money by way of loan for the purpose of

providing extraordinary public financial support through

financial stabilisation tools.

(2) For the purpose of sub-article (1), the Minister is hereby

authorised to borrow sums of money on such terms and subject to

such conditions as the said Minister may approve under the

provisions of this Act for such amount not exceeding any amount

which the House of Representatives may from time to time by

resolution authorise.

(1) The Minister may represent the Republic of Malta

when entering into the Loan Facility Agreement with the Single

Resolution Board in pursuance of Regulation (EU) No. 806/2014 of

the European Parliament and of the Council of 15 July 2014

establishing uniform rules and a uniform procedure for the resolution

of credit institutions and certain investment firms in the framework of

a Single Resolution Mechanism and a Single Resolution Fund and

amending Regulation (EU) No. 1093/2010.

(2) The Minister may, in terms of the Loan Facility Agreement

between the Republic of Malta and the Single Resolution Board

referred to in sub-article (1), raise a sum of money by way of loan for

the purpose of lending to the Single Resolution Board an unsecured

loan facility of up to sixty-six million euro (€66,000,000).

(3) For the purposes of sub-articles (1) and (2), the Minister

responsible for finance is hereby authorised to borrow sums of money

on such terms and subject to such conditions as the said Minister may

approve under the provisions of this Act for an amount which in total

does not exceed sixty-six million euro (€66,000,000).

To ensure sustainable levels of debt, the debt burden Limits on debt

during any year shall be subject to a limit as specified by the fiscal and borrowing.

rule in the Fiscal Responsibility Act.

The requirement in article 11 may not be met only as a Exceptions.

result of exceptional circumstances.

(1) The gross borrowing of the Government during any Limits on gross

year shall be subject to limits implied by article 11 and the Budget borrowing

pre-financing.

Measures Implementation Act relevant for any specific year.

(2) Subject to approval from the Minister and market

conditions, the gross borrowing during any year can exceed the limit

specified in the Budget Measures Implementation Act by not more

than ten percent for purposes of debt management operations aimed at

minimising the cost of borrowings, avoiding financing under market

uncertainty and to reduce the risk exposure of the debt portfolio.

(3) In the absence of the enactment of the Budget Measures

Implementation Act for a relevant fiscal year, the Government may

borrow in the interim to redeem any outstanding debt maturing and to

make interest payments and any other charges associated with such

debt.

(4) The maximum amount of outstanding debt held by Central

Government at any time, held separately in the form of Treasury

Bills, Bilateral Loans and debt instruments, is subject to a statutory

instrument that has to be laid before Parliament and approved by a

resolution of Parliament.

All money so raised though borrowings shall be paid into Monies raised

paid into the

the Consolidated Fund.

Consolidated

Fund.

(1) So long as any interest is payable under this Act in Payments

respect of any debt security and any debt instrument, the Minister related

debt to be

shall, on the date on which the interest on such debt securities and charged

public revenues.

other debt instruments falls due, appropriate out of the general

revenue and assets of the Government of Malta a sum sufficient to

meet all interest payable on that date and shall authorise the

Accountant General to pay such interest out of the sum so

appropriated.

(2) For any public debt contracted or issued, as specified under

article 14, all payments related to such debt in respect of interest,

sinking fund, redemption monies, and any other charges and expenses

incidental to the management of that debt shall be payable out of the

general revenue and assets of the Government and charged to the

Consolidated Fund and other public funds of the Government without

the need of any further appropriation other than this Act.

(1) In every financial year, the Minister shall prepare a

medium-term debt management strategy, which shall set forth the

Government's strategic priorities, that guides the Government's

borrowing policies and debt management operations, and seeks to

achieve the objectives established in article 7, by assessing the range

of cost and risks to the debt portfolio.

(2) The medium-term debt management strategy shall be

prepared annually with a minimum of a three year rolling basis for the

government's debt management together with the description of any

underlying assumptions. The strategy shall set out the Government's

debt management plans for the forthcoming budget year and the two

subsequent years.

(3) The medium-term debt management strategy shall be

recommended by the Committee and approved by the Minister before

being tabled to the House of Representatives.

(4) For every year, the medium-term debt management

strategy shall be approved by the Minister not later than two weeks

following the approval of the Government's medium term fiscal

policy strategy.

The medium-term debt management strategy should take

into account

(a)

the future borrowing needs of the Government; and

(b) the current conditions and medium-term outlook on

macroeconomic and market conditions; and

(c)

macroeconomic and other shocks to which the

economy is exposed; and

(d) any other factors which may be related to the market

development and the public debt management strategy.

(1) For every fiscal year, the Government shall prepare

an annual borrowing plan as approved by the Minister, which covers

the projected borrowing needs of the Government.

(2) The annual borrowing plan shall be based on the

determined medium-term debt management strategy, annual cash

flow forecast of the Government and market outlook.

(3) The annual borrowing plan shall be published and shall

include the total Government's gross long-term borrowing along with

an indicative quarterly calendar for domestic market issuance of

Government securities with maturities of more than one year.

(4) For every year, the first annual borrowing plan shall be

published by not later than the end of January of the relevant financial

year.

(5) For every year, an updated annual borrowing plan shall be

approved and published not later than two weeks of the approval of

the Government's medium-term debt management strategy for the

relevant financial year.

(6) The annual borrowing plan may be updated at least once a

year with the approval of the Minister.

The Government may, subject to the provisions of this Act Loan

and any other Act, borrow money by a loan or line of credit agreements.

agreement concluded with the government of any other country,

multilateral institutions and funds, or from any local banks, foreign

banks or international financial institutions.

The loan agreements entered between the Government and Loan

other foreign governments and multilateral institutions and funds agreements

other

must be in accordance with any existing international treaty of the governments

and multilateral

Government.

institutions.

The Minister, while approving the terms and conditions of Minister to seek

any loan agreement and line of credit, shall seek advice on the advice.

financial and legal implications to mitigate any future financial and

legal risk arising out of such obligation.

The implementation of entering into bilateral loan Delegation of

agreement may be delegated by the Minister to the Accountant authority.

General including the power to effect the loan, negotiate and

determine the terms and conditions of the said loan and to sign the

loan agreement on behalf of and on account of the Government.

(1) Except as expressly authorised by article 4 and any Issuance of debt

other Act, the Minister shall not, borrow any money through loans for securities

debt

any other purpose.

instruments.

(2) Whenever the Minister is authorised to issue debt

securities under this Act, such securities may be issued either on the

domestic or the international market as the said Minister may direct.

(3) Whenever the Minister is authorised to issue debt

instruments under this Act, such debt instruments shall be issued in

the domestic market as the said Minister may direct.

(1) The issuance of debt securities and debt instruments

shall be carried out by the Treasury Department, by any method

approved by the Minister, including an auction, private placement,

syndication, offer for sale by tender, offer for sale at fixed price or

any other method deemed appropriate.

(2) The Treasury Department may issue debt securities and

debt instruments either directly or through the appointment of one or

more financial institutions, as considered appropriate, to manage the

sale of the debt securities and debt instruments on behalf of the

Government.

(3) In pursuance of sub-article (2) to appoint one or more

financial institutions for placement of securities and, or market

making activities, the Treasury Department may enter into any

contract or agreement relating to such terms and conditions that it

may consider appropriate.

(1) With the exception of Treasury bills each issue of

debt securities under this Act, before such debt security is issued, on

obtaining approval from the Minister, the Treasury Department shall

specify the issuance amount and the relevant terms and conditions

and cause such offering circular to be published. The terms and

conditions of the offering circular shall apply in conjunction with the

General terms and conditions of the General Prospectus of the

Government Securities.

(2) There shall be General Prospectus for Treasury Bills and

their issuance shall be governed by the terms and conditions of the

said prospectus.

(3) The issuance of debt instruments shall be governed by the

terms and conditions of the relevant prospectus. Before such debt

instrument is issued, on obtaining approval from the Minister, the

Treasury Department shall cause the publication of the prospectus

including the amount on issue and the terms and conditions of the

offer.

(1) The sale of debt securities, with the exception of

Treasury bills, shall be effected on the basis of an indicative quarterly

issuance calendar approved by the Minister, which provides more

detailed information on the issuance and constitutes an integral part

of the annual borrowing plan established in article 18 which may be

revised in the course of the year.

(2) The Accountant General shall immediately after the

approval publish the indicative quarterly issuance calendar.

The Treasury Department shall have the power, on behalf Power of

of and on account of the Government, to accept or reject tenders Treasury

Department to

including non-competitive tenders related to local market issuances accept

tenders.

or offers that have been submitted including the determination of the

cut-off price in an auction.

The Treasury Department shall have the power, on behalf Possibility of

of and on account of the Government, to issue securities other than by issuance

security other

auction, based on the terms and conditions as specified in any other than by auction.

Act.

(1) In the case where the securities are issued in another Procedure for

issuance other

manner other than by auction, the Minister shall approve the terms than

and conditions of the issuance, including the investment memoranda/

prospectus.

(2) In the case where the securities are issued in a manner

other than by auction and their issue has been included in the annual

financing programme, approved by the Minister in accordance with

article 18, the Treasury Department shall have the power to issue and

sign agreements, on behalf of and on account of the Government,

which shall regulate the sale of the said securities.

The terms and conditions of securities issued may also Terms and

include collective action clauses, in consonance with the prevailing conditions

securities.

international capital market conventions or any treaty agreed by the

Government, the regulation of which shall be effected by indentures

included in the prospectus for issuance of specific securities.

(1) Each issue of debt securities or debt instruments Registration.

under this Act shall be registered and maintained electronically in an

uncertified form by the appropriate entry in the register of the

Treasury Department, or its designated Registrar, by entering therein

the name and address of the holders, the amount thereof, coupon

interest rate payable, all transfers of and all dealings in such debt

securities issued, and such other particulars as may, from time to time,

be considered necessary by the Treasury Department or as prescribed

in regulations made under this Act.

(2) For the purposes of sub-article (1) the Register of debt

securities is currently held and maintained by the Central Securities

Depository (CSD) of the Malta Stock Exchange. The Minster may

however, by regulation under this Act, designate any recognised

electronic central securities depository to provide the services and

functions of a registrar in terms of sub-article (1).

(1) The Government may engage into portfolio

management operations including buybacks, switches, pre-payments

and pre-financing operations. The Government may engage into

repurchase (repos) and reverse repurchase (reverse repos) based on a

Master Repurchase (Repo) Agreement with financial institutions as

part of cash management operations. The Government may further

engage in a securities lending facility to support debt market

development and other forms of collateralised lending.

(2) The Minister shall have the power to authorise any

portfolio management and other operations as referred to in sub-

article (1), which may be delegated to the Treasury Department to

undertake specialised debt management operations.

The Minister shall have the power and authority to

exercise, from time to time, the following powers or any of them as

may be desirable for the sound and efficient management of public

debt

(a)

to authorise the early redemption, in full or in part,

securities issued either before or after the commencement of

this Act, subject to any contrary provision in the respective

prospectus;

(b) to authorise the conversion of any existing security

under the terms and conditions of any other securities issued as

a result of the conversion;

(c)

to authorise any arrangement for conducting

operations with respect to buy-back or exchange of existing

securities.

(1) The powers conferred on the Minister by article 33

shall include the power to authorise the Treasury Department to make

such arrangements as may be necessary to create and issue under this

Act such amount of securities for the purpose of carrying out any

arrangement in pursuance of article 33(a), (b) and (c).

(2) In the exercise of his powers under article 33, the Minister

shall have regard to the recommendation of the Committee.

(3) Any arrangement authorised by the Minister under article

33 may be effected on a voluntary basis to holders of existing

securities. The Accountant General shall publish immediately after

the approval the terms and conditions of any offer and arrangements

authorised under sub-article (1).

(1) The Minister shall have the power and authority on Swaps and

behalf of the Government to engage in swaps and other hedging hedging

transactions.

transactions provided that such transactions support the objectives of

debt management strategy to mitigate currency and, or interest rate

risks

Provided that in the exercise of his powers the Minister

shall have regard to the recommendation of the Committee.

(2) The Treasury Department shall execute such transactions

under this article and appropriately account and monitor such

exposures.

(1) The Treasury Department, at the end of the financial Reporting.

year, shall prepare and submit to the Minister an annual report on the

management of the central government debt. The Minister shall cause

such report to be published and tabled in the House of

Representatives.

(2) The annual report shall, inter alia, include the following

(a)

an analysis of the developments in the domestic and

international capital markets;

(b) information on the debt management strategy

prevailing during the reporting period, with a report on

performance against the stated targets;

(c)

statistics on the outstanding public debt portfolio

and on related debt flows during the fiscal year, including

changes in the relevant risk indicators;

(d) exposure on individual hedging transactions with

implications for overall currency and interest rate risk;

(e)

the size of the sinking funds and lending balance and

any changes to these balances in the fiscal year; and

(f)

developments with regard to the assessment of the

creditworthiness of the Republic of Malta.

The Annual Report shall be tabled in the House of Tabling of

annual report.

Representatives before the end of March of the following year.

The Treasury Department shall maintain comprehensive Obligation to

and accurate records of all central Government debt outstanding, in maintain

comprehensive

an appropriate database.

and accurate

records.

(1) (a) Subject to the provisions of sub-article (2), upon

the entry into force of this Act, the Malta Treasury Bills Act, Local

Loans (Registered Stocks and Securities) Ordinance and

Development Loan Acts, and all subsidiary legislation made under

such Acts and Ordinance, shall be repealed.

(b) Any reference to the Local Loans (Registered Stock and

Securities) Ordinance in the Ecclesiastical Entities (Properties) Act shall

be read and construed as a reference to this Act.

(2) The powers, rights and obligations of the Government in

respect of loans entered into and debt securities issued in pursuance to

the laws and regulations which are repealed under sub-article (1)(a),

shall continue to apply and the loan agreements entered into and terms

and conditions of debt securities issued prior to the coming into force

of this Act shall remain in force.

Part IV

Government Guarantees

(1) Notwithstanding the provisions of any other law and

subject to the provisions of this Part, the Government through the

Minister may provide financial guarantees to a third party in Malta

for the benefit of the economy in Malta.

(2) Such guarantees referred to in sub-article (1) may be

provided in respect of any debt obligation of the beneficiary.

(3) The Minister may authorise the guarantee of the repayment

of the principal of, and the payment of interest and other charges

thereon, in the event that the guarantee beneficiary defaults on any

authorised borrowings.

No guarantee shall be provided to a third party outside

Malta

(a)

unless there is an existing law as part of an

international treaty; and

(b) the Minister on the advice of the Treasury

Department approves the terms and conditions for issuance of

the guarantee.

Any guarantee given under article 40 may be signed by the

Minister or any person authorized in writing by the Minister to do so.

(1) The Minister shall manage the financial guarantees Limit on

of the Government in accordance with the relevant provisions of the guarantee.

Fiscal Responsibility Act.

(2) The ceilings on issuance of Government guarantees shall

be based on the medium-term fiscal policy statement for the

forthcoming budget year and two further years conditional on the

revenue forecasts and consistent with the fiscal rules.

(3) The ceiling on government guarantees for the forthcoming

budget year shall be included in the Budget Measures Implementation

Act.

(1) All amounts required for the payment of sums in Charge on

pursuance of a guarantee given under this Act and for the payment of Consolidated

Fund.

all interest and other charges on those sums shall be charged upon and

shall be payable out of the Consolidated Fund.

(2) Where the Minister is satisfied that there has been any

default in the payment of any amount guaranteed under the provisions

of this Act, the Minister shall direct the payment of such amount out

of the Consolidated Fund.

(3) All liabilities in the form of central Government debt and

in the form of obligations under guarantees authorized under this Act

shall rank pari passu.

(4) Any money paid by the Government under a loan

guarantee given under this Part and any expenses incurred in relation

to the guarantee may be incurred without further appropriation than

this Part.

(1) The money paid in terms of article 44(4) shall Constitution of

constitute a debt due to the Government from the beneficiary debt

recovery of

concerned.

money paid

under the

guarantee.

(2) A debt referred in this sub-article (1) may be paid over

such period of time and on such terms and conditions as the Minister

deems proper; or may be written down by the Minister in accordance

with an appropriation, by or under the authority of an Act of

Parliament.

(3) This Part does not limit or affect any other rights that the

Government may have as a guarantor.

The Treasury Department shall assess requests related to Assessment of

guarantees for the consideration of the Minister, accompanied by a requests

guarantees.

statement setting out -

(a)

the details of a risk assessment exercise undertaken

with respect to the issue of the guarantee and a determination as

to the quality and level of risk involved; and

(b) an assessment of the financial risk for the

Government stemming from the total outstanding amount in

respect of all other guaranteed loans.

(1) Where a loan is guaranteed under this Act, the

borrower shall, unless the Minister otherwise determines, pay to the

Government a fee reflecting the credit risk at such rate and in such

manner as may be prescribed in regulations made under this Act.

(2) Such guarantee fee charged as referred to in sub-article (1)

shall be paid into the Consolidated Fund.

(1) The Minister shall, at the time of the annual budget,

disclose the stock of guarantees outstanding pursuant to article

3(a)(ii) of the Fiscal Responsibility Act.

(2) At the end of each fiscal year the Treasury Department

shall report on the ceilings on guarantees issued by the Government

through the Ministry for Finance pursuant to article 15(5)(e) of the

Fiscal Responsibility Act for the forthcoming budget year and the

further years.

The Treasury Department, at regular intervals and at least

on an annual basis, shall conduct a reassessment of the financing risk

from a sample of the stock of outstanding guarantees with balances

outstanding above a particular threshold to be determined by the

Minister. The Minister shall be informed in writing of the results of

the findings of the reassessment.

The Treasury Department shall maintain comprehensive

and accurate records of all outstanding government guarantees, in an

appropriate database.

All beneficiaries benefiting from Government Guarantee

shall, notwithstanding anything to the contrary in any other law or

document, furnish to the Minister, on or before the last day of each

month, a report on the status of all of its debts and other liabilities

whether guaranteed or not, as at the end of the preceding month.

For the purpose of monitoring, reporting and assessment of

the risk of Government guarantees, the Treasury Department shall

have the power to request and receive from the beneficiaries of

government guarantees and credit institutions any analytical

information concerning the guarantees.

Part V

Government Lending Operations, cash and Reserves Management.

Other than the on-lending amount authorised under article Government

8(e), the Government shall not lend money to an organisation or a lending.

public entity, whether in Malta or elsewhere, or to a government of

another country except as expressly authorised by a resolution or an

Act of Parliament.

The authority to lend money for or on behalf of the Authority to

Government shall vest solely in the Minister by entering into loan lend money.

agreements or inter-creditor agreements, either in local and any

foreign currency, and based on the terms and conditions as approved

by any other Act of Parliament.

(1) For every fiscal year, the Treasury Department shall Liquidity buffer

prepare a proposal with regard to the desired size of the liquidity stock.

buffer stock of the Government that may be authorised under article 8

(b) in the form of the minimum and maximum liquidity levels in the

General Government Account for the administration of cash

management, taking into account

(a)

the prevailing market conditions and cash volatility;

(b)

the current credit facilities of the Government;

(c)

the forecast of timely cash flows and cash reserves;

and

(d) any other factors related to determining the

appropriate liquidity buffer stock.

(2) The proposal referred to in sub-article (1) shall be updated

at least every quarter and shall be approved by the Minister.

The first decision with regard to the indicative liquidity Decision on

buffer stock for cash management shall be taken within three months, liquidity

stock.

at the latest, from the time this Act comes into force.

The Treasury Department shall be responsible for retaining Responsibility

for retaining

the liquidity buffer stock by borrowing the necessary funds in time.

liquidity buffer

stock.

(1) The Minister may decide to form a sinking fund for Sinking funds.

the repayment of any loan and for the purpose to repurchase

government debt securities already issued.

(2) In the case the Minister decides to establish a sinking fund

for the repayment of any loan of the Government, there shall be

annual contributions in the said fund in accordance with the terms and

conditions published, or any other agreement governing the said loan.

The Minister shall appropriate out of the general revenue and assets

of the Government of Malta a sum determined in accordance with the

rate specified in the terms of the agreement or in any terms and

conditions governing the said loan as contributions to the sinking

fund established for the purpose of redeeming that loan and shall

thereafter make a like timely appropriation up to the full repayment of

the loan.

(3) The Minister may further authorise the appropriation, out

of the general revenue and assets of the Government of Malta, of a

contribution towards the sinking fund established specifically to

repurchase loans already issued.

(1) All moneys appropriated under article 58(2) as

contributions to the sinking fund established for any loan shall be

placed at interest or invested in such stocks or securities or in such

other investment or classes of investments, including stocks or

securities issued under the provisions of this Act, as the Minister may

from time to time direct.

(2) The interest, dividends, bonus and other profit of any

investment of any part of any sinking fund shall be placed at interest

or invested as directed by the Minister so as to form part of the

sinking fund in like manner as moneys appropriated under article

58(2) as contributions to the sinking fund.

(1) The Minister may make regulations on how the

special sinking fund may operate.

(2) The Minister may from time to time authorise changes to

the regulations referred to in sub-article (1).

Notwithstanding anything to the contrary contained in this

Act, if at any time the Accountant General is satisfied that the sinking

fund of any loan raised under the provisions of this Act shall be

sufficient with further accumulations of interest but without further

payments of contributions, to enable the loan to be redeemed at the

time fixed for its redemption, the Accountant General shall be

authorised in such event to suspend further contributions to that

sinking fund

Provided, however, that the contributions to that sinking

fund shall be recommenced if the Accountant General at any time is

no longer satisfied that the sinking fund with further accumulations of

interest shall be sufficient for the redemption of that loan.

There shall be paid out of the sinking fund all expenses Expenses to be

paid out of

specifically incurred in, or incidental to, the investment and sinking

management of that fund and the repayment of the loan for which that

fund was established.

Where no sinking fund is established or in the event of the Deficiency in

sinking fund to

sinking fund established for any loan under this Act being found, at be

the time fixed for the repayment of that loan, to be insufficient for revenue.

such redemption, the loan shall be repaid or the deficiency shall be

made good out of the general revenue and assets of the Government

without any further appropriation other than this Act.

Part VI

Public Debt Management Directorate

There shall be a Directorate known as the Debt Establishment of

the Public Debt

Management Directorate, (hereinafter referred to as "the Management

Directorate"), to perform the functions relating to the management of Directorate.

central Government debt and the borrowing of money under article 4

as entered into or issued in accordance with articles 19 and 24 of this

Act and any other directions that may be given by the Minister under

the provisions of this Act.

(1) The Directorate shall be established within the Management of

Treasury Department under the responsibility of the Minister for the Directorate.

finance.

(2) The Directorate shall be under the management of a public

officer who shall be known as the Director, Debt Management,

hereinafter referred to as "the Director", and who shall be appointed

by the Prime Minister.

Detailed functions of the Directorate shall be made by Functions of the

Directorate.

regulations giving better effect to the provisions of article 64.

(1) The Director shall lead and manage the Directorate Duties and

in the delivery of its key objectives and shall be in charge of the day- functions

Director.

to-day management and operations of the Directorate. The Director

shall be responsible and report to the Accountant General and shall

perform such other duties in relation to the Directorate as may, from

time to time, be assigned to him by the Permanent Secretary

answerable to the Minister.

(2) The representation of the Directorate in legal and judicial

proceedings shall lie in the Director.

(1) There shall be established a Committee, appointed

by the Minister, to be known as the Public Debt Management

Advisory Committee (in this Act referred to as "the Committee"), to

assist and advise the Minister on matters relating to the management

of public debt, the borrowing of money for the central Government

and any other such matters as are referred to it for that purpose by the

Accountant General.

(2) The functions of the Committee in relation to the

management of the public debt shall be to

(a)

advise the Minister on policy issues regarding debt

management strategic options and risk management framework;

(b) monitor the implementation of the annual debt

management strategy and borrowing plan approved by the

Government for the current financial year;

(c)

advise on an indicative issuance programme for

government securities; and

(d) provide overall guidance to the Government

borrowing programme.

Part VII

Cessation of liability and Prescription

(1) Where an amount has become payable on any date

as interest due on any debt security or any debt instruments on which

demand could lawfully have been made, no interest on that amount

shall, after that date, be paid or payable by the Government to any

other person in any circumstances.

(2) No person shall be entitled to claim interest on any

government security or any debt instrument issued under this Act in

respect of any period which has elapsed after the earliest date on

which demand could lawfully have been made for the payment of the

principal amount due on such securities or debt instruments.

Claims in respect of government securities or debt

instruments issued under this Act shall become prescribed unless

presented within six years from the maturity date of the respective

government security or debt instrument issued.

Part VIII

General

The Minister may make regulations for the purpose of Power of the

Minister to

giving effect to the provisions of this Act, and without prejudice to make

the generality of the foregoing may make regulations with respect to: regulations.

(a)

the management of the public debt;

(b) a code of conduct (including conflict of interest

guidelines) for persons employed in the management of the

public debt;

(c)

the manner in which, and the conditions subject to

which, monies may be raised and repaid, including the payment

of interest;

(d)

procedures for borrowing;

(e)

the issue of guarantees, including the terms and

conditions subject to which guarantees may be given;

(f)

the issue, administration, registration, transfer,

redemption and payment of interest on and the holding of

uncertified government securities and debt instruments;

(g) third-party rights in or over government securities

and debt instruments;

(h) the keeping and maintenance of the Register and any

other register required to be kept and maintained pursuant to

this Act; and

(i)

any other matter required by this Act to be

prescribed.

Article 21 of the Financial Administration and Audit Act is Consequential

amendment to

hereby repealed, without prejudice to anything done or omitted to be the

done thereunder.

Administration

and Audit Act.

Passed by the House of Representatives at Sitting No. 19 of the 18th

July, 2017.

ANĠLU FARRUGIA

Speaker

RAYMOND SCICLUNA

Clerk of the House of Representatives

€2.16