LAW REPUBLIC OF LITHUANIA LAW ON THE NATIONAL DEBT 22 August 1996 No. I-1508 Vilnius Article 1. Objective of the Law Thi

LAW REPUBLIC OF LITHUANIA LAW ON THE NATIONAL DEBT 22 August 1996 No. I-1508 Vilnius Article

1. Objective of the Law This Law regulates the relationship of the national debt to domestic and foreign creditors. Article
2. Definitions As used in this Law:
3. National debt means the amount of domestic and foreign debt of the Republic of Lithuania.
4. Domestic debt means liability of the Republic of Lithuania in national currency under loan agreements, agreements with government guarantee or other debt instruments whereunder funds, valuables or services have been acquired and have not yet been repaid.
5. Foreign debt means liability of the Republic of Lithuania in foreign currency under loan agreements, agreements with government guarantees or other debt instruments whereunder funds, valuables or services have been acquired and have not yet been repaid.
6. Domestic creditors means legal or natural persons of the Republic of Lithuania or enterprises without the rights of legal persons who have lent funds under loan agreements or other debt instruments.
7. Foreign creditors means foreign states, international financial organisations, foreign banks, other legal or natural persons who have lent funds under loan agreements or other debt instruments.
8. Foreign loan means funds, valuables or services received in the name of the State from domestic or foreign creditors under loan agreements or other debt instruments and repayable in foreign currency.
9. Domestic loan means funds, valuables or services received in the name of the State from domestic or foreign creditors under loan agreements or other debt instruments and repayable in national currency.
10. Loan guaranteed by the government means funds, valuables or services received by a legal or natural person of the Republic of Lithuania or an enterprise without the rights of legal person from domestic or foreign creditors under loan agreement or debt instrument the fulfilment of terms whereof is guaranteed by the government.
11. Government guarantee means the liability of the Republic of Lithuania to repay the loan wholly or in part and to cover other debt-related expenses to the domestic or foreign creditor for the borrower the fulfilment of whose obligations is guaranteed by the government, in the event of the borrower's default or partial default when meeting its obligations provided for in the loan agreement or other debt instruments.
12. Borrower means a legal or natural person of the Republic of Lithuania or an enterprise without the rights of legal person who has obtained a loan under a loan agreement concluded with the state or under any other debt instrument and who assumes the obligation to the state to meet the requirements of loan use and repayment.
13. Borrower the fulfilment of whose obligations is guaranteed by the government means a natural or legal person of the Republic of Lithuania or an enterprise without the rights of legal person who has obtained a loan under a loan agreement concluded with domestic or foreign creditors or under any other debt instrument the meeting of terms and conditions whereunder is guaranteed by the government.
14. National currency means litas, the official currency of the Republic of Lithuania.
15. Foreign currency means the currency of any foreign state or the currency used by two and more foreign states, including the ECU (European Currency Unit) and SDRs (IMF, Special Drawing Rights).
16. Loan currency means foreign or national currency used by the borrower to repay the loan, pay interest and other loan fees provided for in the loan agreement. Article
17. Basic Principles of Government Borrowing and Provision of Guarantees
18. Decision concerning annual borrowing limits on foreign and internal loans or on loans with government guarantee taken from foreign or domestic creditors shall be adopted, on the proposal of the Government of the Republic of Lithuania, by the Seimas in the course of approval of the annual State Budget of the Republic of Lithuania or in the process of passing of other laws of the Republic of Lithuania.
19. Domestic and foreign loans in the name of the Republic of Lithuania shall be taken and guarantees shall be provided by the Government of the Republic of Lithuania in compliance with the limits laid down by the laws of the Republic of Lithuania.
20. The Ministry of Finance shall represent the Government of the Republic of Lithuania in the management of the national debt.
21. On the instruction of the Government of the Republic of Lithuania the Ministry of Finance shall: 1) borrow funds from international financial organisations, banks, and borrow on the domestic and foreign markets by taking loans, issuing securities and other debt instruments of the Government of the Republic of Lithuania; 2) set the specifications and conditions of issuance of the Government of the Republic of Lithuania securities; 3) perform operations in securities of the Government of the Republic of Lithuania on domestic and foreign markets; 4) borrow and extend credits to national programmes and projects for the support of industry, small business and farmers.
22. The Ministry of Finance must: 1) keep records of the national debt; 2) register all domestic and foreign loans, government guarantees; 3) keep the originals of all loan agreements and government guarantees; 4) generalise and plan the borrowing needs, prepare draft programmes of borrowing; 5) control the extension and repayment of loans, loan application as well as the fulfilment of other loan-related financial obligations.
23. Domestic and foreign loans that are received and repaid as well as expenses related to the servicing of loans must be provided for in the revenue and expenditure sides of the State Budget.
24. All possible state revenue sources including new liabilities of the state shall be used to fulfil the obligations arising out of the relationships regulated by this Law.
25. The national debt may be expressed by loan agreements, government guarantees, securities or entries in securities accounts as well as in other debt instruments.
26. All legal norms applicable to securities shall also apply to the national debt expressed by entries in securities accounts.
27. Any available or future state assets may not be pledged in order to secure the fulfilment of state liabilities.
28. Gold and foreign currency reserves of the Bank of Lithuania may not be pledged in order to secure the fulfilment of state liabilities. The Bank of Lithuania shall not be held responsible for the liabilities of the Republic of Lithuania except in cases when the Bank of Lithuania assumes such liabilities or such liabilities are provided for by the laws of the Republic of Lithuania.
29. The Government of the Republic of Lithuania may apply the borrowed funds only for the purposes provided for by this Law.
30. The Government of the Republic of Lithuania shall have the right to on-lend domestic or foreign loans received in the name of the state to legal and natural persons of the Republic of Lithuania or enterprises without the rights of legal person, unless loan agreements provide otherwise.
31. All borrowers or borrowers the fulfilment of whose obligations is guaranteed by the government must timely repay the loan, pay interest and perform other obligations provided for by the loan agreement.
32. Without a written permission of the Ministry of Finance borrowers or borrowers the fulfilment of obligations whereof is guaranteed by the government shall have no right to perform the following actions before the full repayment of the loan: 1) to reorganise an enterprise; 2) to reduce the authorised capital; 3) to lease or mortgage long-term assets; 4) to warrant or guarantee by way of their property the fulfilment of other entities’ obligations; 5) to extend loans (except short-term trade credits). Article
33. State Borrowing Purposes
34. The Government may take loans in the name of the Republic of Lithuania for the following purposes: 1) to finance the national budget deficit; 2) to finance State investments and to increase current assets of enterprises; 3) to cover the expenses related to the national debt and to repay the national debt; 4) for other purposes if there is a separate law of the Republic of Lithuania. Article
35. Foreign Loan
36. The decision to take a foreign loan exceeding 40 million litas, except a loan for the financing of the national budget deficit, shall be taken by the Seimas at the proposal of the Government of the Republic of Lithuania and shall be enacted by a separate law.
37. The decision to take a foreign loan of less than 40 million litas shall be taken by the Government of the Republic of Lithuania pursuant to the Law on the State Budget of the Republic of Lithuania of the corresponding year.
38. Foreign loan agreements and other debt instruments shall be considered to be commercial agreements. A foreign loan agreement or other debt instruments shall be signed by the Minister of Finance or, on the proposal of the Minister of Finance, by other state officials granted authorisation on the decision of the Government of the Republic of Lithuania.
39. Legal findings concerning a foreign loan or other debt instruments shall be signed by the Minister of Justice.
40. All foreign loan agreements - both those ratified by the Seimas of the Republic of Lithuania and concerning which resolutions of the Seimas of the Republic of Lithuania are passed as well as those that are not ratified and in relation whereto no separate decision is passed by the Seimas of the Republic of Lithuania shall have a binding effect.
41. A foreign loan shall be taken, disbursed and repaid through the fiscal agent of the State - the Bank of Lithuania or, upon the approval of the Bank of Lithuania, through another bank.
42. The procedure for obtaining, distributing and repaying a foreign loan as well as the functions and responsibilities of the institutions participating in the process shall be provided for by a joint Decree of the Government of the Republic of Lithuania and the Bank of Lithuania. Article
43. Domestic Loan
44. Domestic loan agreements and other debt instruments shall be signed by the Minister of Finance.
45. Dematerialised securities of the Government of the Republic of Lithuania shall be entered in the securities accounts to be managed in accordance with the procedure established by the Central Depository.
46. The Ministry of Finance shall have the right to appoint the fiscal agent for performing operations of trading in Government securities.
47. In order to ensure that the loans are used for their proper purpose, the procedure for obtaining, distributing and repaying of domestic loan, as well as the functions and responsibilities of institutions participating in this process shall be established by the Government of the Republic of Lithuania. Article
48. Loan Guaranteed by the Government
49. Decisions to provide government guarantee to the loan extended by domestic or foreign creditor under the loan agreement, which exceeds 40 million litas, shall be passed by the Seimas of the Republic of Lithuania on the proposal of the Government.
50. Decisions to provide government guarantee to the loan extended by domestic or foreign creditor under the loan agreement, which is less than 40 million litas shall be passed by the Government of the Republic of Lithuania pursuant to the Law on State Budget of the Republic of Lithuania of the relevant year.
51. The government guarantee shall be signed by the Minister of Finance, whereas legal finding concerning the guarantee shall be signed, at the request of the creditor, by the Minister of Justice.
52. The procedure for giving the government guarantee to the loan being received, the procedure for receiving and repaying of the loans with the government guarantee as well as the functions and responsibilities of the institutions participating in this process shall be established by a joint decree of the Government of the Republic of Lithuania and the Bank of Lithuania. Article
53. Control of Financial Activities of the Borrowers or the Borrowers the Fulfillment of the Obligations whereof is Guaranteed by the Government
54. The borrowers and the borrowers the fulfillment of the obligations whereof, with the exception of institutions maintained out of the funds of the state budget, must furnish to the Ministry of Finance: 1) auditor's finding — prior to the receipt of a loan; 2) auditor's finding concerning the annual performance during the period of the utilisation of the loan; 3) on the instructions of the Ministry of Finance or the administration of the borrower or the borrower the fulfillment of the obligations whereof is guaranteed by the government, auditor's finding concerning another period.
55. The audit may be carried out by the audit enterprise that has the licence issued by the Ministry of Finance.
56. The auditing services shall be provided under the contract between the audit enterprise and the borrower or the borrower the fulfillment of the obligations whereof is guaranteed by the government. The services shall be paid for from the funds of the borrower or the borrower the fulfillment of the obligations whereof is guaranteed by the government.
57. The audit enterprise must furnish the findings of the audit to the administration of the borrower or the borrower the fulfillment of the obligations whereof is guaranteed by the government, and to the Ministry of Finance.
58. State control institutions shall have the right, in accordance with the procedure established by laws, to inspect economic and financial activities of the borrowers and those borrowers the fulfillment of the obligations whereof is guaranteed by the government, as well as the obtaining of foreign loans received in the name of the state or with the guarantee of the government, their distribution, utilisation and repayment.
59. The borrower or the borrower the fulfillment of the obligations whereof is guaranteed by the government, must furnish to the Ministry of Finance, the audit enterprise and State control institutions the documents required by them. Article
60. Sanctions
61. The Ministry of Finance shall have the right to recover from the defaulting borrower an interest of 0.1 percent on the outstanding amount for each overdue day.
62. The Ministry of Finance shall recover without suit from the bank accounts of the borrower the outstanding loan or a part thereof, arrears of interest on the loan, penalties or other charges provided for in the loan agreement.
63. If the funds of the borrower are not sufficient to cover the outstanding amounts, such amounts shall be recovered from other property of the borrower, i.e a lien shall be held against the borrower's accounts or against his any other property that shall be realised in accordance with the procedure established by laws in order to perform all obligations under loan agreement, to pay interest, as well as cover government expences incurred due to the non-fulfillment of the obligations of the borrower.
64. If the actions referred to in par. 2 and 3 of this Article are not sufficient and the non-fulfillment of obligations persists, the Ministry of Finance shall have the right to institute bankruptcy proceedings against the defaulter. The Ministry of Finance shall notify the borrower of its intention to institute bankruptcy proceedings against the enterprise and the borrower must acknowledge the receipt of such notification by signing it. The notification shall state the non-fulfilled obligations and shall contain a warning that in case the borrower fails to fulfill its obligations within the period indicated in the notification, the Ministry of Finance shall apply to court in order to institute bankruptcy proceedings.
65. If the borrower the fulfillment of obligations whereof is guaranteed by the government fails to fulfill obligations under the loan agreement and therefore these obligations must be fulfilled by the government as the guarantor, the Ministry of Finance, as the executor of the government's guarantee, shall take recourse against the borrower the fulfillment of the obligations whereof is guaranteed by the government, and recover all direct and indirect expenses incurred due to the fulfillment of such obligations, from defaulting borrower's bank accounts.
66. If the funds of the borrower the fulfillment of the obligations whereof is guaranteed by the government are not sufficient to cover all direct and indirect expenses referred to in par. 5, a lien shall be held against the accounts and other property of the borrower the fulfillment of the obligations whereof is guaranteed by the government, and shall be realised in accordance with the procedure established by laws in order to cover government expenses incurred due to the non-fulfillment of the obligations of the borrower the fulfilment of the obligations whereof is guaranteed by the government.
67. If the actions referred to in par. 6 of this Article are not sufficient and the non-fulfilment of obligations persists, the Ministry of Finance shall have the right to institute bancruptcy proceedings against the borrower the fulfillment of obligations whereof is guaranteed by the Government. The Ministry of Finance shall notify the borrower the fulfilment of the obligations whereof is guaranteed by the government of its intention to institute bakruptcy proceedings against the enterprise, and the borrower must acknowledge the receipt of such notification by signing it. The notification shall state the non-fulfilled obligations and shall contain a warning that if the borrower the fulfilment of the obligations whereof is guaranteed by the government fails to fulfill its obligations within the period indicated in the notification, the Ministry of Finance shall apply to court in order to institute bankruptcy proceedings.
68. If the Government of the Republic of Lithuania shall decide that it is in the interest of the State not to institute bankruptcy proceedings, to calculate interest (penalty) on the amount due or if it decides to propose to the borrower or the borrower the fulfillment of the obligations whereof is guaranteed by the government to reconsider the initial terms of the loan agreement, the Ministry of Finance must assess the financial consequences of such decision and the amounts so established shall be treated as budget expenditure of the current financial year ( and if the consequences last for several years, for an accordingly longer period).
69. If the loan ( or a part thereof ) has been used not for its proper purpose, the total amount which has been used not for its proper purpose shall be repaid into special loan accounts opened by the Ministry of Finance. The borrower must pay to the loan risk account a margin of 5 percent of the loan (a part thereof) that has been used not for its proper purpose.
70. If the borrower fails to use the received loan for its proper purpose for more than six months, it must pay into the loan risk account the penalty in the amount of interest on the loan for that period, provided in the loan agreement.
71. Sanctions pursuant to pars. 9 and 10 of this Article shall be imposed by the State control institution in accordance with the procedure established by laws.
72. All payments due under sanctions shall be paid into loan risk account opened by the Ministry of Finance. The funds of this account may be used for the performance of all liabilities arising from the relations regulated by this Law. Article
73. Accounting At the close of the budget year, the Government of the Republic of Lithuania must submit to the Seimas, together with the budget report, a report on the national debt. I promulgate this Law passed by the Seimas of the Republic of Lithuania. Algirdas Brazauskas President of the Republic