
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 22USC2763]

 
               TITLE 22--FOREIGN RELATIONS AND INTERCOURSE
 
                     CHAPTER 39--ARMS EXPORT CONTROL
 
          SUBCHAPTER II--FOREIGN MILITARY SALES AUTHORIZATIONS
 
Sec. 2763. Credit sales


(a) Financing procurement of defense articles and services, and design 
        and construction services

    The President is authorized to finance the procurement of defense 
articles, defense services, and design and construction services by 
friendly foreign countries and international organizations, on such 
terms and conditions as he may determine consistent with the 
requirements of this section. Notwithstanding any other provision of 
law, and subject to the regular notification requirements of the 
Committees on Appropriations, the authority of this section may be used 
to provide financing to Israel and Egypt for the procurement by leasing 
(including leasing with an option to purchase) of defense articles from 
United States commercial suppliers, not including Major Defense 
Equipment (other than helicopters and other types of aircraft having 
possible civilian application), if the President determines that there 
are compelling foreign policy or national security reasons for those 
defense articles being provided by commercial lease rather than by 
government-to-government sale under this chapter.

(b) Repayment period

    The President shall require repayment in United States dollars 
within a period not to exceed twelve years after the loan agreement with 
the country or international organization is signed on behalf of the 
United States Government, unless a longer period is specifically 
authorized by statute for that country or international organization.

(c) Interest rate; definitions

    (1) The President shall charge interest under this section at such 
rate as he may determine, except that such rate may not be less than 5 
percent per year.
    (2) For purposes of financing provided under this section--
        (A) the term ``concessional rate of interest'' means any rate of 
    interest which is less than market rates of interest; and
        (B) the term ``market rate of interest'' means any rate of 
    interest which is equal to or greater than the current average 
    interest rate (as of the last day of the month preceding the 
    financing of the procurement under this section) that the United 
    States Government pays on outstanding marketable obligations of 
    comparable maturity.

(d) Participations in credits

    References in any law to credits extended under this section shall 
be deemed to include reference to participations in credits.

(e) Payments on account of prior credits or loans

    (1) Funds made available to carry out this section may be used by a 
foreign country to make payments of principal and interest which it owes 
to the United States Government on account of credits previously 
extended under this section or loans previously guaranteed under section 
2764 of this title, subject to paragraph (2).
    (2) Funds made available to carry out this section may not be used 
for prepayment of principal or interest pursuant to the authority of 
paragraph (1).

(f) Audit of certain private firms

    For each fiscal year, the Secretary of Defense, as requested by the 
Director of the Defense Security Assistance Agency, shall conduct audits 
on a nonreimbursable basis of private firms that have entered into 
contracts with foreign governments under which defense articles, defense 
services, or design and construction services are to be procured by such 
firms for such governments from financing under this section.

(g) Notification requirements with respect to cash flow financing

    (1) For each country and international organization that has been 
approved for cash flow financing under this section, any letter of offer 
and acceptance or other purchase agreement, or any amendment thereto, 
for a procurement of defense articles, defense services, or design and 
construction services in excess of $100,000,000 that is to be financed 
in whole or in part with funds made available under this chapter or the 
Foreign Assistance Act of 1961 [22 U.S.C. 2151 et seq.] shall be 
submitted to the congressional committees specified in section 634A(a) 
of the Foreign Assistance Act of 1961 [22 U.S.C. 2394-1(a)] in 
accordance with the procedures applicable to reprogramming notifications 
under that section.
    (2) For purposes of this subsection, the term ``cash flow 
financing'' has the meaning given such term in subsection (d) of section 
2765 of this title.

(h) Limitation on use of funds for direct commercial contracts

    Of the amounts made available for a fiscal year to carry out this 
section, not more than $100,000,000 for such fiscal year may be made 
available for countries other than Israel and Egypt for the purpose of 
financing the procurement of defense articles, defense services, and 
design and construction services that are not sold by the United States 
Government under this chapter.

(Pub. L. 90-629, ch. 2, Sec. 23, Oct. 22, 1968, 82 Stat. 1324; Pub. L. 
93-559, Sec. 45(a)(2), Dec. 30, 1974, 88 Stat. 1813; Pub. L. 94-329, 
title II, Sec. 208(a), June 30, 1976, 90 Stat. 739; Pub. L. 96-533, 
title I, Sec. 105(b)(3), Dec. 16, 1980, 94 Stat. 3134; Pub. L. 99-83, 
title I, Sec. 102, Aug. 8, 1985, 99 Stat. 195; Pub. L. 100-202, 
Sec. 101(e) [title V, Sec. 572], Dec. 22, 1987, 101 Stat. 1329-131, 
1329-176; Pub. L. 101-513, title V, Sec. 580, Nov. 5, 1990, 104 Stat. 
2045; Pub. L. 104-164, title I, Sec. 102(a)-(c), July 21, 1996, 110 
Stat. 1422.)

                       References in Text

    The Foreign Assistance Act of 1961, referred to in subsec. (g)(1), 
is Pub. L. 87-195, Sept. 4, 1961, 75 Stat. 424, as amended, which is 
classified principally to chapter 32 (Sec. 2151 et seq.) of this title. 
For complete classification of this Act to the Code, see Short Title 
note set out under section 2151 of this title and Tables.


                               Amendments

    1996--Subsecs. (f) to (g). Pub. L. 104-164 added subsecs. (f) to 
(g).
    1990--Subsec. (e). Pub. L. 101-513 added subsec. (e).
    1987--Subsec. (a). Pub. L. 100-202 inserted sentence at end 
authorizing financing to Israel and Egypt for commercial leasing of 
defense articles, not including Major Defense Equipment, with exception 
for certain aircraft, upon a Presidential determination that there are 
compelling foreign policy or national defense reasons for such leasing.
    1985--Pub. L. 99-83 amended section generally. Prior to amendment, 
section read as follows: ``The President is authorized to finance 
procurements of defense articles, defense services, and design and 
construction services by friendly foreign countries and international 
organizations on terms requiring the payment to the United States 
Government in United States dollars of--
        ``(1) the value of such articles or services within a period not 
    to exceed twelve years after the delivery of such articles or the 
    rendering of such services; and
        ``(2) interest on the unpaid balance of that obligation for 
    payment of the value of such articles or services, at a rate 
    equivalent to the current average interest rate, as of the last day 
    of the month preceding the financing of such procurement, that the 
    United States Government pays on outstanding marketable obligations 
    of comparable maturity, unless the President certifies to Congress 
    that the national interest requires a lesser rate of interest and 
    states in the certification the lesser rate so required and the 
    justification therefor.''
    1980--Pub. L. 96-533 substituted ``defense articles, defense 
services, and design and construction services'' for ``defense articles 
and defense services''.
    1976--Par. (1). Pub. L. 94-329 substituted ``twelve years'' for 
``ten years''.
    1974--Pub. L. 93-559 incorporated existing provisions in cl. (1) and 
added cl. (2).


                    Effective Date of 1985 Amendment

    Amendment by Pub. L. 99-83 effective Oct. 1, 1985, see section 1301 
of Pub. L. 99-83, set out as a note under section 2151-1 of this title.


                    Effective Date of 1976 Amendment

    Section 208(b) of Pub. L. 94-329 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply with respect to 
financing under agreements entered into on or after the date of 
enactment of this Act [June 30, 1976] for the procurement of defense 
articles to be delivered, or defense services to be rendered, after such 
date.''

                         Delegation of Functions

    Functions of President under this section and section 580 of Pub. L. 
100-461, see Similar Provisions note below, except those functions 
relating to determinations of a rate of interest which is less than the 
market rate, delegated to Secretary of Defense, to be exercised in 
consultation with Secretary of State and Secretary of the Treasury, by 
section 1(e) of Ex. Ord. No. 11958, Jan. 18, 1977, 42 F.R. 4311, as 
amended, set out as a note under section 2751 of this title.


                           Similar Provisions

    Provisions similar to those in last sentence of subsec. (a) of this 
section which were applicable to NATO and major non-NATO allies in 
addition to Israel and Egypt were contained in the following 
appropriation acts and were not repeated in subsequent appropriation 
acts:
    Pub. L. 106-113, div. B, Sec. 1000(a)(2) [title V, Sec. 528], Nov. 
29, 1999, 113 Stat. 1535, 1501A-90.
    Pub. L. 105-277, div. A, Sec. 101(d) [title V, Sec. 529], Oct. 21, 
1998, 112 Stat. 2681-150, 2681-178.
    Pub. L. 105-118, title V, Sec. 528, Nov. 26, 1997, 111 Stat. 2413.
    Pub. L. 104-208, div. A, title I, Sec. 101(c) [title V, Sec. 528], 
Sept. 30, 1996, 110 Stat. 3009-121, 3009-149.
    Pub. L. 104-107, title V, Sec. 528, Feb. 12, 1996, 110 Stat. 730.
    Pub. L. 103-306, title V, Sec. 530, Aug. 23, 1994, 108 Stat. 1635.
    Pub. L. 103-87, title V, Sec. 530, Sept. 30, 1993, 107 Stat. 954.
    Pub. L. 102-391, title V, Sec. 558, Oct. 6, 1992, 106 Stat. 1676.
    Pub. L. 101-513, title V, Sec. 561, Nov. 5, 1990, 104 Stat. 2026.
    Pub. L. 101-167, title V, Sec. 571, Nov. 21, 1989, 103 Stat. 1245.
    Pub. L. 100-461, title V, Sec. 580, Oct. 1, 1988, 102 Stat. 2268-48.

                  Section Referred to in Other Sections

    This section is referred to in sections 2291c, 2305, 2311, 2321j, 
2360, 2761, 2764, 2771, 2774, 2775, 2776, 2777, 2791, 5854 of this 
title.
