Decree of the Ministry of Finance No. 278 / 1998 Coll.
Decree of the Ministry of Finance implementing the Act on Insurance and Financing of Exports with State Aid
Valid
Order
Effective from 30.11.1998
278
DECLARATION
Ministry of Finance
of 12 November 1998
to implement the Act on Insurance and Export Financing with State Aid
The Ministry of Finance provides pursuant to Sections 3 (1), 4 (5) and (7), 6 (2), 9 and 12 of Act No. 58 / 1995 Coll., on Insurance and Financing of Exports with State Aid and on the Addition of Act No. 166 / 1993 Coll., on the Supreme Audit Office, as amended, as amended, as amended, as amended by Act No. 60 / 1998 Coll., (the complete version published under No. 151 / 1998 Coll.) (hereinafter referred to as "the Act"):
Method of calculating insurance capacity of the Export Insurance Corporation
(K § 4 (6) of the Act)
(1) The insurance capacity for export credit risk insurance is calculated as the sum
(a) the current state of business and its expected development, including the aggregate value of the export credit risks contained in
1. in insurance promise contracts; and
2. in the proposed developed insurance contracts, the conclusion of which can be expected to be qualified in the calendar year for which the State budget is drawn up; and
(b) the aggregate value of export credit risks contained in active hedging contracts.
(2) The Export Insurance Corporation shall calculate the amount of the insurance capacity referred to in paragraph 1 and shall propose to the Ministry of Finance its amount after taking account of the creation and the amount of the funds referred to in Article 3 and the state of the technical provisions.
Method of creating funds for insurance of export credit risks
(K § 4 (9) of the Act)
(1) In order to compensate for the loss incurred during the current accounting period to an extent exceeding the value of the assets the technical provisions for insurance claims of export insurance undertakings from export credit risks shall constitute the following funds:
(a) a fund consisting of a profit allocation on the basis of a decision of the general meeting or of a shareholder performing the general meeting; and
(b) a fund consisting of a subsidy from the State budget for the creation of that fund, which may be used only after the fund has been exhausted under point (a).
(2) The request for subsidies from the State Budget referred to in paragraph 1 (b) shall be made by the Export Insurance Corporation against the Ministry of Finance (hereinafter referred to as "the Ministry") when drawing up the State Budget for the relevant financial year. This requirement is justified by the analysis of the export insurance company
(a) the state of the funds in relation to the current and foreseeable development of the insurance exposures; and
(b) the value of the current and foreseeable amount of the primary capital in relation to the current and foreseeable evolution of the Solvency Capital Requirement and the Minimum Capital Requirement under Articles 4a (3) and 8 (7) of the Act and under the law governing insurance.
(3) In processing the draft amount of the subsidy from the State Budget resources to supplement the insurance funds referred to in point (a) of paragraph 2, the state of the funds for the insurance of export credit risks generated from the State budget in previous years and the anticipated changes to those funds following the allocation of profits to the company. When preparing the draft amount of the subsidy from the State Budget resources to supplement the insurance funds referred to in paragraph 2 (b), the Export Insurance Corporation shall be based on the actual values of the primary capital, the Solvency Capital Requirement and the Minimum Capital Requirement and on the assumptions of the values of these amounts at the end of each quarter of the year for which the State Budget is drawn up, depending on the current and foreseeable developments in the insurance exposures during that period.
(4) The release of approved subsidies from the state budget shall take place, as decided by the Ministry, on the basis of a request from the Export Insurance Corporation to supplement the funds referred to in paragraph 1, following a request under paragraph 2, in which the Export Insurance Corporation shall state the current status of the insurance liabilities and insurance funds and the assumption of the development of the values of these quantities for the forthcoming period of at least 90 days. Furthermore, the export insurance undertaking shall indicate in the application the actual values of the primary capital, the Solvency Capital Requirement and the Minimum Capital Requirement and the assumption of the values of these values at the end of each quarter of the current accounting year. These assumptions are a qualified estimate of export insurance companies.
(5) In the event of a decrease in the value of the primary capital of the Export Insurance Corporation below § 4a (3) of the Act or below the minimum capital requirement during the year, or if the Czech National Bank orders the Export Insurance Corporation to submit a recovery plan or a short-term financing plan to it for approval, it shall, without undue delay, request the Export Insurance Corporation, in accordance with § 8 (7) of the Act, to the Ministry to supplement the funds referred to in paragraph 1, following a request under paragraph 2. The application of the Export Insurance Corporation shall state the justification for the inadequacy of its primary capital to meet the Solvency Capital Requirement and the Minimum Capital Requirement, including the assumption of the future evolution of primary capital, Solvency Capital Requirement and the Minimum Capital Requirement at the end of each calendar year for the next three years, depending on the current and anticipated evolution of the insurance exposures during that period, and the proposal of measures to reduce its risk profile. These assumptions are a qualified estimate of export insurance companies.
(6) The total amount of funds and reserves must not fall below CZK 1.5 billion for more than 3 months.
(7) In the event of an expected fall in funds and provisions below the threshold set out in paragraph 6, the Export Insurance Corporation shall:
(a) at the end of the calendar quarter, notify the Ministry of expected claims;
(b) on the date of completion of the protocol containing the results of the insurance claim investigation, notify the dates and amounts of the insurance claim;
(c) submit to the Ministry a reasoned request for the addition of the funds in the manner referred to in paragraph 2.
(8) After assessing whether the requirements referred to in paragraphs 4, 5 and 7 (c) are justified, the amount requested shall be released as a subsidy from the State budget for the creation of funds for the insurance of export credit risks.
Requirement to include funds to cover losses
(1) The requirement to include the funds earmarked for the subsidy to cover the losses resulting from the operation of the long-term supported financing (hereinafter referred to as the "loss subsidy") will be applied by the Export Bank to the Ministry of Finance in drawing up the State Budget for the relevant financial year.
(2) The request referred to in paragraph 1 shall be made by the exporting bank by the end of February of each year on the basis of a qualified estimate of the amount of the loss compensation grant pursuant to Article 6 (5) of the Act; and
(a) an overview of the state of the liabilities arising from contracts for the acquisition of long-term financial resources concluded on the date of the submission of the application for the grant of loss compensation pursuant to Article 6 (5) of the Act;
(b) an overview of the estimated amount of long-term financial resources in the financial year due;
(c) an analysis of the estimated need to obtain new financial resources in connection with their use on 31 December of the financial year in question;
(d) the supporting documents and documents on the basis of which this request has been processed.
(3) The request referred to in paragraph 1 shall be accompanied by a qualified estimate to the Ministry of Finance of the State Budget subsidy requirement for the next two years following the current financial year. This qualified estimate of the export bank requirement shall demonstrate the medium-term outlook of the following items:
(a) net interest income;
(b) net revenue from fees and commissions;
(c) profit or loss on financial activities;
(d) administrative costs and depreciation,
(e) other operating income and costs;
(f) reserves and adjustments.
Application for a loss payment grant
(1) The request to grant a loss payment subsidy pursuant to Article 6 (5) of the Act is submitted by the Export Bank on the basis of the audited results of the management and calculation of the entitlement to the subsidy at 31 December of the year concerned, at the latest by 15 April of the following year.
(2) The request for a subsidy to cover losses is not submitted by the exporting bank unless a loss is recognised under Section 6 (5) of the Act.
(3) The request to grant a grant to cover losses includes:
(a) the amount of the grant required to cover losses for the previous financial year;
(b) information on the state guarantee status,
(c) an overview of commercial cases organised by type of trade and, in the case of commercial cases, type of credit transactions broken down by asset assessment rules issued by the Czech National Bank on the basis of the Bank Act, which contains the following information on each agreed business case within the framework of long-term supported financing:
1. the contract number or business case,
2. the identification of the Contracting Parties for each commercial case which is the name, registered office and identification number of the person, if assigned;
3. Indication whether the Contracting Party is, for example, an exporter, an export supplier, an importer, a guarantor or a guarantor,
4. type of transaction;
5. the amount of the transaction, expressed in the currency in which the transaction was concluded and in the crowns of the Czech Republic;
6. the amount of the credit framework and commitment,
7. the manner in which the contract is drawn up;
8. the method and value of the collateral;
9. the amount of the claim without an adjustment and the amount of the adjustment, provisions, depreciation costs for the claim; and
10. information on the modification of financial assets under IFRS 9 (International Financial Reporting Standards); and
(d) information on activities under the securities and book-entry programmes over the period.
(4) The application for a grant of loss compensation pursuant to Article 6 (5) of the Act shall be accompanied, in electronic form, by an electronic data medium:
(a) the main book of accounts, to the extent of the data and information to be provided for the supported financing, with a subsidy entitlement in detail, concluded on the last day of the period to which the application relates;
(b) all data and information on the basis of which the export bank has calculated the subsidy for the loss of the supported financing, in a structured spreadsheet form,
(c) the statutory auditor's report on the verification of the financial statements of the year to which the subsidy application relates; and
(d) all data and information on the basis of which the export bank has been calculated 100 basis points pursuant to Article 6 (2) of the Act, in tabular form.
Checks on the correctness of the amount of the loss compensation subsidy and the method of granting
(1) The Ministry of Finance will provide a quantification of the amount of the loss compensation subsidy on the basis of the outcome of the correctness check. The Ministry of Finance shall immediately initiate the calculation of the amount of the loss payment pursuant to Article 6 (5) of the Act.
(2) The Ministry of Finance will send the relevant amount of the grant to the Export Bank to an account held by the National Bank of the Czech Republic under the Budget Rules Act.
Comparison of interest differences
(K § 7b (7) of the Act)
(1) The interest difference is calculated using the formula:
where:
The interest is the interest difference,
The JO is the principal of the loan,
Rfix is the agreed fixed interest rate per year,
Ds is the number of days of interest-bearing balance of the principal of the credit in the settlement period,
Rt is the floating interest rate as a percentage of the year,
Mb is the system margin of the exporter bank.
(2) For the purpose of determining the floating interest rate, the six-month interest rate shall be used for the currency in which the export credit is granted, published by Reuters two working days before the beginning of the period for which the comparison is made.
(3) The interest rate on the currency in which the export credit is granted is as follows:
(a) EURIBOR for the euro;
(b) the reference interest rate for a currency other than the euro.
(4) For the purposes of converting the interest difference into Czech crowns, the exchange rate of the Czech koruna to the currency in which the export credit is granted, announced by the Czech National Bank for the last day of the interest period on which the interest difference is calculated, shall be used. The resulting amount shall be rounded down to the nearest crown.
Amount of the systemic margin of the exporter bank
(Paragraph 1 (4) of the Law)
The system margin of the exporter's bank shall be set at a premium of 0,5% per year to the floating interest rate referred to in Article 8 (2).
Decree No. 217 / 1995 Coll., implementing Sections 9 (a) and 9 (b) of Act No. 58 / 1995 Coll., on Insurance and Financing of Exports with State Aid and supplementing Act No. 166 / 1993 Coll., on the Supreme Audit Office, as amended, is hereby repealed.
This decree shall take effect on the day of its publication.
Minister:
Mgr. Svoboda v. r.
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Regulation Information
| Citation | Decree of the Ministry of Finance No. 278 / 1998 Coll., implementing the Act on Insurance and Financing of Exports with State Aid |
|---|---|
| Regulation Type | Order |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 30.11.1998 |
|---|---|
| Effective from | 30.11.1998 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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