The Treasury Ministry has recently enacted, by Decree No. 87 of January 24 1997, published in the Official Gazette on April 2 1997, new provisions amending the terms, conditions and timing of state subsidies for export credits and credit in the execution of works abroad under Law No. 227 of May 24 1977.
The terms and conditions of such subsidies, effected by Mediocredito Centrale SpA, are now much stricter. The new regime, which applies to all applications filed with Mediocredito Centrale after April 18 1995, can be summarized as follows:
- transactions eligible for subsidy are (i) credit supply transactions or (ii) financial credit transactions, provided that the extension of payment granted to the foreign counterparty is at least 24 months and that the maximum duration does not exceed that set forth by international agreements;
- transactions eligible for subsidy are to be denominated in one of the convertible currencies for which reference interest rates (CIRRs) are periodically communicated, provided the denomination of the loan and that of the underlying commercial contract is the same. If the transactions are denominated in another currency, the subsidies can still be granted, provided the denomination of the loan and that of the underlying commercial contract is the same. However this is subject to the approval of the Treasury Ministry.
Mediocredito Centrale checks the adequacy of the financial conditions of the transactions and no longer subsidizes the usual/standard expenses and fees or the fees to be paid in a lump sum to banks performing disinvestment transactions with or without recourse without guarantee. Furthermore, Mediocredito Centrale does not subsidize any margins exceeding 2% of the cost of the funding for the lender.