of such assistance and, to the extent applicable, the information required by paragraphs (1) through (11) of subsection (b) of such section with respect to such assistance.

SUBTITLE B-CREDIT ASSISTANCE 361

SEC. 256.362 MICROENTERPRISE DEVELOPMENT CREDITS.

(a) FINDINGS AND POLICY.-Congress finds and declares that(1) the development of micro- and small enterprises is a vital factor in the stable growth of developing countries and in the development and stability of a free, open, and equitable international economic system; and

(2) it is, therefore, in the best interests of the United States to assist the access to financial services and the development of microenterprises 363 in developing countries and to engage the United States private sector in that process.

(b) 364 PROGRAM. -To carry out the policy set forth in subsection (a), the President is authorized to provide assistance to increase the availability of financial services to microenterprise households lacking full access to credit, including through

(1) loans and guarantees to microfinance institutions for the purpose of expanding the availability of savings and credit to poor and low-income households;

(2) training programs for microfinance institutions in order to enable them to better meet the financial services needs of their clients; and

361 Sec. 4(c)(2) of the Microenterprise Results and Accountability Act of 2004 (Public Law 108484; 118 Stat. 3922) inserted subtitle heading.

362 22 U.S.C. 2212. Formerly at sec. 108 (22 U.S.C. 2151f), transferred and redesignated as sec. 256 by sec. 4(a) and (b) of the Microenterprise Results and Accountability Act of 2004 (Public Law 108-484; 118 Stat. 3922). Other legislative references in this note, enacted prior to transfer and redesignation, refer to sec. 108.

Formerly titled "Private Sector Revolving Fund"; amended and restated by sec. 106 of the Microenterprise for Self-Reliance Act of 2000 (title I of Public Law 106-309; 114 Stat. 1085) to read "MICRO- AND SMALL ENTERPRISE DEVELOPMENT CREDITS". Subsequently amended by sec. 2(f) of Public Law 108-31 (117 Stat. 775) to read "MICROENTERPRISE DEVELOPMENT CREDITS". Earlier versions of the section were added by the International Security and Development Assistance Authorization Act of 1983 (sec. 101(b)(2) of the Further Continuing Appropriations, 1984; Public Law 98-151; 97 Stat. 972), and by sec. 2211 of the Omnibus Trade and Competitiveness Act of 1988 (Public Law 100-418; 102 Stat. 1335). Previously, the section authorized up to $18,000,000 in each of fiscal year 1986 and fiscal year 1987 to be deposited in the Private Sector Revolving Fund.

Sec. 4 of Public Law 108-31 (117 Stat. 775; 22 U.S.C. 2151f note), as amended, provided the following:

"SEC. 4. REPORT TO CONGRESS.

"Not later than September 30, 2005, the Administrator of the United States Agency for International Development shall submit to Congress a report that documents the process of developing and applying poverty assessment procedures with its partners.".

363 Sec. 2(a) of Public Law 108-31 (117 Stat. 775) struck out "the development of the enterprises of the poor" and inserted in lieu thereof "the access to financial services and the development of microenterprises".

364 Sec. 2(b) of Public Law 108-31 (117 Stat. 775) amended and restated subsec. (b). It formerly read as follows:

"(b) PROGRAM.-To carry out the policy set forth in subsection (a), the President is authorized to provide assistance to increase the availability of credit to micro- and small enterprises lacking full access to credit, including through

"(1) loans and guarantees to credit institutions for the purpose of expanding the availability of credit to micro- and small enterprises;

"(2) training programs for lenders in order to enable them to better meet the credit needs of microentrepreneurs; and

"(3) training programs for microentrepreneurs in order to enable them to make better use of credit and to better manage their enterprises.".

(3) training programs for clients in order to enable them to make better use of credit, increase their financial literacy, and to better manage their enterprises to improve their quality of life.

(c) ELIGIBILITY CRITERIA.-The Administrator of the Agency 365 shall establish criteria for determining which microfinance institutions 366 described in subsection (b)(1) are eligible to carry out activities, with respect to microenterprise households,367 assisted under this section. Such criteria may include the following:

(1) The extent to which the recipients of financial services 368 from the entity do not have access to the local formal financial sector.

(2) The extent to which the recipients of financial services 368 from the entity are among the poorest people in the country. (3) The extent to which the entity is oriented toward working directly with poor women.

(4) The extent to which the entity recovers its cost of lending.

(5) The extent to which the entity implements a plan to become financially sustainable.

(d) ADDITIONAL REQUIREMENT.-Assistance provided under this section may only be used to support programs for microenterprise households 369 and may not be used to support programs not directly related to the purposes described in subsection (b).

(e) PROCUREMENT PROVISION.-Assistance may be provided under this section without regard to section 604(a).

(f) AVAILABILITY OF FUNDS.

(1) IN GENERAL.-Of the amounts authorized to be available to carry out this part,370 there are authorized to be available such sums as may be necessary for each of the fiscal years 2005 through 2009 371 to carry out this section.372

365 Sec. 4(cX3XA) of the Microenterprise Results and Accountability Act of 2004 (Public Law 108-484; 118 Stat. 3922) struck out "Administrator of the agency primarily responsible for administering this part” and inserted in lieu thereof "Administrator of the Agency".

***Sec. 2(c)(1)(A) of Public Law 108-31 (117 Stat. 775) struck out "credit institutions" and inserted in lieu thereof "microfinance institutions".

*Sec. 2(cX1XB) of Public Law 108-31 (117 Stat. 775) struck out "micro- and small enterprises" and inserted in lieu thereof "microenterprise households".

*6* Sec. 2(c)(2) of Public Law 108-31 (117 Stat. 775) struck out "credit" and inserted in lieu thereof "financial services".

**Sec. 2(d) of Public Law 108-31 (117 Stat. 775) struck out "micro- and small enterprise programs and inserted in lieu thereof "programs for microenterprise households".

Sec. 4(c)3XBXi) of the Microenterprise Results and Accountability Act of 2004 (Public Law 108-484; 118 Stat. 3922) struck out "section 131" and inserted in lieu thereof "this part".

31 Sec. 4(c)(3)BXii) of the Microenterprise Results and Accountability Act of 2004 (Public Law 108-484; 118 Stat. 3922) struck out "$1,500,000 for each of fiscal years 2001 through 2004" and Enserted in lieu thereof “such sums as may be necessary for each of the fiscal years 2005 through 2009"

Previously, sec. 2(e) of Public Law 108-31 (117 Stat. 775) struck out "for each of fiscal years 2001 and 2002" and inserted in lieu thereof "for each of fiscal years 2001 through 2004".

Title II of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2005 (division D of Public Law 108-447; 118 Stat. 2809), provided the following:

"DEVELOPMENT CREDIT AUTHORITY

"(INCLUDING TRANSFER OF FUNDS)

For the cost of direct loans and loan guarantees provided by the United States Agency for International Development, as authorized by sections 108 and 635 of the Foreign Assistance Act 1961, funds may be derived by transfer from funds appropriated by this Act to carry out part If such Act and under the heading 'Assistance for Eastern Europe and the Baltic States': Proraded, That such funds shall not exceed $21,000,000, which shall be made available only for Continued

micro and small enterprise programs, urban programs, and other programs which further the purposes of part I of the Act: Provided further, That such costs, including the cost of modifying such direct and guaranteed loans, shall be as defined in section 502 of the Congressional Budget Act of 1974, as amended: Provided further, That funds made available by this paragraph may be used for the cost of modifying any such guaranteed loans under this Act or prior Acts, and funds used for such costs shall be subject to the regular notification procedures of the Committees on Appropriations: Provided further, That the provisions of section 107A(d) (relating to general provisions applicable to the Development Credit Authority) of the Foreign Assistance Act of 1961, as contained in section 306 of H.R. 1486 as reported by the House Committee on International Relations on May 9, 1997, shall be applicable to direct loans and loan guarantees provided under this heading.

"In addition, for administrative expenses to carry out credit programs administered by the United States Agency for International Development, $8,000,000, which may be transferred to and merged with the appropriation for Operating Expenses of the United States Agency for International Development: Provided, That funds made available under this heading shall remain available until September 30, 2007.".

Sec. 306 of H.R. 1486, as reported by the Committee on International Relations, May 9, 1997 (H.Rept. 105-94), sought to amend the Foreign Assistance Act of 1961 by adding a new sec. 107A to establish the President's authority to use development credit authority where recipients would otherwise not have access to such credit and that credit would be in keeping with U.S. development purposes. Sec. 107A(d), as referred to in the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2005, would have provided the following, if enacted: “(d) GENERAL PROVISIONS APPLICABLE TO Development CREDIT AUTHORITY. —

"(1) POLICY PROVISIONS.-In providing the credit assistance authorized by this section, the President should apply, as appropriate, the policy provisions in this part applicable to development assistance activities.

"(2) DEFAULT AND PROCUREMENT PROVISIONS.—

"(A) DEFAULT PROVISION.-The provisions of section 620(q) of this Act, or any comparable provisions of law, shall not be construed to prohibit assistance to a country in the event that a private sector recipient of assistance furnished under this section is in default in its payment to the United States for the period specified in such section. "(B) PROCUREMENT PROVISION. -Assistance may be provided under this section without regard to section 604(a) of this Act.

"(3) Terms and conditions of credit assistance.—(A) Assistance provided under this section shall be offered on such terms and conditions, including fees charged, as the President may determine.

"(B) The principal amount of loans made or guaranteed under this section in any fiscal year, with respect to any single country or borrower, may not exceed $100,000,000.

"(C) No payment may be made under any guarantee issued under this section for any loss arising out of fraud or misrepresentation for which the party seeking payment is responsible.

"(4) FULL FAITH AND CREDIT. -All guarantees issued under this section shall constitute obligations, in accordance with the terms of such guarantees, of the United States of America and the full faith and credit of the United States of America is hereby pledged for the full payment and performance of such obligations to the extent of the guarantee. "(5) CO-FINANCING AND RISK SHARING.

“(A) IN GENERAL.-(i) Assistance provided under this section shall be in the form of co-financing or risk sharing.

"(ii) Credit assistance may not be provided to a borrower under this section unless the Administrator of the United States Agency for International Development determines that there are reasonable prospects of repayment by such borrower.

“(B) ADDITIONAL REQUIREMENT.-The investment or risk of the United States in any one development activity may not exceed 80 percent of the total outstanding investment or risk.

"(6) ELIGIBLE BORROWERS.

"(A) IN GENERAL.-In order to be eligible to receive credit assistance under this section, a borrower shall be sufficiently credit worthy so that the estimated costs (as defined in section 502 of the Federal Credit Reform Act of 1990) of the proposed credit assistance for the borrower does not exceed 30 percent of the principal amount of credit assistance to be received.

"(B) ADDITIONAL REQUIREMENT.—(i) In addition, with respect to the eligibility of foreign governments as an eligible borrowers under this section, the Administrator of the United States Agency for International Development shall make a determination that the additional debt of the government will not exceed the debt repayment capacity of the government.

"(ii) In making the determination under clause (i), the Administrator shall consult, as appropriate, with international financial institutions and other institutions or agencies that assess debt service capacity.

"(7) ASSESSMENT OF CREDIT RISK.-(A) The Administrator of the United States Agency for International Development shall use the Interagency Country Risk Assessment System (ICRAS) and the methodology approved by the Office of Management and Budget to assess the cost of risk credit assistance provided under this section to foreign governments.

"(B) With respect to the provision of credit to nongovernmental organizations, the Administrator

"(i) shall consult with appropriate private sector institutions, including the two largest United States private sector debt rating agencies, prior to establishing the risk assessment standards and methodologies to be used; and

(2) COVERAGE OF SUBSIDY COSTS.-Amounts authorized to be available under paragraph (1) shall be made available to cover the subsidy cost, as defined in section 502(5) of the Federal Credit Reform Act of 1990, for activities under this section. SUBTITLE C-UNITED STATES MICROFINANCE LOAN FACILITY 373 SEC. 257.374 UNITED STATES MICROFINANCE LOAN FACILITY.

(a) ESTABLISHMENT.-The Administrator is authorized to establish a United States Microfinance Loan Facility (in this section referred to as the "Facility") to pool and manage the risk from natural disasters, war or civil conflict, national financial crisis, or short-term financial movements that threaten the long-term development of United States-supported microfinance institutions. (b) DISBURSEMENTS. —

(1) IN GENERAL.-The Administrator shall make disbursements from the Facility to United States-supported microfinance institutions to prevent the bankruptcy of such institutions caused by

(A) natural disasters;

(B) national wars or civil conflict; or

(C) national financial crisis or other short-term financial movements that threaten the long-term development of United States-supported microfinance institutions.

(2) FORM OF ASSISTANCE.-Assistance under this section shall be in the form of loans or loan guarantees for microfinance institutions that demonstrate the capacity to resume self-sustained operations within a reasonable time period.

(3) CONGRESSIONAL NOTIFICATION PROCEDURES. - During each of the fiscal years 2005 through 2009,375 funds may not be made available from the Facility until 15 days after notification of the proposed availability of the funds has been provided to the congressional committees specified in section 634A in ac

(ii) shall periodically consult with such institutions in reviewing the performance of such standards and methodologies.

"C) In addition, if the anticipated share of financing attributable to public sector owned or controlled entities, including the United States Agency for International Development, exceeds 49 percent, the Administrator shall determine the cost (as defined in section 502(5) of the Federal Credit Reform Act of 1990) of such assistance by using the cost and risk assessment determinations of the private sector co-financing entities.

18) USE OF UNITED STATES TECHNOLOGY, FIRMS, AND EQUIPMENT.-Activities financed under this section shall, to the maximum extent practicable, use or employ United States technology, firms, and equipment.".

Sec. 5(c)(1) of the Microenterprise Results and Accountability Act of 2004 (Public Law 108484, 118 Stat. 3922) added subtitle designation.

422 U.S.C. 2213. Added by sec. 107(a) of the Microenterprise for Self-Reliance Act of 2000 tite I of Public Law 106-309; 114 Stat. 1086) as sec. 132 (22 U.S.C. 2152b). Transferred and redesignated as sec. 257 by sec. 5(a) and (b) of the Microenterprise Results and Accountability Act of 2004 (Public Law 108-484; 118 Stat. 3922).

Sec. 107(b) of Public Law 106-309 provided the following:

b) REPORT.-Not later than 120 days after the date of the enactment of this Act, the Administrator of the United States Agency for International Development shall submit to the Comittee on Foreign Relations of the Senate and the committee on International Relations of the House of Representatives a report on the policies, rules, and regulations of the United States Microfinance Loan Facility, established under section 132 of the Foreign Assistance Act of 1961, as added by subsection (a).".

Sec. 5(c)2)(A) of the Microenterprise Results and Accountability Act of 2004 (Public Law 208-484, 118 Stat. 3922) struck out "2001 and 2002" and inserted in lieu thereof “2005 through

cordance with the procedures applicable to reprogramming notifications under that section.

(c) GENERAL PROVISIONS.

(1) POLICY PROVISIONS.-In providing the credit assistance authorized by this section, the Administrator should apply, as appropriate, the policy provisions in this part that are applicable to development assistance activities.

(2) DEFAULT AND PROCUREMENT PROVISIONS. —

(A) DEFAULT PROVISION.-The provisions of section 620(q), or any comparable provision of law, shall not be construed to prohibit assistance to a country in the event that a private sector recipient of assistance furnished under this section is in default in its payment to the United States for the period specified in such section.

(B) PROCUREMENT PROVISION.-Assistance may be provided under this section without regard to section 604(a). (3) TERMS AND CONDITIONS OF CREDIT ASSISTANCE.

(A) IN GENERAL.-Credit assistance provided under this section shall be offered on such terms and conditions, including fees charged, as the Administrator may determine.

(B) LIMITATION ON PRINCIPAL AMOUNT OF FINANCING. The principal amount of loans made or guaranteed under this section in any fiscal year, with respect to any single event, may not exceed $30,000,000.

(C) EXCEPTION. -No payment may be made under any guarantee issued under this section for any loss arising out of fraud or misrepresentation for which the party seeking payment is responsible.

(4) FULL FAITH AND CREDIT.-All guarantees issued under this section shall constitute obligations, in accordance with the terms of such guarantees, of the United States of America, and the full faith and credit of the United States of America is hereby pledged for the full payment and performance of such obligations to the extent of the guarantee.

(d) 376 FUNDING.—

(1) ALLOCATION OF FUNDS.-Of the amounts made available to carry out this part for each of the fiscal years 2005 through 2009, such sums as may be necessary 377 may be made available for

(A) the subsidy cost, as defined in section 502(5) of the Federal Credit Reform Act of 1990, to carry out this section; and

(B) the administrative costs to carry out this section. (2) RELATION TO OTHER FUNDING.-Amounts made available under paragraph (1) are in addition to amounts available under any other provision of law to carry out this section.

376 Sec. 5(c)(2)(C) of the Microenterprise Results and Accountability Act of 2004 (Public Law 108-484; 118 Stat. 3922) struck out subsec. (e), which had provided definitions applicable to the

section.

377 Sec. 5(c)(2)(B) of the Microenterprise Results and Accountability Act of 2004 (Public Law 108-484; 118 Stat. 3922) struck out "this part for the fiscal year 2001, up to $5,000,000" and inserted in lieu thereof "this part for each of the fiscal years 2005 through 2009, such sums as may be necessary".