22 U.S.C. § 2763: Credit sales

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. 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. 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. the term “concessional rate of interest” means any rate of interest which is less than market rates of interest; and 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. References in any law to credits extended under this section shall be deemed to include reference to participations in credits. 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). 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). 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. 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. 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 . 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. strengthen the United States-Philippines alliance in accordance with the historic agreement reached at the United States-Philippines 2+2 Ministerial Dialogue on August 2, 2024 ; enable the acceleration of phase three of the modernization of the Armed Forces of the Philippines; provide additional information to the Chairs of the United States-Philippine Bilateral Security Dialogue to enable planning and prioritization of Joint Capability Areas; support the execution of the Philippines-Security Sector Assistance Roadmap; and safeguard the territorial sovereignty of the Philippines; improve maritime domain awareness; counter coercive military activities; improve the military and civilian infrastructure and capabilities necessary to prepare for regional contingencies; and strengthen cooperation between the United States and the Philippines on counterterrorism-related efforts. Not later than March 1, 2026 , and annually thereafter for a period of 4 years, the Secretary of State, in coordination with the Secretary of Defense, shall submit to the appropriate congressional committees a plan describing how amounts authorized to be appropriated pursuant to subsection (e), if made available, would be used to achieve the purpose described in subsection (a). Not later than 270 days after the date of the enactment of this Act [ Dec. 18, 2025 ], and annually thereafter for a period of 4 years, the Secretary of State, in consultation with the Secretary of Defense and such other heads of Federal departments and agencies as the Secretary of State considers appropriate, shall submit to the appropriate congressional committees a report that describes steps taken to enhance the United States-Philippines defense relationship. coastal defense; long-range fires; integrated air defenses; maritime security; manned and unmanned aerial systems; mechanized ground mobility vehicles; intelligence, surveillance, and reconnaissance; defensive cybersecurity; military construction; maintenance and sustainment of military capabilities; and any other defense capabilities that the Secretary of State determines, including jointly with the Philippines, are crucial to the defense of the Philippines. An assessment of the absorptive capacity of the Armed Forces of the Philippines, including the coast guard, over the next 5 years. A description of how statutory authorities under title 10, United States Code, including under section 333 of such title and authorities relating to unspecified minor military construction and overseas humanitarian, disaster, and civic aid, will be used to provide support for the Philippines-Security Sector Assistance Roadmap and the defense capabilities described in subparagraph (A), prioritized according to the assessment of the absorptive capacity of the Armed Forces of the Philippines required under subparagraph (B). Each report required under paragraph (1) shall be submitted in unclassified form, but may contain a classified annex. During fiscal years 2026 through 2030, the Secretary of State may make direct loans available for the Philippines pursuant to section 23 of the Arms Export Control Act ( 22 U.S.C. 2763 ). Gross obligations for the principal amounts of loans authorized under subparagraph (A) may not exceed $1,000,000,000. has the meaning given such term in section 502(5) of the Congressional Budget Act of 1974 ( 2 U.S.C. 661a(5) ); shall include the cost of modifying a loan authorized under subparagraph (A); and may include the costs of selling, reducing, or cancelling any amounts owed to the United States or to any agency of the United States. Amounts authorized to be appropriated under subsection (e) may be made available to pay for the cost of loans authorized under subparagraph (A). The Government of the United States may charge processing and origination fees for a loan made pursuant to subparagraph (A), not to exceed the cost to the Government of making such loan, which shall be collected from borrowers through a financing account (as defined in section 502(7) of the Congressional Budget Act of 1974 ( 2 U.S.C. 661a(7) ). Amounts made available under any appropriations Act for any fiscal year may not be used to pay any fees associated with a loan authorized under subparagraph (A). Loans made pursuant to subparagraph (A) shall be repaid not later than 17 years after the loan is received by the borrower, including a grace period of not more than 1 year on repayment of principal. Notwithstanding section 23(c)(1) of the Arms Export Control Act ( 22 U.S.C. 2763(c)(1) ), interest for loans made pursuant to subparagraph (A) may be charged at a rate determined by the Secretary of State. Amounts made available under this paragraph for interest costs shall not be considered assistance for the purposes of any statutory limitation on assistance to a country. Amounts authorized to be appropriated under subsection (e) may be made available for the costs of loan guarantees for the Philippines under section 24 of the Arms Export Control Act ( 22 U.S.C. 2764 ) for the Philippines to subsidize gross obligations for the principal amount of commercial loans and total loan principal, any part of which may be guaranteed. may be made only to the extent that the total loan principal, any part of which is guaranteed, does not exceed $1,000,000,000; and may not exceed 80 percent of the loan principal with respect to any single borrower. another debt contracted by the borrower; or any other claims against the borrower in the case of default. Repayment in United States dollars of any loan guaranteed under this paragraph shall be required not later than 17 years after the loan agreement is signed. Notwithstanding section 24 of the Arms Export Control Act ( 22 U.S.C. 2764 ), the Government of the United States may charge processing and origination fees for a loan guarantee authorized under subparagraph (A), not to exceed the cost to the Government of such loan guarantee, which shall be collected from borrowers, or from third parties on behalf of such borrowers, through a financing account (as defined in section 502(7) of the Congressional Budget Act of 1974 ( 2 U.S.C. 661a(7) ). Amounts made available under this paragraph for the costs of loan guarantees authorized under subparagraph (A) shall not be considered assistance for the purposes of any statutory limitation on assistance to a country. Loan guarantees authorized under subparagraph (A) may be provided to entities doing business inside or outside the United States, notwithstanding any provision of the Arms Export Control Act ( 22 U.S.C. 2751 et seq.) that would otherwise limit eligibility for such guarantees based on geographic location or business operations. Amounts authorized to be appropriated to carry out this subsection may not be expended without prior notification of the appropriate committees of Congress. In addition to amounts otherwise authorized to be appropriated for Foreign Military Financing, there are authorized to be appropriated to the Department of State for Foreign Military Financing grant assistance for the Philippines not more than $500,000,000 for each of fiscal years 2026 through 2030. Of the amounts authorized to be appropriated pursuant to paragraph (1), not less than $500,000 is authorized to be appropriated each fiscal year for one or more blanket order agreements for Foreign Military Financing training programs related to the defense needs of the Philippines. Assistance may not be provided under this section after September 30, 2035 . the Committee on Foreign Relations, the Committee on Armed Services, and the Committee on Appropriations of the Senate; and the Committee on Foreign Affairs, the Committee on Armed Services, and the Committee on Appropriations of the House of Representatives. does not include a definitive list of items or quantities; and specifies a dollar ceiling against which orders may be placed.” “This Act may be cited as the ‘Eastern European Security Act’. deter aggression against North Atlantic Treaty Organization (NATO) allies by Russia or any other adversary; assist NATO allies in acquiring and deploying modern, NATO interoperable military equipment and reducing their dependence on Russian or former Soviet-era defense articles; ensure that NATO allies meet alliance defense commitments, including through adequate investments in national defense; supplement existing grant assistance to key allies through foreign military financing loans, at rates competitive with those already available on commercial markets, to purchase NATO-interoperable military equipment; and work to maintain and strengthen the democratic institutions and practices of all NATO allies, in accordance with the goals of Article 2 of the North Atlantic Treaty. to make direct loans under section 23 of the Arms Export Control Act ( 22 U.S.C. 2763 ) to NATO member countries that joined the alliance after March 1, 1999 , notwithstanding the minimum interest rate required by subsection (c)(1) of such section; and to charge fees for such loans under paragraph (1), which shall be collected from borrowers in accordance with section 502(7) of the Congressional Budget Act of 1974 [ 2 U.S.C. 661a(7) ], and which may be used to cover the costs of such loans as defined in section 502 of the Congressional Budget Act of 1974 [ 2 U.S.C. 661a ]. the recipient country is making demonstrable progress toward meeting its defense spending commitments in accordance with the 2014 NATO Wales Summit Declaration; and the government of such recipient country is respecting that country’s constitution and upholds democratic values such as freedom of religion, freedom of speech, freedom of the press, the rule of law, and the rights of religious minorities. A loan made under the authority provided by subsection (a) shall be repaid in not more than 12 years, but may include a grace period of up to 1 year on the repayment of the principal. the Committee on Foreign Affairs and the Committee on Appropriations of the House of Representatives; and the Committee on Foreign Relations and the Committee on Appropriations of the Senate.”