Under current law, the Department of State can make direct loans to members of the North Atlantic Treaty Organization to purchase U.S. defense articles. The department must charge an interest rate of at least 5 percent, and the loans must be repaid within 12 years. The subsidy costs of those loans are paid from discretionary appropriations. H.R. 2444 would waive the restriction on interest rates, authorize an additional year for loan repayment, and allow the department to charge fees to recover the subsidy cost of the loans.
On the basis of information from the department about how it would implement the bill, CBO estimates that the department would lend up to $4 billion each year and would charge interest and fees that are sufficient to substantially offset the cost of the loans. Thus, CBO estimates that implementing H.R. 2444 would have an insignificant effect on the federal budget; any costs would be subject to the availability of appropriated funds.
