(d) The Bank shall have power to determine any other terms and conditions of the guarantee.
Section 6. Special reserve
The amount of commissions received by the Bank under Sections 4 and 5 of this Article shall be set aside as a special reserve, which shall be used only for meeting liabilities of the Bank in accordance with Section 7 of this Article. The special reserve shall be held in such liquid form, permitted under this Agreement, as the Executive Directors may decide.
Section 7. Methods of meeting liabilities of the Bank in case of defaults
In cases of default on loans made, participated in, or guaranteed by the Bank:
(a) The Bank shall make such arrangements as may be feasible to adjust the obligations under the loans, including arrangements under or analogous to those provided in Section 4 (c) of this Article.
(b) The payments in discharge of the Bank's liabilities on borrowings or guarantees under Section 1 (a) (II) and (III) of this Article shall be charged:
- (I) first, against the special reserve provided in Section 6 of this Article.
- (II) then, to the extent necessary and at the discretion of the Bank, against the other reserves, surplus and capital available to the Bank.
(c) Whenever necessary to meet contractual payments of interest, other charges or amortization on the Bank's own borrowings, or to meet the Bank's liabilities with respect to similar payments on loans guaranteed by it, the Bank may call an appropriate amount of the unpaid subscriptions of members in accordance with Article II, Sections 5 and 7. Moreover, if it believes that a default may be of long duration, the Bank may call an additional amount of such unpaid subscriptions not to exceed in any one year one per cent. of the total subscriptions of the members for the following purposes:
- (I) To redeem prior to maturity or otherwise discharge its liability on all or part of the outstanding principal of any loan guaranteed by it in respect to which the debtor is in default.
