An export credit agency (known in

trade finance Trade finance is a phrase used to describe different strategies that are employed to make international trade easier. It signifies financing for trade, and it concerns both domestic and international trade transactions. A trade transaction requir ...

as an ECA) or investment insurance agency is a private or quasi-governmental institution that acts as an intermediary between national governments and

exporter An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...

s to issue export insurance solutions and guarantees for financing. The financing can take the form of

credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...

s (financial support) or credit

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect ...

and

guarantee A guarantee is a form of transaction in which one person, to obtain some trust, confidence or credit for another, agrees to be answerable for them. It may also designate a treaty through which claims, rights or possessions are secured. It is to ...

s (pure cover) or both, depending on the mandate the ECA has been given by its government. ECAs can also offer credit or cover on their own account. This does not differ from normal banking activities. Some agencies are government-sponsored, others private, and others a combination of the two. ECAs currently finance or underwrite about US$430 billion of business activity abroad – about US$55 billion of which goes towards project finance in developing countries – and provide US$14 billion of insurance for new foreign direct investment, dwarfing all other official sources combined (such as the World Bank and Regional Development Banks, bilateral and multilateral aid, etc.). As a result of the claims against developing countries that have resulted from ECA transactions, ECAs hold over 25% of these developing countries' US$2.2 trillion debt. Export credit agencies use three methods to provide funds to an importing entity: * Direct Lending: This is the simplest structure whereby the loan is conditioned upon the purchase of goods or services from businesses in the organizing country. * Financial Intermediary Loans: Here, the export–import bank lends funds to a financial intermediary, such as a commercial bank, that in turn loans the funds to the importing entity. * Interest Rate Equalization: Under an interest rate equalization, a commercial lender provides a loan to the importing entity at below market interest rates, and in turn receives compensation from the export–import bank for the difference between the below-market rate and the commercial rate.

Officially supported export credits

Credits may be short term (up to two years), medium term (two to five years) or long term (five to ten years). They are usually supplier's credits, extended to the exporter, but they may be buyer's credits, extended to the importer. The risk on these credits, as well as on guarantees and insurance, is borne by the sponsoring government. ECAs limit this risk by being "closed" on risky countries, meaning that they do not accept any risk on these countries. In addition, a committee of government and ECA officials will review large and otherwise riskier than normal transactions.

Tied aid credits

Officially supported export credit may be connected to

official development assistance Official development assistance (ODA) is a category used by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure foreign aid. The DAC first adopted the concept in 1969. It is w ...

(ODA) in two ways. First, they may be mixed with ODA, while still financing the same project (mixed credit). As the export credit is tied to purchases in the issuing country, the whole package qualifies as a tied aid credit, even if the ODA part is untied aid. Second,

tied aid Tied aid is a kind of Aid, foreign aid. It must be spent on products and services provided by companies from the country providing the aid (the donor country) or in a group of specified countries. A developed country provides a bilateralism, bil ...

credits are not very different from export credits, except in interest, grace period (the time when there is no repayment of the principal) and terms of repayment. Such credits are separated from export credit by an OECD requirement that they have a minimum degree of "softness". "Softness" is measured by a formula that compares the

present value In economics and finance, present value (PV), also known as present discounted value (PDV), is the value of an expected income stream determined as of the date of valuation. The present value is usually less than the future value because money ha ...

of the credit with the present value of the same amount at standardized "commercial" terms. This difference is expressed as a percentage of the credit and called "concessionality level". Thus a grant has a concessionality level of 100%, a commercial credit scores zero per cent. The higher the concessionality level, the more the tied aid credit looks like ODA, the lower, the more it looks like an export credit. Partially untied credits consist of a tied and an untied part. The latter is usually intended to finance "local cost", investment cost to be made in the importing country. This part may also be in a local currency. Partially untied aid is treated as tied aid.

International regulation

Both officially supported export credits and tied aid credit and grants are extended on terms bound by the OECD's arrangement on official export credits. The Arrangement is a "Gentlemen's Agreement" amongst its Participants who represent most OECD Member Governments. The Arrangement sets forth the most generous export credit terms and conditions that may be supported by its Participants. The main purpose of Arrangement is to provide a framework for the orderly use of officially supported export credits. In practice, this means providing for a level playing field (whereby competition is based on the price and quality of the exported goods and not the financial terms provided) and working to eliminate subsidies and trade distortions related to officially supported export credits. Since 1999, country risk categories have been harmonized by the Arrangement and minimum premium rates have been allocated to the various risk categories. This is intended to ensure that competition takes place via pricing and the quality of the goods exported, and not in terms of how much support a state provides for its exporters. The Arrangement does not extend to exports of agricultural commodities or military equipment. A recent decision at the

World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization headquartered in Geneva, Switzerland that regulates and facilitates international trade. Governments use the organization to establish, revise, and enforce the rules that g ...

(WTO) indicates that the use of officially supported export credits in agriculture is bound by WTO members' commitments with respect to subsidised agricultural exports (see the WTO Appellate Body decision on the Brazil-US cotton case as it relates to the General Sales Manager (GSM) 102 and 103 programs and other US agricultural export credits, summarize
here
. At the EU level, the European Commission, in particular the Directorate General for Trade, plays a role in the harmonization of Export Credit Agencies and the co-ordination of policy statements and negotiation positions. This is based on

council A council is a group of people who come together to consult, deliberate, or make decisions. A council may function as a legislature, especially at a town, city or county/shire level, but most legislative bodies at the state/provincial or natio ...

decisions 73/391/EEC and 76/641/EEC. These decisions provide for prior consultations among member states on long term export credits. Member states may ask each other if they are considering to finance a specific transaction with official export credit support. EU members may not subsidize intra-EU export credits. The application of the OECD arrangement in providing export credit is mandatory in EU countries under Art. 1 of Regulation (EU) No. 1233/2011. The Berne Union, or officially, the International Union of Credit & Investment Insurers, is an international organisation for the export credit and investment insurance industry. The Berne Union and Prague Club combined have more than 70 member companies spanning the globe. Its membership includes both commercial and state-sponsored insurers.

Support and criticism

Some observers view state-sponsored export credits as nothing more than export subsidies by a different name. As such, the activities of ECAs are considered by some to be a type of

corporate welfare Corporate welfare refers to government financial assistance, Subsidy, subsidies, tax breaks, or other favorable policies provided to private businesses or specific industries, ostensibly to promote economic growth, job creation, or other public b ...

. Others argue that ECAs create debt in poor countries motivated not by development goals but to support rich countries' industry. In addition, ECAs may soak up aid money as debt relief programs predominantly relieve poor countries from debt owed to donor countries' ECAs. ECAs are also criticised for insuring companies against political actions that aim to protect

workers' rights Labor rights or workers' rights are both legal rights and human rights relating to labor relations between workers and employers. These rights are codified in national and international labor and employment law. In general, ...

, other

human rights Human rights are universally recognized Morality, moral principles or Social norm, norms that establish standards of human behavior and are often protected by both Municipal law, national and international laws. These rights are considered ...

, or the natural environment in the countries in which the investment is being made. Advocates of ECAs assert that export credits allow impoverished importers to purchase needed goods that would otherwise be unaffordable; export credits are components of a broader strategy of trade policies; and government involvement can achieve results that the private sector cannot, such as applying greater pressure on a recalcitrant borrower. These arguments for and against export credits are not new and have been studied at length in academic literature. For a good general discussion, see Baron, David P. The Export-Import Bank: An Economic Analysis. Academic Press. 1983.; or Eaton, Jonathan. "Credit Policy and International Competition." Strategic Trade Policy and the New International Economics, ed. Paul Krugman. MIT Press, Cambridge Mass. 1988.

List of export credit agencies

Export credit agencies

Africa Africa is the world's second-largest and second-most populous continent after Asia. At about 30.3 million km2 (11.7 million square miles) including adjacent islands, it covers 20% of Earth's land area and 6% of its total surfac ...

–

African Export-Import Bank African or Africans may refer to: * Anything from or pertaining to the continent of Africa: ** People who are native to Africa, descendants of natives of Africa, or individuals who trace their ancestry to indigenous inhabitants of Africa *** List ...

( Afreximbank) *

Asia Asia ( , ) is the largest continent in the world by both land area and population. It covers an area of more than 44 million square kilometres, about 30% of Earth's total land area and 8% of Earth's total surface area. The continent, which ...

–

Asian Development Bank The Asian Development Bank (ADB) is a regional development bank to promote social and economic development in Asia. The bank is headquartered in Metro Manila, Philippines and maintains 31 field offices around the world. The bank was establishe ...

* Islamic Corporation for the Insurance of Investment and Export Credit ("ICIEC") (part of the

Islamic Development Bank The Islamic Development Bank (, abbreviated as IsDB) is a multilateral development finance institution that is focused on Islamic finance for infrastructure development and located in Jeddah, Saudi Arabia. There are 57 shareholding member st ...

) *

(

IsDB Integrated Services Digital Broadcasting (ISDB; Japanese: , ''Tōgō dejitaru hōsō sābisu'') is a Japanese broadcasting standard for digital television (DTV) and digital radio. ISDB supersedes both the NTSC-J analog television system and ...

) *

Latin America Latin America is the cultural region of the Americas where Romance languages are predominantly spoken, primarily Spanish language, Spanish and Portuguese language, Portuguese. Latin America is defined according to cultural identity, not geogr ...

–

Inter-American Development Bank The Inter-American Development Bank (IDB or IADB) is an international development finance institution headquartered in Washington, D.C., United States of America. It serves as one of the leading sources of development financing for the countri ...

("IADB") *

–

Development Bank of Latin America and the Caribbean Development or developing may refer to: Arts *Development (music), the process by which thematic material is reshaped * Photographic development *Filmmaking, development phase, including finance and budgeting *Development hell, when a projec ...

("CAF") *

Nordic Development Fund The Nordic Development Fund is the joint multilateral development finance institution of Denmark, Finland, Iceland, Norway and Sweden. It was established in 1989 and adheres to the development assistance policies of the Nordic countries and has ...

("NDF") *

OPEC The Organization of the Petroleum Exporting Countries (OPEC ) is an organization enabling the co-operation of leading oil-producing and oil-dependent countries in order to collectively influence the global oil market and maximize Profit (eco ...

Fund for International Development ("OFfID") *Multilateral financial institutions ** African Trade Insurance Agency ("ATI") **

Central and Eastern Europe Central and Eastern Europe is a geopolitical term encompassing the countries in Baltic region, Northeast Europe (primarily the Baltic states, Baltics), Central Europe (primarily the Visegrád Group), Eastern Europe, and Southeast Europe (primaril ...

–

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...

( EU) **

–

European Investment Bank The European Investment Bank (EIB) is the European Union's investment bank and is owned by the 27 member states. It is the largest multilateral financial institution in the world. The EIB finances and invests both through equity and debt sol ...

("EIB") **

Multilateral Investment Guarantee Agency The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution which offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect foreign direct investments against ...

("MIGA') (part of

World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...

) **

International Finance Corporation The International Finance Corporation (IFC) is an international financial institution headquartered in Washington, D.C. and a member of the World Bank Group that offers investment, advisory, and asset-management services to encourage private ...

("IFC") (part of

*Sub-regional banks ** –

Australian Agency for International Development Australian Aid is the brand name used to identify projects in developing countries supported by the Australian Government. As of 2014 the Department of Foreign Affairs and Trade (DFAT) has been responsible for Australia's official development ...

(AusAID) ** – Austrian Development Agency (ADA) ** –

Canadian International Development Agency The Canadian International Development Agency (CIDA; in French: ''Agence canadienne de développement international''; ''ACDI'') was a federal Canadian organization that administered foreign aid programs in developing countries. The agency was me ...

(CIDA) ** – Danish Development Agency (DANIDA) ** – Department for International Development Cooperation ** –

Agence française de développement The French Development Agency (, AFD), known from 1992 to 1998 as the Caisse Française de Développement (CFD, ), is a public financial institution that implements France's development and international solidarity policies. It works to fight pov ...

(AFD) ** –

Kreditanstalt für Wiederaufbau The KfW, which together with its subsidiaries DEG, KfW IPEX-Bank and FuB forms the KfW Bankengruppe ("banking group"), is a German state-owned investment and development bank, based in Frankfurt. As of 2014, it is the world's largest national d ...

(KFW) ** –

Japan International Cooperation Agency The Japan International Cooperation Agency (), also known as JICA'','' is a governmental agency that delivers the bulk of Official Development Assistance (ODA) for the government of Japan. It is chartered with assisting economic and social gr ...

(JICA) ** – Netherlands Development Cooperation ** – New Zealand Official Development Assistance (NZODA) ** –

Norwegian Agency for Development Cooperation The Norwegian Agency for Development Cooperation (Norad) is a directorate under the Norwegian Ministry of Foreign Affairs. It is primarily concerned with offering development aid to international partners, but in matters regarding Norway's Inter ...

** – Foreign Insurance Agency of Russia ** –

Swedish International Development Cooperation Agency The Swedish International Development Cooperation Agency (, ) is a government agency of the Swedish Ministry for Foreign Affairs. Sida is responsible for organization of the bulk of Sweden's official development assistance to developing coun ...

(SIDA) ** –

Department for International Development The Department for International Development (DFID) was a Departments of the Government of the United Kingdom, ministerial department of the government of the United Kingdom, from 1997 to 2020. It was responsible for administering foreign aid ...

(DFID) ** – U.S. Agency for International Development (USAID)

Official export credit agencies by country

* – Compagnie Algérienne Assurance et de Garantie des Exportations, (CAGEX) * – Export Finance and Insurance Corporation ( EFIC) * –

Oesterreichische Kontrollbank The ''Oesterreichische Kontrollbank'' (OeKB, ) is a special-purpose financial institution in Austria, headquartered in Vienna. It was founded in 1946 and is owned by Austria's main banks. While technically a private-sector organization, part of ...

(OeKB) * – Export Import Bank of Bangladesh Limited * – Office national du Ducroire/Nationale Delcrederedienst (ONDD) * – Brazilian Guarantees Agency (ABGF),

Brazilian Development Bank The National Bank for Economic and Social Development or NBESD (, abbreviated: BNDES) is a development bank structured as a federal public company associated with the Ministry of the Economy of Brazil. The stated goal is to provide long-term fi ...

(BNDES) * –

Export Development Canada Export Development Canada (EDC; ) is Canada's export credit agency and a Crown corporation wholly owned by the Government of Canada. Its mandate is to support and develop trade between Canada and other countries, and help Canada's competitiveness ...

( EDC) * – Export-Import Bank of China (Exim), China Export & Credit Insurance Corporation (Sinosure),

China Development Bank China Development Bank (CDB) is a policy bank of China under the State Council. Established in 1994, it has been described as the engine that powers the national government's economic development policies.

(CDB), People's Insurance Company of China (PICC) ** –

Hong Kong Export Credit Insurance Corporation The Hong Kong Export Credit Insurance Corporation was established in 1966 under the Hong Kong Export Credit Insurance Corporation Ordinance (Chapter 1115). It was created by statute with the aim of encouraging and supporting export trade by pr ...

* – Banco de Comercio Exterior de Colombia (

Bancóldex The Bank of Foreign Trade (), Bancóldex, is a state owned commercial bankhttps://www.bancoldex.com/en that operates as Colombia's entrepreneurial development and export-import bank, providing long- and short-term financing and specialised finan ...

) * – Export Guarantee and Insurance Corporation ( EGAP), Czech Export Bank * – Export and Investment Fund of Denmark (EIFO) * – Export Credit Guarantee Company of Egypt, (ECGE) * – Kredex Krediidikindlustus (EST) * – Finnvera and its subsidiary Finnish Export Credit Ltd (FEC) * – BPIfrance Assurance Export ( BPI FAE),

Direction des Relations Economiques Extérieures Direction may refer to: *Body relative direction, for instance left, right, forward, backwards, up, and down ** Anatomical terms of location for those used in anatomy ** List of ship directions *Cardinal direction *Bearing (navigation) Mathemat ...

(Ministère de l'Economie) ( DREE) * – Euler Hermes Kreditversicherungs-AG, AuslandsGeschäftsAbsicherung der Bundesrepublik Deutschland * –

Export Credit Insurance Organisation An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ' ...

( ECIO) * – Hungarian Export Credit Insurance Ltd ( MEHIB), Hungarian Export-Import Bank * –

Export-Import Bank of India The Export-Import Bank of India (Exim Bank) is a specialized financial institution in India that was established in 1982. The bank's primary function is to finance, facilitate and promote India's international trade. It is owned by the Governm ...

, ECGC Limited * - Export Guarantee Fund of Iran,(EGFI) * – Israel Foreign Trade Risks Insurance Corporation, (ASHRA) * – SACE S.p.A. Servizi Assicurativi del Commercio Estero *-

Japan Bank for International Cooperation The , JBIC, is a Japanese public financial institution and export credit agency that was created on October 1, 1999, through the merger of the Japan Export-Import Bank (JEXIM) and the Overseas Economic Cooperation Fund (OECF). JBIC became the ...

( JBIC),

Nippon Export and Investment Insurance The , NEXI, is a Japanese insurance corporation owned by the Japanese government. The current organization was formed as an Independent Administrative Institution on April 1, 2001 under the jurisdiction of the Ministry of Economy, Trade and Indus ...

( NEXI) * – Jordan Loan Guarantee Cooperation ( JLGC), Loan Guarantee & Export Credit Guarantee * - Export Insurance Company Export Credit Agency of Kazakhstan, JSC * – Office du Ducroire (ODD) * – Banco Nacional de Comercio Exterior ( Bancomext) * –

Société Marocaine d'Assurance à l'Exportation Groupe Lactalis S.A. (doing business as Lactalis) is a French multinational dairy products corporation, owned by the Besnier family and based in Laval, Mayenne, France. The company's former name was Besnier S.A. Lactalis is the largest dairy pr ...

* –

Atradius Atradius provides trade credit insurance, surety and collections services worldwide through a presence in more than 50 countries around the globe. It is the credit insurance arm of Grupo Catalana Occidente (GCO.MC). Credit insurance, bonding and ...

* – Export Credit Office (ECO) * –

Nigerian Export-Import Bank The Nigerian Export-Import Bank (NEXIM) is an export credit agency in Nigeria, established in 1991. In its function, NEXIM focuses on the development and expansion of the non-oil sectors of the Nigerian economy, with a view to reducing the co ...

* – The

Norwegian Guarantee Institute for Export Credits The Norwegian Export Credit Guarantee Agency (, GIEK) is a public-sector enterprise that reports to the Ministry of Trade, Industry and Fisheries (MTIF). GIEK promotes Norwegian exports by issuing guarantees on behalf of the state. The guarantees h ...

( GIEK), Export Credit Norway * – The EXIM Bank of Pakistanhttp://eximbank.gov.pk/ * - Philippine Guarantee Corporation * – Korporacja Ubezpieczeń Kredytów Eksportowych ( KUKE) * – Companhia de Seguro de Créditos * – Export Insurance Agency of Russia * – Saudi Export Program, (SEP) * – Export-Import Credit Insurance Agency ( EICIA) * –

Korea Trade Insurance Corporation Korea is a peninsular region in East Asia consisting of the Korean Peninsula, Jeju Island, and smaller islands. Since the end of World War II in 1945, it has been politically divided at or near the 38th parallel between North Korea (Demo ...

( K-SURE), The Export-Import Bank of Korea ( KEXIM) * – Export-Import Bank of the Slovak Republic (Eximbank SR) * – Sri Lanka Export Credit Insurance Corporation ( SLECIC) * – Compañía Española de Seguros de Crédito a la Exportació
CESCEMinisterio de Economía
* –

Exportkreditnämnden Swedish National Export Credits Guarantee Board (, EKN) is a Sweden, Swedish government agency that answers to the Ministry for Foreign Affairs (Sweden), Ministry for Foreign Affairs. The agency is located in Stockholm. Its aim is to promote Swe ...

( EKN) * – Swiss Export Risk Insurance (SERV) * –

Export–Import Bank of the Republic of China The Export–Import Bank of the Republic of China (Chexim) () is a state-owned enterprise of the Ministry of Finance of Taiwan. It primarily offers credit insurance for foreign investment originating in Taiwan. The company also insures against p ...

* – Export Credit Bank of Turkey ( Türk Eximbank) * – Export Credits Agency (ECA) * – Etihad Credit Insurance (ECI

* – United Kingdom Export Finance ( UKEF) * – Export-Import Bank of the United States ( Ex-Im Bank), CoBank

References

External links

Berne Union
the leading international organisation

ECA Watch
international

NGO A non-governmental organization (NGO) is an independent, typically nonprofit organization that operates outside government control, though it may get a significant percentage of its funding from government or corporate sources. NGOs often focus ...

campaign on export credit agencies
European export credit agencies reform campaign
coordinated by

FERN The ferns (Polypodiopsida or Polypodiophyta) are a group of vascular plants (plants with xylem and phloem) that reproduce via spores and have neither seeds nor flowers. They differ from mosses by being vascular, i.e., having specialized tissue ...

The Use of Environmental and Social Criteria in Export Credit Agencies’ Practices
, by Markus Knigge et al. Published in 2003 by the Deutsche Gesellschaft fuer Technische Zusammenarbeit – GTZ {{DEFAULTSORT:Export Credit Agency de:Kreditversicherung fr:Crédit-export