Export credit agencies play an important role in international trade and investment flows. Exports insured or financed by the approximately 50 export credit agencies that are members of the Berne Union account for about 10 percent of their countries exports, which, in turn, represent about 78 percent of world exports. The IMF estimates that in 1997 debts to Berne Union members accounted for more than 21 percent of the total indebtedness of developing countries and economies in transition. Edited by Malcolm Stephens, this book provides useful background information to those whose involvement in international trade and investment brings them into contact with the services of export credit agencies.


Appendix I: Statistical Tables on Berne Union Members

Table A1.

New Business Covered by Berne Union Members

(In billions of U.S. dollars)

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Source: Annual and quarterly reports of members to the Berne Union.Note: New business covered is, for export credit, the value of new business insured or guaranteed, including cover given to suppliers in respect of bonds issued in favor of the buyer or borrower, plus the amount of direct lending issued during the year, whether on the export credit agency’s own account or on government account. For investment insurance, it is the amount invested under the terms of the investment insurance contract by the investor in the host country during the year, excluding interest and reinvested earnings and interest on insured loans.Medium- and long-term credit is that with a maturity of more than one year, and short-term credit that with a maturity of up to 360 days.Data prior to 1992 for developing countries are not available (n.a.). Data are actual data for medium- and long-term business; for short-term business, data are estimated on the basis of twice the average quarterly stock of such commitments outstanding during the calendar year. Data up to the quarter ended September 30, 1994, are for the 45 developing countries with the greatest amounts of new business covered by Berne Union members; thereafter data are for the top 65 countries (see Table A5).
Table A2.

Premiums Received by Berne Union Members

(In billions of U.S. dollars)

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Source: Annual reports of members to the Berne Union.Note: The amount of premiums received is, for both export credit and investment insurance, a cash figure showing either the gross amount actually received from policyholders or the amount invoiced during the year. No account is taken of any premiums passed on to reinsurers. Premiums or the equivalent (excluding funding costs) for direct lending are also included and represent the “charge” (premium for the credit risk). This figure may be actual or notional, depending on the system used by the reporting export credit agency (i.e., some agencies that lend do not charge premiums as such).
Table A3.

Annual Cash Flows of the Export Credit Business of Berne Union Members

(In billions of U.S. dollars)

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Source: Annual reports of members to the Berne Union.Note: The figures apply only to the export credit insurance and direct lending business of members, and not to their investment insurance business.Premiums received are as defined as in Table A2.Recoveries received are gross amounts, with no setoff against claims paid. No account is taken of sums passed on to reinsurers. Recoveries, including payments of moratorium interest, received in accordance with the terms of multilateral rescheduling or refinancing agreements (i.e., Paris Club agreements) are included. For direct lending business, the “recoveries” equivalent is the amount received in the current year on the “claims” equivalent (see below) shown at the previous year’s end.Claims paid are gross amounts, with no account taken of payments received from reinsurers. Funding costs in respect of unrecovered claims are excluded. Claims paid on debts included in a bilateral agreement in accordance with the terms of multilateral rescheduling or refinancing agreements (i.e., Paris Club agreements) are included, but any related funding costs are excluded. For direct lending business, the “claims” equivalent is the amount of principal and/or interest 90 days or more overdue at year’s end.Administrative costs are those related to both export credit insurance and guarantee business and direct lending business, including brokerage and commission payments to brokers and agents but excluding commissions, etc., received from the agency’s guardian authority and/or reinsurers.Annual cash flow is the sum of premiums and recoveries received, less the sum of claims paid and administrative costs, during the year.Cumulative cash flow is calculated as cash flow for the current year plus the cumulative figure for the preceding year, recalculated using the dollar exchange rate at the end of the current year.
Table A4.

Total Exposure of Berne Union Members

(In billions of U.S. dollars)

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Source: Annual reports of members to the Berne Union.Note: Exposure for export credit business is the value of outstanding short-term, medium- to long-term, and direct lending commitments at year’s end. Short-term commitments are estimates of the maximum amount outstanding (usually 50 percent of business covered during the year, less the uninsured percentage). Medium- and long-term commitments are the total amount outstanding (and not yet due for payment) at the end of the current year under each contract covered in the current year and previous years, including interest. Direct lending commitments are the total amount outstanding (and not yet due for payment) at the end of the current year under each loan covered in the current year and previous years. Interest, plus arrears not refinanced or rescheduled and claims not yet paid, debt not refinanced or rescheduled but where a claim has been paid, debt that has been refinanced or rescheduled, and arrears on refinanced and rescheduled debt, is included for both medium- and long-term business and direct lending business. Exposure for investment insurance is the total amount of investment remaining covered at year’s end.Data prior to 1992 for developing countries are not available (n.a.). Data are actual data for medium- and long-term business; for short-term business, data are estimated on the basis of twice the average quarterly stock of such commitments outstanding during the calendar year. Data up to the quarter ended September 30, 1994, are for the 45 developing countries with the greatest amounts of new business covered by Berne Union members; thereafter data are for the top 65 countries (see Table A5).
Table A5.

Major Developing and Transition Economies Used for Berne Union Reporting

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Source: Berne Union.

Appendix II: Glossary of Terms Commonly Used in Export Credit, Export and Project Finance, and Investment Insurance

Export credit is, unfortunately, not characterized by a lack of jargon. This glossary therefore tries to give some explanation and background for some of the most commonly used terms. Obviously it is not comprehensive, but it may both help to explain some of the terms used elsewhere in this volume (and more widely) and be of use for more general reference.

This glossary is not intended as a general dictionary of economic and commercial terms. Rather, it has been prepared from the standpoint of an export credit agency, and so the terms are defined and explained primarily in a practical way and with reference to how they are used by, in, and between export credit agencies. Terms in boldface within an entry may be found under their own entries elsewhere in the glossary.

Advance payment bond, advance payment guarantee. A bond or guarantee issued, usually by a bank, on behalf of an exporter or export contractor in favor of an importer or buyer, to protect the latter against the risk that, having made a down payment or deposit or progress payments on a contract, the exporter may not meet the terms of the contract. If this happens, the bond or guarantee may then be called (i.e., payment required) by the importer. These bonds are usually conditional in the sense that they cannot be called unless the exporter is, or can be shown to be, in breach of the contract. The terms and conditions vary from bond to bond and from country to country. Some export credit agencies will consider issuing such bonds themselves, and others will provide insurance against their unfair calling for political reasons.

Advising bank. The bank in the exporter’s country that agrees to pay the exporter if the terms and conditions of a letter of credit have been met and (unless the advising bank has confirmed the letter of credit) if the funds have been transferred to it by the opening bank in the importer’s or buyer’s country.

À forfait. See forfait.

Agreed minute. The framework document setting out the terms of a rescheduling or other arrangement between a debtor country and its Paris Club creditors. This document specifies the types of debts to be involved, the cutoff date, the consolidation period during which the debt repayments have fallen or will fall due, the proportion of repayments to be rescheduled, any down payments to be made, and the new repayment schedule. The agreed minute will then be implemented through bilateral agreements negotiated between and signed by the individual creditor countries and the debtor country.

Aid. See bilateral aid.

All vetting. A technique applied when an export credit agency is concerned about repayment risks (either political risk or commercial risk, or both) in a buying or importing country and so requires that exporters apply for separate credit limits on all buyers. That is, exporters cannot use the arrangements that apply in most short-term export credit insurance policies for discretionary limits, which allow them, within certain defined areas or under certain conditions, to set their own credit limits. If the situation in the importing country is very serious, the export credit agency may make the all vetting credit limit only usable once, so that exporters have to reapply for a new limit for follow-up orders or contracts.

Annual maturities limit (AML). A technique used by some export credit agencies as a quantitative control on the amount of exposure they are prepared to accept (normally for medium- and long-term business) on a particular buying country. For example, under an AML of $25 million, an agency will continue to underwrite new business until total repayments from the buying country under insured contracts reach $25 million in any one year. The country will then be reassessed, or the export credit agency will go off cover.

Arrangement. See OECD Arrangement.

Arrears. (1) Overdue payments on contracts or loans that an export credit agency has insured but on which no claims have yet been paid to the insured exporter or bank. (2) Overdue payments of principal or interest under a Paris Club agreement on already rescheduled debts.

Ascertainment of loss. The process by which an export credit agency examines a claim submitted by an exporter, bank, or investor. Claims are not paid until the process of ascertaining loss has been completed and the claim is found to be a valid claim.

Assignment. The transfer of rights and/or obligations under a contract from one party to another. With respect to export credit this most often applies where an exporter assigns the benefits of insurance it has obtained from an export credit agency to a bank as security for financing. In other words, part of the security for the bank is the exporter’s export credit insurance, but there is no separate or additional insurance issued to the bank by the export credit agency.

Aval. A generally recognized and widely used form of guarantee of payment, given normally by a bank. An aval normally takes the form of an endorsement “per aval” from the bank, with the appropriate signature, on the back of a bill of exchange or promissory note (which improves the security from the buyer to the bank). This then puts the bank broadly into the position of an opening bank under a letter of credit. The legal enforceability of an aval may vary from country to country but should always be checked in advance. Such bills and notes are widely used in connection with forfait transactions.

Avaliser, avalising bank. A bank that issues an aval.

Back end-loaded repayment. A type of repayment profile in which earlier repayments are much smaller (or less frequent) than later ones. Such a profile is most common in medium- and long-term lending for projects, where it often takes time for cash flows or project earnings to build up (e.g., a telecommunications project) or for a plant to ramp up to full production (e.g., an aluminum smelting project). Such unequal or irregular payments have not been permitted under the OECD Arrangement but may become so under the new flexibility to be introduced in 1999 for project financings.

Balloon payment. The old-fashioned name for back end-loaded repayment.

Banker’s acceptance. A document under which a bank agrees to make payment to the bearer at a specified future date. These acceptances can usually be sold on the market, at a discount that depends both on when the payment is due and on the reputation and location of the bank. Banker’s acceptances are widely used in short-term business.

Barter. See countertrade.

Berne Union. The International Union of Credit and Investment Insurers. Established in 1934, this organization now has almost 50 of the largest export credit agencies and investment insurers from both member and nonmember countries of the Organization for Economic Cooperation and Development among its members. Institutions, not their governments, are members. The Union works for the acceptance of sound principles of export credit and investment insurance and the exchange of information and experience. It also has adopted a series of agreements and understandings by which members undertake to abide by certain maximum credit terms and terms for goods. The secretariat is in London, and members hold two general meetings each year as well as specialist seminars and workshops.

Bid bond. A bond or guarantee, normally issued by a bank on behalf of an exporter in favor of a buyer, that provides that if an exporter submits a bid or tender and is awarded the contract, but then fails to conform or to comply with the terms of its tender, the bond may be called. A bid bond gives the buyer some financial assurance that bidders will comply with the terms of their bids. In theory, the calling of the bond should compensate the buyer for the costs of the aborted tender and of retendering and reawarding the contract. A few export credit agencies are prepared to issue such bonds, which are normally conditional; others will insure the risk of their unfair calling for political reasons. Sometimes also called tender bonds, bid bonds do not normally have the format of demand bonds, which are largely unconditional and so rather dangerous.

Bilateral agreement. An agreement reached between a single debtor and a single creditor country putting into effect a debt rescheduling agreed within the Paris Club. In some creditor countries these agreements have the status of international treaties.

Bilateral aid. Assistance provided on a concessional basis from one country to another. Export credit agencies’ facilities are almost without exception not bilateral aid, because such agencies in countries that are members of the World Trade Organization are required under its rules to break even. In cases where export credit agency facilities are blended with bilateral aid to create a mixed credit, these are carefully monitored and controlled under the OECD Arrangement.

Bilateral debt. In the context of the Paris Club, debt between an individual (normally public or sovereign) debtor and a sovereign creditor. Such debt may have arisen from the existence of the associated export credit agency facilities but becomes subject to rescheduling when the debtor encounters difficulties. Creditors are thus governments or export credit agencies, and the governments of the debtor countries bear responsibility for repayment of the rescheduled debts.

Bill of exchange. An unconditional order in writing from one party to another requiring the latter, if it accepts the order, to make payment on demand on the due payment date. Thus, in export transactions, a bill of exchange is drawn up by the exporter and accepted by the importer, who then is responsible for paying on presentation of the bill at the appropriate time. When the bill bears no date, it is normally referred to as a sight bill. Where credit is involved, bills are variously referred to as time bills, tenor bills, or usance bills. Once accepted, bills can be sold or discounted. Bills accepted by companies with a high credit rating or that have the aval of a bank are often used in forfait transactions. Export credit agencies frequently stipulate the use of bills of exchange by exporters, especially when underwriting medium-term supplier credit transactions. Bills of exchange are carefully controlled by law in many countries.

Bill of lading. A very important document in international trade that provides evidence of receipt of goods by the shipper, gives details of the conditions of transport, and, importantly, normally conveys title to the goods. When presented to the shipper, for example after being released by a bank, a bill of lading is usually sufficient to obtain the release of the goods.

BOO (build-own-operate). See build-operate-transfer.

BOOT (build-own-operate-transfer). See build-operate-transfer.

Build-operate-transfer (BOT). A form of project financing often used for electric power projects. In its most common form, a host government or power authority in an importing country awards a concession to an entity (the concessionaire) to build, for example, a power station and then operate it for a time before handing it over to the host government. The concessionaire may be a specially formed project or vehicle or sponsoring company, possibly with foreign shareholding, or an established foreign electric power company. The transfer normally occurs at the end of the concession period. Variations on this model include build-own-operate (BOO) and build-own-operate- transfer (BOOT) arrangements.

Build-own-operate. See build-operate-transfer.

Build-own-operate-transfer. See build-operate-transfer.

Buyer. For export credit agencies this can be a very important and rather technical area. Risks on buyers (e.g., default and insolvency) are commercial risks that export credit agencies normally insure. Buyers are normally divided into categories. Private buyers have to be underwritten on the basis of their own financial strength and track record (or guarantees or security must be sought). Public buyers may not have private shareholders but can nevertheless be sued and made bankrupt. They therefore must be underwritten individually in their own name. Sovereign buyers are those able to commit the full faith and credit of their governments and cannot be made bankrupt or insolvent. Most export credit agencies are now much more cautious about accepting buyers as sovereign buyers, for which they sometimes give lower premium rates and wider forms of cover.

Buyer credit. An arrangement in which an exporter enters into a contract with a buyer, which is financed by means of a loan agreement between a bank in the exporter’s country and a bank in the buyer’s country (see Figure 7 on page 11). Such arrangements are most frequently used to finance capital goods or projects on a medium- or long-term basis. The export credit agency in the exporting country typically provides its facilities to the lending bank. The exporter can draw on the loan as the work is done and accepted (these disbursements are called loan drawings or progress payments). Interest on the loan is payable during the drawdown period, but repayments on principal do not normally begin until the project is completed and the loan fully drawn. Some export credit agencies are also willing to provide a separate facility to the exporter against risks that could arise during the construction period and where the exporter could face losses on costs incurred, but that cannot, for various reasons, be drawn from the loan. A line of credit is a variation of the buyer credit technique. In another variation, the importer or buyer pays the exporter directly but can then be reimbursed from the buyer credit loan (a reimbursement credit). An important feature of buyer credits is that the borrower must repay all drawings from the buyer credit loan, irrespective of what may have happened on the contract or project being financed. Thus, any failure on the part of the exporter to meet the terms of the contract does not provide grounds for defaulting on the loan; rather, the exporter must be pursued by the legal remedies provided for in the contract. This separation of obligations, rights, and responsibilities under the contract from those under the loan agreement is sometimes known as the Isabella clause.

Buyer limit. See credit limit.

CAD. See Cash against documents.

Capitalized interest. Interest that, upon falling due, is added to the principal rather than paid. This would normally arise under a buyer credit. Interest capitalization is fairly common practice during the period before a project is completed—that is, when it is not generating cash flow—but is rarely allowed over a longer period or for interest payments falling due during the credit period. It is subject to the terms of the OECD Arrangement.

Capricious calling. For export credit agencies, this normally arises in the context of the unfair calling of bonds and guarantees (e.g., performance bonds). A capricious call would be an unfair calling, that is, one done for political reasons rather than for reasons justified by the situation in the contract or project itself or by the terms of the contract.

Carencia. Now a rather old-fashioned name for the grace period before the first principal repayment of a loan, or the first credit installment in a contract, is due. Such provisions are not permitted under the OECD Arrangement if they exceed six months beginning from the starting point of credit.

Case reserves. See provisions, reserves.

Cash against documents (CAD). A method of payment in international trade in which the documents giving title to the goods are released by the bank to the importer either against cash or according to the payment terms of the relevant invoice. Thus, no bill of exchange or promissory note is involved. CAD leaves exporters exposed to a range of risks, such as cancellation of the order or default in payments on the invoice. Hence, CAD does not mean that export credit agency facilities are not relevant; indeed, they may be required by exporters to provide protection against these risks or in order to obtain bank finance.

Cash flow. Cash received or paid in a specified period. Analysis of past or future cash flows is usually an important part of the process of underwriting a project or a buyer.

Cash payments. See down payment.

Cash with order (CWO). An arrangement whereby a buyer or importer makes payment when an order is confirmed, and so, normally, before the seller or exporter begins work and incurs costs. Although obviously attractive and secure from the exporter’s point of view, by the same token CWO arrangements leave the importer exposed to a range of risks. See also advance payment bond.

Causes of loss. The risks normally covered by export credit agencies most frequently under supplier credit transactions. Examples include default of the buyer or enactment of a law preventing the transfer of foreign currency. Thus, before an export credit agency will pay a claim, it will look at the circumstances to determine whether the event giving rise to the claim is a cause of loss covered by its policy document.

CEN. See confiscation, expropriation, and nationalization.

CIRRs. See commercial interest reference rates.

Claim. A request for payment by an insured party that believes it has suffered a loss covered by the policy. When an export credit agency has issued cover to an exporter or bank, and appropriate premiums have been paid, if the insured exporter or bank then does not receive payments or repayments covered under the policy, it will submit a claim to the export credit agency. The claim is then examined against the insured causes of loss set out in the policy, and if ascertainment of loss is possible (i.e., if the claim is valid), the export credit agency will pay the exporter or bank, after the appropriate claims waiting period. The export credit agency and the exporter or bank will then cooperate to try to obtain recoveries from the buyer or borrower or its government. Until recovery is made, the claim is regarded as an unrecovered claim, and if all or part of it is eventually written off, it is classified as a loss. In some countries, claims are also referred to as indemnities, and the payment of claims as indemnification.

Claims waiting period (CWP). The period before a claim is paid. All export credit insurance policies include provisions specifying the earliest date after filing on which a claim may be paid. These are normally different for different causes of loss. A CWP is established partly to avoid claims being submitted prematurely and clogging up the system when payment may only be temporarily delayed. But another reason is to give the export credit agency time to examine the circumstances of the claim before ascertainment of loss is complete and the agency accepts the claim as a valid claim.

Cofinancing. Joint or parallel financing, normally of a project, where part of the financing involves export credit agency support and the rest comes from another source or sources, such as bilateral loans or grants, an internaltional financial institution, or a commercial bank, Whatever the other source, there will almost always be at least two separate financing streams.

Coinsurance. Normally joint (but sometimes parallel) insurance on a project or contract involving two or more insurers, one of which is an export credit agency and the other usually another export credit agency but could be a private insurer.

Collecting bank. A name sometimes applied to the advising bank in letter of credit transactions.

Collection agency. See debt collector.

Commercial credit. In a Paris Club context, nonaid credit supported by export credit agencies. In a wider export credit context, the term sometimes refers to those parts of a cofinancing that do not involve export credit agencies.

Commercial interest reference rates (CIRR). Figures published monthly by the Organization for Economic Cooperation and Development, which represent the lowest interest rates for each of the major currencies at which export credit agencies may support credits of over two years’ maturity. They are generally set by reference to government borrowing rates in the appropriate currency plus a margin.

Commercial risk. One of the two main categories of risk insured by export credit agencies (the other being political risk). The term applies primarily to the risk of nonpayment by a private buyer or commercial bank or a public buyer due to default (protracted or otherwise), insolvency or bankruptcy, or failure or unwillingness to take delivery of the goods (i.e., repudiation). Usually excluded are cases where there are disputes between exporter and importer about product quality, delivery dates, performance, and the like. Claims will generally not be considered until these disputes are resolved. Also usually excluded are commercial risks on sales from exporters in one country to their subsidiaries in other countries.

Commitment. (1) An offer made by an export credit agency to an exporter or bank to provide facilities, where the offer may not yet have been taken up but where the agency cannot withdraw the offer. (2) The total exposure of an export credit agency to a country. This includes all outstanding exposure on business already finalized and on offers made but not finalized, and all principal and outstanding contractual interest on loans extended by the agency, even on undrawn or partially drawn facilities. Use of the term may vary among export credit agencies. Some, for example, include arrears, overdue payments, and unrecovered claims, whereas others exclude them. Therefore it is advisable to check what an agency’s commitments figure covers before placing too much weight on it.

Compensation trade. See countertrade.

Comprehensive facility. (1) An export credit facility that embraces both political risk and commercial risk. (2) The preference of export credit agencies, in their short-term business, to diversify or balance their risk, or agencies’ requirement or preference that exporters take out insurance for exports to a range of countries and buyers. This is done to try to reduce the risk that the exporters or their banks will select against the export credit agency, insuring only what they perceive as the worst risks.

Concession agreement. In project financing, an agreement normally awarded or signed by the host government giving the entity building the project (the project or concession company, or the project sponsor or concessionaire) the right to operate the project for a specified period. This period will normally be at least the length of the credit period.

Concession period. The duration of a concession agreement.

Concessionality. A measurement of the grant element of (usually) a loan. For example, a pure grant would have 100 percent concessionality. For a loan, the concessionality element is the difference between the face value of the loan and the present value of the sum of discounted future repayments to be made by the borrower, expressed as a percentage of the face value. The OECD Arrangement sets out requirements for maximum levels of concessionality in transactions where export credit agency facilities are involved, and minimum levels of concessionality for mixed credits.

Conditions precedent. The stipulation in a buyer credit transaction that the exporter may not draw on the loan (or that the loan agreement may not become fully effective) until certain actions have been completed or events have taken place. Such actions and events might include payment of the appropriate premium, the obtaining of legal opinions, or payment of an appropriate down payment.

Confirmed letter of credit. See letter of credit.

Confiscation, expropriation, and nationalization (CEN). A major category of risks covered by insurers, especially investment insurers. The common factor in these risks is that they involve assets being taken over by the host government without appropriate compensation.

Consensus. See OECD Arrangement.

Consignment cover, consignment stocks cover. Cover for goods shipped by an exporter and held in a foreign country but that remain under the ownership of the exporter. Short-term export credit facilities can provide cover against some of the risks of holding stock in other countries (e.g., expropriation or inability to reexport). In addition, export credit agencies can provide their usual cover for sales made from stocks to local buyers in the country or countries concerned, or reexported to buyers in other countries.

Construction period. The period before a project is completed or while goods are being made prior to delivery. Also called the preshipment period or the precredit period. Export credit agencies may provide cover to exporters for risks arising during this period.

Contract limit. A restriction applied by some export credit agencies to control the buildup of their cover on individual countries, normally from medium- and long-term business. Agencies set maximum amounts (e.g., $10 million) on the contracts they will insure. The rationale is to try to make cover available for as many contracts as possible and not to use it all on one large contract. Rationing in this way both results in a better and wider spread of risks and keeps more exporters happy.

Conversion risk cover, convertibility cover. See transfer cover.

Cosmetic interest rate. An interest rate set out in a contract or loan agreement that does not reflect the true interest rate. This charade is used in some medium- and long-term export credits. The interest rates on transactions supported by export credit agencies are set by reference to the OECD Arrangement. However, because some buyers or borrowers seek a lower interest rate, the difference between the true interest rate and the desired rate may be calculated and hidden in the contract price or in the principal of the loan.

Cost escalation cover. Insurance against significant inflation in the manufacturing costs of capital goods during the construction period. Such cover may be offered when price increases are not covered by provisions in the contract. This form of cover is now only rarely used by export credit agencies.

Cost overruns. Costs incurred during execution of a project that turn out to be higher than anticipated when the project and its financing arrangements were signed. Usually at the outset some provision (and associated funding or financing arrangements) for cost overruns will have been made, and the basic construction contract should specify who is responsible for any overruns. Often the contractor is assigned responsibility (backed up by completion agreements, etc., put in place by the time work starts). But even if costs still exceed the contracted amount and the amount of cost overruns provided for, or appear likely to do so, there will normally be a common interest in finishing the project, since all parties, including the export credit agencies involved, depend on the successful operation of the project to repay loans, earn profits, and so on. Clearly the issue of cost overruns is one that should be analyzed carefully before project financings are finalized

Countertrade. Barter, or the exchange of goods for goods. In practice, such direct exchange is relatively rare in international trade. More commonly, exports of goods are priced in money in the usual way, but the resulting debt is repaid in goods, which are also priced in a contractually agreed way. In its simplest form the same parties are involved on both sides of both transactions. Probably more common, however, is the case where, on the “repayment leg,” the goods are sold to others who pay into an escrow account, which is then used to repay the debt to the original exporter or bank. Offsets may be seen as a kind of countertrade. It probably still remains the case that there is more talk about countertrade than actual business.

Country categories, country risk categories. Most export credit agencies classify buying countries into different categories, whose primary impact is on the premium rates charged for political risk. These categories usually apply only to medium- and long-term business. The number of categories varies from one export credit agency to the next, but beginning in 1999 some greater standardization will be achieved, with the inclusion of minimum political risk premium rates and a common country classification model in the OECD Arrangement. Normally those countries in an agency’s category 1 or A are those regarded as having the lowest political risk.

Country limit. A quantitative limit on exposure set by most export credit agencies to monitor and control their total commitments on individual countries. Country limits apply usually to medium- and long-term business and only rarely include short-term business. They can have various forms, including annual maturities limits and contract limits.

Cover. The insurance provided by an export credit agency. Thus, for example, if some insurance facilities are available from such an agency for country X, that agency is “on cover” for that country. Conversely, where no insurance facilities are available, the agency is said to be “off cover.” An agency’s underwriting policy on a particular buying country is usually referred to as its cover policy for that country. But the term “cover” is also used more loosely, to embrace insurance against both political and commercial risks.

Credit insurance. The principal product of an export credit agency. However, the term can include both export credit insurance and domestic credit insurance (i.e., insurance on sales within a country). Credit insurance protects the insured party (normally the seller), in exchange for a premium, against a range of risks that result in nonpayment by the buyer. In domestic cover, only commercial risks are involved. In export credit cover, both commercial and political risks are normally involved.

Credit limit. The maximum amount of credit that an export credit agency will insure on an individual buyer. The setting of credit limits is the basic technique that export credit agencies use to control, measure, and manage risk in issuing their short-term facilities. Exporters apply for such limits on individual importers. When a credit limit is approved by the underwriters, it normally includes the maximum exposure to the buyer to which the exporter may agree, whether any security such as a letter of credit will be required, the maximum maturity of the credit (normally 180 days), and whether limits may be used once only or on a rollover basis. In order to underwrite credit limits in a manner and on a time scale acceptable to exporters, an export credit agency needs information on huge numbers of buyers in other countries. The sheer volume of the resources (e.g., for information technology) required to obtain such information and keep it up-to-date is a significant barrier to new entrants to this kind of insurance.

Credit period. The period from the time of delivery or acceptance of goods (for short-term business) or from the commissioning of the project (in project financing) until repayment is complete. Maximum credit periods are set for repayment periods. The starting point of credit for short-term business is set by Berne Union agreements, and that for medium- and long-term business by the Berne Union and the OECD Arrangement.

Credit terms. The terms or main features relating to the repayment of credit, including the length of credit, the repayment profile, the interest rate, the amount of any down payment, and so on.

Credits mixtes. See mixed credit.

Creeping expropriation. Discriminatory action by a host government that effectively undermines the value of an investment. It can also arise when host governments breach understandings or agreements undertaken in project financings, leading directly to defaults of various kinds.

Cutoff date. In the context of the Paris Club, the date that sets the threshold for eligibility of debts to be considered for rescheduling. A cutoff date is established when a country first goes to the Paris Club. It is typically set a year or two prior to the first rescheduling. Typically only loans or contracts signed before the cutoff date are eligible for rescheduling. Thus, new loans or contracts finalized after the cutoff date will not be included in Paris Club discussions. This is a very important concept, and cutoff dates have almost never been changed once they have been established for a country.

CWO. See cash with order.

CWP. See claims waiting period.

D/A. See documents against acceptance.

Dead loss. A loss on which no, or no further, recovery is considered possible. This arises when an export credit agency pays a claim to an exporter or a bank and recognizes at some later date that there is no chance of (further) recoveries on the claim. Thus, the difference between the value of the claims payment and any recovery is an irrecoverable loss, in both practical and accounting terms.

Debt collector. A person or agency, normally residing in the country of the debtor, that pursues debtors and seeks recovery of the funds they owe. When an export credit agency pays a commercial risk claim, the claim is not (initially at least) regarded as an irrecoverable or dead loss. Rather, agencies expect, on average, to recover as much as 25 to 30 percent of buyer risk claims paid. For all but the largest claims, agencies normally use the services of specialist debt collectors or collection agencies in the country of the debtor. Legal action is normally a last resort. Export credit agencies work under the presumption that the sooner efforts to avoid or minimize loss begin, the greater the chances of recovery, and the smaller the loss. Many agencies prefer to enter into arrangements with debt collectors on a “no collection, no fee” basis.

Debt forgiveness. See debt reduction.

Debt reduction. In the context of the Paris Club, a reduction in a country’s bilateral debt through either outright forgiveness or a concessional rescheduling. In the latter, the net present value of the obligation remaining after the rescheduling is lower than that of the original obligation. Various debt reduction arrangements have been agreed to over the years, for example under the so-called Trinidad, Naples, Toronto, and Lyon terms.

Debt refinancing. See refinancing.

Debt relief. See debt reduction.

Debt rescheduling. See rescheduling.

Debt restructuring. Any action by a creditor that alters the terms of the original debt (e.g., under a supplier credit or buyer credit) in such a way as to provide for smaller debt-service obligations in the short or the medium term. In other words, the amount or the timing, or both, of debt repayments are reprofiled so as to ease the burden of repayment in the near future. Restructuring may—but need not—include some element of debt reduction.

Debt-service ratio. The ratio (usually expressed as a percent) of a country’s debt repayments (both principal and interest) due in a given year to the country’s export earnings in that year. It is often useful both to calculate a country’s debt-service ratio from a backward-looking perspective, to see what level of past export earnings was used to service debt in earlier years and whether the ratio is on a rising or a falling trend, and to estimate the ratio for future years. But in the second case it is important also to look at the basis for forecasts of export earnings and to have some alternative scenarios for them.

Declaration. A statement by an exporter showing how much business it has done with a given country or buyer over a given period (often a month). Many export credit agencies use such declarations both to measure their short-term exposure to individual countries or buyers and to assess and collect premiums.

Deductible. The portion of an insured loss to be borne by the insured party on its own account. As a rule, the higher the deductible (also called first loss), the lower the premium charged and the greater the element of risk sharing. Deductibles are most commonly used by export credit agencies for their short-term business.

Default. The failure of a buyer or borrower (or its guarantor) to make contractually due payments, whether of principal or of interest. The term can also refer to a situation where a contractor or exporter is in breach of a contract that is the subject of an export credit agency facility. Buyer default is a commercial risk normally covered by export credit agencies. See also protracted default.

Demand bond, demand guarantee. A bond or a guarantee that can be called by the holder on demand at any time and without any reason given. Both are, therefore, very dangerous from the point of view of exporters or those on whose behalf they are issued. Demand bonds can be issued in the form of advance payment bonds, bid bonds, or (most frequently) performance bonds. Banks issuing these bonds normally do so either on the basis of cash deposits lodged with them by exporters or on the basis of a “clean” counterguarantee from the exporter that any sum paid out as a result of the bond call can be immediately recovered from the exporter. In theory, the bank need not tell the exporter that a bond call has been received (and paid). But these bonds are, by the same token, cleaner and easier for buyers or importers than bonds or sureties that require the holder or recipient of the bond to prove default of some kind before the bond can be called. These bonds are more common in some parts of the world than others. Historically, they are a result of the strong position in which many buyers found themselves during the 1970s, especially in the oil-producing countries. Many export credit agencies cover the risks of bonds being called unfairly, that is, for political reasons.

Deposit. See down payment.

Direct lender. An export credit agency (especially an eximbank) that may lend directly to overseas buyers or borrowers and therefore does not issue buyer credit guarantees to lending banks. Direct lending by export credit agencies is still subject to the terms of the OECD Arrangement. Agencies that may lend directly include the Export Finance and Insurance Company of Australia, the Export Development Corporation of Canada, and the Export-Import Bank of the United States.

Direct payment. Payment made directly to an exporter by an importer or by a bank that is not the subject of a buyer credit loan, and so is not normally covered by export credit agency insurance. Direct payments usually arise in a buyer credit context. They can include down payments or payments for local costs or foreign goods that are not being financed from or covered by the export credit agency’s facilities.

Disbursement. A drawing made by an exporter on a loan that is the subject of a buyer credit. Most projects or capital goods contracts of any size provide for exporters to receive payments while their work is in progress (these are called progress payments), that is, before construction of the project is finished or before the finished capital goods are delivered or accepted. These payments are usually made according to an agreed schedule and on the basis of qualifying certificates of some kind, showing that the work has been completed satisfactorily. The arrangements are designed, therefore, to protect both exporters and importers as well as lenders and borrowers. See also drawdown.

Discretionary limit. A limit on credit to a given buyer or importer that is set by the exporter itself, without prior specific approval by the export credit agency. Export credit agencies operate their short-term cover on the basis of approved credit limits on individual buyers or importers. To avoid the need for each and every transaction, however small, to be submitted for underwriting to the export credit agency, and to take account of large and experienced exporters (in particular those who perform their own credit checks), agencies will usually allow exporters whose credit management procedures have been checked to set their own limits, up to certain levels, without prior specific approval. But when problems arise and claims are submitted, the exporter has to show on what basis it set the discretionary limit.

Dispute. A disagreement between buyer and seller about, for example, the quality, timing, or performance of goods delivered. This is a difficult area for export credit agencies (and thus for their policyholders). An agency will not normally be willing to pay a claim or agree ascertainment of loss if there is an unresolved dispute. The dispute must be resolved, if necessary in a court of law, before a claim will be paid. However, agencies will not usually enforce a blanket rule on this matter, because some buyers who are unable (or unwilling) to pay may use a dispute as a pretext for default, and therefore export credit agencies need to look with some flexibility at the circumstances in these cases.

Documents against acceptance (D/A). A trade finance technique whereby an importer or buyer receives the documents giving title to the purchased goods upon accepting a bill of exchange or issuing a promissory note, and thus undertakes to pay the sum on the bill or note on the date specified. Thus, some credit is normally involved, for the period between the date when title is handed over to the buyer and the due payment date on the bill or note.

Documents against payment (D/P). A mechanism in trade finance whereby documents giving title to purchased goods are handed over to the buyer by the bank only upon receipt of the necessary payment. This mechanism thus differs from cash against documents.

Domestic credit insurance. Credit insurance on transactions between sellers and buyers within the same country.

Down payment. A payment made directly by a buyer at the time of the contract, or at the latest by final delivery of the goods, before the credit period begins. These arise most commonly in the context of medium- and long-term business. The OECD Arrangement sets minimum down payments (15 percent at present), which buyers or borrowers must pay from their own resources (or from a loan that is not the subject of an export credit agency facility) before repayments begin under a buyer credit. For example, if a project has a contract value of $100 million and a construction or delivery period of four years, then by the end of the fourth year, the buyer must have made direct payments to the exporter of $15 million.

D/P. See documents against payment.

Drawdown. The period during which drawings may be made on a buyer credit loan. It is normally the same as the period required to construct the project being financed. See construction period.

ECA. See export credit agency.

Escrow account. An account, normally in an offshore bank (that is, a bank outside the country of the debtor or importer), into which all or an agreed proportion of the proceeds of export sales from the output of the project are paid. This account is then used first to service the loans that financed the project. Escrow accounts are an increasingly important part of the security package associated with a project financing or a limited recourse financing. Normally, lenders and export credit agencies like to see such accounts hold the equivalent of about one year’s debt-service payments. The existence of such accounts is a comfort to foreign creditors. Such accounts normally need the prior approval of the host government of the project, and care needs to be taken that the existence and operation of the accounts do not infringe upon any negative pledge requirements, for example, of the international financial institutions, especially the World Bank.

Exchange risk insurance. In a strict sense, cover issued against the risk of movements in the exchange rate between the currency of the exporter (and thus of the export credit agency) and the currency in which the export contract is denominated. It insures against the risk that, when the overseas buyer pays in the specified currency, the payment will be worth less in the exporter’s currency than was expected when the contract was signed (and less than at the exchange rate for the exchange risk cover agreed with the export credit agency). However, the term is more usually—and loosely—used to refer to circumstances governing the exchange rate used by the export credit agency when paying a claim. Should it be the exchange rate on the date the export credit agency came on risk, or on the date the goods were shipped, or on the due payment date, or on the date when the claim is paid? There is no one right answer, but exporters and investors should be sure they understand the position they are taking and, in particular, what date the export credit agency will use for the exchange rate, before taking out an export credit or investment insurance facility.

Eximbank. A type of export credit agency that normally not only issues insurance but also lends directly. Some eximbanks also act as borrowers for import finance. There is no single or perfect model, and an eximbank’s organization, status, and functions usually differ from country to country.

Export credit, export credit insurance. The main type of facility offered by an export credit agency. The term describes a range of facilities and can mean different things in different contexts. Strictly speaking, export credit refers to the credit extended by exporters to importers (supplier credit) or the medium- and long-term loans used to finance projects and capital goods exports (buyer credit). It includes credit extended both during the period before goods are shipped or projects completed (the preshipment period or precredit period) and the period after delivery or acceptance of the goods or completion of the project (the postshipment period or credit period).

Export credit agency. An institution providing export credit insurance facilities. All export credit agencies were at one stage government-owned or controlled or, if they were private companies, operated on government account. This is no longer the case, because the position is now rather more complicated, and so there is today probably no single meaning for the term “export credit agency.” It is probably best to define it in terms of the functions of the organization rather than its status. There is, in any case, no single model for an export credit agency. Their organization, function, status, and facilities differ between countries. Ideally, the structure and function of an export credit agency should reflect the conditions in and the needs of the country in which it operates. These can change as time passes, even within the same country. Attempts to transfer one model from one country to another without appropriate adaptation nearly always cause more problems than they solve. Most export credit agencies belong to the Berne Union, except for those that are too new or too small to meet its membership criteria.

Exposure. Most commonly, the total commitments of an export credit agency with respect to a specific buying country, including unrecovered claims, overdue payments, and rescheduled debts as well as debt-service payments not yet due. The concept thus embraces both principal and interest. In this sense, exposure measures the maximum loss an export credit agency could suffer in the event of total default, with no insured payments received or recovered from the buying country. But the term can also be used in relation to commitments on an individual buyer or bank, or even under an individual facility or policy.

Extended political risk. Political risk that goes beyond those traditionally covered by investment insurance, including expropriation, war or civil war, and inability to transfer—most usually including breaches of host government undertakings or obligations.

External trade. Trade in which the goods offered for export originate in a country other than that of the exporter or the importer. Some export credit agencies offer cover for short-term business where their exporters are essentially merchants, buying goods in one (foreign) country and selling them in another. The return to the exporter’s country is, therefore, mainly the profit on the transaction. Sometimes called third country trade.

Facility. A generic term referring to a policy or other product issued by an export credit agency. It can refer either to the categories of cover the agency provides (e.g., preshipment cover or investment insurance) or to individual policy documents issued to an exporter or a bank.

Factoring. A trade finance mechanism whereby an exporter sells its export receivables (bills of exchange or promissory notes, or simply issued invoices, which the exporter is selling on an open account basis) at a discount. The company purchasing the receivables is called a factor. Factors are normally specialized financial services companies, but many are owned by banks. Normally, after the factor has purchased a receivable, the importer or buyer pays the factor directly. Some factors actually issue the invoices to buyers and, in effect, operate the exporter’s sale ledgers. Some factors operate on a nonrecourse basis (i.e., they assume the risk of nonpayment). Less frequently, the factor will take recourse to the exporter for all or part of the sums involved in the event of nonpayment or delayed payment by the buyer. Some export credit agencies have special policies or facilities for factors to cover both political risk and commercial risk.

FDI. See foreign direct investment.

First loss. A loss up to a specified amount that is borne by the insured exporter as part of the policy conditions of some facilities issued by export credit agencies. First loss can be defined either as a percentage of an individual claim or loss or as a percentage of total claims or losses arising during a specified period (normally one year). See also deductible.

Foreign direct investment (FDI). Investment in a foreign company or foreign joint venture. The investment is normally made in cash but sometimes in the form of plant and equipment or know-how. As defined by the international financial institutions for statistical purposes, FDI is investment in at least 10 percent of the voting stock of a foreign company. (An investment constituting less than 10 percent of the voting stock is considered portfolio investment.) Export credit agencies may use the term in a more general sense to include not only equity capital but also reinvested earnings. See also investment insurance.

Foreign exchange cover. Cover, now issued by only a very few export credit agencies, against movements in exchange rates, whether or not there are payment defaults. See also exchange risk insurance.

Foreign goods, foreign content. Goods and services included under export contracts that originated elsewhere than in the exporting country. Traditionally, export credit agencies have mainly supported the export of goods and services from their own countries. In the area of short-term business, however, the national origin of covered goods has become increasingly blurred, especially as many export credit insurers and many large multinational companies operate in and out of a number of countries, and as more business is done on an own-account basis with private market reinsurance. Rules governing foreign content are applied more carefully in the area of medium- and long-term credit, where the conventional guideline is that such goods may be covered up to a maximum of 15 percent of the total national exported amount. But special arrangements apply within the European Union, and some agencies enter into reciprocal arrangements with other export credit agencies to cover each other’s goods and services.

Forfait, forfaiting. An export finance mechanism, most commonly used in medium- and long-term credit, involving the purchase (usually without recourse to the exporter in the event of payment default or difficulties) of promissory notes or bills of exchange by a forfaiter. The payment instruments are normally guaranteed (avalised) by a bank. The forfaiter does not, of course, buy the instrument at face value. Rather, a discount is applied, which partly reflects the funding costs that accrue before the due payment date (or dates), and partly the perceived risk of the guaranteeing (avalising) bank and its home country. These risks can obviously vary over time, but as a general rule, the longer the credit period and the higher the perceived risk, the larger the discount. A few export credit agencies have or are considering special facilities for forfaiters, to share with them the political risk (and sometimes the commercial risk). Forfait companies are often owned by banks or other financial services entities.

Front end-loaded repayment. A debt repayment profile in a medium- or long-term credit transaction in which the largest repayments occur at the beginning of the credit period. The reverse is true for back end-loaded repayments.

General purpose line of credit. See line of credit.

Government account, government account business. Business done by an export credit agency that is owned by a government, or business that the agency underwrites on behalf of its government, that is, where the premium (less any administrative charges) is passed on to the government in some way and where the government funds claim payments. Most export credit agencies were originally closely linked with their governments, either as government agencies or as private companies writing business on behalf of their governments. This is no longer true. Some export credit agencies are private companies that underwrite most of their business on the basis of their own capital and private market reinsurance (own-account business). Most Berne Union members, however, write all of their medium- and long-term export credit business and their investment insurance business on government account.

Government buyer. See sovereign buyer, private buyer, public buyer.

Grace period. The time during which no principal repayments are made on an outstanding loan. More loosely, the absence of repayments of principal or interest during the precredit period of a project, that is, before its completion. Normally, interest is payable from the time that loan drawings are made under a buyer credit, but principal repayments do not begin until six months after goods have been accepted or a project has been commissioned. See starting point of credit. If interest payments are not made before the repayment of principal begins, the interest is said to be capitalized. Sometimes the period between signature of the contract and the first repayment of principal is referred to as the grace period, even though interest payments may be made during this period. All these provisions are subject to the OECD Arrangement.

Grant element. A measure of the concessionality (often the terms are used interchangeably) of an export credit. It is calculated as the difference between the face value of the loan and the sum of the discounted future debtservice payments, expressed as a percentage of the face value of the loan. See also OECD Arrangement.

Guarantee. Most commonly, a type of facility or policy issued by an export credit agency. For example, an insurance policy issued to an exporter in respect of short-term export credits might be called a short-term guarantee, and a policy issued to a bank in respect of a medium-term loan to finance a project might be called a buyer credit guarantee. The term can also refer to the facilities issued by banks to overseas buyers in respect of contract performance (e.g., performance guarantees). See also advance payment bond, bid bond. In addition, many export credit agencies will stipulate a repayment guarantee as underwriting security: for example, a credit limit might be issued on an overseas buyer subject to a payment guarantee being obtained from a bank or from a parent company. Export credit agencies almost never issue unconditional guarantees.

Guarantor. The provider of a guarantee of repayment. This can be a government, a bank, a parent company, or an individual. The guarantee will be in respect of repayment of a debt obligation under a contract or loan agreement.

Guardian authority. The department or agency of government, normally the finance or external trade ministry, responsible for supervising the country’s export credit agency. In countries where the export credit agency is organized as a corporation, the guardian authority may or may not be the main shareholder. The guardian authority normally plays an important part in the larger underwriting decisions, or country underwriting and setting country limits, not least because it is ultimately responsible for the financial consequences of such decisions.

Heavily Indebted Poor Countries (HIPC). A group of 41 developing countries with low per capita incomes and high ratios of external debt to exports or to GNP. These countries are a major focus of proposals for debt relief of various kinds.

Horizon of risk. The period during which an export credit agency is at risk with respect to one of its facilities. The term is most commonly used in the context of medium- and long-term credit. It is not the same thing as the credit period but rather refers to the entire period between the issue of the facility and the final repayment. Thus, it covers both the precredit period and the credit period.

Host government. The government of a country in which a foreign investor is investing, or into which goods or services are being imported or where a project subject to project financing is located. The term is most often used in the context of investment insurance, but it is being increasingly used in relation to project financings.

Hypothecation. An arrangement that arises in most short-term business where an exporter assigns or pledges to another party the benefits of the protection of an insurance policy issued by an export credit agency. Usually these benefits are hypothecated to a bank, as security for financing. Hypothecation is more or less the same thing as assignment of a policy, but it is normally more formal and structured in that the agency formally acknowledges the position but does not issue a separate or new policy to the bank. However, any claim arising under the policy would then be paid directly to the bank and not to the exporter.

ICIA. See International Credit Insurance Association.

ILC. See letter of credit.

Indemnity. For some export credit agencies, a claim, that is, the sum paid to an insured party under the terms of the insurance policy, whether for export credit insurance or for investment insurance. See also claim.

Inflation insurance. See cost escalation cover.

Insurance. The main business of export credit agencies. These agencies issue insurance policies of various kinds in respect of a range of risks against payment of a premium. For export credit insurance the risks embrace both political and commercial causes of loss, which may arise in the precredit period (before shipment), or during the credit period (after shipment). Policies may be issued to exporters (supplier credit) or to banks engaged in financing trade (buyer credit). For investment insurance the risks are restricted to political risks. In both export credit and investment insurance, the insurance is against specified risks or classes of risk and is therefore conditional, although individual policies may be loosely referred to as guarantees.

Insured percentage. See percentage of cover.

Interest rate support, interest rate subsidy. The difference between the interest rate actually paid by a borrower and that required by the lender. This normally arises in the context of medium- and long-term business, where export credit agencies arrange with lending banks to provide actual or contingent financial support of the interest rates they charge. In other words, if a bank lends to an overseas borrower at the commercial interest reference rate (CIRR) set out in the OECD Arrangement, and if market interest rates rise above the CIRR before the loan is fully repaid, the export credit agency may, in certain circumstances, meet the cost of the difference between the market rate (however defined) and the CIRR. It was feared that subsidization of interest rates by different export credit agencies could have led to a subsidy war among them, although this was much more of a problem in the 1960s and 1970s than today. The large interest rate subsidies of that era were indeed the driving force behind the OECD Arrangement. In some countries, export credit agencies are the vehicle chosen by government to provide interest rate subsidies for working capital.

International Credit Insurance Association (ICIA). An association of private companies involved in issuing credit insurance. Established in 1928, the ICIA initially concentrated on domestic credit insurance, but today its members write both this and export credit insurance. No government institutions are members. The ICIA now has about 45 members from 28 countries. Its secretariat moved from Switzerland to London in 1998. Some companies belong to both the ICIA and the Berne Union.

International Union of Credit and Investment Insurers. See Berne Union.

Investment insurance. Insurance issued to an investor against loss in another country due to confiscation, expropriation, or nationalization by the host government; to war or civil war; or to inability to convert profits or dividends into other currencies or to transfer them out of the country. Unlike export credit insurance, investment insurance covers only these political risks (and not commercial risks), and for this reason it is sometimes misleadingly referred to as political risk insurance. In fact, most export credit agencies issue the bulk of their political risk insurance under their export credit policies. Some export credit agencies offer both investment insurance and export credit insurance. Some only offer export credit insurance, but three Berne Union members—C&L of Germany, the Overseas Private Investment Corporation of the United States, and the Multilateral Investment Guarantee Agency (an affiliate of the World Bank Group)—provide only investment insurance. Traditionally, such insurance could be applied only to equity investments and covered three types of risk, namely, confiscation, expropriation, or nationalization without compensation; loss due to war or civil war; and inability to convert profits and dividends into other currencies and transfer them abroad. Investment insurance can now, however, be obtained for loans into projects, and some insurers will look at extended political risks such as the breach of host government undertakings in project financings (sometimes treated as creeping expropriation).

Irrevocable letter of credit. See letter of credit.

Isabella clause. A clause or provision in a contract or loan provision that separates the obligations, rights, and responsibilities under the contract from those under an associated loan agreement. Such a clause may be inserted when export credit agencies issue buyer credits. Buyer credit loans subject to an Isabella clause thus involve “clean” repayment obligations on the borrower, irrespective of what may be happening under the contract being financed. In other words, problems with the contract or project do not give the borrower any right to default or delay payment on the loan or to suspend repayments.

Joint and several liability. A provision in a loan agreement or other contract involving multiple debtors or contracting parties whereby any one or all of them take responsibilities beyond their own direct involvement and so may be sued either for the whole sum or for part of it.

Joint financing. See cofinancing.

Joint insurance. See coinsurance.

Joint venture. A commercial undertaking by two or more persons or entities. Joint ventures are of importance to export credit agencies most commonly in the area of investment insurance, where investors may seek to insure their equity in a venture in a host country with local partners.

Late interest. Interest payable on principal or interest that is overdue or in arrears.

Late payments. Payments of principal or interest on a buyer credit loan agreement, or payments contractually due under supplier credit arrangements, that are overdue.

Lease, leasing. An alternative to a sale of equipment in which the buyer (the lessee) is granted use of the equipment but does not own it. Ownership remains with the seller (the lessor). Repayments are normally equal over the period of the lease. There are two main kinds of lease: in a full payout lease, the lessee assumes ownership at the end of the lease; in an operational lease, the equipment is returned to the lessor.

Length of credit. The period from the starting point of credit until the final repayment date. The starting point of credit is generally the time of shipment or acceptance of the goods or of the commissioning of a project. The length of credit is normally no more than six months for short-term business, five years for medium-term business, and ten years for long-term business. Premiums are normally charged with reference either to the length of credit or to the horizon of risk (which includes the precredit period, before the starting point of credit). For short-term business, the length of credit is set with reference to the appropriate terms for goods and the appropriate Berne Union Understanding or sector agreement. For medium- and long-term credit it is set with reference to the OECD Arrangement as well as the appropriate Berne Union Understanding.

Letter of credit. A document issued by a bank guaranteeing payment on behalf of one of its clients when all the conditions stated in the letter have been met. This is a very important mechanism of world trade, including for export credit agencies both in their short-term business and, less frequently, in their medium-term business. Letters of credit can take a variety of forms, but essentially they are a means of payment between an importer and an exporter via their banks. The importer is sometimes called the opener, and the importer’s bank the opening bank (or sometimes the issuing bank). The bank in the exporter’s country is called the advising bank, and the exporter is called the beneficiary. A letter of credit may be revocable, which means that it can be canceled or modified by the importer or the importer’s bank without prior approval from the beneficiary. Thus, a revocable letter of credit offers little security to exporters. The more commonly used irrevocable letter of credit (ILC) cannot be modified without the prior approval of the beneficiary. Unless the letter of credit is conditional, the bank issuing it effectively assumes the risk of default by the importer, provided that the terms and conditions of the letter of credit are fully met. The advising bank, on the other hand, is not required to pay the beneficiary unless and until it receives the funds from the issuing bank. Thus, even ILCs do not provide full protection to exporters. Letters of credit can also be confirmed. This is done either on an open confirmation basis, in which case the issuing bank is aware of the confirmation, or on a silent confirmation basis, in which case the issuing bank and the importer or buyer may not be aware. Confirmed letters of credit reduce certain risks for exporters, for example the risk that the issuing bank may fail or be unable to transfer foreign exchange. But a key point is that when the exporter seeks payment from the advising (or confirming) bank, it must meet all the terms of the letter of credit. Thus, it is vital that exporters carefully read all the conditions and requirements, as these can sometimes be onerous and may contain provisions that significantly reduce their benefit from the transaction. As many as 40 percent of applications from exporters for payments under letters of credit are rejected because of mistakes in documentation and the like. Obviously, this leads to payment delays. But even under a confirmed letter of credit an exporter may be exposed to risks, for example those that arise before the letter of credit is opened. Letters of credit are subject to widely accepted practices and procedures under the International Chamber of Commerce’s Uniform Customs and Practices for Documentary Credits. See also stand-by letter of credit.

Level payments. See mortgage-type repayments.

Limit. A ceiling on the amount of insurance or credit that an export credit agency will provide under certain circumstances. Limits arise in a wide variety of contexts for export credit agencies. They can be applied to individual buyers (credit limits) or to total exposure on buying countries (country limits) or to maximum contract sizes (contract limits). Limits are used both to monitor and to control or even to reduce exposure in a variety of contexts. Many export credit agencies also set limits on the exposure that can be covered by a single policy. Thus, it is very important to check the context in which the term “limit” is being used by, or by reference to, export credit agencies.

Limited recourse financing. A technique in which a major project is financed or insured by an export credit agency with reference to the viability of the project and its cash flow, rather than by reference to the general financial strength or creditworthiness of the buyer, borrower, or guarantor. The earnings of the project thus provide the essential security for the lender and the insurer. The security package may also involve the retention of foreign currency earnings from the project in an offshore escrow account. Now more commonly called project financing.

Line of credit. A kind of buyer credit in which a bank in the exporting country lends to a bank in the buying country money to be used to finance one or more contracts. Lines of credit are most commonly used for medium- and long-term business. But in certain circumstances they can be used for short-term business (e.g., where it is difficult to underwrite individual buyers). In a project line of credit, the contracts being financed are for a single project. In a general purpose or shopping list line of credit, the contracts to be financed may be varied, provided they meet the eligibility criteria set out in the loan documentation.

Loan drawings. See disbursement, drawdown.

Local costs. The cost of goods and services purchased in the importing or buying country, typically as part of a project financing. Thus, these arise most often in the context of medium- and long-term business. An export credit agency may agree to cover or finance such costs up to some maximum percentage (normally 15 percent, and subject to the OECD Arrangement) of the exported value of the contract.

London Club. A group of commercial banks whose representatives meet periodically to negotiate the restructuring of debts of sovereign borrowers. Membership varies for each debtor country. Unlike the Paris Club, the London Club lacks an organizational framework, a permanent secretariat, or even a permanent location.

London terms. A set of credit terms for bilateral debt reduction, applied since 1991 within the Paris Club, which normally involve a reduction of up to 50 percent in the net present value of the debt. See also debt reduction.

Long tail cover. Insurance provided in cases where the horizon of risk or credit period extends approximately 10 years or more.

Long-term business. Traditionally, insurance or financing applied over a period of more than five years. But there is no generally accepted or precise division between long-term and medium-term business.

Loss. Strictly speaking, the amount of a claim or claims paid by an export credit agency net of any recoveries on those claims. However, the term is often applied to the gross amount claimed and paid, before deducting recoveries. See also debt collector.

Loss adjuster. An independent party with which an insurance underwriter contracts to assess the validity and value of a claim under the terms and conditions of one of its insurance policies. Normally, export credit agencies have not used loss adjusters.

Loss minimization. An obligation imposed on insured parties under export credit agency policies to take steps to reduce their insured losses. For example, exporters might refuse to ship to buyers or buying countries known to be in difficulties, or they might pursue buyers as promptly as possible when payments become overdue or when payment problems seem likely to arise.

Loss ratio. The ratio of the sum of administrative costs and net losses to premium income. The loss ratio is an important measure of the “profitability” of an export credit agency and the adequacy of its premium rates. It cannot usually be calculated with any precision until a year or so after business has been underwritten (longer for medium- and long-term business). A loss ratio over 100 percent would be a real cause for concern, especially if it continued for more than one or two years.

Lyon terms. A set of credit terms for bilateral debt reduction, applied since 1996 within the Paris Club, which normally involve a reduction of up to 80 percent in the net present value of the debt. See also debt reduction, London terms, Naples terms.

Matching. The practice whereby one export credit agency offers the same credit terms as those supported by another whose exporters are competing for business with the first agency’s exporters in a third country. The credit terms offered are normally longer than those provided for under the Berne Union agreements or the OECD Arrangement. The matching export credit agency normally has the responsibility to check whether the longer credit terms are being supported by the competing agency and, if it decides to match, to tell other export credit agencies that it is doing so and on what credit terms.

Maturity. The entire period during which an export credit agency is at risk with respect to a guarantee or loan (i.e., both the precredit period and the credit period). The term usually arises in the context of medium- and long-term business and thus normally is synonymous with horizon of risk.

Mean delivery date. The average date for deliveries under an export contract in which deliveries are made at intervals. The starting point of credit is normally from the mean delivery date rather than the final delivery date.

Medium-term business, medium-term credit. Conventionally, business with a credit period of between one and five years. However, under the OECD Arrangement, medium-term business is that with a credit period of two to five years. There are no universally accepted or generally applied divisions between short-term business and medium-term business, or between medium-term and long-term business.

Minimization of loss. See loss minimization.

Mixed credit. A credit in which bilateral aid is blended with export credit agency-supported financing so as to provide softer (i.e., more concessional) credit terms (e.g., a lower rate of interest or a longer credit period) than would be available under normal medium- and long-term credits. Because such credits have a higher level of concessionality (i.e., a larger grant element) than other export credit agency facilities, they are now subject to close control, reporting, and monitoring under the OECD Arrangement.

Moratorium interest. Interest charged on rescheduled debt. In the Paris Club, moratorium interest rates are negotiated bilaterally between the debtor and creditor countries and thus can differ between creditors. In the London Club, however, a common moratorium interest rate usually applies to all bank credits under the agreement.

Mortgage-type repayment. A credit arrangement that involves equal repayments of combined principal and interest during the credit period, so that each successive repayment comprises an increasing amount of principal and a decreasing amount of interest. Such repayment schedules are more common in lease transactions than in sales contracts. Since these arrangements apply most commonly in medium- and long-term credits, they are subject to the terms of the OECD Arrangement, under which they are normally only permitted for leasing arrangements and, sometimes, for project financings. Sometimes also called level repayments.

Multisourcing. Procurement of goods and services from a number of countries, typically for a large project. The decision to multisource is usually a matter of commercial and industrial considerations (e.g., seeking out the best or cheapest or most easily available source of supply), but it can also be part of a policy of spreading risk. Multisourcing has caused export credit agencies to take a closer look at easier and more flexible cooperation arrangements, not only for covering and financing foreign goods and services, but also for closer cooperation on coinsurance and reinsurance arrangements.

Naples terms. A set of terms for debt reduction for Paris Club debt.

National interest business, national interest account. Business for which an eport credit agency provides cover, even if it does not meet the agency’s normal underwriting criteria and standards, because the business is deemed by the guardian authority to be in the broader interest of the agency’s home country. Thus, the business is done at the request of (or on the instruction of) the export credit agency’s government or guardian authority, for political or industrial policy reasons. The terms of such business must, however, still conform with Berne Union or OECD Arrangement credit terms if the exporting country is a participating member of those organizations, and however accounted for, the business is still subject to the World Trade Organization’s requirement that export credit agencies in member countries break even. See also government account.

Negative pledge. A requirement that a buyer or borrower not pledge its assets without the prior approval of its creditors. The issue usually arises in the context of medium- and long-term business. It is normally of greater significance to export credit agencies in facilities issued to sovereign borrowers by the international financial institutions, where it could, for example, prevent projects owned by the host government from setting up escrow account arrangements as part of the security package.

Net loss. Claims paid or expected to be paid, less recoveries made or anticipated to be made, with respect to a single case or facility or to an agency’s total business over a given period. In export credit insurance it is very dangerous (and misleading) to equate claims with losses, since export credit agencies normally expect to recover, over time, a good proportion of the claims they pay, both on commercial risk and on political risk. See also loss.

New business limit. A limit on the amount of new (usually medium- or long-term) business that an export credit agency will underwrite in a given country in a given period, normally one year, as a means of monitoring and controlling exposure.

Nonacceptance risk. See repudiation.

Nonrecourse financing. An arrangement whereby a bank (or a factor or a forfaiter) either buys a debt from an exporter or finances its exports but agrees not to seek recovery from the exporter if there are repayment difficulties. In other words, the buyer relieves the exporter of all risks of nonpayment. Those providing nonrecourse finance (which is normally available only from the time a buyer accepts the goods) will often have taken out cover from an export credit agency.

Note. See promissory note.

OECD. See Organization for Economic Cooperation and Development.

OECD Arrangement. Formally known as the Arrangement on Guidelines for Officially Supported Export Credits, a framework of rules or “soft law” among participating members of the Organization for Economic Cooperation and Development that seeks to provide an institutional framework for an orderly export credit market involving official intervention. The arrangement came into being in 1978 and was originally called the Gentlemen’s Agreement, then the Consensus, and later the Guidelines. It has grown in importance, coverage, and scope since its early days. The arrangement applies to all credits of over two years’ duration issued by an export credit agency based in a participating OECD member country. Its original intention was to prevent an export credit subsidy war between OECD member countries, for which their taxpayers would ultimately pay the price. To this end it sets minimum rates of interest, called commercial interest reference rates, on export credit facilities. It also sets minimum down payments (15 percent), maximum lengths of credit (normally 8 or 10 years, depending on the buying country), and standard repayment terms (equal half-yearly payments of principal beginning not more than six months from the appropriate starting point of credit). The arrangement also sets limits on local costs (normally 15 percent of the value of the contract) and rules on mixed credits (including their grant elements and concessionality levels). Beginning in 1999 it will also set minimum premium rates for political risk cover. Some flexibility, subject to prior notification of other OECD members, is now possible for project financings. There are also provisions for derogation from the requirements of the arrangement, subject to notification and reporting to other OECD members.

Off cover. See cover.

Offer. A commitment by an export credit agency to provide cover for a given contract if the exporter wins the contract. This normally arises in medium- and long-term business.

Official creditor. A public sector lender or insurer. Some official creditors, such as the international financial institutions, are multinational. Others are bilateral, such as individual creditor governments and their official agencies such as central banks and export credit agencies when writing business on government account.

Officially supported export credit. An export credit supported (usually insured) by an export credit agency on government account, rather than on its own account. The credit may be a supplier credit or a buyer credit. For medium- and long-term business, the extent of permissible official support is set by the OECD Arrangement (normally limited to 85 percent of the exported value, plus, where appropriate, the maximum permissible share of local costs, normally 15 percent of the exported value).

Offset. A transaction in which an exporter (or exporting country) agrees to take certain goods or the proceeds from the sale of those goods, to place subcontracts, or to make investments with companies in the importing country up to some agreed proportion of the original export contract, in lieu of, or in addition to, partial cash payment. See also countertrade.

On cover. See cover.

On-demand bond, on-demand guarantee. See demand bond, demand guarantee.

Open account, open account business. Trade finance business whereby goods are shipped and delivered and payment is made on the basis of invoices, usually in cash. There are thus no bills of exchange or promissory notes, and the exporter relies on the importer to pay in accordance with the invoice or terms of the contract. Open account business is thus most commonly used where seller and buyer have a good, long-standing trading relationship. Export credit agencies are prepared to cover open account business if they are content to underwrite the buyer.

Open confirmation. Confirmation of a letter of credit in such a manner that the importer and the importer’s bank (the opening bank or issuing bank) and, where relevant, the authorities and the central bank in the importing country are aware of the confirmation. See also silent confirmation.

Opening bank. The bank opening a letter of credit on behalf of an importer. Often also called the issuing bank. When it opens an irrevocable letter of credit, the opening bank takes over responsibility for payment for the imports from the buyer, subject to the terms of the letter of credit.

Organization for Economic Cooperation and Development (OECD). An organization, with headquarters in Paris, of mostly high-income countries that provides their governments a setting in which to discuss, develop, coordinate, and perfect their economic and social policies. These exchanges may lead to agreements such as the Arrangement on Guidelines for Officially Supported Export Credits (the OECD Arrangement).

Overdue payment. Payment under a contract or a loan insured by an export credit agency that has not been made on the due date but that is not yet sufficiently late for the insured party to submit a claim to the agency. Exporters are normally required to report payments that are overdue by more than a week or so to the export credit agency, which will then consider the need for loss minimization and may withdraw credit limits issued to other exporters on the same buyer.

Own-account business. Business done by an export credit agency on the basis of its own capital, possibly with reinsurance purchased in the private market, without the involvement or responsibility of its home government or guardian authority. It is thus different from government account and national interest business. This business is of increasing importance for export credit agencies, especially short-term business.

Packing credit. Finance provided (normally by a commercial bank) in respect of export orders not yet shipped. Thus it is not really an export credit facility but more in the nature of a working capital arrangement. Cover for such credits is distinct from preshipment credit cover, but such cover may be a useful security for the bank providing working capital. Some export credit agencies will insure packing credits by issuing facilities to the financing bank.

Parallel financing. An arrangement in which an export credit facility is issued for a project and another, separate source or stream of finance is also obtained that is not supported or insured by the export credit agency in any way. This may be used to finance a separate contract or, for example, the down payment. In some cases the providers of this finance will share security on a pari passu basis with the lenders supported by the export credit agency. See also cofinancing.

Parallel insurance. Insurance consisting of two separate streams or sources of insurance for the same contract or program. See parallel financing, coinsurance.

Pari passu. Literally, “in equal step.” A condition in which one creditor (e.g., an export credit agency) enjoys at least equal priority, precedence, or status with other creditors involved in the same transaction or project.

Paris Club. An informal group of creditor governments whose representatives have met regularly in Paris since 1956 to reschedule the bilateral debts of troubled debtor countries. The French Treasury provides the group’s secretariat. The rescheduling thus negotiated is part of the international support provided to a country with a heavy debt burden that is pursuing an adjustment program with the IMF. The Paris Club has no fixed membership, and its meetings are open to all official creditors. Russia became a member in September 1997. Creditors usually look for comparable relief to be provided by other nonmultilateral creditors, such as commercial banks in the context of the London Club.

Participation. The share of the risks of a transaction or project retained by the insured party under an export credit facility. Sometimes called uninsured portion or uninsured percentage. See also retention.

Part-period cover. Insurance provided when the credit period for a transaction extends beyond what an export credit agency is willing or able to underwrite or support. Instead the agency issues a facility for part of the credit period (say, the first five years), leaving the risks on the balance of the period to be carried by others.

Payment with order. See cash with order.

Percentage of cover. The share of the risk or the contract value of a transaction or project that an export credit agency is willing to cover. In short-term business, export credit agencies never insure 100 percent of the risk or the contract value. Normally they will cover 80 to 90 percent of the commercial risk and 85 to 95 percent of the political risk. Some agencies will not allow insured parties to pass on this residual risk to other parties (e.g., banks or other insurers). For medium- and long-term supplier credits, broadly the same arrangements apply. But for buyer credits, some agencies will insure 100 percent of the credit (i.e., 100 percent of the 85 percent of the contract that is financed, excluding the 15 percent down payment under the terms of the OECD Arrangement). Most agencies, however, will not do so, preferring the exporter or bank to carry some of the risk, even if only 5 percent or less. This difference in approach often makes coinsurance or multisourcing more complicated.

Performance bond, performance guarantee. A facility normally issued by a commercial bank to a buyer, in effect to guarantee that the exporter will meet the terms of its contract with the buyer. The bond or guarantee will normally be for only part (say, 10 percent) of the contract value. Performance bonds and guarantees are normally conditional; that is, they can usually only be called if the buyer can demonstrate (in accordance with the terms of the facility) breach of contract by the exporter. However, sometimes these bonds are unconditional (see demand bond). Many export credit agencies will provide cover against the unfair calling for political reasons of these bonds.

Plant cover. Insurance provided by some export credit agencies against the inability of an exporter or contractor to reexport a plant when this happens for political reasons, such as seizure or confiscation by the host government, war, or civil war, provided the exporter or contractor has the contractual right to do so. This cover is most often used by contractors, for example for road building.

Policy. (1) A facility issued by an export credit agency, whether for short-term or for medium- or long-term business. (2) The document establishing such a facility.

Policyholder. The insured party in an export credit facility, normally an exporter or a bank.

Political risk. The risk of nonpayment on an export contract or project due to action by an importer’s or buyer’s host government. Such action may include intervention to prevent the transfer of payments, cancellation of a license, or acts of war or civil war. Nonpayment by sovereign buyers themselves is also a political risk. Political risk is one of the two main categories of risks insured by export credit agencies (the other being commercial risk). Some export credit agencies cover political risks in their own countries, especially the cancellation of export licenses. In recent decades the most common political risk claims have been due to inability to convert and transfer foreign exchange, but in these circumstances buyers must first have made local currency deposits. See also investment insurance.

Portfolio management. Management of an entire portfolio of risks with the objective of balancing risks and preventing their concentration in any country or sector. Portfolio management is relevant even where business on government account is involved. It is a subject of increasing importance for export credit agencies, some of which are considering selling or exchanging some of their exposure to achieve better portfolio balance.

Postshipment cover. Insurance of risks arising during the postshipment period. Sometimes called credit cover.

Postshipment period. The period from the date on which goods are shipped or accepted until the last payment has been received. Sometimes called the credit period.

Potential loss. A situation in which an export credit agency recognizes the possibility of suffering a loss on one of its facilities. When payments are overdue and where insured parties, be they exporters or banks, have any reason to expect payment problems, they are required to notify the export credit agency that issued the insurance. Especially when payments are overdue, export credit agencies will then categorize the exposure as a potential loss, even if claims have not yet been paid.

Power purchase agreement (PPA). An agreement whereby electric power produced by a power project is sold to a local or national power authority. Such an agreement is often the centerpiece of the security package for a project financing involving a power project. The agreement typically specifies long-term arrangements containing specific formulas and procedures for setting tariffs, as well as the minimum quantity to be purchased and over what period. In some countries the terms of such agreements need to be approved by the host government.

Precredit cover. See preshipment cover.

Precredit period. See preshipment period.

Preferred creditor. A creditor who will receive repayment ahead of other creditors or whose claims are not subject to reductions imposed on or negotiated with other creditors, where this position has been agreed to by the other creditors. In reschedulings in the context of the Paris Club, the international financial institutions have implicitly been granted preferred creditor status, in that the arrangements do not require the debtor country to abide by the normal comparability-of-treatment clause in the case of debts to those organizations. This clause requires a debtor to request from its other creditors rescheduling of its debts on terms at least as favorable as those obtained from the Paris Club and not to grant such creditors terms that are more favorable to the creditor than to others.

Premium. The sum paid by an insured party (usually an exporter or a bank) to an export credit agency for its facilities. Cover will usually not be fully effective until the premium has been paid. Apart from recoveries, premiums are usually the main source of income for export credit agencies—most do not have significant amounts of investment income, unlike other insurance institutions. Premiums are normally calculated on the basis of the exposure, length of credit, and the riskiness of doing business in the buying country.

Premium income. Revenues accruing to an export credit agency from the receipt of premiums.

Premium surcharge. An extra charge levied by some export credit agencies as a condition of providing or maintaining cover on certain countries or buyers at times of higher risk.

Preshipment cover. Insurance of risks arising during the preshipment period.

Preshipment credit. Credit extended for the preshipment period.

Preshipment period. The time from the date of an insured contract until the date of shipment (or of acceptance by the buyer)—in other words, the period up to the time the credit period begins. Most export credit agencies offer cover for risks arising in this period, but it is sometimes handled through a separate policy or as an addition to the policy, rather than as part of the standard policy or facility.

Private buyer. A buyer that is neither a government nor a public sector agency. Most export credit agencies divide buyers into various categories, subject to differing terms of cover and premium rates. Traditionally, the two main categories have been private buyers and public buyers. Default by a private buyer is a commercial risk. See also sovereign buyer.

Progress payment. See disbursement.

Project financing, project finance. Essentially, cases in which the underwriters in an export credit agency look at the cash flow and viability of a project as the security for repayment rather than the general creditworthiness or financial strength of the buyer (or borrower or guarantor). See also limited recourse financings.

Project line of credit. A form of buyer credit in which a single loan can be used to finance a number of contracts for the same project. See also line of credit.

Promissory note. An unconditional promise to pay a certain sum on demand on a specified due date. Promissory notes are widely used in international trade as a secure means of payment. They are drawn up by a buyer or importer in favor of a creditor or exporter, normally referred to as the payee or beneficiary. When endorsed by the payee, if the buyer is considered creditworthy, a promissory note can be sold or traded (e.g., to a factor or forfaiter). Export credit agencies sometimes specify the use of promissory notes as a condition of underwriting their facilities, perhaps as an alternative to bills of exchange.

Protracted default. Failure on the part of a buyer to pay within a certain period (normally six months) after the due date. This is one of the commercial risks typically covered by export credit agencies. See also default.

Provisions, provisioning. Funds set aside against future net losses. Many export credit agencies engage in this practice. Provisions are usually divided into general and specific provisions. General provisions apply to the overall business of an export credit agency (often broken down into categories), and the amounts set aside are based on the historical experience of claims and recoveries, as quantified, for example, by the agency’s past loss ratios. Specific provisions are set aside on a case-by-case basis.

Public buyer. A buyer that is owned wholly or in a majority or controlling part by a government but that (unlike a sovereign buyer) cannot commit the full faith and credit of the government but can be sued and made bankrupt. Some export credit agencies charge lower premium rates for public buyers. See also private buyer.

Pure cover. Provision by an export credit agency of an insurance facility only (either via supplier credit or buyer credit), with no interest rate support or interest rate subsidy and no direct lending.

Qualifying certificates. The evidence of work done in accordance with the terms of an export contract. Often required from exporters before they may draw disbursements or progress payments from buyer credit loans. The format and procedures are set out in the loan agreement and may require the signature of the buyer or the buyer’s agent.

Quantitative limits. See limits.

Reciprocal arrangement. An agreement between two export credit agencies to treat exports of goods and services from each other’s country as though they were national goods and services. This simplifies and speeds up the process and reduces the need for documentation, since then only one export credit agency facility or loan is needed, rather than two. See also foreign goods.

Recourse. An attempt to recover a claim that has been paid. Recourse can arise in various contexts. For export credit agencies, it most frequently occurs in situations where a borrower fails to pay and can demonstrate that this failure occurred because the exporter was in breach of its contract with the borrower. The export credit agency then has the right to take recourse to the exporter to recover any claims payment it may have made on the transaction (e.g., to a financing bank). Similarly, if an export credit agency pays a claim to an exporter, and subsequent events show that the reason for the buyer’s nonpayment was not a covered risk, recourse can be taken to the exporter to recover the claim. Finally, if a factor or forfaiter has purchased a facility that is not a nonrecourse facility, it may seek recourse from the exporter if the buyer (or the accepter or avaliser of the bill of exchange or the issuer of the promissory note) defaults.

Recovery, recoveries. Amounts collected from a debtor by an export credit agency, an exporter, or a debt collector or collection agency after the export credit agency has paid a claim consequent on the debtor’s nonpayment. Recoveries can include payments made by debtor governments under Paris Club arrangements. In recent years, recoveries have exceeded premium income for most export credit agencies, especially the larger ones. Where the export credit agency has paid out less than the total value of the debt (which is usually the case, because the percentage of cover is always less than 100 percent), any recoveries will normally be shared pro rata with the insured party, although some export credit agencies seek to recover all of their claim payments before passing any of the recoveries to the exporter.

Reduced percentage of cover. A smaller percentage of cover than normally issued. Sometimes export credit agencies will only be prepared to underwrite buyers or projects (especially in terms of commercial risks) if the insured party (either the exporter or the bank) takes a higher than usual share of the risks. Thus, in these circumstances, the normal percentage of cover of, say, 85 percent can be reduced to, say, 70 percent.

Refinancing. The replacement of an existing loan to a borrower (or a debtor country government) with a new source of finance. In a potential claims situation, this can be done by either an export credit agency, its government, or a bank under an export credit agency guarantee, so that the borrower can continue to service debt that the export credit agency has insured. Refinancing in effect exchanges one insured debt for another, thus avoiding the need for the export credit agency to pay a claim. But refinancing can also arise when a buyer or borrower decides to change the source of its finance for a project (e.g., to a different bank, or from a loan to a bond).

Reinsurance. The practice whereby an insurer passes on to another insurer (called a reinsurer) part of the risk (and a portion of the premium income) of a policy it has written. Export credit agencies can be involved in reinsurance both as reinsurers and as reinsured parties. Export credit agencies receive reinsurance from their governments or purchase it in the private reinsurance market. These are several varieties of reinsurance (e.g., facultative, quota share, excess loss), but the basic principle is the same. Some export credit agencies (e.g., in the United Kingdom) are beginning to provide reinsurance to some private insurers on political risks in some countries.

Repayment period. This refers to the length of credit, or credit period. So it will begin from the appropriate starting point of credit and end with the final payment date. See also terms for goods. The Berne Union agreements and the OECD Arrangement set maximum repayment periods for their participating members.

Repayment terms. The schedule for payments due on a contract or loan insured by an export credit agency. Generally, repayment terms reflect the nature of the goods and the value of the contract. See terms for goods. The Berne Union agreements and the OECD Arrangement set maximum repayment terms for their participating members.

Repudiation. The refusal of a buyer to accept or take delivery of goods for which it has contracted, provided that this is not due to breach of contract by the exporter (e.g., late delivery). Many export credit agencies cover repudiation as a commercial risk. Also called nonacceptance.

Rescheduling. The setting of a new timetable for repayments on a debt, normally as part of a workout for a debtor in difficulty, to give the debtor more time to repay and/or to reduce the risk of loss to the creditor or its insurer. Within the Paris Club, rescheduling involves the restructuring of debt owed to a bilateral creditor, in which specified arrears and future repayments are consolidated and a new debt created, on the repayment terms set in the appropriate Paris Club agreement covering the debtor country in question. Thus, rescheduling is one means of providing a debtor or a debtor country with debt relief by allowing a longer repayment period. Refinancing is an alternative technique that can be used for this purpose.

Reserves. (1) Provisions made by an export credit agency against possible future losses or potential losses, whether across its business generally or for specific cases. (2) Reserves of cash (or of “near cash,” i.e., highly liquid assets) accumulated by export credit agencies in those years when they record surpluses, to be used in future years when they may suffer losses.

Retention. That portion of the risk of a contract or loan that is not covered by an export credit agency but continues to be held by the exporter or bank. This reflects the fact that export credit agencies do not normally provide 100 percent cover. See also percentage of cover.

Retention bond. A facility, normally issued by a bank, that protects buyers against the risk that a plant or other expensive capital good will fail to meet full contractual specifications. If this happens, the bonds can be called by the buyer or holder of the bonds. They are an alternative to retention payments, in which the buyer withholds part of the contract price until the plant or other capital good has been in full working order for the contractually agreed period. Export credit agencies can provide cover against the unfair calling of these bonds for political reasons, or the failure of the buyer to make retention payments when due, unless such failure is in accordance with the buyer’s contractual rights.

Retention of title. A technique used in some countries to improve the prospects of payment by buyers, by providing that title to exported goods does not pass to the buyer until all payments or repayments have been made. Some export credit agencies require the inclusion of retention of title clauses in contracts they insure, but experience has shown that in most countries the legal enforcement of such clauses is rarely easy or straightforward.

Retention payment. See retention bond.

Revocable letter of credit. See letter of credit.

Salvage. Generally, the practice of making recoveries in whatever seems the most cost-effective way, which may involve seeking to take back the goods in question, not shipping additional goods to buyers in default, or seizing other assets of the buyer in default and selling them. See also loss minimization.

Sector agreement. An agreement among export credit agencies that specifies the maximum credit terms that an agency may underwrite for transactions involving a particular industry or kind of good. Examples are the Berne Union agreement on raw materials and spare parts and the agreement on large aircraft within the Organization for Economic Cooperation and Development.

Securitization. The use of export credit agency facilities (especially guarantees) to produce assets that can be sold to capital market investors. This allows export projects insured by export credit agencies to be financed in the capital markets as well as by the more usual route of loans from commercial banks.

Security package. The totality of arrangements made to try to ensure full payment or repayment and thus to minimize risk. It may include escrow accounts, take-or-pay contracts, undertakings by host governments, or other arrangements. Most frequently these arise for export credit agencies in the context of project financings. Thus, decisions on their form and scope will be made not only by export credit agencies but also by lenders and countries relating to the viability and cash flow of the project and of the protection provided by arrangements and mechanisms that can be negotiated.

Self-insurance. The practice whereby exporters or their banks decide not to buy insurance from an export credit agency but to carry the risks themselves. One of the things that export credit agencies most fear.

Shipping documents. Documents that relate to the circumstances of conveyance and delivery of goods. Their possession normally represents title to the goods in question. The stage at which these documents are handed over to importers or buyers is therefore important, not least in terms of whether payment is made at this stage (see documents against payment, cash against documents) or the documents are exchanged for some form of promise to pay (see documents against acceptance, bill of exchange, promissory note).

Short-term business, short-term credit. Transactions involving a maximum credit period of, usually, 180 days, although under some definitions it can extend to 360 days and, in exceptional cases, to two years. For purposes of the OECD Arrangement, the medium term begins (and, by implication, the short term ends) at two years. Short-term business represents the bulk of the business of most export credit agencies and normally includes transactions in raw materials, commodities, and consumer goods. There is no universally accepted dividing line between short-term and medium-term credit.

Shortfall undertaking, shortfall agreement. An agreement whereby a buyer promises, in the event of a devaluation in the buyer’s country, to make up any resulting shortfall in the local currency deposit required by the export credit agency related to the buyer’s debt. Such agreements are used in countries where buyers have difficulty converting and transferring foreign exchange. In other words, these undertakings protect exporters and export credit agencies against the risk that, where local currency can be converted and transferred, there is insufficient local currency to purchase the required amount of foreign currency. Export credit agencies will normally not pay transfer claims unless the buyer has made a local currency deposit.

Silent confirmation. Confirmation by a bank (normally in the exporting country) of a letter of credit (issued, usually, by a bank in the buying country) in a manner such that the importer and the importer’s bank are not aware of the confirmation. This is not a common occurrence, but some opening banks are not happy when the need is perceived to confirm their letters of credit. Or the authorities in the importing country may see the need for confirmation as a blot on their banks’ reputation or even that of the country itself.

Sovereign buyer. A government buyer, or another buyer that can commit the full faith and credit of its government (and which cannot be made insolvent or bankrupt). Many export credit agencies will charge lower premium rates and increase the scope of their cover for sovereign buyers. See also public buyer.

Sovereign risk. A term broadly synonymous with political risk but particularly relevant to defaults by or actions of host governments.

Specific cover, specific policy. Insurance underwritten by an export credit agency for a single contract, transaction, or project. Specific cover is normally written for medium- and long-term business, whereas in short-term business most export credit agencies issue framework or comprehensive policies covering the whole range of an exporter’s business or an agreed portion thereof.

Stand-by letter of credit. A letter of credit that provides for payment by a bank (the opening bank or issuing bank) to a beneficiary only in the event that the circumstances set out in the letter of credit come to pass at some future date. Such letters are often issued by banks in one country to beneficiaries in another and could, for example, be activated in the event of breach of contract by an exporter. Stand-by letters of credit are often used in international trade in lieu of a performance bond or performance guarantee. They are also covered by the International Chamber of Commerce’s Uniform Customs and Practices Guidelines.

Starting point of credit. The date on which the credit period begins. It is the subject of a Berne Union definition (or set of definitions, each covering a different kind of goods and services), part of which has since been adopted under the OECD Arrangement. For most short-term business, the starting point of credit is not later than the acceptance of the goods by the buyer. For capital goods and projects it is normally the date of installation or commissioning, but this will reflect the contractual responsibilities that the exporter may have undertaken (e.g., whether it is commissioning all or part of a project, or only providing delivery at the site). It is vital to establish the date at the time the contract is signed, because otherwise, if the buyer finds itself short of money, it can delay the final handover or acceptance of a project. The first principal repayment is normally made six months after the starting point of credit. Where a series of deliveries is involved, the starting point is not usually the final delivery but the mean delivery date or the mean commissioning date.

Status information. Information about individual buyers, on the basis of which underwriting decisions are made and, in short-term business, credit limits issued. It is hugely expensive to collect status information on thousands, if not millions, of buyers worldwide and keep that information up-todate. Electronic storage and transmission of information and data entry and access are thus vital and very sensitive areas. One of the reasons for the development of large multinational credit insurers has been their ability to spread these high overheads over a large volume of business.

Stocks cover. See consignment stock cover.

Stop loss. A limit on the loss that an insured party must bear before its insurer will pay a claim (or that an insurer must bear before presenting a claim to a reinsurer). Stop loss is a kind of first loss mechanism but is applied more commonly in reinsurance.

Subordination strategy. The policy of Paris Club creditors that new loans extended after the cutoff date will not be subject to rescheduling. Therefore, pre-cutoff date loans are effectively subordinated to new loans.

Subrogation. The transfer to an export credit agency, by an exporter or bank that has been paid a claim, of its rights connected with the debt, including the right to pursue the debtor in whichever way and by whatever means the agency chooses.

Supplier credit. Credit extended by an exporter (supplier) to an overseas buyer as part of the export contract (see Figures 4-6 on page 9). Cover for this transaction may be extended by the export credit agency to the exporter. Such arrangements are much more common in short-term business. When they arise in the area of medium-term credit, the buyer normally makes a cash down payment (up to 15 percent) and then accepts bills of exchange or issues promissory notes for the balance, at some stage before final delivery or acceptance of the goods. See also buyer credit.

Surety bond. Normally, a bond that gives an assurance to a buyer that a contract or project will be successfully completed either by the exporter or contractor itself or by someone else. These bonds are issued by specialist surety companies rather than by banks and are not to be confused with demand bonds.

Take-or-pay contract. A contract to pay for something whether or not it is actually delivered, subject to various conditions. Such a contract is often part of the security package of a project financing.

Tender bond. See bid bond.

Tenor. The credit period or repayment period (e.g., “short-term business with tenor of six months”).

Tenor bill. See bill of exchange.

Term. See credit period, repayment period.

Terms for goods. The credit terms for particular kinds of goods (e.g., maximum of 180 days’ credit for raw materials set out in the Berne Union agreements and the OECD Arrangement; see sector agreement). In theory, terms for goods should be set according to the economic life of the goods; for example, machine tools or aircraft would call for longer credit terms than paper bags. Grains and cereals remain a politically sensitive area, where discussions among the countries of the Organization for Economic Cooperation and Development continue.

Third country costs, third country goods. See foreign goods.

Third country trade. See external trade.

Tied aid. Bilateral aid linked to purchases from the country providing it. See also mixed credits.

Tied facilities. Facilities restricted to the supply of national goods or services. Traditionally, export credit agencies exist to support the export of goods and services from their own countries. This is still true in medium- and long-term business, especially where business is underwritten on government account or national interest account. But most export credit agencies may cover some element of nonnational goods and services. See foreign goods, multisourcing.

Time bill. See bill of exchange.

Trade finance. A catch-all term applied essentially to the whole area of short-term business, especially that involving finance provided directly by banks issuing letters of credit.

Transfer claim. See transfer cover.

Transfer cover. Insurance written to cover the risk (called transfer risk) that a buyer may make a deposit of local currency to pay for an international transaction but find itself unable to convert the local currency into foreign exchange for transfer to the exporter. A claim issued under such cover is called a transfer claim. Such inconvertibility can happen even where letters of credit exist. The risk normally arises from restrictions imposed by host governments, through laws or through regulations that have the force of law. During the last 20 years, transfer risk has been the most important political risk covered by export credit agencies. This risk is also covered under investment insurance, where investors are unable to convert and transfer profits and dividends. Export credit agencies often stipulate shortfall undertakings in transfer situations, to protect against the possibility that, even if transfer is possible, devaluation may have rendered the local currency deposit insufficient to purchase the foreign exchange necessary to effect the full transfer. Transfer risk is more complicated when a currency collapses, so that even though foreign exchange may still be available to purchase, its price will have risen sharply in local currency terms since the insured contract was signed (or the insured investment made). These events are probably best looked at case by case, but what in the past have been transfer claims may in future be default claims, where importers simply do not have sufficient local currency to purchase the requisite foreign exchange.

Transfer risk. See transfer cover.

Underdeclaration. The failure of an exporter or other client of an export credit agency to declare and pay premiums on all its business covered under a short-term facility from the agency. This is a problem for many export credit agencies. Because short-term business is typically handled in bulk or conveyor belt fashion, the risk often arises that insured exporters will underdeclare. The problem may only be discovered when the agency makes a spot check (as many export credit agencies have the right to do) or when the exporter submits a claim.

Underwriter. Strictly speaking, those in an export credit agency who decide whether certain risks will be accepted (underwritten) and facilities or credit limits issued. The term tends, however, to be applied to all involved in the process of underwriting or even to all those who work in the export credit agency.

Underwriting. The process undertaken by an export credit agency leading to the issue of an insurance policy or other facility.

Unfair calling. The calling of a bond or other instrument, often for political reasons, rather than because of contractual default by the exporter. This can arise in the context of bid bonds (also called tender bonds), advance payment bonds, performance bonds, or retention bonds. Export credit agencies often cover this risk. This cover can be given either to the exporter or to the bank issuing the bond. See also demand bond.

Uninsured percentage, uninsured portion. That part of a contract or loan that is left at the risk of the insured party. Export credit agencies do not normally cover 100 percent of export contracts or loans. Exporters and banks are expected to carry a share of the risks. This portion can vary between 20 percent and 5 percent and is normally higher for commercial risk than for political risk. See also percentage of cover.

Unrecovered claim. A claim paid by an export credit agency that has not yet been either fully recovered or written off.

Untied aid. Bilateral aid that is not linked to purchases from the country providing it.

Untied facilities. See tied facilities, foreign goods.

Usance bill. See bill of exchange.

Valid claim. A claim submitted by an exporter or bank that has been accepted and will be paid.

Waiting period. See claims waiting period.

Whole turnover policy. A short-term insurance policy that covers all of an exporter’s export business. This is now rather an old-fashioned concept: few export credit agencies now insist that exporters insure all their export business, partly because of competition from other insurers and partly because of the risk of self-insurance. Most export credit agencies will, however, seek to spread their risk and to avoid selection against them by exporters (i.e., the possibility that exporters will insure only the very worst risks). As a general rule, the better and wider the spread of risk, the lower will be the premium rate charged by the export credit agency, and the more flexible the underwriting. See also comprehensive facility.

Working capital. The financing required by an exporter to start or continue to operate and to produce goods and services to be exported. Normally, export credit agencies are not directly involved in providing working capital. But many exporters offer export credit agency cover (including cover of precredit risk) to their banks as security for finance, including working capital. (They often accomplish this through assignment or hypothecation of the insurance policy to the bank.) A few export credit agencies are directly involved in the provision of working capital, offering either facilities or guarantees directly to banks. However, this is a difficult and high-risk area, especially if the exporter fails to perform its contractual duties and as a result is not paid by the importer. The export credit agency is then faced with the (usually politically sensitive) job of trying to recover from the exporter the money it has paid to the bank under its working capital facilities.

Appendix III: The Berne Union and Its Members

The International Union of Credit and Investment Insurers (the Berne Union) has a total of 44 members and 4 observers from 40 countries and other locations. Its members are organizations engaged in export credit and investment insurance, not their governments. Eighteen of its members come from countries that are not members of the Organization for Economic Cooperation and Development. One additional member is an international organization: the Multilateral Investment Guarantee Agency, an affiliate of the World Bank Group. The secretariat of the union is in London. Table A6 lists the current and past members of the union by their date of entry into membership. The union has also established cooperation arrangements with the new export credit agencies in Albania, Belarus, Bulgaria, Croatia, Latvia, Lithuania, Romania, Russia, the Slovak Republic, Ukraine, and Uzbekistan.

Role in International Trade

The Berne Union was set up in 1934 with four founding members, from France, Italy, Spain, and the United Kingdom. The union not only works for international acceptance of sound principles of export credit insurance and foreign investment insurance, but also provides a vital forum for the exchange of information, experience, and expertise among members. It has extensive international contacts and speaks for its members in discussions both with the international financial institutions and with individual buying countries.

The Berne Union—like export credit itself—plays a role of central importance in world trade and investment. It and its members provide critical support of exports and foreign investment. Without the active involvement of Berne Union members, it would not normally be possible to organize the financing required for infrastructure and other large projects on any scale, especially in developing countries.

The statutes of the union provide that its purpose shall be to

  • Work for the international acceptance of sound principles of export credit insurance and the establishment and maintenance of discipline in terms of credit for international trade

  • Foster international cooperation in encouraging a favorable investment climate and in developing and maintaining sound principles of foreign investment insurance, and

  • Provide for the exchange of information, assistance, expertise, and advice in rlation to the commercial and political risks involved in exporting, the political risks involved in foreign investment insurance, and a range of associated matters.

Table A6.

List of Berne Union Members by Date of Entry into Membership

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Source: Berne Union.Note: The full names of the agencies are listed in Appendix IV.

To achieve these aims, members agree that they will

  • Exchange information and furnish the union with the information necessary to accomplish its tasks

  • Maintain and adhere to the maximum credit terms, starting points of credit, and other provisions set out in a series of agreements and understandings

  • Consult with each other on a continuing basis, carry out research, and participate in agreed projects

  • Cooperate closely and, where appropriate, take coordinated action, and

  • Cooperate with other international institutions concerned with these matters.

Members of the union meet at least twice a year. At least one workshop (sometimes attended by nonmembers as observers) and one specialist seminar are held each year.

Within the Berne Union there are specialist export credit insurance committees (one for short-term business and, beginning in 1999, one for mediumand long-term business), as well as a technical subcommittee. There is also a specialist investment insurance committee (with a technical panel). The specialist committees meet at least twice a year. The organization also has a management committee.

Major Activities

For most Berne Union members, major activities include

  • Supporting the sale of raw materials, spare parts, and consumer goods on cash or short credit terms. This means underwriting the repayment risks on individual buyers and, often, their banks, as well as a whole range of political risks.

  • Supporting, either by insurance or guarantees or by direct lending, the supply of project and capital goods on medium- and long-term credit. This often includes underwriting the risks on the viability of the projects themselves, as well as a wide range of other commercial and political risks.

  • Supporting outward investment in various forms (e.g., equity, loans) made in other countries. This is a very important area, but one that is frequently overlooked. The risks covered by Berne Union members in this area embrace a wide range of political factors. Hence it is vital that information on current legislation and regulation on investment in the host country be made readily accessible to them.

Export credit agencies do not provide access to untied finance. Although their facilities relate primarily to exports and investments from their own countries, most make arrangements for taking in nonnational goods and services, for example to enable projects to be completed.

Berne Union members do not provide foreign aid. All export credit agencies are required by the rules of the WTO and, usually, by their own ministries of finance to operate on a break-even basis. In other words, export credit agencies are not in the business of giving money away or of encouraging their customers to become involved in unviable projects.


The status of export credit agencies varies. Some are government departments and some are private companies. Some are government or quasigovernment corporations, and some are eximbanks.

Some members write part of their business on their own account (e.g., short-term commercial risk business) using private sector reinsurance. Other members write most of their business on government account.

Appendix IV: List of Berne Union Members


Compañía Argentina de Seguros de Crédito a la Exportación S.A. (CASC)

Corrientes 345, 7th Floor

1043 Buenos Aires


  • (54 14) 313 3048/313 2986

  • 313 4303/313 2683

  • 313 5071/313 4362

Fax (54 14)313 2919

E-mail bu-casc@dexnet.geis.com


Export Finance and Insurance Corporation (EFIC)

Level 5, Export House

22 Pitt Street

Sydney, N.S.W.1223

Mailing address: P.O. Box R65

  • Royal Exchange, N.S.W. 1223

Telephone (61 2) 9201 2111

Fax (61 2) 9201 2294

Telex (71) 121224 EFIC AA

WWW http://www.efic.gov.au

E-mail bu-efic@dexnet.geis.com


Oesterreichische Kontrollbank Aktiengesellschaft (OeKB)

Export Guarantee Department

International Relations and Cover Policy

Am Hof 4

A-1011 Vienna

Mailing address: Postfach 70

  • A-1011 Vienna

Telephone (43 1) 53127 - 0 (or extension)

Fax (43 1) 53127 - 693

WWW http://www.oekb.co.at

E-mail bsburny@oekb.co.at


Office National du Ducroire (OND)

40 Square de Meeûs

1000 Brussels


  • (32 2) 509 42 11

  • (32 2) 513 50 59

Telex (46) 21147 OND B

E-mail bu-ond@dexnet.geis.com


Export Development Corporation (EDC)

151 O’Connor Street

Ottawa K1A 1K3

Telephone (1 613) 598 2500

Fax (1 613) 237 2690

Telex (21) 0534136 EXCREDCORP OTT

WWW http://www.edc.ca

E-mail bu-edc@dexnet.geis.com


The People’s Insurance Company of China (PICC)

No. 69 Xuan Wu Men Dong He yan

Xuan Wu


Telephone (8610) 63 03 46 75

Fax (8610) 63 03 47 14

E-mail bu-picc@dexnet.geis.com


Export Credit Insurance Service (ECIS)

Ministry of Commerce and Industry


Telephone (357 2) 86 71 00

Fax (357 2) 37 51 20

Telex (605) 2283 MINCOMIND CY

E-mail bu-ecis@dexnet.geis.com

Czech Republic

Export Guarantee and Insurance Corporation (EGAP)

Vodickova 34

110 00 Prague 1

Mailing address: P.O. Box 6

  • 111 21 Prague 1


  • (420 2) 2284 2000

  • (420 2) 2284 2010

Fax (420 2) 2284 4100

WWW http://www.egap.cz

E-mail bu-egap@dexnet.geis.com

Denmark (observer)

Eksportkreditfonden (EKF)

Tagensvej 137

DK-2200 Copenhagen N

Telephone (45 35) 86 86 86

Fax (45 35) 86 85 77

WWW http://www.ekf.dk

E-mail bu-ekf@dexnet.geis.com


Finnvera plc (Finnvera)

Vuorimiehenkatu 1


Mailing address: P.O. Box 1010

  • FIN-00101 Helsinki

Telephone (358) 204 6011

Fax (358) 204 607272

WWW http://www.fgb.fi

E-mail bu-fgb@dexnet.geis.com


Compagnie Française d’Assurance pour le Commerce Extérieur (COFACE)

12 Cours Michelet

La Défense 10

92800 Puteaux

Mailing address: 92065 Paris La Défense Cedex

Telephone (33 1)4902 2000

Fax (33 1) 4773 8649/4906 0988

WWW http://www.coface.com

E-mail bu-coface@dexnet.geis.com


Hermes Kreditversicherungs Aktiengesellschaft (HERMES)

Friedensallee 254

22763 Hamburg

Mailing address: Postfach 22746

  • Hamburg

Telephone (49 40) 8834-0 (or extension)

Fax (49 40) 8834 9175

WWW http://hermes.kredit.com

E-mail bu-hermes@dexnet.geis.com


C&L Deutsche Revision Aktiengesellschaft


New York-Ring 13

22297 Hamburg

Mailing address: Postfach 60 27 20

  • 22237 Hamburg

Telephone (49 40) 63780

Fax (49 40) 6378 1510

E-mail pwc_kapitalanlagen@compuservexom

Hong Kong

Hong Kong Export Credit Insurance Corporation (HKEC)

South Seas Center, Tower 1

2nd Floor, 75 Mody Road

Timshatsui East


Telephone (852) 2723 3883

Fax (852) 2722 6277

Telex (802) 56200 HKXC HX

WWW http://www.hkecicxom

E-mail bu-hkec@dexnet.geisxom

Hungary (observer)

Hungarian Export Credit Insurance Ltd. (MEHIB)

Nagymezo u. 46-48

H-1065 Budapest

Telephone (361) 374 9200

Fax (361) 269 1198/1197

WWW http://www.mehib.hu

E-mail bu-mehib@dexnet.geisxom


Export Credit Guarantee Corporation of India Ltd. (ECGC)

10th Floor, Express Towers

Nariman Point

Bombay 400 021

Telephone (91 22) 202 4852

Fax (91 22) 204 5253

Telex (81) 1183231 ECGC IN

WWW http://www.visionindia.com/ecgc

E-mail bu-ecgc@dexnet.geis.com


Asuransi Ekspor Indonesia (ASEI)

Sarinah Building, 13th Floor

J l.M.H. Tharnrin No. 11

Jakarta 10350

Telephone (62 21) 3903535

Fax (62 21) 327886 / 323662

Telex (73) 69061 ASEIIA

  • (73) 69062 AXINDO IA

WWW http://www.asei.co.id

E-mail aseio2@asei.co.id


The Israel Foreign Trade Risks Insurance Corporation Ltd. (IFTRIC)

65 Petah Tikva Road

Tel Aviv 61201

Mailing address: P.O. Box 20215

  • Tel Aviv 61201

Telephone (972 3) 563 1777

Fax (972 3) 561 0313

Telex (606) 341179 IFTI IL

WWW http://www.iftric.co.il

E-mail bu-iftric@iftric.co.il


Sezione Speciale per l’Assicurazione del Credito all’Esportazione (SACE)

Piazza Poli 37

00100 Rome

Mailing address: C.P. 253 Roma Centro

Telephone (39 06) 67361

Fax (39 06) 678 9835

Telex (43) 613160 SACE I

WWW http://www.ntt.it/SACE

E-mail bu-sace@dexnet.geis.com


Società Italiana Assicurazione Crediti S.p.A. (EULER-SIAC)

Via Raffaello Matarazzo 19

00139 Rome

Mailing address: C.P. 11/253 Roma - Montesacro

Telephone (39 06) 87292-1 (or extension)

Fax (39 06) 87292218

Telex (43) 620616 SIACRE I

WWW http://www.grupposiac.it

E-mail sbargnani@grupposiac.it


National Export-Import Bank of Jamaica Limited (EXIM J)

48 Duke Street


Mailing address: P.O. Box 3

  • Kingston

Telephone (1 876) 92 29690/9

Fax (1 876) 92 29184

Telex (291) 3650 EXIMJJA

E-mail bu-eximj@dexnet.geis.com


Export-Import Insurance Department (EID/MITI)

International Trade Administration Bureau

Ministry of International Trade and Industry

1-3-1 Kasumigaseki


Tokyo 100

Telephone (81 33) 501 1665

Fax (81 33) 508 2624

Telex (72) 22916 EIDMITI J or 28576

WWW http://www.miti.go.jp

E-mail bu-eid-miti@dexnet.geis.com

Paris office: Export-Import Insurance Department

  • Jetro - Paris

  • Centre d’Affaires le Louvre

  • 2 Place du Palais Royal

  • 75001 Paris


  • (33 1) 4261 5879

  • (33 1) 4261 5883

Fax (33 1) 4261 5049

Telex (42) 213294 JETASS F

E-mail kira@eid-miti.netntt.fr


Korea Export Insurance Corporation (KEIC)

33 Seorin-Dong


Seoul 110-752

Telephone (82 2) 399 6800

Fax (82 2) 399 6577

WWW http://keic.or.kr

E-mail bu-keic@dexnet.geis.com

Paris office: Korea Export Insurance Corporation (KEIC)

  • Paris Representative Office

  • 5 Avenue du Marechal

  • Juin 92100 Boulogne

  • Billancourt

  • Paris

Telephone (331) 4699 1893

Fax (331) 4131 2600

E-mail korparis@keic.or.kr


Malaysia Export Credit Insurance Berhad (MECIB)

Level 12 & 13, Bangunan Bank Industri

Jalan Sultan Ismail

50250 Kuala Lumpur

Mailing address: P.O. Box 11048

  • 50734 Kuala Lumpur

Telephone (60 3) 291 0677

Fax (60 3) 291 0353

Telex (84) 31190 EXCRED MA

WWW http://www.jaring.my/webworks/mecib

E-mail bumecib@mecib.po.my


Banco Nacional de Comercio Exterior S.N.C. (BANCOMEXT)

Camino a Santa Teresa 1679

3a Planta

Colonia Jardines del Pedregal

C.P. 01900 Mexico D.F.

Telephone (52 5) 490 6000

Fax (52 5) 481 6157

WWW http://www-mexico.businessline.gov.mx

E-mail bu-bancomext@dexnet.geis.com


Nederlandsche Credietverzekering Maatschappij N.V. (NCM)

Keizersgracht 271-285

1016 ED Amsterdam

Mailing address: Postbus 473

  • NL 1000 AL Amsterdam

Telephone (31 20) 553 9111

Fax (31 20) 553 2811

Telex (44) 11496 NCM NL

E-mail bu-ncmnl@dexnet.geis.com

New Zealand

Export Guarantee Office (EXGO)

1st Floor

Norwich Insurance House

3-11 Hunter Street


Mailing address: Norwich Insurance House

  • Box 5037

  • Wellington

Telephone (64 4) 496 9600

Fax (64 4) 496 9670

E-mail bu-exgo@dexnet.geis.com


Garanti-Instituttet for Eksportkreditt (GIEK)

Dronning Maudsgate 15 IV

0250 Oslo

Mailing address: Postboks 1763 Vika

  • N-0122 Oslo

Telephone (47) 22837070

Fax (47) 22832445

Telex (056) 76783 GIEK N

WWW http://www.giek.no

E-mail bu-giek@dexnet.geis.com

Poland (observer)

Export Credit Insurance Corporation (KUKE)

ul. Widok 5/9

00-023 Warsaw

Telephone (48 22) 827 3535 / 7884

Fax (48 22) 827 3587

WWW http://www.kuke.com.pl

E-mail bu-kuke@dexnet.geis.com


Companhia de Seguro de Créditos, S.A. (COSEC)

Avenida da Republica 58

1069 Lisbon Codex

Telephone (351 1) 791 3700

Fax (351 1) 791 3720

Telex (404) 12885 COSEC P

E-mail bu-cosec@dexnet.geis.com


ECICS Credit Insurance Ltd.

7 Temasek Boulevard

#11-01 Suntec Tower One

Singapore 038987

Telephone (65) 337 4779

Fax (65) 338 9267

WWW http://www.ecics.com.sg

E-mail ecics@pacific.net.sg

Slovenia (observer)

Slovene Export Corporation Inc. (SEC)

Josipine Turnograjske 6

61000 Ljubljana

Telephone (38 661) 176 2019

Fax (38 661) 152 3015

E-mail: vida.zabukovec@sid.sigov.mail.si

South Africa

Credit Guarantee Insurance Corporation of Africa Ltd. (CGIC)

Credit Guarantee House

31 Dover Street

Randburg 2194


Mailing address: P.O. Box 125

  • Randburg 2125

Telephone (27 11) 889 7000

Fax (27 11) 886 1027/5715

Telex (95) 420508SA

WWW http://www.creditguarantee.co.za

E-mail bu-cgic@dexnet.geis.com


Compañía Española de Seguros de Crédito a la Exportación, S.A. (CESCE)

Valázquez, 74

E-28001 Madrid

Telephone (34 91) 423 4800

Fax (34 91) 576 51 40

Telex (52) 23577 CESCE E

WWW http://www.cesce.es

E-mail cmunoz@cesce.es


Compañía Española de Seguros de Crédito y Caución S.A. (CESCC)

Paseo de la Castellana, 4

E-28046 Madrid

Telephone (34 91) 432 6300/6380

Fax (34 91) 432 6511

Sri Lanka

Sri Lanka Export Credit Insurance Corporation (SLECIC)

Level 4, Export Guarantee House

No. 42, Navam Mawatha

Colombo 2

Telephone (94 74) 719 410-13

Fax (94 74) 719 400

WWW http://www.tradenetsl.lk/slecic/slecic.html

E-mail bu-slecic@dexnet.geis.com


Exportkreditnämnden (EKN)

Kungsgatan 36


Mailing address: Box 3064

  • S-103 61 Stockholm

Telephone (46 8) 701 00 00

Fax (46 8) 411 81 49

WWW http://www.ekn.se

E-mail angela.montenegro@ekn.se


Geschäftsstelle für die Exportrisikogarantie (ERG)

Kirchenweg 8

CH-8032 Zürich

Mailing address: Postfach

  • CH-8032 Zürich

Telephone (41 1) 384 47 77

Fax (41 1) 384 47 87

WWW http://www.swiss-erg.com

E-mail bu-erg@dexnet.geis.com


The Federal Insurance Company Ltd. (FEDERAL)

(Eidgenössische Versicherungs Aktiengesellschaft)

Flössergasse 3

CH-8032 Zürich

Mailing address: Postfach

  • CH-8032 Zürich

Telephone (41 1) 208 44 22

Fax (41 1) 201 28 04

Telex (45) 815353 FED CH

E-mail bu-federal@dexnet.geis.com

Taiwan Province of China

Taipei Export-Import Bank of China (TEBC)

8th Floor

3 Nanhai Road

Taipei (100)

Telephone (88622) 321 0511

Fax (88622) 394 0630

E-mail bu-tebc@dexnet.geis.com


Export Credit Bank of Turkey

Müdafaa Cad. 20

Bakanliklar 06100


Telephone (90 312) 417 13 00/417 32 87/425 65 02

Fax (90 312) 425 78 96/425 75 47

Telex (607) 46751 EXMB TR/46106 EXBN

E-mail tsayar@eximbank.gov.tr

United Kingdom

Export Credits Guarantee Department (ECGD)

2 Exchange Tower

Harbour Exchange Square

London E14 9GS

Telephone (44 171) 512 7000

Fax (44 171) 512 7649

WWW http://www.open.gov.uk/ecgd

E-mail bu-ecgd@dexnet.geis.com

United Kingdom

EULER Trade Indemnity plc (ETI)

1 Canada Square

London E14 5DX

Telephone (44 171) 512 9333

Fax (44 171) 512 9186

WWW http://www.tradeindemnity.com

E-mail eticountryrisk@eulergroup.com

United States

Export-Import Bank of the United States (U.S. Eximbank)

811 Vermont Avenue, N.W.

Washington, DC 20571

Telephone (1 202) 565 3946

Fax (1 202) 565 3380

(In-Safe no.) 6710607 EXIMBANK

Telex (023) 89461 EXIMBANK/197681 EXIM UT

WWW http://www.exim.gov

E-mail bu-eximbank@dexnet.geis.com

United States

FCIA Management Company Inc. (FCIA)

40 Rector Street

New York, NY 10006

Telephone (1 212) 306 5000

Fax (1 212) 513 4704/(1 212) 732 9497

E-mail shoulton@fcia.com

United States

Overseas Private Insurance Corporation (OPIC)

1100 New York Avenue, N.W.

Washington, DC 20527

Telephone (1 202) 336 8586


  • (1 202) 408 5142

  • (1 202) 408 9859

WWW http://www.opic.gov

E-mail bu-opic@dexnet.geis.com


Credit Insurance Zimbabwe Ltd. (CREDSURE)

69 Second Street

P.O. Box CY 1584



Telephone (263 4) 738944-7/706101-4

Fax (263 4) 706105

Telex 24424 CREDIT ZW

E-mail bu-credsure@dexnet.geis.com

World Bank Group

Multilateral Investment Guarantee Agency (MIGA)

12th Floor

1800 G Street, N.W.

Washington, DC


Mailing address: 1818 H Street, N.W.

  • Washington, DC 20433

  • U.S.A.

Telephone (1 202) 473 6168

Fax (1 202) 522 2630

WWW http://www.miga.org

E-mail bu-miga@worldbank.org