Front Matter
Author: Mr. Jian-Ye Wang, Mr. Yo Kikuchi, Mr. Sidhartha Choudhury, and Mr. Mario Mansilla
Language:
English
Keywords:
WEFS; financing; trade; market; trade finance provider; export credit agency; OECD arrangement; trade finance advantage; export credit business; Export credits; Trade finance; Exports; Credit; Emerging and frontier financial markets; Africa; Global; Central and Eastern Europe; Sub-Saharan Africa; Europe
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Abstract

This paper assesses the issues of government involvement in international trade finance stemming from the recent changes in global financial markets. This study is based on discussions with representatives of export credit agencies during the period from October 2003 to May 2004. A survey of 27 agencies provided valuable insights. Financial flows facilitated by official export credit agencies are large in comparison with official development assistance and gross lending by international financial institutions to developing countries. However, the importance of officially supported trade finance has been declining relative to the rapid expansion of world trade and total capital flows to developing countries. The study highlights the key challenges facing official export credit agencies, including complementing the private sector, facilitating financing to low-income countries while helping maintain these countries’ debt sustainability, and playing a positive role in the area of trade finance in international efforts to address emerging market financial crises.

© 2005 International Monetary Fund

Production: IMF Multimedia Services Division

Series design: Luisa Menjivar

Cover, figures, and typesetting: Wendy Arnold

Officially supported export credits in a changing world / prepared by Jian-Ye Wang … [et al.] -- Washington, D.C.: International Monetary Fund, 2005.

p. cm. — (World economic and financial surveys, 0258-7440)

Includes bibliographical references.

ISBN 9781589064355

1. Export credit. 2. Export credit -- Developing countries. I. Wang, Jian Ye. II. International Monetary Fund.

HG3753.O34 2005

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CONTENTS

  • Frequently Used Abbreviations

  • Preface

  • Chapter I. Overview

  • Chapter II. Trends and Developments in Export Credits

    • Volume of Export Credits

    • Allocation of Export Credits

    • Financial Position of Export Credit Agencies

    • Structural Changes in Major Market Segments

  • Chapter III. Factors Affecting Officially Supported Export Credits

    • Government Policies

    • Private Sector Competition

    • Other Factors

  • Chapter IV. The Changing Role of Official Export Credit Agencies

    • Subsidies, Distortionary Interventions, and the Role of Public Agencies

    • Strengths and Constraints of Official Export Credit Agencies

  • Chapter V. Challenges Facing Official Export Credit Agencies

    • Complementing the Private Sector

    • Financing for Low-Income Countries

    • Trade Finance in Financial Crisis

    • Export Credit Agencies in Developing Countries

  • Appendixes

    1. Technical Note on Export Credit Statistics

    2. Mandate and Scope of Operations of Selected Export Credit Agencies

    3. Recent Developments in the OECD Arrangement on Guidelines for Officially Supported Export Credits

    4. Financing for Low-Income Countries and Countries in Crisis from Selected Export Credit Agencies

    5. Aircraft Financing Supported by Selected Export Credit Agencies

    6. Risk Management in Export Credit Agencies

    7. Strengths and Constraints of Public and Private Trade Finance Providers

    8. Reinsurance and Export Credit Agencies

  • Glossary of Terms

  • Bibliography

  • Boxes

    • 2.1. The Trade Finance Market and Official Export Credit Agencies

    • 2.2. Institutional Environment of Arrangements for Officially Supported Export Credits

    • 2.3. Official Export Credit Agencies in Emerging Market Economies: China and India

    • 3.1. Multilateral Development Banks and Trade Finance

  • Figures

    • 2.1. Officially Supported Export Credits: New Commitments

    • 2.2. Officially Supported Export Credits: Outstanding Commitments

    • 2.3. Composition of External Debt of Developing Countries Owed to Official Creditors

    • 2.4. Officially Supported Export Credits: New Commitments Relative to Total Exports

    • 2.5. Medium- and Long-term Export Credits: New Commitments Relative to Capital Goods Exports

    • 2.6. Twenty Main Recipients of Export Credits: Share in Berne Union Agencies’ Portfolio

    • 2.7. Composition of Long-Term Officially Supported Export Credits by Sector

    • 2.8. Export Credit Agencies: Net Cash Flow

    • 3.1. Foreign Direct Investment and Commercial Bank Lending to Emerging Market Economies

    • 3.2. Selected Private Export Credit Insurers: Premium and Exposure

  • Tables

    • 2.1. Selected Export Credit Agencies in OECD Countries: Ratio of Medium- and Long-Term New Commitments to Capital Goods Exports

  • Appendix Figures

    • A5.1. Aircraft Financing Supported by Selected Export Credit Agencies

    • A8.1. Capital and Reserves of Top Ten Reinsurers, 2002–03

  • Appendix Tables

    • A1.1. New Export Credit Commitments by Type of Recipient Country, 1988–2003

    • A1.2. Export Credit Commitments Outstanding, 1988–2003

    • A2.1. Mandate and Scope of Operations of Selected Export Credit Agencies

    • A4.1. ECA Financing for Low-Income Countries

    • A4.2. ECA Response to Countries in Financial Crisis

    • A7.1. Strengths and Constraints of Public and Private Trade Finance Providers

    • A8.1. Reinsurance of Short-Term Business by Official Export Credit Agencies

The following conventions are used in this report:

  • … to indicate that data are not available or not applicable;

  • — to indicate that the figure is zero or less than half the final digit shown;

  • – between years or months (for example, 1991–92 or January–June) to indicate the years or months covered, including the beginning and ending years or months;

  • / between years or months (for example, 1991/92) to indicate a fiscal or financial year.

“Billion” means a thousand million; “trillion” means a thousand billion.

“Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

Minor discrepancies between constituent figures and totals are due to rounding.

* * *

As used in this report, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.

FREQUENTLY USED ABBREVIATIONS

ADB

Asian Development Bank

AIG

American International Group

ATI

African Trade Insurance Agency

BIS

Bank for International Settlements

COFACE

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

COMTRADE

Commodity Trade Database (United Nations)

EBRD

European Bank for Reconstruction and Development

ECA

Export credit agency

ECGC

Export Credit Guarantee Corporation of India

ECGD

Export Credits Guarantee Department (United Kingdom)

ECO

New Zealand Export Credit Office

EDC

Export Development Corporation (Canada)

EFIC

Export Finance and Insurance Corporation (Australia)

FCIA

Foreign Credit Insurance Agency (United States)

HIPC

Heavily Indebted Poor Countries

IDB

Inter-American Development Bank

IFC

International Finance Corporation (World Bank Group)

IFI

International financial institutions

IMF

International Monetary Fund

JBIC

Japan Bank for International Cooperation

KfW

Kreditanstalt für Wiederaufbau (Germany)

MIGA

Multilateral Investment Guarantee Agency (World Bank Group)

MPR

Minimum premium rate

NCM

Nederlandsche Credietverzekering Maatschappij (Netherlands)

NEXI

Nippon Export and Investment Insurance (Japan)

OECD

Organization for Economic Cooperation and Development

SACE

Servizi Assicurativi del Commercio Estero (Italy)

SCM

WTO Agreement on Subsidies and Countervailing Measures

SINOSURE

China Export and Credit Insurance Corporation

VaR

Value-at-Risk

WTO

World Trade Organization

PREFACE

This study is intended to assess the issues of government involvement in international trade finance stemming from the recent changes in global financial markets. It attempts to summarize the information available concerning the disparate responses by public and private sector trade finance providers to these developments, based on discussions with representatives of official export credit agencies and private trade finance providers, and a survey of market participants conducted from October 2003 to May 2004. The study also updates developments in officially supported export credits. The last comprehensive review of official export finance by the International Monetary Fund staff was published in 1995 (Kuhn, Horvath, and Jarvis).

This study was prepared in the Official Financing Operations Division of the IMF’s Policy Development and Review Department under the general guidance of Martin Gilman. Lisandro Abrego, Corinne Delechat, and Alberto Espejo made contributions at various stages of the study. The work benefited from comments by staff in the Policy Development and Review Development and other IMF departments. Helpful comments on early drafts by Kimberly Wiehl of the Berne Union, Janet West of the Organization for Economic Cooperation and Development, and Piper Star of the U.S. Export-Import Bank are gratefully acknowledged. The treatment of the issues in this study reflects the views of the authors and does not necessarily represent the views of the International Monetary Fund or its Executive Directors.

The authors are grateful to Aminata Toure for research and to Esther George, Maria Fernanda Gusmao, and Lorna Campbell for secretarial assistance. David Einhorn of the External Relations Department edited the manuscript and coordinated production of the publication.

Cover Officially Supported Export Credits in a Changing World
Officially Supported Export Credits in a Changing World
Author: Mr. Jian-Ye Wang, Mr. Yo Kikuchi, Mr. Sidhartha Choudhury, and Mr. Mario Mansilla
ISBN:
9781589064355
ISSN:
0258-7440
Publication Date:
01 Jul 2005
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589064355.083
Pages:
56

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