To better understand agencies’ cover policy response in various situations, the staff discussed with the 11 agencies and their export credit authorities the evolution of cover policies toward a sample of 14 developing countries. That sample was selected for both geographical distribution and the representation of countries in a wide range of circumstances regarding their external position and their relations with official creditors.
There is now a free forward exchange market.26 Authorized foreign exchange dealers (banks and nonbank financial institutions) are permitted to negotiate forward exchange contracts in any currency. They may deal among themselves and with their customers, including both residents and nonresidents, at mutually negotiated rates. The Reserve Bank sets a limit for each dealer’s overall overnight foreign exchange exposure. However, in aggregate, dealers rarely use more than 25 percent of their approved limit.
In this and past Fund staff papers on officially supported export credits, quantitative analysis of developments has been based on two statistical sources. One source is the Berne Union Country Reporting Quarterly Return, commonly referred to as the “40 Countries Report,” in which the member agencies of the Berne Union report their outstanding commitments, unrecovered claims, and outstanding offers for each of 40 countries. These data are not available to the public and have been provided to the staff on a confidential basis for its use in analyzing various aggregates for individual debtor countries.
The Arrangement on Guidelines for Officially Supported Export Credits (the Consensus Arrangement) is adhered to by 22 members of the OECD Group on Export Credits and Credit Guarantees. The Arrangement has been in place since April 1978 and replaced a less elaborate understanding that had been in effect among a more limited number of OECD countries since early 1976. The Arrangement is intended to limit competitive subsidization of export financing and sets, inter alia, minimum allowable interest rates and maximum repayment terms for officially financed or subsidized export credits of two years and more.
—the terms agreed upon in a Paris Club rescheduling meeting are embodied in an Agreed Minute. The Minute normally specifies the coverage of debt service payments to be consolidated, the cutoff date, the consolidation period, the proportion of payments to be rescheduled, the provisions regarding the down payment, and the repayment schedule for both the rescheduled and deferred debt. Delegates to the meeting undertake to recommend to their governments the incorporation of these terms in the bilateral agreements that implement the rescheduling.