In this period of sharply curtailed capital flows it is to be expected that attention has focused on the volume of new credits, and this paper has that same focus. Nevertheless, questions concerning the quality of spending that is financed by foreign borrowing and its impact on the debtor’s economic development are fundamental. They are important at the present time, and they will be crucial when the developing world is firmly launched on a recovery from the present period of debt difficulties and capital flows are again more readily available. For officially supported export credits, there would appear to be at least two key questions that will need to be addressed. The first is the quality of the projects financed by officially supported export credits, and the second is whether the policies of export credit agencies are such that they can be responsive to the increasing role for the private sector that many developing countries now see as a key part of their development strategy.
The raison d’être and the primary mandate of official export credit agencies is to facilitate and promote national exports through the direct provision of export credits and/or the guarantee of privately financed transactions. At the same time, each agency operates within the objective that its activities be self-supporting over time. A clear distinction is generally drawn between export credit and cover facilities, which are to be provided on a commercial basis, and aid programs, which are intended to provide concessional finance for development.1
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.
How will the global economic crisis alter precrisis trends in the Millennium Development Goals (MDGs)? With only five years left until the target date of 2015, it is obvious that several of the MDGs will not be attained, globally or by a majority of countries. Many of the goals are too high for low-income countries, given their low starting points. Many countries, including low-income ones, have seen substantial gains in recent years, however, and entered the current crisis in a stronger position than in past crises (chapter 1 and chapter 2). Important questions are whether the gains will be preserved, and what happens if the fragile recovery slips into a prolonged stagnation.