Front Matter

Front Matter

Malcolm Stephens
Published Date:
May 1999
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    © 1999 International Monetary Fund

    Production: IMF Graphics Section

    Cover design: Luisa Menjivar-Macdonald

    Typesetting: Alicia Etchebarne-Bourdin

    Library of Congress Cataloging-in-Publication Data

    Stephens, Malcolm.

    • The changing role of export credit agencies / Malcolm Stephens.

      • p. cm.

    • ISBN 1-55775-801-8

    • 1. Export credit. I. Title.

    HC3753.S73 1999




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    In mid-1998 I was invited by the International Monetary Fund to do some work as a Visiting Scholar on the topic of Southeast Asia and the export credit agencies. The first result of this work was published as an IMF Working Paper titled “Export Credit Agencies, Trade Finance, and South East Asia” (WP/98/175) in December 1998. During the course of this work, it became clear that there was a good deal of uncertainty on the part of many about the role of export credit agencies. Partly because of this, some serious myths and misconceptions had become established. In view of this misunderstanding, and because the role of export credit agencies and the background against which they operate are undergoing important change, it seemed helpful to try to produce a more general work on the topic. It is hoped that this volume will correct some of the misconceptions and help clarify the work of export credit agencies within the wider context of international trade and investment flows.

    The views and opinions expressed in this volume are solely mine. They do not in any way necessarily represent those of the Executive Board or staff of the International Monetary Fund, or of the International Union of Credit and Investment Insurers (the Berne Union), of which I was the Secretary-General until March 1998.


    I should like to record my thanks for all the help and kindness I have received from the staff of the IMF and, especially, from Anthony Boote, Doris Ross, and their colleagues in the Policy Development and Review Department. I am also very grateful to Sulochana Kamaldinni for all her hard and excellent work in typing and retyping several versions of the manuscript, and to Michael Treadway of the External Relations Department for his help and advice in editing the volume. Thanks are also due to Dr. Graham Young, Research Officer at the Berne Union, for his help with most of the statistics and tables. Finally, I am also grateful to my wife Lyn for her help and encouragement and for rereading drafts on many occasions.


    Export credit agencies play a role of central importance in international trade and investment flows. Exports insured or financed by the approximately 50 export credit agencies that are members of the Berne Union (about $410 billion in 1997) account for about 10 percent of their countries’ exports, which, in turn, represent about 78 percent of world exports. In addition, 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.

    The first export credit agencies were established in the 1920s, but most of those in operation today have been set up in the last 25 years. Their traditional role is to support and encourage exports and outward investment by insuring international trade and investment transactions, and in some cases by providing trade finance directly. But export credit agencies come in all shapes and sizes, and there is no such thing as a typical export credit agency. Most of them insure both political and commercial risks on exports, and until the last decade they operated as government entities or on the account of their governments. There was little competition for business, as there tended to be one export credit agency in each country.

    But much of this has changed and is still changing, not least as private sector insurers (especially certain large corporate groups operating in or out of several countries) and reinsurers are increasingly willing to undertake this business. The growing competition between—or at least coexistence of—private and public insurers raises some controversial issues. Not the least of these is whether export credit agencies can realistically be expected to act as insurers of last resort, taking on that business—and perhaps only that business—in which private insurers still fear to tread, while at the same time breaking even. An increasing number of governments are subjecting their export credit agencies to this dual mandate. Another important issue—and another challenge to agencies’ ability to break even—is whether to develop special facilities for small exporters, and if so, what kinds of facilities to provide (and how much to charge for them). This volume addresses these and other issues and offers some specific and practical recommendations.

    It is hoped that this volume and its appendices (especially the extended glossary provided in Appendix II) will provide useful background information to those whose involvement in international trade and investment brings them into contact with the services of export credit agencies. But its principal audience is policymakers in this domain, including in particular those who may be considering setting up an export credit agency for their country or reforming an existing one. Export credit remains an important instrument of policy—perhaps more so than ever in today’s globalizing world economy—and an export credit agency can do much that is beneficial for a country’s economic and foreign policy. But it can also do some harm, and there are many pitfalls to be avoided. This volume is intended to help sort out the right objectives for export credit agencies from the wrong ones, so that these agencies can continue to make their vital contribution to the world economy.

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