exportcredit

Export credit refers to government-supported financing and guarantees offered to foreign buyers to purchase goods and services from a domestic supplier. It is typically administered by an export credit agency (ECA) or by banks acting on behalf of the government. The goal is to promote national exports, support domestic manufacturers, and improve competitiveness by reducing the cost or risk of international sales.

Instruments include buyer credits (direct loans to the foreign buyer), supplier credits (credit extended by the exporter or the exporter's bank to the buyer), guarantees to lenders or exporters, and export credit insurance against commercial or political risks. Some arrangements are tied to the export contract, while others are untied.

Terms vary by contract and project size, ranging from short-term to long-term financing. Pricing may reflect market rates, with potential government subsidies or guarantees that influence terms. Coverage can extend to a large portion or the full contract value, particularly in higher-risk transactions, and political risk insurance may cover events such as expropriation, currency inconvertibility, or nonpayment.

Regulation and governance: ECAs operate within national policy frameworks and international rules. The OECD Arrangement on Officially Supported Export Credits coordinates terms and subsidies among member countries to maintain fair competition and avoid market distortion. Compliance typically includes due diligence, risk assessment, transparency, and reporting obligations.

Impact and considerations: Export credit can broaden access to foreign markets and support strategic industries, but it may distort competition and expose governments to contingent liabilities. Policy aims to balance trade promotion with prudent risk management and international cooperation.