Economic science/2.International economic activity.

Baboshkina А.А.

Plekhanov Russian University of Economics, Russia

The main aspects of export credit agencies

Nowadays export credit agencies play key role in the global economy as well as national financial stability in all developed countries and emerging markets.

National export support is the main purpose and the goal for the agency activity. Various export credit agencies operate under the national state programs and provide services on behalf of the government.

Current economic problems of the world economy, financial instability and necessity of improving the quality service are the main factors for new innovative solutions implementation in the credit agencies activities to satisfy exporter’s needs for promotion goods and services on the international markets.

Based on foreign literature the Credit export agency is a specialized financial institute which provides different services for the purpose of national export supporting.

Nowadays export credits; insurance of export credits, guarantees, investments; guarantee instruments; debt collector services; factoring; project and structured financing; working capital financing; consulting services and products via internet are the most popular and modern instruments granted by export credit agencies.

It is possible to compare activity of export credit agencies partially with banking services, insurance business and operations of export-import banks and banks for development of the national economy.

Surely the main direction for export credit agencies now is implantation of new and highly developed structural credit support schemes between huge amounts of involved participants.

Also it is important to turn attention to the new internet-based technologies implementation of which help on-line services arising. Additionally innovative solutions allow to make expertise of export deals participants and to pass the request directly by internet for insurance and credit services.

The main economic goals of export credit agencies are nontraditional export support, financing nontraditional exporters (size, products, regions), assistance to indirect exporters, providing additional and complex instruments for the financial institutes and commercial banks, risks limitation in international trade, improving the balance of payment in the country and supporting the level of domestic employment, products diversification in the financial market, new financial skills and knowledge providing.

The world history of export credit agency appearance counts more than one hundred years. The first privately owned export credit agency was established in 1906 year in Switzerland. Later in 1917 year Euler Hermes Kreditversicherungs-AG was organized in Germany [4] and in 1919 year Export Credits Guarantee Department (ECDG) [6] was set up in United Kingdom for the purpose to support national export within the guarantees and insurance schemes.

Necessity of economy recovery after the World War played key role in the process of export credit agencies arising all over the world: Belgium (ONDD, 1921), Denmark (1922), Netherlands (1923), Finland (1925), Austria (Atradius N.V., 1925), Italy (1927), Spain (1928) and Norway (GIEK,1929).

In 1946 year Societe Francaise d’Assuarance Credit (SFAC) [2] was established which nowadays well known as a Coface (1946) [5].

Government export credit agency Exportkreditnamnden (EKN) [3] was established in Sweden in 1933 and later one of the key agency in the world - Export-Import Bank of the United States [7] was established in the United States in 1934 г. as a government institute.

For the purpose of export support in 1937 first agency was established in emerging market in Mexico - Banko Mexicano Comercio Exterior (BANCOMEXT) to finance the project in Europe. In 1950 Japan agency also has been organized for the government project realization.

Private export Risks Insurance Corporation was opened in India in 1957. Since 1959 Morocco starts to provide insurance programs for the export activity by The Banque Marocaine du Comerce Exterieur.

For the export guarantee providing to exporters Finland agency FINNVERA started to implement the government program since 1963. In 1970 г. Compania Espanola de Credito a la Exportacion SA (CESCE) was established in Spain.

Since 1986 year export credit agencies actively appeared in Ecuador, Jamaica (EXIM J, 1986), Saudi Arabia (SEP, 1974), Singapore (ECICS Limited, 1975), Malaysia (MEXIM, 1977), Philippines (PHILEXIM, 1977), Sri Lanka (SLECIC, 1978), Taiwan, Uruguay, Venezuela, Indonesia, Tunisia, Turkey (TURK EXIMBANK, 1987), Greece (ECIO, 1988).

Last 20 years world history showed hasty growth of export credit agencies in huge amount of countries: Oman, Poland (1991), Rumania, Czech Republic, Korea, Slovenia, Croatia, Ukraine (1992), Thailand, Egypt (1993), Bulgaria Iran, Jordan, Uzbekistan (1994), Bosnia and Herzegovina (1996), Slovakia, Brazil, Bermuda (1997), Bulgaria Latvia, Macedonia (1998), New Zealand, Japan, Belarus, Lebanon, South Africa (2001), Kazakhstan (2003), Serbia, Sudan (2005), Switzerland (2007), Emirates (2008), Estonia (2009), Qatar and Russia (2011).

Nowadays US Eimbank, Euler Hermes, NEXI, Coface, Ksure, EKN, UK Finance, Sinosure are the most leading export credit agencies in the world as shown in the Chart 1 below.

Totally leading agencies have provided more than 447 transactions in 2012 on the total amount of 117,9 billion USD dollars that is more than 52 % fixed in 2011 [1].

Chart. 1. - Volume of export support by export credit agencies in 2012

There are few main key parameters for the export credit agencies to operate successfully on the world and national markets.

Basically export credit agencies should pay attention to the Capital adequacy for the possibility to satisfy all incurred liabilities.

Export credit agencies should to organize the independent organizational anatomy to make business decisions individually. All modern export credit agencies operate under the government programs and support which allow to providing interesting programs on behalf of the government.

For the risk limitation export credit agencies use different instruments with assistance of commercial banks and insurance companies based on the mutual agreement on cooperation and understandings.

Under the current market conditions export credit agencies should offer competitive and attractive fees for the services to be more open and available for the potential clients.

In order to be successful on the world market export credit agencies provide full range of products: different insurance policies, export loans, project and structured financing, guarantees, assistance to small and medium business, consulting services and educational programs.

Majority of export credit agencies try to recruit finance specialists from the market with prior experience in financing and insurance spheres for the agency development in a line with modern requirements and experience. Procedures efficiency helps to implement new innovative methods for the service which can be provided for example via internet. Some internal rules and procedures also generate additional force for the agencies efficiency. For the purpose of providing new programs for the exporters agencies use aggressive marketing strategy through bank, government authorities and trade associations.

Adequate credit analysis allows export credit agencies to reduce all possible risks including commercial and political. Guarantees as a security provide additional risk reduction for the export credit agencies. Most agencies use technical sophistication for the business improvement and flexibility with the current economic condition.

Summarize mentioned above it is evident that export credit agencies are the sophisticated financial institutes for the national export support within different instruments such as insurance policies, export loans, project and structured financing, guarantees, assistance to small and medium business, consulting services and educational programs, assistance to small and medium business.

Nowadays in the conditions of the world recession exporters should interact with export credit agencies for optimal export schemes realization to reduce risks of international trade.

Literature:

1. ECA Origination Newsletter no.1 Issue – January 2013|Semi-annual, P.3.

2. Berne Union Yearbook 2005, Pensord Press,Wales, UK. 2006.

3. EKN official site www.ekn.se.

4. Euler Hermes official site www.eulerhermes.com.

5. Coface official site www.coface.com.

6. UK Export Finance official site www.ecgd.gov.uk.

7. US Eximbank official site www.exim.gov.