Ministers have agreed a new financial framework for ECGD, the UK’s official export credit agency. Minister for trade, investment and foreign affairs, Ian McCartney, has announced the new framework, which has been agreed with the chief secretary to the treasury and the shareholder executive.
McCartney says: “This new framework will ensure the continued provision of export credits and guarantees to help British exporters secure overseas business.”
The new financial framework, to be in place from April 1, 2008, will replace plans for ECGD to become a government trading fund. It takes account of the results of ECGD operating as a pilot trading fund over the past two years and has four main components.
- There will be an overall cap on the risk exposure that ECGD can commit but with sufficient headroom to meet current and potential demand from exporters
- Robust systems will continue to assess and control the assumption of new risks
- The premiums ECGD charges on the transactions its supports will continue to properly reflect the risk, make a contribution to the cost of capital and reserves, and finance administration costs
- ECGD’s administration costs will in future be subject to departmental expenditure limits and the disciplines of government spending reviews.
The new financial framework will be subject to revised financial objectives that will enable ministers to monitor the performance of ECGD’s operations.
McCartney adds: “The new arrangements will balance the needs of exporters by ensuring the adequate provision of support to meet their current and expected needs while affording protection to the taxpayer and providing value for money.”