Grain shipments destined for Iraqi consumers are now aboard ships bound for and in ports in the Middle East, representing a milestone in the relationship between US grain exporters, US Exim Bank, the Trade Bank of Iraq (TBI), and JP Morgan Chase Bank.
The shipments are part of the US$277mn in sales of grain to the ministry of trade’s Grain Board, the state-run buyer of wheat and rice for Iraq. These commodities are the first agricultural commodities sold to the Iraqi government on 180-day credit terms under US Exim Bank’s US$500mn short-term insurance facility for TBI. These sales were supported by letters of credit issued by the TBI, confirmed by Chase and insured by US Exim for the benefit of exporters The Rice Company, ADM Rice, and Cargill International.
Under US Exim Bank’s facility with TBI, Ex-Im will insure irrevocable letters of credit issued by TBI, and confirmed by a US bank. Standard terms under the facility include a repayment period up to 180 days, a pre-presentation period of 60 days and coverage of 100% of the principal and interest. In October 2004, US Exim, the ministry of finance (MOF) and the Trade Bank of Iraq (TBI) signed a framework agreement that enabled Ex-Im to continue to provide support for Iraqi reconstruction under this programme.
US Exim Bank is also willing to support US exports to Iraq through its working capital guarantee programme under which it will consider applications to support pre-export activities of US subcontractors, particularly small businesses, operating under US government-funded reconstruction projects. In addition, US Exim will consider applications for financing of US exports to Iraq under its loan guarantee, working capital, and credit insurance programmes if there is a creditworthy source of repayment in a third country.