US Ex-Im Bank has voted to notify Congress of a proposed US$500mn facility that would provide the bank’s short-term export insurance to cover transactions with the new Trade Bank of <
Ex-Im’s new programme which is also subject to finalisation of a framework agreement involving itself, the Trade Bank, and the Coalition Provisional Authority (CPA) would provide coverage for transactions authorized by the CPA, Iraq’s administrative authority. The CPA established the Trade Bank in July to support Iraqi reconstruction through trade finance services. It will support Iraqi imports of equipment and commodities funded through the Development Fund for Iraq (DFI). The DFI, which is administered by the CPA, is being funded by proceeds from Iraqi oil exports.
The Ex-Im programme is anticipated to be available soon after the expected initial start of operations of the Trade Bank. This facility is also expected to serve as a model for other export credit agencies that are interested in providing similar support for the Trade Bank, and making this a truly multilateral effort.
The new short-term insurance programme for Iraq would allow for aggregate Ex-Im Bank exposure of US$500mn, and would be administered under the bank’s internal delegated authority guidelines. Transactions in excess of existing individual delegated authority would be brought to the bank’s board of directors for approval.
Under the program, Ex-Im will insure irrevocable letters of credit issued by the Trade Bank through Ex-Im’s letter of credit policies as well as repayment obligations of the Trade Bank in connection with short-term credits extended by an eligible bank through Ex-Im’s financial institution buyer credit policies. Because Ex-Im will treat transactions as sovereign, coverage will be available for 100% of the principal and interest. Normal Ex-Im repayment terms are applicable; ie, up to 180 days for consumer goods, spare parts and raw materials and up to 360 days for qualifying products such as capital equipment, fertiliser and bulk agricultural commodities.