officially supported export credits over this period was guaranteedbankcredits. This expansion in guaranteedbankcredits was particularly marked for countries that have not experienced debt-servicing difficulties. For countries that have rescheduled their debts in recent years, the reported data show that officially supported export credits increased at the same rate as nonguaranteed bank credits.
However, for several reasons, the available data understate the growth of officially supported export credits over the 18 months to mid-1985, both in absolute terms and
This paper has paid special attention to developments and issues concerning export credits from the perspective of the economic adjustment process of indebted developing countries. This emphasis is consistent with the principle that officially supported export credit—whether it takes the form of direct official credits or insurance and guarantees on privately funded credits—is an instrument of commercial financing for exports and not a means of aid finance. Export credit insurance is accepted by the General Agreement on Tariffs and Trade (GATT) as a form of export promotion but not as a form of export subsidy, and export cover policies are a means of considerable commercial competition among creditor government authorities. At the same time, export credits are expected to assume increasing importance in transferring capital to developing countries and, when used effectively, can promote their economic growth.
This paper discusses developments and issues concerning export credits from the perspective of the economic adjustment process of indebted developing countries. This emphasis is consistent with the principle that officially supported export credit—whether it takes the form of direct official credits or insurance and guarantees on privately funded credits—is an instrument of commercial financing for exports and not a means of aid finance. All creditor governments have a broad range of objectives in using the economic instruments at their disposal to help overcome the adjustment problems of heavily indebted countries, with which important bilateral trade relations are being maintained. In support of an expansion in world trade and notwithstanding the competitive element, export credit insurance and guarantees may have a special role in helping to catalyze private credit flows, especially since such a role coincides with the interest of private lenders to shift away from general purpose balance of payments finance to trade and project finance.
At the onset of the debt difficulties in 1982, most export credit authorities applied their traditional principles guiding cover policies, which had been developed over many years to deal with country-specific and isolated debt problems. Medium- and long-term cover was suspended for a large number of debtor countries that rescheduled debts, although short-term cover was generally retained if the debtor country was current on such obligations. Most export credit agencies also began to emphasize more rigorous countryrisk assessment procedures and employed more frequently quantitative instruments to help limit country exposures, such as country ceilings or limits on the size of individual transactions. One agency reported, for example, that the number of countries for which it imposed overall limits had been increased from 10 to 80 over the past few years. Also, in 1982-84, all ten agencies made upward adjustments in the premium rate structure in order to cope with the financial strains of claims payments relating to debt reschedulings and arrears. In many cases, the premium structure has become considerably steeper to reflect country-risk differentials, and at times substantial surcharges have been introduced on a case-by-case basis for high-risk countries.
The initial reaction of export credit authorities to the debt-servicing difficulties that emerged in 1982 and the related reschedulings was to apply the same policies concerning new credit cover that had been developed and used over many years for isolated, single-country problem cases. Recently, however, it has been increasingly recognized that such a policy approach could be counterproductive in the aggregate when applied to a range of debtor countries that were experiencing problems but implementing satisfactory adjustment policies and that had reasonable medium-term prospects. Consequently, as noted above, many export credit authorities have shown greater flexibility and have begun on a case-by-case basis to introduce special cover policies or programs that would allow the maintenance or early resumption of cover for certain countries.
countries grew faster than nonguaranteed commercial bank credits. Second, guaranteedbankcredits were the fastest-growing component of total credits. This implies that banks were seeking official guarantees for an increasing share of their trade-related lending to those countries, perhaps in response to a perceived increase in systemic risk. Third, the distribution of new credits differed among groups of debtor countries. Officially supported credits to countries with debt-servicing difficulties (those that have rescheduled their debt to official creditors or have