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International Monetary Fund. External Relations Dept.

instruments, bonds, and notes issued in international markets by both public and private sector borrowers C Brady bonds 2 World Bank Bonds issued to restructure commercial bank debt under the 1989 Brady Plan D Nonbank trade credits 1 OECD Official and officially guaranteed nonbank export credits from 21 OECD countries E Multilateral claims (IBRD, IDA, IMF) 2 World Bank/IMF IBRD loans and IDA credits from the World Bank and use of IMF credit F Official bilateral loans (DAC creditors) 2 OECD Concessional (aid) and other loans

International Monetary Fund

on disbursed and undisbursed credits, including amounts in arrears when reported as unrecovered claims; excludes Colombia. 3 Disbursed principal only. Table 3. Outstanding Stocks of Officially Supported Export Credits and Nonguaranteed Bank Credits, 1983–86 (In billions of U.S. dollars; current exchange rate basis) 1 End-1983 End-1984 End-1985 End-1986 All developing countries 2 Officially supported export credits 144.2 146.6 167.3 191.1 Nonbank export credits 3 94.7 95

Mr. Eduard H. Brau

developing countries 3 Officially supported export credits 133.4 138.7 143.4 4.0 6.9 4.9 6.3 Nonbank export credits 86.9 89.9 92.5 3.4 5.8 4.2 5.5 Guaranteed bank credits 4 46.5 48.8 50.9 5.0 8.9 6.2 7.6 Nonguaranteed bank credits 5 BIS/OECD statistics 454.3 454.0 455.9 -0.1 0.9 0.2 1.5 IMF statistics 500.8 505.4 507.7 0.9 0.9 0.9 2.2 In percent of nonguaranteed bank credits (BIS

Mr. Eduard H. Brau

Abstract

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.

International Monetary Fund

Abstract

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.

Mr. Eduard H. Brau

Abstract

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.

Mr. Eduard H. Brau

Abstract

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.

Mr. Eduard H. Brau

Abstract

Before the emergence of cross-border commercial bank lending on a large scale in the late 1960s, credit flows to developing countries had been dominated by bilateral and multilateral development assistance and by export credits officially supported by the creditor countries. During the 1970s when bank lending increased at a rapid rate, the relative significance of export credits as a source of commercial financing to developing countries declined. In the wake of the debt difficulties that emerged in 1982 and the subsequent slowing of international bank tending flows, officially supported export credits have begun to increase in relative terms.

International Monetary Fund

Abstract

This paper emphasizes on the policy reaction of the agencies and their authorities to countries in various stages of debt-servicing difficulties. It was found that, largely for competitive reasons and provided that significant arrears had not emerged, agencies as a group had tended to remain quite open for debtors pursuing policies that could be expected to lead to payments difficulties, thus facilitating the postponement of necessary adjustment by the debtor and increasing the likelihood of eventual debt-servicing difficulties. Despite this more open stance, the volume of new medium-term credit and cover commitments to developing countries appears to have fallen off sharply over the past two years. Although for some debtors the operative constraint is clearly on the supply of new credits and cover, this is not the general case and, indeed, agencies reported net repayments from some countries for which they were wide open for new business.

International Monetary Fund

disbursed and undisbursed credits, including amounts in arrears when reported as unrecovered claims; excludes Colombia. Disbursed principal only. Table 3 . Outstanding Stocks of Officially Supported Export Credits and Nonguaranteed Bank Credits, 1983-86 (In billions of U.S. dollars; current exchange rate basis) 1 End- End- End- End- 1983 1984 1985 1986 All developing countries 2 Officially supported export credits 144.2 146.6 167.3 191.1 Nonbank export credits 3 94.7 95.4 107