Calculating Ex-Im Bank Local Cost Support

Products & Policies | Ex-Im Bank Policies

Local Cost Policy

Local Cost

When Ex-Im Bank provides medium- or long-term guarantee, loan, or insurance support for U.S. exports for foreign projects, it may also provide local cost support. Local costs are those project-related costs for goods and services incurred in the buyer's country.

Ex-Im Bank can support up to 30% of the value of the U.S exports for locally originated and/or manufactured goods and services subject to the following availability and eligibility guidelines.

Availability

Long-Term Transactions: Ex-Im Bank may provide local cost support for all long-term transactions.

Medium-Term Transactions: Ex-Im Bank offers local cost support for all medium-term environmental exports, medical equipment exports, exports of products related to U.S. transportation security or foreign transportation security projects (Transportation Security Export Program (TSEP)), and project finance transactions.   For other categories of medium-term export transactions, Ex-Im may provide local cost support if the U.S. exporter can prove either: (i) the availability of official export credit support for the local cost; or (ii) private market financing of local costs is difficult to obtain for the transaction.

All transactions that receive local cost support must meet the eligibility criteria defined below.

Eligibility

If Ex-Im Bank provides local cost support for long-term transactions, then the local costs must be:

• Beneficial to the project;
• Certified by the Borrower;
• Detailed in the Acquisition List; and
• Originated/manufactured in the host country. Services must be provided by individuals and/or business entities that are residents of the host country.

Note: Ex-Im Bank will require the Borrower to certify that the local cost support was not used to cover products that could reasonably be purchased in the U.S.

If Ex-Im Bank provides local cost support for medium-term transactions, then the local costs must be:

• Related to the U.S. exporter's scope of work;
• Certified by the U.S. exporter in the Exporter's Certificate;
• Detailed in the Acquisition List; and
• Originated/manufactured in the host country. Services must be provided by individuals and/or business entities that are residents of the host country.

Note: The decision to extend local cost support is subject to budgetary and other discretionary considerations as determined by Ex-Im Bank's management.

Example Of Ex-Im Bank Local Cost Support

A U.S. exporter has been awarded a $130 million contract to build a gas power plant in China. The U.S. exporter is responsible for providing the turbines from the U.S. while its subsidiary in China is responsible for managing the foundation work (local concrete and local labor).

The following example illustrates how Ex-Im Bank structures local cost financial support in conjunction with support for U.S. exports. Assumptions:

1. The U.S. exporter's total contract is $130 million.
2. The U.S. export value is $100 million.
3. The eligible foreign content included in the U.S. supply contract is $20 million.
4. The local costs related to the project are $30 million.

This long-term transaction is structured as follows:

* The total level of support for a U.S. supply contract will be the lesser of: (i) 85% of the value of all eligible U.S. and foreign goods and services in the U.S. supply contract; or (ii) 100% of the U.S. content in all eligible U.S. and foreign goods and services in the U.S. supply contract.

** Ex-Im Bank may support up to 30% of the U.S. export value for locally originated and/or manufactured goods and services.

Date Reviewed: April 2011