FOR IMMEDIATE RELEASE June 18, 2003
Marianna Ohe (202) 565-3200
The Export-Import Bank of the United States (Ex-Im Bank) has determined that it is no longer legally prohibited from supporting U.S. exports to Iraq. While it is still closed for routine trade finance transactions, Ex-Im Bank is prepared to immediately start processing applications for exports to Iraq that involve buyers or letters of credit from banks located in third countries. Ex-Im Bank is also ready to consider applications under its Working Capital Guarantee Program (WCGP) for subcontractors providing goods and services to Iraq under USAID contracts. The Bank's determination will also allow it to consider support for trade finance facilities that may be established in connection with the reconstruction of Iraq.
Under the WCGP, Ex-Im Bank provides guarantees to allow small and medium size businesses in the U.S. to obtain the working capital they need to fulfill export contracts. In addition to the support for subcontractors noted above, coverage under the WCGP may be available for transactions that are supported by an irrevocable letter of credit issued by a bank, and/or due from a buyer, located in a third country where Ex-Im Bank is open without restrictions for short-term transactions.
In addition, under its general loan and guarantee export finance programs, Ex-Im Bank support may be available for transactions where:
- the primary source of repayment is an acceptable financial institution or other party located in a third country where Ex-Im Bank is open for the amount and term of the proposed transaction;
- there are structured financing arrangements that offer a reasonable assurance of repayment, including reliable access to adequate foreign exchange. Such financing arrangements include limited recourse project finance (where repayment is based on project revenues) and asset-based aircraft leases; and
- the primary source of repayment is the Development Fund for Iraq, or another entity established under the auspices of the Coalition Provisional Authority with access to foreign exchange and protection from claims of creditors of the former regime. This could include trade finance facilities designed to support the reconstruction efforts.
Ex-Im Bank is an independent U.S. government agency that helps finance the sale of U.S. exports primarily to emerging markets throughout the world by providing loans, guarantees and insurance. The Bank is mandated by Congress to have reasonable assurance of repayment for every transaction. In fiscal year 2002, Ex-Im Bank supported $13 billion of U.S. exports worldwide.