FOR IMMEDIATE RELEASE August 27, 2003
Phil Cogan or Bo Ollison (202) 565-3200
WASHINGTON, DC ---The Export-Import Bank of the United States (Ex-Im Bank) today voted to notify Congress of a proposed $500 million facility that would provide the Bank's short-term export insurance to cover transactions with the new Trade Bank of Iraq (Trade Bank). The notification triggers a statutory waiting period of up to 35 days before Ex-Im Bank's board can take final action on the proposed facility.
This will be another solid step forward in helping the Iraqi people rebuild their country after years of dictatorship and neglect, Philip Merrill, Ex-Im Bank's chairman said. Under the program Ex-Im Bank financing would be available for U.S. exporters seeking to provide the goods and services necessary to help Iraq embark on the road to a secure, just, and prosperous future.
Ex-Im Bank's new program -- which is also subject to finalization of a framework agreement involving Ex-Im Bank, the Trade Bank, and the Coalition Provisional Authority (CPA) -- would provide coverage for transactions authorized by the CPA, Iraq's current administrative authority. The CPA established the Trade Bank on July 17 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, under United Nations Security Council Resolution 1483, by proceeds from Iraqi oil exports.
The Ex-Im Bank program 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 program for Iraq would allow for aggregate Ex-Im Bank exposure of $500 million, 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 Bank will insure irrevocable letters of credit issued by the Trade Bank through Ex-Im Bank'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 Bank's financial institution buyer credit policies. Because Ex-Im Bank will treat transactions as sovereign, coverage will be available for 100 percent of the principal and interest. Normal Ex-Im Bank repayment terms are applicable; i.e., up to 180 days for consumer goods, spare parts and raw materials and up to 360 days for qualifying products such as capital equipment, fertilizer and bulk agricultural commodities.
As the official export credit agency of the United States, Ex-Im Bank helps finance the sales of U.S. exports, primarily to developing markets, by providing guarantees, export credit insurance, and loans. In fiscal year 2002, Ex-Im Bank authorized financing to support nearly $13 billion of U.S. exports.