EXIM Board Votes to Notify Congress of a Potential $450 Million Transaction to Support U.S. Exports to Iraq and an Estimated 1,700 American Jobs
WASHINGTON - The Export-Import Bank of the United States (EXIM) Board of Directors today unanimously voted to notify the U.S. Congress, pursuant to the law, of its consideration of a potential transaction that would facilitate the authorization of $450 million of insurance coverage on letters of credit issued by the Trade Bank of Iraq (TBI) for the purchase of U.S. goods and services, such as agricultural commodities, including wheat and rice, and engineering services. If approved, the facility would support an estimated 1,700 jobs across the United States.
Under this approval, EXIM is expected to authorize various transactions that will insure covered U.S. banks including J.P. Morgan in relation to TBI's irrevocable letters of credit associated with the purchase of U.S. goods and services such as agricultural commodities, including wheat and rice from America's great agricultural exporters, and engineering services. Private-sector trade finance insurers are unavailable for this transaction, and EXIM support will protect U.S. exporters against the risk of buyer non-payment. EXIM support may be extended only where there is a "reasonable assurance of repayment" and should supplement, not compete with, private capital. This transaction meets these requirements.
On October 16, 2019, EXIM President and Chairman Kimberly Reed and Republic of Iraq then Deputy Prime Minister and Minister of Finance Dr. Fuad Hussein signed a $5 billion Memorandum of Understanding (MOU) between EXIM and the Republic of Iraq Ministry of Finance. Under the MOU, both parties agreed to identify potential projects in Iraq for procurement of U.S.-produced goods and services. EXIM also agreed to explore options for providing the agency's medium- and long-term loans, guarantees, and export credit insurance to support U.S. exports to Iraq. Dr. Hussein currently is the Republic of Iraq Minister of Foreign Affairs.
Dr. Fuad Hussein, Republic of Iraq Deputy Prime Minister and Minister of Finance, and Kimberly A. Reed, EXIM President and Chairman, sign MOU for up to $5 billion in EXIM financing on October 16, 2019, at EXIM's headquarters in Washington, D.C.
"Building on the $5 billion Memorandum of Understanding that I signed with the Republic of Iraq Deputy Prime Minister and Minister of Finance and my recent conversations with Iraq Ambassador the United States Fareed Yasseen and U.S. Ambassador to Iraq Matthew H. Tueller, today's unanimous Board action underscores EXIM's commitment to strengthening and expanding our relationship with Iraq while supporting U.S. jobs-including in American agriculture-here at home. This potential transaction also is particularly important as we address COVID-19 challenges in both of our countries," said EXIM President and Chairman Kimberly A. Reed.
"The transactions that EXIM notified Congress of today will not only sustain approximately 1,700 jobs in the United States but will also support the American farm community hard hit by the current pandemic," said EXIM Board member Spencer T. Bachus, III.
"Following years of conflict and compounded by the global pandemic and related economic fallout, the United Nations' Food and Agriculture Organization estimates there are about three million Iraqis facing food insecurity," said EXIM Board Member Judith D. Pryor. "This special delegated authority will ensure EXIM short-term insurance policies for the shipment of grain and rice are available quickly. Not only are we supporting American workers and agricultural exports, we are supporting food security for Iraq's citizens."
EXIM is an independent federal agency that promotes and supports American jobs by providing competitive and necessary export credit to support sales of U.S. goods and services to international buyers. A robust EXIM can level the global playing field for U.S. exporters when they compete against foreign companies that receive support from their governments. EXIM also contributes to U.S. economic growth by helping to create and sustain hundreds of thousands of jobs in exporting businesses and their supply chains across the United States. In recent years, approximately 90 percent of the total number of the agency's authorizations has directly supported small businesses. Since 1992, EXIM has generated more than $9 billion for the U.S. Treasury for repayment of U.S. debt.
For more information about EXIM, please visit www.exim.gov.