Arrangement on Export Credits

The major Western industrialised nations adhere to the Arrangement on Officially Supported Export Credits when they provide officially supported export credits. Finnvera plc is an official Export Credit Agency, ECA, and thus all credits guaranteed by Finnvera must adhere to rules, laid down in the OECD Arrangement on Export Credits.

The EU has carried into effect the rules of the OECD Arrangement on Export Credits as a decision binding on all EU Member states.

Participating countries

The parties to the OECD Arrangement on Officially Supported Export Credits are Australia, South Korea, Canada, Japan, Norway, Switzerland, New Zealand, USA and the EU (Belgium, Bulgaria, Spain, the Netherlands, Ireland, the United Kingdom, Italy, Greece, Luxembourg, Portugal, France, Sweden, Germany, Finland, Austria, Denmark, Cyprus, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, Czech Republic, Hungary, Estonia and Romania).

What does the OECD Arrangement on Export Credits deal

The OECD Arrangement on Export Credits applies to all officially supported export credits having a repayment period of two years or more. Military equipment, agricultural goods and untied development aid are not covered by the agreement. There are separate rules for ships, aircraft and power stations. The main rules of the arrangement define

• the maximum credit periods
• the minimum interest rates
• the cash payment requirements and
• the repayment conditions.

Minimum interest rate requirement

The minimum interest rate requirement applies when the credit receives official financing support in one way or another. In Finland this means interest equalisation, which is administrated by Finnish Export Credit Ltd . If the credit is granted on market terms and the only form of official support is the Export Credit Guarantee issued by Finnvera, the OECD Arrangement on Export Credits does not regulate the interest rate.

Maximum credit period

• group I, "relatively rich countries", usually 5 years (8.5 years exceptionally in some cases)
• group II, "relatively poor countries", 10 years
• project finance; 10 years (high-income OECD-countries, when ECA participation from the loan syndication is no more than 35%-50%). 14 years (other countries + high-income OECD-countries when ECA participation 0,35%
• renewable energies, 15 years

Interest rate

• market rate of interest or
• CIRR (Commercial Interest Reference Rate), if interest equalisation is involved

Cash payment

• at least 15% of the contract price

Repayment

• in equal instalments not less frequently than every six months from the starting point of credit (normally the delivery of the goods)

You can print the Arrangement on Export Credits, premium rules and information on OECD's country classification from OECD's web pages.