Development finance standards

Non-ODA flows to developing countries: Export credits

 

Officially supported export credits can be critical for financing large projects in developing countries.


Export credits supported by official Export Credit Agencies (ECAs) in developing countries often finance large-scale projects in developing countries. Even though export credits cannot be assimilated to development finance given their commercially motivated and demand-driven nature, they still play an important role – by mitigating risks – in providing access to capital and enabling projects in key segments of the economy (e.g. industry, infrastructure).

  • Direct export credits, i.e. loans extended by ECAs to facilitate and encourage exports to developing countries; and
  • Officially-guaranteed/insured export credits, i.e. loans extended by the private sector but guaranteed/insured by ECAs to finance an export transaction.

According to the DAC statistics, the United States, Germany and Canada are by far the largest providers of export credits in support of activities in developing countries. Clearly, middle-income countries belong among the main beneficiaries of export credit operations.

Sectorial and income group allocation of export credits to developing countries, 2010-2015

Non-ODA: Export credits

Source: DAC statistics, gross disbursements 2010-2015.

 

OECD member countries’ ECAs follow environmental and anti-corruption standards developed by the Working Party on Export Credits and Credit Guarantees, as well as the financing guidelines of the Arrangement on Officially Supported Export Credits. Established in 1878 to avoid potential trade distortions (e.g. through the use of financial subsidies) and ensure fair competition, the purpose of the Arrangement is also to provide a framework for the orderly use of officially-supported export credits (e.g. minimum interest rates, risk fees and maximum repayment terms) and the orderly use of tied aid.

 

DCR 2014 cover

The growing development potential of other official flows,
Development Co-operation Report 2014

Export Credit Group (ECG) The OECD Working Party on Export Credits and Credit Guarantees

 

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