Country Risk Classification

The objectives of the Knaepen Package, as reflected in Article 23 of the Arrangement, are to ensure that Participants to the Arrangement charge premium rates in addition to interest charges that cover the risk of non-repayment of export credits (i.e. credit risk) and are not inadequate to cover long-term operating costs and losses associated with the provision of export credits. Another stated purpose of the Knaepen Package is premium rate convergence, which although not easily measured or defined, is a general outcome that can be expected when the two above-mentioned objectives are met.

One of the key elements of the Knaepen Package is a system for assessing country credit risk and classifying countries into eight country risk categories (0 - 7).

• The Country Risk Classification Method measures the country credit risk, i.e. the likelihood that a country will service its external debt.
• The classification of countries is achieved through the application of a methodology comprised of two basic components: (1) the Country Risk Assessment Model (CRAM), which produces a quantitative assessment of country credit risk, based on three groups of risk indicators (the payment experience of the Participants, the financial situation and the economic situation) and (2) the qualitative assessment of the Model results, considered country-by-country to integrate political risk and/or other risk factors not taken (fully) into account by the Model.
• The details of the CRAM are confidential and not published.
• The final classification, based only on valid country risk elements, is a consensus decision of the sub-Group of Country Risk Experts that involves the country risk experts of the participating Export Credit Agencies.
• The sub-Group of Country Risk Experts meets several times a year. These meetings are organised so as to guarantee that every country is reviewed whenever a fundamental change is observed and at least once a year. Whilst the meetings are confidential and no official reports of the deliberations are made, the list of country risk classifications is published after each meeting.
• A number of Multilateral/Regional Financial Institutions are also classified in relation to Article 26 of the Arrangement.

The Country Risk Classifications are produced solely for the purpose of setting minimum premium rates for transactions covered by the Export Credit Arrangement. Neither the Participants to the Arrangement nor the OECD Secretariat take any responsibility if these classifications are used for other purposes.

Prevailaing Country Risk Classification (PDF)