1. At their 121st Meeting held on 14 November 2012, the Participants to the Arrangement on Officially Supported Export Credits agreed that the automatic classification of High Income OECD and High Income Euro Area countries in Country Risk Category Zero should be terminated. In the future, these countries will no longer be classified but will remain subject to the same market credit risk pricing disciplines that are applied to all Category Zero countries. This means that the change will have no practical impact on the rules that apply to the provision of official export credits.
2. The rationales for making the change are as follows:
Although these countries were technically classified, they have never been subject to the Country Risk Classification Methodology (CRCM) of the Participants. This meant that their classification was never subject to the review of the Participants’ country risk experts. By no longer classifying these countries in Category Zero, the Participants wish to remove any impression that these countries are actually classified on the basis of the methodology applied to other countries.
It is recognized that extending the CRCM to High Income OECD and High Income Euro Area countries (thus introducing the possibility to classify some of them in higher country risk categories) was not feasible, due in large part to the fact that the CRCM was not designed to assess the risk of reserve currency countries.
Although every effort has been made to eliminate misconceptions about the country risk classifications being sovereign risk classifications, many in the outside world continue to make use of the classifications as if they were measurements of sovereign credit risk. Although difference between country risk (i.e. transfer and convertibility risk and force majeure risks such as war, expropriation, revolution, civil disturbance, floods, earthquakes) and sovereign credit risk (country risk plus the risks associated with the fiscal situation of the government) is not significant for many countries, for others the difference can be quite large.
3. In concrete terms, the decision means that the text of the Export Credit Arrangement will be amended, and that the list of classifications published on the OECD’s web site will indicate that High Income OECD and High Income Euro Area countries are “not classified” but remain subject to market risk fees. The changes will take effect as from 1 January 2013.