28/01/2008 - OECD Member Countries have agreed to adopt a set of principles and guidelines designed to ensure that loans supported by their Export Credit Agencies (ECAs) are in line with sustainable development objectives.
Agreed by the OECD's Working Party on Export Credits and Credit Guarantees (ECG), the guidelines support efforts by the IMF and World Bank to help developing countries avoid a renewed build-up of debt following the substantial debt relief provided under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).
The agreement (Principles and Guidelines to Promote Sustainable Lending in the Provision of Official Export Credits to Low Income Countries) sets out commitments for ECAs who wish to provide commercial (i.e. non-aid) credits to public borrowers in low-income countries who face challenges in managing their external debt. These include ensuring that these credits respect any limits on such borrowing that have been agreed between these countries and the IMF and World Bank and taking into account the latest Debt Sustainability Analyses (DSA) jointly produced by the IMF and World Bank. For larger transactions with a repayment term of two years or greater, Members have also agreed to seek assurances from government authorities in the buyer country that the transaction is in line with the country's agreed borrowing and development plans. Finally, the Agreement cements existing Arrangements between ECAs and the World Bank and IMF regarding the sharing of information on official export credits provided to the countries subject to the Principles and Guidelines.
OECD Secretary General Angel Gurria welcomed the agreement as "an important and practical element of wider multilateral debt sustainability efforts and as an example of how the OECD and the International Financial Institutions work closely together on major development issues". With the IMF and the World Bank having participated in negotiation of the Agreement, they too expressed their satisfaction with its conclusion. John Lipsky, First Deputy Managing Director of the IMF, said "I welcome the approval of a set of sustainable lending principles by the OECD's Export Credit Group, which I view as an important contribution to maintaining debt sustainability in low-income countries. This supports the IMF and World Bank's call for all creditors to adhere to sustainable and transparent lending practices". Vincenzo La Via, Chief Financial Officer of the World Bank Group, stated that "maintaining debt sustainability in low-income countries is a priority for the World Bank. We welcome the principles and guidelines adopted by the OECD export credit agencies and we will continue to encourage creditors to embed debt sustainability considerations in all lending decisions."
Members of the ECG, together with the IMF and the World Bank are to meet in February for further discussions on this agreement, including issues related to the practical implementation by ECAs of the Principles and Guidelines. In order to promote the widest possible participation in this initiative, the ECG has invited several non-OECD Member countries to participate in these discussions.
For further information please contact Michael Gonter in OECD's Trade and Agriculture Directorate (tel. + 331 45 24 18 22).