Last Updated: 7 January 2013
The country risk classifications of the Participants to the Arrangement on Officially Supported Export Credits (the "Arrangement") are one of the most fundamental building blocks of the Arrangement rules on minimum premium rates for credit risk. They are produced solely for the purpose of setting minimum premium rates for transactions supported according to the Arrangement and they are made public so that any country that is not an OECD Member or a Participant to the Arrangement may observe the rules of the Arrangement if they so choose. Neither the Participants to the Arrangement or the OECD Secretariat endorse nor encourage their use for any other purpose.
The country risk classifications are meant to reflect country risk. Under the Participants’ system, country risk is composed of transfer and convertibility risk (i.e. the risk a government imposes capital or exchange controls that prevent an entity from converting local currency into foreign currency and/or transferring funds to creditors located outside the country) and cases of force majeure (e.g. war, expropriation, revolution, civil disturbance, floods, earthquakes).
The country risk classifications are not sovereign risk classifications and should not, therefore, be compared with the sovereign risk classifications of private credit rating agencies (CRAs). Conceptually, they are more similar to the "country ceilings" that are produced by some of the major CRAs.
According to the rules of the Arrangement, two groups of countries are not classified. The first group is not classified for administrative purposes and is comprised of very small countries that do not generally receive official export credit support. For such countries, Participants are free to apply the country risk classification which they deem appropriate.
The second group of countries is comprised of High Income OECD countries and other High Income Euro-zone countries. Transactions involving obligors in these countries (and any countries classified in Category 0) are subject to the market pricing disciplines set out in Article 24c) and Annex XIII of the Arrangement.
All other countries (and a limited number of supranational multilateral/regional financial institutions) are classified into one of eight categories (0-7) through the application of a two-step methodology:
1. The Country Risk Assessment Model (CRAM) 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).
2. A qualitative assessment of the CRAM results by country risk experts from OECD members, considered country-by-country to integrate political risk and/or other risk factors not taken (fully) into account by the CRAM.
Accordingly, the final country risk classifications are achieved through a thorough discussion amongst experts and a consensus-building process.
The country risk experts meet 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. Although the meetings and details of the CRAM are confidential and no official reports of the deliberations are made publicly available, the list of country risk classifications is published after each meeting.
Please note that the Participants’ Country Risk Classifications came into existence in 1999 when the Knaepen Package on minimum premium rates was agreed; accordingly no historical classifications are available for prior years.
Current Country Risk Classifications
Prevailing Country Risk Classification (PDF) [Updated on January 11 to take account of the 2013 Arrangement Text]
Prevailing Classifications of Multilateral/Regional Financial Institutions
Historical Country Risk Classification
Historical Risk Classifications of Multilateral/Regional Financial Institutions