The obligations contained in the Recommendation mirror those of the 2016 agreement and thus reinforce the policies and practices adopted by ECG Members in 2016.
The term “lower income countries” refers to countries that are eligible for financing through the International Monetary Fund (IMF) Poverty Reduction and Growth Trust (PRGT) or that only have access to interest-free credit or grants from the International Development Association (IDA) of the World Bank (i.e. “IDA-Only” countries).
According to the Recommendation, whenever an adherent is considering whether or not to provide support for a transaction involving a public sector buyer (or guarantor) in a lower income country, it will:
- take into account the results of the most recent IMF/World Bank country specific debt sustainability analysis (DSA) conducted within the joint Debt Sustainability Framework,
- respect the prevailing limits on public sector non-concessional borrowing for countries that are subject to the IMF’s Debt Limits Policy (DLP) or the World Bank’s Non-Concessional Borrowing Policy (NCBP),
- for countries with a “non-zero” limit on non-concessional borrowing, seek assurances from appropriate government authorities in the debtor country that the transaction is in accordance with the DLP or the NCBP for that country, and
- refrain from providing official export credit support for public sector transactions in countries for which a “zero” limit on non-concessional borrowing under the IMF’s DLP or the World Bank’s NCBP has been established.
Under the Recommendation, adherents have also agreed to important transparency measures. In the first instance, this means informing the IMF and World Bank about the intention to provide support for any official export credit transaction with a credit value in excess of SDR 5 million involving a public buyer or guarantor in a lower income country that is subject to the IMF’s DLP or the World Bank’s NCBP. This is meant to ensure that the IMF and World Bank are aware of all potential public external debt obligations related to projects in lower income countries to be supported by official export credits before they are contracted.
Adherents have also agreed to continue the ECG’s practice of providing detailed information about all official export credits provided to lower income countries on an annual basis.