Did You Know?
According to the World Bank, ECA-related debt constitutes the largest component of developing-country official debt. A few countries-- Gabon, Algeria, and Nigeria-- owe more than 50 percent of their total debt to ECAs. While lending from international financial institutions remains relatively stable, export credit lending since the 1990s has soared. Export credit agencies globally increased their commitments fourfold in eight years, from USD $26B in 1988 to USD $105B by 1996. ECAs are now the largest single source of official finance for developing countries. ECA financing is generally offered in ways that profit the ECA: in the form of loans, most of which are on non-concessional (market) terms. Developing countries incur serious debt to ECAs, for example by accepting guarantees for a project which never makes a profit, perhaps with negative development impacts, and then are forced to accept further loans with strict conditions which may have further negative development impacts. Developing countries therefore incur debt twofold: the initial capital debt, and then the social and ecological debt as a result of export credit agency-supported activity. ECA loans being a form of tied aid results in impediments to local partnership or ownership as well as the use of local producers and suppliers-- a further negative impact developing countries bear as a result of ECA debt.
" What we are seeing is private debt turn into public debt. In effect, Northern governments and companies are effectively forcing people in the Third World to subsidise their exports, the chief beneficiaries being the shareholders of some of the richest companies in the world. In the end it is the poor who pay the price. "
- Jubilee Austrailia (2004)
Important Background Documents on Debt
How export credit support for corporations indebts the world's poor (FERN, Brussels, June 2008) This briefing note by Both ENDS and FERN highlights the fairly hidden role of Export Credit Agencies (ECAs) in the debt problems of many developing countries. It explains how export credit debt comes about, and clarifies how the cancellation of export credit debt is written off with Official Development Assistance (ODA) money. It concludes with suggestions about how ECAs should change, in order to become coherent with international efforts to reduce poverty through sustainable development.
Debt Aspects Related to Export Credit Agencies (Excerpt) 2002 By the Halifax Initiative Read the full text here.
Recommendations for the Export Credit Guarantee Department (ECGD) on Debt and Export Credits May 23, 2002 By Romilly Greenhill, Jubilee Research. Created for the UK Seminar on Export Credit Agency Reform - "Beyond Business Principles" House of Commons.
Export Credits and Sustainable Development: How to Minimize Risks and Save Costs - April, 28 2003 By Helene Ballande, Amis de la Terre France - presentation to the OECD Forum 2003.
NADI Asks: Why Should Common People Pay for Bad ECA Debt? [PDF] - April 2003 By Avi Mahaningtyas, NADI -
a report detailing the massive ECA-backed pulp and paper
sector failure in Indonesia highlighting the environmental,
social and human rights impacts of the failure, and explores the
current struggle over the shuffling of debt between the private
and public sector creditors in Indonesia and abroad (in particular,
Upheaval in the Back Yard: Illegitimate Debts and Human Rights: The case of Ecuador-Norway [PDF] Nov. 2002 by Centro de Derechos Económicos y Sociales (CDES), translated from the Spanish by Leslie Wirpsa.
Why Common People Should Pay for Private Sectors' Bad Debts? Export Credit Agencies’ Roles in Environmental and Social Destruction through Investment of Pulp and Paper Sector in Indonesia 2003 by Avi Mahaningtyas, NADI
Debt-Creating Aspects of Export Credits August 1998 By Michiel Van Voorst, Eurodad.
The Link Between ECAs, Debt and Overseas Development Assistance (ODA)
All export credit debt that is cancelled after debt-rescheduling agreements in the Paris Club may currently be reported as overseas development assistance (ODA). This means that cancellation of ECA debts is often paid for out of official aid budgets. The Organization for Economic Cooperation and Development (OECD), defines the rules of ODA expenditure reporting and allows creditor countries to report debt cancellation related to commercial export credits. Although it may be argued that any debt cancellation is good for developing countries, the transactions that result in export credit debt often do not necessarily serve any development purpose. Export credits often back environmentally and socially destructive projects rather than serving the public good. This must be considered as another reason to report the cancellation of export credit debt as additional non-ODA expenses.
Nigeria's Debt Subject of Paris Club Negotiations October 18, 2005 (Source: Eurodad, Brussels) Nigeria's external debt, mainly owed to ECA's, will be the subject of Paris Club negotiations on October 18th 2005. It appears that only 60% of this debt will be written off, as compared to 80% in the case of Iraq.
NGOs Condemn "False" Aid Statistics Linked to Export Credit Debt Deals September 14, 2005 (Source: Eurodad, Brussels)
Connecting Nature, Power and Poverty FPIC for ECAs August 31, 2005 (World Resources Insitute)
Parliament May Launch Inquiry into French ECA COFACE May 30, 2005 (Source: ECA Watch) Three French Parliamentarians have requested an official inquiry into the activities of the French ECA COFACE in connection with overseas development assistance (ODA).
OECD Participants in the Arrangement on Export Credits Refuse Better Terms for Local Costs May 16, 2005 (Source: ECA Watch)
Filipino Supreme Court Justice: Stop Paying Nuke Plant Debt April 20, 2005 (INQ7.net, Philippines) The Bataan Nuclear Power Plant, once backed by the ECA US Ex-Im, is now under fire by a Filipino Supreme Court Justice who is urging the government to stop payments for loans that the late President Marcos borrowed to build the now-mothballed plant.
The Aid that Isn't April 12, 2005 (Financial Times Editorial, London)
Official Aid to Poor Nations Climbs by 4.6% April 10, 2005 (Financial Times London)
ECAs Join Paris Club to Agree on Debt Relief to Tsunami-Hit Nations January 12, 2005 (Bloomberg)
Iraq Wants 90-95% Debt Forgiveness October 4, 2004 (ABC News: Reuters)
Transparency International critiques the OECD Export Credit Group 2002 Survey on Measures Taken to Combat Bribery in Officially Supported Export Credits April 23, 2003 by Transparency International's Michael H. Wiehen
British ECA Takes "Realistic" Line on Iraqi Debt: April 16, 2003 (Daily Telegraphy)
GIEK Supported Norwegian Ship Exports Brings Ecuadorian debt: March 17, 2003 (Source:
Ecuadorian NGO, Centro De Derechos Economicos Y Sociales - CDES)
For more information, contact the ECA Watch Facilitator.
ECA Watch Campaign Member Links:
Halifax Initiative, Fraser Reilly-King — www.halifaxinitiative.org
Environmental Defense, Aaron Goldzimer — www.environmentaldefense.org
Freedom from Debt Coalition, Maris de la Cruz — www.freedomfromdebtcoalition.org
Reform the World Bank Campaign (CRBM): All Eyes on SACE - Occhio alla SACE, Antonio Tricarico — www.crbm.org
Both ENDS, Wiert Wiertsema — www.bothends.org