(Fiji Times, Suva, 21 February 2025) Interest payments on Fiji’s national debt absorb about $500 million or 16 % of all revenue, subsequently restricting the government’s ability to roll out significant capital infrastructure build, let alone implement nature conservation activities to protect its blue economy. About 30 % of Fiji’s total debt is external debt comprising borrowings from multilaterals such as ADB, World Bank, Asian Infrastructure Investment Bank, overseas export credit agencies such as EXIM Bank of China, the Japan International Cooperation Agency, European Investment Bank and the Australian Infrastructure Financing Facility for the Pacific.
Debt
Sinosure in China’s overseas finance and the evolving international response
(ODI Global, London, 14 December 2023) This year old report explores the development of Sinosure as an institution and its involvement in China’s overseas lending and the Belt and Road Initiative (BRI). This report makes two main contributions. First, it examines an understudied aspect of China’s BRI financing to show how the Chinese government uses Sinosure to hedge – or protect from – risk in its overseas lending and investment. Second, it contextualises Sinosure within the wider landscape of financial institutions providing guarantees and risk insurance, and the challenge and change that China’s state-backed finance has provoked. In several areas, development finance institutions (DFIs) and export credit agencies (ECAs) are adapting not only to Chinese competition but also to new demands on their mandates. The use of export credit within China’s wider official financing is a challenge to OECD regimes that separately govern finance for trade and for aid. Sinosure and other Chinese Export Credit Agencies offer highly favourable terms and longer-term finance, potentially undermining the ‘level playing field’ of the OECD.
US Sanctions on Gazprombank (Russian ECA?) Imperil Uzbek Copper Mine Expansion
(The Diplomat, Arlington, 5 December) The U.S. Treasury Department’s decision to slap sanctions on Gazprombank poses a potential major headache for Uzbekistan’s burgeoning mining industry, which until now has relied on the Russian lender to finance a $4.8 billion mine expansion set to nearly double the country’s copper production. The U.S. designation of Gazprombank could also result in a major financial hit for European mining and engineering firms, banks, and state-backed export credit agencies active in Uzbekistan, which have thus far continued to transact with entities financed by Gazprombank. Gazprombank has established partnerships with major world financial institutions and leading national import-export agencies. Access to international capital markets helps Gazprombank’s customers attract considerable amounts of funding on convenient terms. UKEF has guaranteed a €12.6m loan to Uzbekistan’s Almalyk Mining and Metallurgical Complex to refinance its purchase of fully automated machinery from the Scottish multinational Weir.
Africa Investment Forum Market Days 2024: Global Risk leaders gather to unlock Africa’s investment potential
(Africa Development Bank, Abidjan, 4 December 2024) The African Development Bank Group hosted a high-profile meeting of global insurers, export credit agencies and institutional investors to explore innovative risk-sharing solutions on the sidelines of the Africa Investment Forum Market Days 2024. The Insurer and ECA Day on December 3 reinforced the Bank’s commitment to bringing large scale finance into Africa. Participants included representatives of the Berne Union, Axa, Marsh, Allianz, Chubb, Trade and Development Bank, LGIM, Sinosure, JBIC and ICIEC, among others. Presentations highlighted the urgent need to close Africa’s infrastructure investment gap, noting that private investors currently account for just 10% of infrastructure financing on the continent – less than half the level in Asia, with Africa needing $1.3 trillion annually to achieve its SDG targets by 2030.
Longer payment schedules adding to liquidity woes of India’s exporters
(Financial Express, Delhi, 22 October 2024) Apart from higher costs and other difficulties, the disruption caused by the two war zones in the world has added to the liquidity woes of India’s exporters as they deal with longer payment schedules and the impact of the situation on export credit which is falling consistently since 2022. At the end of March 2022 quarter the outstanding export credit was at Rs 2.27 lakh crore and by the end of March this year it was down to Rs 2.17 lakh crore. While exports grew 15% between 2021-22 and 2023-24, export credit has fallen by 5%. On top of falling credit, the Red Sea disruptions have added to the liquidity pressures on exporters as payments are taking more time. All this has increased the time period of payment from less than 90 days to 120-150 days. Exporters now require more credit for a longer period and costs for them have increased. Despite the Export Credit Guarantee Corporation (ECGC) increasing the coverage of default in payment against exports to 90%, many of the banks have not reduced the collateral requirements which is also reducing the credit off-take by the sector.
Uganda finally signs deal to start building 1,700km railway, dumping China
(Global Construction Review, London, 15 October 2024) After 9 years of striving, the government of Uganda yesterday signed a contract with Turkish contractor Yapı Merkezi to build the first section of the country’s standard gauge railway. The €2.7bn deal was formalised in the capital Kampala by Bageya Waiswa, the permanent secretary for public works, and Erdem Arıoğlu, the vice chair of Yapı Merkezi. Waiswa said Uganda would use its own funds and loans from the UK’s Standard Chartered bank, backed by export credit guarantees, to finance the project. The deal follows a number of false starts. As far back as 2015, Uganda entered into an agreement with China Harbour, a subsidiary of China Communications, to implement the project, on the condition that Chinese capital would be made available to pay for the work. The reluctance of China’s Export–Import Bank to finance the scheme led Uganda last year to abandon the contract, clearing the way for the Turkish deal.
What did Cuba do with the €1.2 billion offered by Russia to build thermoelectric plants?
(Ciber Cuba, Miami, 18 October 2024) According to the agreement approved in 2015 by both governments, the resources would be invested in the construction of four generation units of 200 MW for two thermal power plants. In 2022, the regime quietly admitted that it had not met the conditions to access the loan. In September 2022, the Deputy Minister of Energy and Mines stated that Cuba had not been able to access the Russian credit of 1.2 billion euros for thermoelectric plants as it had not managed to secure the 10% upfront payment (120 million) needed to access this credit. [The US embargo affecting Cuban dollar earning exports undoubtedly had a major influence on this.]
UKEF pushes Titanic builder Harland & Wolff into administration
(Splash 247, Singapore, 17 September 2024) Harland & Wolff, the owner of the Belfast shipyard that built the Titanic, has announced that it will be entering into administration this week after failing to find new funding following the UKEF rejection of the company’s request for a £200m facility. The company said its request for a £200 million (US$260 million) loan from the UK government’s export credit agency UK Export Finance had been had been rejected, leaving it in financial trouble.
Canada’s EDC ‘nursing losses’ after lending $1bn to Thames Water
(Guardian, London, 20 August 2024) Canada’s state-backed export credit agency is reportedly nursing steep losses after lending debt-ridden Thames Water as much as a billion Canadian dollars. The British utility, which has said it could run out of cash by next June, received five loans from Export Development Canada (EDC) between 2018 and 2022 after the Canadian pension fund Omers had invested. The total value of the loans was between C$750m and C$1.45bn (between £422m and £820m), EDC said, while declining to give an exact figure. EDC sold the loans at a deep discount in recent weeks, according to the Financial Times, which cited unnamed investors.
US Law Firm Claims Chinese ECA Sinosure pursues overseas importers to pay off unpaid debts
(Harris Sliwoski, Los Angeles, 17 July 2024) US law firm accuses Sinosure of pressuring clients to pay off Chinese factories for allegedly owed money. They claim the Chinese state-owned export credit insurance company actively pursues overseas companies for alleged unpaid debts on behalf of Chinese manufacturers saying “Sinosure subsidizes Chinese companies and then aggressively seeks reimbursement from overseas companies. It often hires debt collectors and law firms to chase foreign companies for money supposedly owed to its insured Chinese manufacturers. A foreign company pays a Chinese manufacturer an advance for a large order. The rest is owed upon delivery. The shipment arrives, but the quality is terrible and unusable. The foreign company refuses to pay the balance owed and requests a refund or new products. The Chinese company goes silent or tries to negotiate. Then Sinosure jumps in. Sinosure demands payment through threatening calls or letters. It threatens to sue the foreign company in China or its home country.” They publish “China Sinosure as Existential Threat and Fighting Back Against Fake (and Real) Sinosure Claims: A Primer“
