Index for April 2014

Volume 13, Issue 4

  • (Financial Times, Washington, 20 April 2014) The Export-Import Bank of the United States, which provides finance for foreign purchases of US products, faces a fresh battle to survive... That threatens some of its biggest beneficiaries in corporate America, from Boeing to Caterpillar and General Electric. With renewal of Ex-Im’s charter due at the end of September, there are conservative voices on Capitol Hill, as well as at many corporations within the US, that want to see its operations scaled back, if not halted altogether. A Times editorial argued that: "Vital planks of US international economic engagement are at stake. Each delay deepens the uncertainty and imposes a cost on America’s reputation. In the case of the Exim Bank, it also imposes a cost on US exporters. The sooner Congress acts, the better. Waiting until Exim’s licence expires in September should not be an option." The conservative Heritage Foundations claims: "The bank is beset by mismanagement, dysfunction, and risk, all of which have been documented for years by Ex–Im’s own inspector general and the Government Accountability Office (GAO). The problems are the inevitable result of government assuming a function far beyond its proper purview and one that rightly belongs to private business alone."

  • (Guardian, London, 8 April 2014) Banks will have access to a Bank of England facility to make it less risky for them to finance exports under a new scheme to boost Britain's trade announced by George Osborne on April 7. Speaking in Brazil, the chancellor said billions of pounds of extra loans would be made available to UK firms competing in global markets after the Bank broadened the support it provides to lenders. Osborne has set British companies a target of doubling exports to £1tn by 2020. Loans guaranteed by Britain's export credit agency, UK Export Finance (UKEF), will now fall under the Bank's sterling monetary framework, which provides financial help in times of unexpected stress.

  • (Oil Change International, Washington, 22 April 2014) Japanese ECA, the Japan Bank for International Cooperation (JBIC) is the world’s number one public financier of coal projects. In an open letter to Japanese Prime Minister Shinzo Abe prior to his April 24th meeting with us President Obama, 30 NGOs urged Japan to follow the United States and other countries’ pledges to stop financing coal overseas.

  • (Wall Street Journal, London, 30 April 2014)  U.S. sanctions on Russia in response to the country's threats and incursions against Ukraine have created uncertainty over aerospace transactions, from plane purchases to satellite launches... "I see the market now as frozen for lease and financing," said Bertrand Grabowski, managing director of aviation finance at DVB Bank. Export credit guarantees, often provided by the U.S. and European governments to help underpin exports, are effectively suspended in the case of Russia, he said.

  • (Prague Daily Monitor, Prague, 28 April 2014) Czech Export Guarantee and Insurance Company (EGAP) received a subsidy of Kc1bn (US$50.5 million) a year from the Finance Ministry in 2011 and 2012 despite having enough own funds, according to findings by the Supreme Audit Office (NKU)... "At that time, EGAP had enough own resources and did not need money from the state budget to top up its insurance funds," NKU said... EGAP said the decision about the form and amount of the state's subsidy to export is a decision made by the government, and is therefore a purely political decision. [Editors note: The article made no mention of Czech adherence to the WTO Agreement on Subsidies and Countervailing Measures which prohibits ECA premiums that are not inadequate to cover long-term operating costs and losses.]

  • (Bloomberg, Istanbul, 22 April 2014) Azerbaijan’s state oil company, Socar, is in the final stages of negotiations for a $3.5 billion loan to help build a refinery in Turkey, said Kenan Yavuz, chief executive for the company’s Turkish unit... Most of the $3.5 billion package, arranged by the Turkish unit of Unicredit SpA (UCG), Italy’s biggest lender, will be provided by 15 international lenders with guarantees from the ECAs of six countries, the US Ex-Im Bank, JBIC, Export-Import Bank of Korea, and the Italian, Canadian and Spanish ECAs.

  • (The Jet, Lautoka, 30 April 2014) The Fiji Development Bank has reviewed the Export Credit Facility (ECF), an initiative geared towards assisting export oriented businesses that fall under government’s priority sectors for economic development. FDB acting chief executive officer Nafitalai Cakacaka highlighted that the reason for the review was the under-utilisation of the facility... In 2008 the bank received a grant of $1.5M from the Ministry of Industry and Trade to administer a loan product that would assist in the priority sectors of agriculture, forestry, marine products, mineral water products, ICT and audio visual.