Welcome to ECA Watch

Export credit agences provide government-backed loans, guarantees and insurance to corporations working internationally in some of the most volatile, controversial and damaging industries on the planet.

Shrouded in mystery, ECAs provide financial backing for risky projects that might never otherwise get off the ground. They are a major source of national debt in developing countries.

ECA Watch is a network of NGOs from around the world. We come together to campaign for ECA reform - better transparency, accountability, and respect for environmental standards and human rights.

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What's New November 2020

What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

If you would like to receive "What's New!" simply add your e-mail to the ECA-Action list at www.eca-watch.org today! Questions?

Public ECA money guarantees 'risky' fossil fuel projects: experts

(AFP, Paris 15 November 2020) Energy firms are undertaking financially risky natural gas extraction projects from the Arctic to Africa made feasible by government-backed loans and guarantees, jeopardising efforts to curb global warming, experts say. As pressure from the public and investors to green their portfolios grows, and the cost of renewable energy continues to fall, oil and gas majors are finding it harder to attract investment on new fossil fuel projects.  Eight export credit agencies awarded loans to French oil giant Total in July, when the company signed a US$14.9-billion financing agreement for a liquefied natural gas (LNG) project in Mozambique. The province where the sites are located, Cabo Delgado, has been grappling with a jihadist insurgency since 2017 that has killed more than 1,000 people. In a renewed effort to reduce climate obstacles and tackle other environmental issues, five African civil society groups have called on African governments to stop the acceptance of fossil fuel projects driven by European countries through their Export Credit Agencies (ECAs).

https://www.deccanherald.com/science-and-environment/public-money-guarantees-ris...


Western governments suspend talks on new ECA rules

(Reuters, Washington, 20 November 2020) Eleven of 18 governments trying to negotiate new export credit rules said on Thursday they were suspending technical talks because of widely divergent positions among members and troubles with transparency. But in a joint statement, the 11 Western governments including the United States, European Union and Japan said that they remain open to a high-level meeting in a year and to discussing proposals at the vice-ministerial level. The action halts eight years of talks launched in 2012 from a joint U.S.-China initiative to try to craft new international rules on the use of official export credit agencies, that would be followed by OECD countries as well as large emerging market countries including China, India and Brazil.

In 2019, China provided more than three times the amount of official medium- and long-term export credits than the next closest provider, according to the Ex-Im Bank's annual competitiveness report. The top 10 providers, in order, were: China ($33.5 billion), Italy ($11.1 billion), Germany ($10.5 billion), India ($7.0 billion), the United Kingdom ($6.6 billion), France ($6.2 billion), Korea ($5.8 billion), the United States ($5.3 billion), Finland ($4.1 billion), and Sweden ($4.0 billion).

https://www.thestar.com.my/business/business-news/2020/11/20/western-governments...


Only a fifth of climate finance goes to adaptation as share of loans grows

(Climate Home News, Kent, 6 November 2020) Donor countries mobilised $78.9 billion of climate aid in 2018, but developing nations are expected to pay back nearly three quarters of the money. Financial support to help the most vulnerable countries adapt to intensifying climate impacts continues to fall short compared with money spent to cut emissions, according to a report by donor countries. Analysis of the latest climate finance data by the OECD - representing 36 of the world’s most developed countries – found that only 21% of climate finance mobilised in 2018 aimed to help communities adapt to climate change vs more than two-thirds of the money still going to carbon-cutting efforts, with 9% identified as serving both goals. The OECD report analysed progress made by developed countries to meet a 2009 commitment to mobilise $100 billion a year in climate finance by 2020 to help developing countries green their economies and cope with climate impacts. The data included finance from bilateral and multilateral finance, climate-related finance officially supported by export credit agencies and private finance mobilised through public finance interventions, with the vast majority of the money coming from public finance, with private funding accounting for 18.5% of 2018's $78.9 billion. Oxfam’s Climate Finance Shadow Report 2020 offers an assessment of progress towards the $100bn goal.

https://www.climatechangenews.com/2020/11/06/oecd-one-fifth-climate-finance-goes...


International Chamber of Commerce urges G20 to increase ECA support to safeguard small corporations

(International Chamber of Commerce, Paris, 9 November 2020) An advisory group to the International Chamber of Commerce (ICC) has issued a call for G20 leaders to take action to avert the risk of widespread insolvencies amongst small- and medium-sized enterprises (SMEs) globally, due to the Covid-19 pandemic, urging them to make coordinated interventions to increase the availability of trade-related finance to SMEs. Trade finance underpins somewhere between 80 – 90% of global trade and acts as a vital source of working capital for many SMEs. Recent signals suggest that [private] supply of trade credit to SMEs and emerging markets is at significant risk in response to growing corporate, sovereign and currency risks. ICC has further outlined additional measures that could be implemented by G20 governments to prime the supply of trade financing globally – including a scaling of publicly backed credit guarantee schemes, regulatory interventions and export credit insurance to incentivize the provision of trade credit by commercial banks. As noted in our May 2020 What's New, the ICC has said that as much as US$5 trillion of trade credit will be needed to return trade volumes back to 2019 levels in the wake of the Covid-19 crisis in order to enable volumes and demand return to the global economy.

https://iccwbo.org/media-wall/news-speeches/g20-leverage-trade-finance-to-safegu...


Mapping the impacts of ECAs active in Africa

(Both Ends, Amsterdam, 11 November 2020) Many industrialised nations are switching to renewable energy at home. But while they commit to phasing out fossil fuel energy domestically, these commitments are abandoned outside their borders, where they continue to push dirty energy, thus contributing to climate change, human rights abuses and environmental destruction. This is happening in African countries, while they are already being hit particularly hard by the impacts of climate change. By supporting fossil fuel as well as large hydro dam-related energy projects in Africa, export credit agencies (ECAs) add to the many risks and threats. In addition, the ECA-supported investments in fossil fuels makes these countries economically dependent on energy sources that many countries in the world are committed to phase out, which poses serious economic debt risks, undermining their long-term resilience. Coming from a perspective of communities affected by ECA-supported energy projects, this report analyses the question what the best solution is for limiting global warming to 1.5C on the one hand, and facilitating universal energy access on the other hand. Furthermore, it analyses the question what the role of public financial institutions like ECAs could be in terms of promoting a green energy future in Africa.

https://www.bothends.org/en/Whats-new/Publicaties/A-Just-Energy-Transition-for-A...


Berne Union Yearbook 2020

(Berne Union, London, November 2020) Vinco David, Secretary General of the Berne Union (the International Union of Credit and Investment Insurers) notes in his introduction to this 179 page yearbook: "Now that news about the impact of and response to the COVID-19 pandemic is hitting the headlines so frequently, we could almost forget that there have also been several other noteworthy developments in the export credit and investment insurance industry. As the global trade association for the industry, the Berne Union is the organisation par excellence where all developments are shared and come together. Credit and investment insurers, and hence the Berne Union, are moving fast in a business environment that is also moving fast. This article will focus on how the Berne Union is changing in this environment. The following developments are highlighted:

  • The enhanced exchange of information between insurers/Berne Union members
  • Closer cooperation between the private market and ECAs
  • Cooperation with stakeholders in the wider industry
  • The growing importance of business data
  • Digitalisation
  • Regulation
  • And, of course, the COVID-19 pandemic"
https://bublob.blob.core.windows.net/assets/Images/Berne%20Union%20Yearbook%2020...


JBIC to lend Nissan $2B for U.S. sales financing

(Automotive News Europe, Detroit, 26 November 2020) Japan's state-owned export credit agency has agreed to give Nissan up to $2 billion as part of a credit agreement to help it finance car sales in the U.S. The money should help Nissan to sell cars in the world's second-biggest auto market after China by allowing it to provide customers with loans that they can repay in monthly installments. JBIC has provided loans for overseas sales financing to other automakers, including a $78 million October agreement with Honda in Brazil, and one in September for Toyota in South Africa. The latest agreement with Nissan is more than three times as much as a $582 million loan extended by JBIC in July to help Nissan finance car sales in Mexico.

https://europe.autonews.com/automakers/japans-export-credit-agency-will-lend-nis...


Mexican ECA seals US$600mn credit facility for Covid-19 response

Bancomext, a state-owned bank and export credit agency in Mexico, has obtained a US$600mn credit facility from a syndicate of international banks that will support its response to Covid-19. Law firm Norton Rose Fulbright represented Banco Santander, Citibank and Commerzbank, the three banks that took part in the syndicate. The facility is guaranteed by the Multilateral Investment Guarantee Agency (Miga), a member of the World Bank Group. The facility will support the bank’s funding strategy “amid a sharp contraction in export revenues, which account for nearly 40% of Mexico’s GDP. It will also provide working capital to companies across key exporting sectors of the Mexican economy, including the automotive, aeronautic, transport and logistics, tourism, manufacturing, construction and agriculture industries,” the firm said.

https://www.gtreview.com/news/americas/mexican-state-owned-bank-seals-us600mn-cr...


What you need to know about Nigeria’s $1.2bn export loan from Brazil

(Premium Times, Abuja, 9 November 2020) The Nigerian government has announced it plans to obtain a $1.2 billion (N459 billion) loan from Brazil. Funding for the programme will come from the Development Bank of Brazil and Deutsche Bank, with insurance provided by the Brazilian Guarantees and Fund Managements Agency and the Islamic Corporation for Insurance of Export Credit of the Islamic Development Bank, and will be coordinated by the Getúlio Vargas Foundation. The programme will import the completely knocked down parts of about 5,000 tractors and numerous implements (for local assembly) annually for a period of 10 years. The Minister said the Nigerian government would acquire 100,000 hectares of land in each state for food production, adding that link roads would be built in such locations to provide access for farmers to move farm produce to markets and reduce post-harvest losses. On another ECA note, the Nigerian Export-Import Bank (NEXIM) says it is positioning the economy for post crisis performance to be mindful of the fact that fiscal resources are urgently needed to contain the fallout of the COVID-19 outbreak and stimulate the economy. In that regard, the bank is proactively making interventions by way of investment in the manufacturing or production of exportable products – where Nigeria has comparative advantage – with the aim of providing buffer for the economy.

https://www.premiumtimesng.com/agriculture/agric-news/425277-what-you-need-to-kn...


Bombardier cooperating with SFO corruption investigation

(Compliance Week, Boston, 6 November 2020) The U.K. Serious Fraud Office (SFO) on Thursday confirmed it is investigating plane maker Bombardier over suspected bribery and corruption in relation to contracts and orders from Indonesian airline carrier Garuda Indonesia. According to the allegations, Garuda's former CEO received US$3.2 million in bribery payments from consultants in exchange for securing maintenance and procurement contracts for Rolls-Royce, Airbus, Bombardier, and Avions de Transport Regional. The bribery payments were said to have originated from the commissions received by the consultant from each of these airline manufacturers. The U.K. Serious Fraud Office (SFO) on Thursday confirmed it is investigating plane maker Bombardier over suspected bribery and corruption in relation to contracts and orders from Indonesian airline carrier Garuda Indonesia. As Compliance Week previously reported, a March 2017 report by the Organized Crime and Corruption Reporting Project — a consortium of nonprofit investigative centers and media outlets around the globe — alleged Bombardier Transportation paid “millions of dollars in bribes to unidentified Azerbaijani officials through a shadowy company registered in the United Kingdom. Canada's Export Development Corporation (EDC) first initiated a review of Bombardier in August 2019, following leaked preliminary findings from a World Bank investigation into a 2013 contract Bombardier Transportation had with Azerbaijan Railways. In February 2020, (EDC, Canada’s export credit agency wholly owned by the Government of Canada, concluded in an independent review of Bombardier’s compliance policies and procedures that the company was progressing.

https://www.complianceweek.com/anti-corruption/bombardier-cooperating-with-sfo-c...


What's New October 2020

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

If you would like to receive "What's New!" simply add your e-mail to the ECA-Action list at www.eca-watch.org today! Questions?

Email info-at-eca-watch.org

See all "What's New!" updates since 2005 here.

  • ECAs and Green Recovery
  • Africa and ECAs remain at the heart of big oil strategy despite oil export debt
  • UKEF could support 42,000 jobs annually by 2035 by switching focus to renewables
  • EU publishes 4th amendment to Temporary Framework for state aid to corporations re COVID
  • The natural resource curse in Mozambique
  • EXIM President: Battling China's predatory economics
  • FY 2021 Funds Available for Agricultural Export Credit Guarantees
  • S&P declares Zambia in default after missed debt payment
  • ICIEC signs cooperative MoUs with UKEF and CESCE
  • SACE's Michal Ron becomes the new president of Berne Union

ECAs and Green Recovery

(Christian Aid, London, 20 October 2020) This new report warns that post-Covid stimulus packages are in danger of widening global inequality and pushing poorer countries to turn to fossil fuels, which would threaten the success of the UK’s COP26 climate summit. The world stands at a crucial juncture, as nations choose between restarting their economies using fossil fuels, plunging us further into climate crisis, or taking the opportunity to accelerate the transition to a low carbon world which puts us on track to meeting the targets of the Paris climate accord. Governments of richer, OECD countries, including the UK, must cease all new direct and indirect public support for fossil fuels projects in other countries, including the use of aid budgets and export credits. Instead, aid and export credits should be used to scale up renewable energy, energy efficiency and energy access for the poorest.

https://www.christianaid.org.uk/resources/our-work/whose-green-recovery


Africa and ECAs remain at the heart of big oil strategy despite oil export debt

(Energy Intelligence Finance, New York, 30 September 2020) French TNC Total's CEO Patrick Pouyanne has emphasized that Africa will be at the "heart" of the company's long-term energy transition plans. Africa has long been a rich source of cash flow for Total (EIF Feb.19'20). In 2019, the continent generated around $10 billion of Total's $26 billion cash flow from operations, and 30% of its oil and gas production (900,000 barrels of oil equivalent per day). In July, Total and its partners secured $15.8 billion in project financing. The Export-Import Bank of the US and seven other export credit agencies provided loans, guarantees and insurance for Total's Mozambique LNG project alone (EIF Aug.12'20). Meanwhile, the Train 7 expansion of Nigerian LNG is another key African LNG project for Total (EIF Aug.26'20). Train 7, a joint venture between the Nigeria National Petroleum Corporation (NNPC) and international oil majors Royal Dutch Shell, ENI and Total, will be financed by a combination of NLNG's internally generated cashflows and US$3 billion of debt raised from a broad range of financiers, with the international and Nigerian banks and the DFIs providing US$1.5 billion of debt on an uncovered basis, and the South Korean and Italian ECAs directly funding or covering the remaining US$1.5 billion. An October report from Dutch ECA Atradius notes that the risk of sovereign default is growing across Africa because of higher debt levels and currency risk, with the shock hardest felt in oil exporting countries such as the Republic of the Congo and Angola, where oil accounts for more than 90% of the exporting revenues”.

http://www.energyintel.com/pages/eig_article.aspx?DocID=1085505


UKEF could support 42,000 jobs annually by 2035 by switching focus to renewables

(Energy Voice, London, 15 October 2020) The credit export wing of the UK Government could support tens of thousands of jobs in the coming years if it switched its focus from oil and gas to renewables, according to a new study. Research carried out by Vivid Economics, on behalf of the European Climate Foundation, shows that UK Export Finance (UKEF) would create more jobs by supporting clean energy owing to it being a more labour intensive industry. The study claims that, if the ministerial department assumed liabilities for renewables exports to the same scale it currently does for oil and gas, it could support 42,000 jobs in the sector annually by 2035, up from 2,000 today. UKEF came under fire earlier this year after it emerged it pledged $300 million (£230m) to a Total-led LNG project in Mozambique, prompting Boris Johnson to order a review of government guarantees for oil and gas projects. Oil Change International noted that “This report shows that the UK has a clear opportunity to show climate leadership and stop propping up deadly fossil fuels with public money."

https://www.energyvoice.com/otherenergy/271783/uk-export-finance-renewables-jobs...


EU publishes 4th amendment to Temporary Framework for state aid to corporations re COVID

(Lexology, London, 14 October 2020) The EU Commission has published a 4th amendment to its 19 March 2020 guidance document on state aid in reaction to the COVID-19 outbreak (see our blog post). Article 107(1) of the TFEU contains a general prohibition of aid granted by a Member State or through State resources which distorts competition and trade within the EU by favouring certain companies or the production of certain goods. The Temporary Framework was previously amended on 3 April 2020 (see our blog post), on 8 May 2020 (see our blog post) and on 29 June 2020 (see our blog post).The 4th amendment extends the availability of all the measures set out in the Temporary Framework and it introduces an extension of the temporary removal of all countries from the list of “marketable risk" countries under the Short-term export-credit insurance Communication (STEC). As a consequence of the COVID-19 outbreak, the Commission found in March 2020 that there is a lack of sufficient private insurance capacity for short-term export-credits in general and considered all commercial and political risks associated with exports to the countries listed in the Annex to STEC as temporarily non-marketable until 31 December 2020. TFX further reports that "certain governments have used ECAs as vehicles to help corporates better deal with the crisis, and some of the amounts involved have been substantial. For instance, a $6.9 billion support package for Fiat Chrysler was guaranteed by Italy’s Sace, an $817 million package for South Korea’s Doosan Heavy industries was backed by Kexim and the Korea Development Bank, and in July UKEF guaranteed £500 million ($642 million) of a £625 million loan from commercial banks for Jaguar LandRover."

https://www.lexology.com/library/detail.aspx?g=1305cc5f-48c8-4ad6-b7db-09b4459be...


The natural resource curse in Mozambique

(New Frame, Johannesburg, 20 October 2020) Do transnational fossil fuel corporations promote defence spending over social investment? A long read about a complex situation where export credit agencies have supported hugh MNC oil and gas developments.

https://www.newframe.com/the-natural-resource-curse-in-cabo-delgado


EXIM President: Battling China's predatory economics

(Fox News - Opinion, Washington, 17 October 2020) Kimberly Reed: The latest manifestation of China’s economic aggression is the increasing use of export financing to distort fair and free-market competition. In 2019 alone, communist China provided three times the export financing of the next-largest provider. For Beijing, export financing helps increase its influence abroad as well as promote its One Belt, One Road initiative. Chinese official financing in 2019 totaled at least $76 billion all around the world, all of it designed to further Beijing’s global objectives, and much of it targeted to reduce U.S. economic influence. By handing out money around the world at low-interest rates, Beijing is able to advance its strategic objectives. The goal? Global dominance by 2049. If the U.S. is to combat China’s latest form of aggression, we must step up our export financing game. Enter, the Export-Import Bank of the United States (EXIM), which can play a central role in leveling the global marketplace for American exporters and supporting American jobs.  launched a new “Program on China and Transformational Exports” to support the extension of loans, guarantees, and insurance to American exporters on terms competitive with the PRC’s. EXIM’s goal is to reserve at least $27 billion in financing to “neutralize” PRC export subsidies and advance the comparative leadership of the United States with respect to the PRC. [How these U.S. "subsidies" fit into the OECD's efforts "to provide a framework for the orderly use of officially supported export credits by fostering a level playing field in order to encourage competition among exporters based on quality and prices of goods and services exported rather than on the most favourable officially supported export credits" is misterious.]

https://www.foxbusiness.com/economy/export-import-bank-reed-nsa-obrien-china-eco...


FY 2021 Funds Available for Agricultural Export Credit Guarantees

(USDA, Washington, 5 October 2020) On October 5, 2020, the U.S. Department of Agriculture announced availability of export credit guarantees for sales of U.S. agricultural commodities under the Commodity Credit Corporation’s (CCC) Export Credit Guarantee Program (GSM-102) for fiscal year 2021. US$2.5 billion will be available in 2021 allocated as follows: Africa, Middle East, Turkey, Caucasus, Central Asia US$425 million, Asia US$475 million, Latin America US$1.6 billion

https://www.fas.usda.gov/newsroom/fy-2021-funds-available-export-credit-guarante...


S&P declares Zambia in default after missed debt payment

(Agence France-Presse, Washington, 22 October 2020) Ratings agency Standard & Poor's (S&P) declared Zambia's government in default on Wednesday, October 21, after the African nation missed an interest payment. The mineral-rich southern African country has seen its debt surge to nearly $12 billion this year as commodity prices have fallen amid the coronavirus pandemic. S&P noted that half the government's debt is owed to official creditors, including export credit agencies, while over $3 billion or 25% "is owed to various Chinese lenders including policy banks – China Exim Bank and China Development Bank – as well as private Chinese banks."

https://www.rappler.com/business/standard-poors-declares-zambia-default-after-mi...


ICIEC signs cooperative MoUs with UKEF and CESCE

(Zawya, Dubai, 4 October 2020) The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) signed a Memorandum of Understanding (MoU) for cooperation with the United Kingdom’s Export Credit Agency (UKEF). The MoU allows for both entities to enter into co-insurance, reinsurance or cooperation agreements to engage in strategic joint projects that support exports and investments from the United Kingdom into ICIEC’s 47 member countries including UAE, Oman and Bahrain – all ICIEC member countries.. The partnership is beneficial for both institutions as they each offer Shariah compliant financing through the provision of Islamic Sukuk and share an interest in promoting and supporting Islamic finance transactions. ICIEC has also signed a memorandum of understanding with Spanish ECA CESCE

https://www.zawya.com/mena/en/press-releases/story/ICIEC_signs_cooperative_MoU_w...


SACE's Michal Ron becomes the new president of Berne Union

(TXF News, London, 28 October 2020) Last week the Berne Union (BU) also held its annual meeting, on a virtual basis, and Michal Ron, chief international officer of the Italian export credit agency Sace, was voted in as the new BU president. Outgoing president Beatriz Reguero (Cesce) remarked that her term had been characterised by an environment of unprecedented uncertainty, with the Covid pandemic the most visible manifestation of this. Incoming President Michal Ron has expressed her mission for the term is to increase inclusivity and help bridge the gap between export credit insurers from advanced economies and developing economies. She also wants to further promote open dialogue between OECD and non-OECD members, eastern and western hemisphere institutions, private and public operators, contemporaneously providing a wider platform to emerging market members of the BU. During the AGM members also engaged in a virtual ‘stocktake’ of the state of the export credit and investment insurance industry during the Covid pandemic. While claims activity was said to be currently relatively subdued – $3.3 billion paid in 2020 H1, compared to $3.2 billion in 2019 H1 – many members reported a marked increase in payment deferrals and pre-claim situations and most expected to see Covid-related claims levels rising from early next year. BU members flagged particular vulnerabilities in the transportation sector – especially aviation and shipping – as well as retail, construction and product manufacturing. In a BU survey, 80% of members reported an increase in new demand, most commonly for short-term credit and working capital products. Around a third of respondents indicated that this includes a substantial increase in inquiries from new clients. BU data shows that short-term commitments in the first half of 2020 ($1,644 billion) were marginally down year-on-year, but new cover for domestic risks (largely cover for working capital and manufacturing risks) increased almost 50% in the same time, up to $36 billion in the first half of 2020.

https://www.txfnews.com/News/Article/7077/Export-finance-rolls-up-its-sleeves-fo...


What's New September 2020

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

If you would like to receive "What's New!" write us at info-at-eca-watch.org

Questions?  Email info-at-eca-watch.org

See all "What's New!" updates since 2005 here.

  • No proper benchmark for checking European ECAs' compliance with EU objectives
  • ECAs back $9.5 billion financing for Russia's Arctic LNG 2
  • New report calls for end to export credits to coal
  • IFC adopts Urgewald’s Global Coal Exit List
  • EXIM's program to undercut Chinese export subsidies
  • G12 ECA Group Issues First-Ever Joint Statement
  • Trade credit insurance claims expected to surge
  • Are we seeing the end of the UKEF's (& other ECA) fossil fuel empire(s)?
  • Project Finance, human rights and climate change: Updated Equator Principles
  • US EXIM notifies Congress of potential support for Pemex
  • NYT Opinion: EXIM and Corporate Welfare Cronyism
  • Emirates Global Aluminium PJSC (EGA) comes online in Guinea with ECA loans
  • Gensource Potash awaits Hermes approval of ECA support

No proper benchmark for checking European ECAs' compliance with EU objectives

(Bankwatch, Prague, 4 September 2020) Despite being the biggest class of public finance institutions operating internationally, export credit agencies (ECAs) are rarely subject to any public scrutiny. European ECAs self-declare compliance with the non-binding OECD Common Approaches standards, but it’s an insufficient benchmark for evaluating compliance with the EU’s External Action obligations as stated by the relevant EU Regulation.

https://bankwatch.org/blog/no-proper-benchmark-for-checking-european-export-cred...


ECAs back $9.5 billion financing for Russia's Arctic LNG 2

(Reuters, London, 18 September 2020) International lenders have lined up about $9.5 billion in financial support for a Russian Arctic liquefied natural gas (LNG) project, a document seen by Reuters showed, even as such projects come under greater scrutiny over climate concerns. The $21 billion project, which received final investment approval a year ago, is expected to be launched in 2023 and to reach its full capacity of almost 20 million tonnes per year in 2026. Among the lenders is France's Bpifrance, with an offer of $700 million in credit finance, the China Development Bank, expected to offer a facility worth $5 billion and Germany's Euler Hermes, with a covered facility of $300 million. Japan's JBIC is offering $2.5 billion, Italy's SACE plans to put $1 billion into the project, while an unnamed Russian bank is reportedly considering a $1.5-billion investment. While the energy industry touts natural gas as a cleaner alternative to coal or crude, it is a source of carbon emissions and critics say LNG projects are hard to reconcile with the transition to low-carbon economy envisaged in the Paris climate agreement and the European Union's Green Deal economic plan.

https://finance.yahoo.com/news/exclusive-international-lenders-back-9-080925404....


New report calls for end to export credits to coal

(Swedwatch, Stockholm, 25 September 2020) The coal industry is well-known for its serious climate implications and effects on local communities. Still, European export credits have contributed to expand the coal industry in countries already dependent on coal, including South Africa, a new Swedwatch report finds. In the last decade, ECAs from Germany, Sweden and France have provided significant export credits to South Africa’s coal sector. The country derives 90% of its electricity from coal and is currently constructing two new, large-scale coal-fired powerplants while establishing several new coal mines. Through their export support, the ECAs have contributed to the expansion of the country’s coal industry, which has a well-documented history of adverse environmental and human rights impacts. As European ECAs generally adhere to export guidelines from the OECD, which do not prohibit support for coal-related exports, the report urges France, Sweden and Germany – who have taken vital steps in this direction – to actively push for other OECD member countries to follow suit. The report makes it clear that there is an extensive lack of transparency in relation to export credits, guarantees, insurances and other means of export support.

https://swedwatch.org/regions/africa-south-of-the-sahara/new-report-calls-for-en...


IFC adopts Urgewald’s Global Coal Exit List

(Urgewald, Sassenberg, 21 September 2020) In its recently released report on Greening Equity Investments in Financial Institutions the International Finance Corporation (IFC), the private sector arm of the World Bank Group, announced it has adopted Urgewald’s Global Coal Exit List. Furthermore, the IFC recommends the Global Coal Exit List to its clients and urges them to screen their exposure against the list. [2] Urgewald’s Global Coal Exit List provides comprehensive data on the world’s coal industry. Talks about cooperating with Urgewald to adopt the Global Coal Exit List had started after an IFC announcement in April 2019. Since then the NGO has been able to convince the IFC to amend their coal exit criteria in two important ways:

  • to exclude the companies responsible for coal expansion as opposed to only coal projects
  • include a definition of the coal share of revenue that not only refers to coal sales but different coal-related business activities

While urging clients to screen their portfolios against the Global Coal Exit List is an important first step, the next step for the IFC has to invariably be a detailed follow-up to verify that clients actually implement the new criteria.

https://urgewald.org/en/medien/ifc-adopts-urgewalds-global-coal-exit-list-and-re...


EXIM's program to undercut Chinese export subsidies

(EXIM, Washington, 9 September 2020) EXIM announced today the appointment of 17 members to its Advisory Committee, and establishment of a new EXIM Advisory Committee Subcommittee on Strategic Competition with the People’s Republic of China. The Program’s purpose is to support the extension of loans, guarantees, and insurance, at rates and on terms and other conditions, to the extent practicable, that are fully competitive with [i.e. undercut] rates, terms, and other conditions established by the People’s Republic of China or by other covered countries (as designated by the Secretary of the Treasury). From 2015 to 2019, China’s official medium- and long-term (MLT) export credit activity alone was at least equal to 90% of that provided by all G7 countries combined. China’s official MLT export and trade-related financing totaled at least $76 billion in 2019. EXIM seeks to reserve at least 20% of our financing authority, or at least $27 billion of our $135 billion in financing, to ‘neutralize’ Beijing’s export subsidies, advance the comparative leadership of the United States with respect to the PRC, and support U.S. innovation, employment, and technological standards through direct exports in 10 industries key to America’s prosperity and security.

https://www.exim.gov/who-we-serve/external-engagement/program-on-china-and-trans...


G12 ECA Group Issues First-Ever Joint Statement

(Global Trading Magazine, Dallas, 25 September 2020) At the Sept. 9 end of the two-day 2020 G12 Heads of Export Credit Agencies (ECAs) meeting, which EXIM Bank hosted virtually from its Washington, D.C. headquarters, the 12 Heads of ECAs issued its first-ever G12 joint statement. ECAs involved included: EXIM USA (Host), Brazil, Canada, China, France, Germany, India, Italy, Japan, Russia, the Republic of Korea and the United Kingdom. The 2020 G12 Heads of Export Credit Agencies (ECA) Meeting was a productive and open exchange that highlighted efforts aimed at stabilizing the availability of working capital and export credit in a volatile international market environment. The transparent discussion brought forth the important work each ECA is undertaking to mitigate the economic impacts of the COVID-19 pandemic. The ECA leaders reiterated their steadfast commitment to supporting their global supply chains—domestically and internationally—as well as promoting exports, job security, and financial investment, all of which underpin prosperity at home and abroad. In the wake of the COVID-19 pandemic, this is an important time for Export Credit Agency leaders from around the world to find common ground on key initiatives, especially those that foster greater transparency,

https://www.globaltrademag.com/g12-export-credit-agency-issues-first-ever-joint-...


Trade credit insurance claims expected to surge

(Asia Insurance Review, Singapore, 23 September 2020) A Berne Union report notes that the expected spike in trade credit claims resulting from the COVID-19 pandemic has not yet been realised, according to a preliminary report on the business activity of Berne Union members in the first half of 2020. Export credit claims paid in the 1st half of 2020 were 16% lower overall than for the first half of 2019. The fall can be partially attributed to a decline in new commitments during the same time which has been largely caused by a general decline in exports. A 23% drop in new medium and long-term commitments (MLT) was reported and there was also a 4% decrease in aggregate credit limits issued under short-term (ST) export credit insurance policies. In the MLT business, both public and private insurers’ new commitments declined. Meanwhile, for the short-term, private insurers’ commitments fell by 8%, whereas those of public insurers rose by the same percentage according to The Berne Union.

https://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/73772/Type/e...


Are we seeing the end of the UKEF's (& other ECA) fossil fuel empire(s)?

(Prospect, London, 10 September 2020) Boris Johnson has pledged to end Britain's support for global gas and oil projects. But will the government really make good on its promise? Investors across the world are growing increasingly wary of financing fossil fuels—and for good reason. In an era of climate protest, carbon neutrality pledges and cheap renewable energy, oil refineries and gas fields look like risky bets. Until recently, ECAs had sunk serious sums of money into fossil fuels without facing much backlash. Figures compiled by the research and advocacy group Oil Change International show that the world’s ECAs provided over $40bn annually to support fossil fuel projects between 2016 and 2018—compared to $2.9bn for clean energy. UK Export Finance (UKEF) was no outlier among its peers. Last year, a report from Parliament’s Environmental Audit Committee revealed that 96% (£2.5bn) of UKEF’s of energy investments between 2013 and 2017 went to polluting projects. Of this total, £2.4bn was funneled into fossil fuel projects in low and middle-income countries. If the legislation is free of loopholes, it will divert several billion pounds of public money away from extractive industries and, ideally, towards renewable alternatives. Most importantly, it will signal to the private sector that the end of the oil age is fast approaching. Since the 2015 Paris Agreement, the world’s largest investment banks have provided more than $700bn for fossil fuel projects. In January, a joint investigation by Newsnight and Greenpeace’s Unearthed revealed that UKEF has helped to finance oil and gas projects which, when complete, will emit 69 million tonnes of greenhouse gases a year. The agency found itself in hot water again in July when it was discovered that it was helping to fund a massive new gas extraction project in Mozambique, along with seven other ECAs.

https://www.prospectmagazine.co.uk/science-and-technology/fossil-fuels-uk-statis...


Project Finance, human rights and climate change: Updated Equator Principles

(Lexology, London, 25 September 2020) The Equator Principles have been one of the principal frameworks for managing sustainability and ESG risk in projects by financial institutions since 2003. The latest update – known as EP4 – renews the focus on human rights and climate change with effect from October 1, 2020. EP4 is the latest update for EP assessment and management of environmental and social risk in international project finance. There are now 110 EPFIs which include banks and [some] export credit agencies. Key differences from the June 2013 version (EP3) relate to the scope of transactions covered by the Equator Principles, and new requirements in relation to projects in high-income Organization for Economic Cooperation and Development (OECD) nations, human rights, impacts on indigenous peoples and climate change

https://www.lexology.com/library/detail.aspx?g=fe7f3b12-06e9-4671-b73e-544b08a49...


US EXIM notifies Congress of potential support for Pemex

EXIM, Washington, 27 August 2020) The Export-Import Bank of the United States (EXIM) Board of Directors today unanimously voted to notify the U.S. Congress, pursuant to the law, of its consideration of two transactions that would facilitate the authorization of a $350 million general facility and $50 million small business facility (SBF) for Petroleos Mexicanos (Pemex). If approved, the combined $400 million financing facilities would support an estimated 1,700 jobs in California, Colorado, Connecticut, Georgia, Illinois, Iowa, Louisiana, Minnesota, Oklahoma, Pennsylvania, and Texas in the oilfield services industry, which has faced difficulties as a result of the COVID-19 pandemic. EXIM received the applications from PEMEX for the facilities in March 2020.

https://www.exim.gov/news/exim-board-votes-notify-congress-two-potential-transac...


NYT Opinion: EXIM and Corporate Welfare Cronyism

(New York Times, Fairfax, 4 September 2020) In 1971 at the urging of banking lobbyists, the U.S. Export-Import Bank created the Private Export Funding Corporation (PEFCO), a private entity owned by over two dozen banks and a handful of big corporations. It has operated under consecutive 25-year mandates with an exclusive arrangement, under special terms, to acquire EXIM loans from commercial lenders. Because these loans are fully backed by taxpayers, they impart no risk for the banks that issue them. PEFCO’s current authorization expires at the end of December, but its cozy dealings with big banks and corporations deserve far greater scrutiny. Consider this hypothetical scenario: Boeing wants to sell airplanes to China Air. Boeing asks EXIM to guarantee a loan to China Air so it can purchase the aircraft. JPMorgan Chase originates what becomes a loan from EXIM -  guaranteed by taxpayers -  for China Air. (The bank earns interest at no risk because, even if the borrower defaults, taxpayers will cover it.) Then JP Morgan Chase turns around and sells the loan to PEFCO, which buys the loan using debt raised from investors that is separately guaranteed by EXIM (again, American taxpayers). JPMorgan Chase is also a major shareholder of PEFCO, and PEFCO can pay its shareholders dividends. PEFCO’s shareholders include the same large corporate exporters that account for a large portion of EXIM financing, like Boeing and General Electric. The extensive dealings between Boeing and EXIM - in 2014, for instance, Boeing benefited from 40% of the bank’s activities - explains why critics refer to “the Bank of Boeing.” PEFCO takes that cronyism to a new level. Of EXIM's guaranteed loans that PEFCO acquires, 86% are in the aircraft sector. What’s more, Boeing’s senior vice president for finance and treasurer is on PEFCO’s board of directors.  Nearly every proponent claims that PEFCO plays a crucial role in supporting loans to small businesses. Yet as that unit’s own public reporting shows, less than 4% of the portfolio involves small-business lending — a far cry from the current 25% mandated by EXIM's charter (that will rise to 30% in 2021).

https://www.nytimes.com/2020/09/04/opinion/pefco-export-import-bank.html


Emirates Global Aluminium PJSC (EGA) comes online in Guinea with ECA loans

(Aluminum Insider, Paris, 30 August 2020) With full production at its alumina refinery in Abu Dhabi, coupled with the beginning of production at GAC, EGA says it has completed its strategic upstream expansion. GAC is one of the biggest greenfield investments in Guinea in over four decades, made possible by an investment of US$1.4 billion. About half of that funding was provided in the form of a loan from development finance institutions, export credit agencies, and international commercial banks.

https://aluminiuminsider.com/ega-shipped-over-6-1-million-dmt-of-bauxite-ore-fro...


Gensource Potash awaits Hermes approval of ECA support

(Business Wire, Saskatoon, 31 August 2020) Gensource Potash Corporation, a Canadian fertilizer development company focused on sustainable potash production, announces the successful completion of the next major milestone for its Tugaske Project. Gensource has now received approval of its Development Permit Application for a potash mine from the Rural Municipality of Huron No. 223, whose offices are in the Village of Tugaske, Saskatchewan. A significant portion of the Facility is to have ECA coverage from Hermes, with procurement managed by MAVEG Industrieausrüstungen GmbH using a Debt Facility of approximately US$180 million, with due diligence to be overseen and managed by KfW IPEX-Bank.

https://www.businesswire.com/news/home/20200831005158/en/


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