EFIC Reform Puts Pacific ‘Step-Up' at Risk

(Australian Council for International Development, Canberra, 14 Feb, 2019) ACFID has raised concerns about reform to Australia’s export credit agency - EFIC - as part of the Australian Government’s Pacific ‘step-up’ and is calling for the legislation to be referred to a parliamentary committee for scrutiny. The Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019 introduced to the House of Representatives proposes reform to EFIC so it can administer $1.2bn in callable capital to finance Australian businesses to build infrastructure overseas. The increase for EFIC from $200m to $1.2bn in callable capital and the Minister’s statement that EFIC will assist in administering loans for the Australian Infrastructure Financing Facility (AIFFP) is cause for concern. ACFID stressed that it is untenable to have $1.2bn of taxpayers’ funding being used for Australian businesses without transparency in its delivery and reporting. A financial scale-up without the relevant capabilities and expertise within EFIC, and the lack of transparency over how EFIC will interact with other Government departments, raises very serious concerns in the aid sector over the suitability of EFIC in holding such a central role in administering new loan-finance. DFAT reassured the Senate that there was no need for any such requirement since Efic has signed up to various OECD export credit guidelines, and will “carefully assess” any number of things to ensure that only good projects are selected, in particular the country’s capacity to repay the loan. [ECA Watch note: The OECD Arrangement's "gentlemans' agreement" and peer review process has not proven much of a deterrent to bad practice, as show by the many flaws and concerns raised here on the ECA Watch web site.]