Export support in CR

Doc.Ing.Alena Longauerová,PhD.

EGAP

The Export Guarantee and Insurance Corporation (EGAP) was founded in June 1992 as a state-owned export credit agency, insuring credits connected with exports of goods and services from the Czech Republic against political and commercial risks.

EGAP, now part of the state export support programme, provides insurance services to all exporters of Czech goods irrespective of their size, legal form and volume of insured exports.

EGAP

The mission of EGAP -is to provide credit insurance with

state support and assist the Czech exporters, investors

and their banks in situations when they are unable to find insurance for risks connected with financing of an export or of a foreign investment on the market.

State Support of Export

Export support is a part of the general economic policy of the state.

The state is assisting in acceleration and multiplication of positive effects achieved by Czech firms on foreign markets by the system of the pro-export policy

Support for SME

EGAP offers to the SMEs in cooperation with several banks a substantially simplified administrative procedure in insurance of:

credits for pre-export financing of the production for export or for financing of an investment in the production for export,

bank guarantees for obligations of an exporter in relation to terms and conditions of winning or fulfilment of an export contract

Environmental impact of export and investment

Principle of sustainable development requires reduction of negative impact of human economic activities on environment

IAE

Based on the filled-in Questionnaire and recommendation of the expert, EGAP shall classify the export into one of following categories:

Those exports are classified as category A where significant adverse environmental impacts can be assumed which go beyond an area where the said export will be realized, they are primarily exports to sensitive areas or sectors,

Those export are classified as category B where the environmental impacts are less adverse than in the exports of category A, impacts are site-specific and can be mitigated; all selected export not classified as category A and category C shall be classified as category B,

Those exports are classified as category C where the environment impact is minimal or none.

The country classification

according to the export credit risk is made periodically and is based on results of the Country Risk Assessment Model (CRAM)

processing the latest IMF and World Bank data on financial - economic situation of a classified country and the payment experience indicators of Export Credit Agencies - participants to the OECD Consensus 

O Category Country:  Category:  Country classification valid

from: 04.11.2011 Countries in the category 0 with a high income per capita

Australia Hungary PortugalAustria Iceland SlovakiaBelgium Ireland SloveniaCanada Israel South KoreaCzech Republic Italy SpainDenmark Japan SwedenEstonia Luxembourg SwitzerlandFinland Netherlands United KingdomFrance New Zealand United StatesGermany Norway  Greece Poland  

7 Category

http://www.egap.cz/klasifikace-zemi/index-en.php

Insurance products

B -Insurance of a Short Term Export Supplier Credit Bf Insurance of a Short Term Export Supplier Credit Financed

by a Bank C - Insurance of a Medium and Long Term Export Supplier Credit Cf

 - Insurance of a Medium and Long Term Export Supplier Credit Financed by a Bank

D Insurance of an Export Buyer Credit E - Insurance of a Confirmed Letter of Credit F Insurance of a Credit

for Pre Export Financing I Insurance of Investment of Czech Legal Persons in Foreign Countries

If Insurance of a Credit for the Financing of Investments of Czech Legal Persons in Foreign Countries

P- Insurance of Prospection of Foreign Markets V Insurance against the Risk of Inability to Fulfil an Export Contract

Z -Insurance of Bank Guarantees Issued in Relation to an Export Contract  

B

Brief description of the insurance product and contacts

An export supplier credit is a credit extended by an exporter to a foreign importer in the form of deferred of payment for delivered goods or services.

The payment may be deferred for the maximum period of 2 years in case of a short-term export supplier credit.

The export supplier credit has not character of a bank credit and the insured is directly the exporter who is covered against the risk that the foreign importer will not duly pay the full owed amount on the predetermined date.

You can find indicative insurance premium through the interactive calculator.

1.Export contract 2.Bank cover of an export receivable by a

short-term credit 3. Insurance contract 4.Indemnification paid to the insured or to

a bank on request of the insured

Bf Brief description of the insurance product and

contacts

An export supplier credit financed by a bank is a credit extended by an exporter to a foreign importer in the form of deferment of payment for delivered goods or services which has been subsequently bought by a bank from the exporter without any buyback option.

The payment may be deferred for the maximum period of 2 years in case of a short-term export supplier credit. The insured is the bank that is covered against the risk that the foreign importer will not duly pay the full owed amount on the predetermined date.

Scheme

Stage

1.Export contract 2. Contract on purchase of an export receivable 3. Insurance contract 4. Purchase of a receivable 5.Effectiveness of the insurance contract 6.Indemnification 7. Option of recourse against the exporter in

case the exporter caused the insurance loss

Brief description of the insurance product and contacts

An export supplier credit is a credit extended by an exporter to a foreign importer in the form of deferment of payment for delivered goods or services.

The maturity exceeds 2 years in case of a medium- and long-term export supplier credit. Conditions of insurance are governed by the OECD Arrangement; these rules require a down-payment by the foreign importer of at least of 15 per cent before the credit is extended.

EGAP also reserves the right to request from an exporter to submit an environmental impact assessment of the export in the importer’s country.

The export supplier credit has not character of a bank credit and the insured is directly the exporter who is covered against the risk that the foreign importer will not duly pay the full owed amount on the predetermined date.

Scheme

1.Export contract 2.Bank cover of an export receivable by a

medium-term or long-term credit 3.Insurance contract 4.Indemnification paid to the insured or to

a bank on request of the insured

Cf Brief description of the insurance product and contacts

An export supplier credit financed by a bank is a credit extended by an exporter to a foreign importer in the form of deferment of payment for delivered goods or services which has been subsequently bought by a bank from the exporter without any buyback option.

The maturity exceeds 2 years in case of a medium- and long-term export supplier credit. Conditions of insurance are governed by the OECD

Arrangement; these rules require a down-payment by the foreign importer of at least of 15 per cent before the credit is extended. EGAP also reserves the right to request from an exporter to submit an environmental impact assessment of the export in the importer’s country.

The insured is the bank that is covered against the risk that the foreign importer will not duly pay the full owed amount on the predetermined date.

The insurance contract is co-signed by the exporter who guarantees the fulfilment of all his obligations and that he will not in any way endanger the repayment of the credit

Schema

.

1.Export contract 2. Contract on purchase of an export receivable 3.Insurance contract 4.Purchase of a receivable 5.Effectiveness of the insurance contract 6.Indemnification 7.Option of recourse against the exporter in case

the exporter caused the insurance loss

D

An export buyer credit is a credit extended by a bank to a foreign importer for purchase of goods or services.

The bank pays the exporter and the owed amount is then repaid by the foreign importer on a regular schedule stipulated in the credit contract. The recipient of the credit and afterwards the debtor is in some cases the bank of the foreign importer.

The maturity of the credit exceeds 2 years. Conditions of insurance are governed by the OECD Arrangement; these rules require a down-payment by the foreign importer of at least of 15 per cent before the credit is extended.

EGAP also reserves the right to request from an exporter to submit an environmental impact assessment of the export in the importer’s country. The insured is the bank that is covered against the risk of the non-repayment of the extended export buyer credit on the stipulated

D scheme

1.Export contract 2. Credit contract for financing of the export

contract 3.Obligation to further extend the credit to the

importer 4. Insurance contract 5.Obligation of the exporter to the bank 6.Indemnification 7.Option of recourse against the exporter in case

the exporter caused the insurance loss

E

Brief description of the insurance product and contacts A Documentary Letter of Credit is a written obligation of a bank

of a foreign importer to pay to an exporter for delivered goods and services after presentation of prescribed documentation. The issued Documentary Letter of Credit shall be confirmed by the exporter’s bank which thus guarantees the obligation of the foreign importer’s bank.

The insured is the confirming bank of the exporter that is covered against the risk of material damage resulting from a full or partial non-payment in accordance with conditions of the confirmed Documentary Letter of Credit. Insurance also covers a so-called silent confirmation of the Documentary Letter of Credit. Both issuing and confirming banks only control whether all documents prescribed by the Letter of Credit have been presented; they do not control the goods or services and payments from the Letter of Credit are completely separated from contracts of sale.

1.Export contract 2.Request of the importer to open a L/C 3.Confirmation of the L/C 4. Insurance contract 5.Notification of the exporter on opening of

the L/C 6.Indemnification