International Trade, Part II: Government Programs

Continuing in our series on trade financing, here we’re going to talk a bit about government programs to subsided credit for national exporters.

One example is export credit insurance, which allows an exporter to receive insurance in the case that the customer (importer) defaults on payment.  If so, the insurance agency will pay a large portion of the loss.  The availability of such programs allows commercial banks to offer long-term financing for exports.  In the United States, the Foreign Credit Insurance Association (FCIA) provides insurance to U.S. exporters against non-payment from foreign importers.

Another independent agency of the U.S. government is the Export-Import (or “Exim” for short) Bank, which facilitate foreign trade with the U.S.  Some tools offered by the Exim Bank are guarantees for the repayment of loans to financial institutions as well as direct-lending operations to projects that qualify.  Many countries around the world have similar export-import banks backed by their national government.

Any questions? Comments?

But as always… make sure you make an informed decision in all cases,

All the Best,

The Capital Corp

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