UK Export Finance is the operating name of the Export Credits Guarantee Department (ECGD), the United Kingdom's Export Credit Agency (ECA). It reports through to the Secretary of State for Business, Innovation and Skills. ECGD derives its powers from the 1991 Export and Investment Guarantees Act and undertakes its activities in accordance with a specific consent from HM Treasury. ECGD was established in 1919 to promote UK exports lost during the submarine blockade of World War I.
ECGD's aim is to benefit the UK economy by helping exporters of UK goods and services to win business, and UK firms to invest overseas, by providing guarantees, insurance and reinsurance against loss, taking into account HM Government’s wider international policy agenda. ECGD is required by HM Government to operate on a slightly better than break-even basis, charging exporters premium at levels that match the perceived risks and costs in each case.
The largest part of ECGD's activities involves underwriting long term loans to support the sale of capital goods, principally for the export of aircraft, bridges, machinery and services; it helps UK companies take part in major overseas projects such as the construction of oil and gas pipelines and the upgrading of hospitals, airports and power stations. Support can be given for contracts as low as £25,000, but some of the projects ECGD backs go well beyond the £100 million mark.
As part of its risk management process, ECGD has to make a judgement on the ability of a country to meet its debt obligations. The department uses a ‘productive expenditure’ test, undertaken in consultation with the Department for International Development, that makes sure that the countries defined as Heavily Indebted Poor Countries and those exclusively dependent on International Development Association financing only get official export credits from the UK for projects that help social and economic development without creating a new unsustainable debt burden. ECGD continues to check that the proposed borrowing is sustainable.
Read more about UK Export Finance: Criticisms of The ECGD, Defence Exports, ECGD’s Anti-Bribery and Corruption Procedures, Equivalent in The World
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