The export credit agency will provide cover either by means of insurance to the exporters or bankers or by means of a direct guarantee of payment to the bank covering a loan to an overseas borrower to finance the supply of goods and services in the event of any default in payment by the buyer or the borrower under a loan agreement. Such insurance cover or guarantees could be a combination of comprehensive cover ie, commercial and political or only political risk cover. Previously export credit agencies promoted exports through subsidies that assisted those exporters who were able to obtain cover from them. Where credit agencies were involved, exporters were likely to offer more competitive business terms. The use of credit agencies was and is helpful to exporters in those markets where the political situation is more risky. Credit agencies can provide appropriate cover when commercial lenders are more reluctant to take political risks.
EDC provides financing and risk management services to more than 8, Canadian exporters and investors in up to markets worldwide, with 17 offices spread across all provinces in Canada, and permanent representations in 12 foreign market. As a Crown corporation wholly owned by the Government of Canada, EDC operates at arm's length from the Federal Government and funds it activities by charging fees for its services and interest on its loans, as well as issuing debt in capital markets. EDC operates according to a corporate plan that approved annually by the Federal Government. Products provided by EDC include:.
In this article we continue with our discussion on credit enhancement and risk mitigation instruments to facilitate infrastructure investments. These are predominantly public agencies and entities that provide government-backed loans, guarantees and insurance to facilitate exports from their home countries. ECAs provide cover either by means of insurance to the exporters or bankers or by means of a direct guarantee to the bank or other investors covering a loan to an overseas borrower to finance the supply of goods and services.
An export credit agency ECA is a quasi-governmental or private entity that acts as an intermediary between exporters and national governments to issue export financing, i. The agencies may also offer cover or credit on their own account. Their services do not differ from normal banking activities.
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