Improving Export Credit Agency Impact Through Full Faith and Credit
Journal
Journal of World Trade
Type
journal article
Date Issued
2023
Author(s)
Andreas Klasen
;
Janus, Hans
Abstract
International trade requires sufficient, reliable, and affordable sources of financing. Export credit agencies (ECAs) fill trade finance gaps by offering financing, insurance and guarantees to provide liquidity or mitigate risks. They help to create or secure jobs in the domestic economy. However, comprehensive government support is required to create significant impact. This includes 'full faith and credit' of the state. In the context of public foreign trade promotion, full faith and credit is defined as an explicit, direct or indirect, irrevocable, legal commitment to accept all liabilities of an ECA as unconditional obligations of the respective government. Our policy recommendations for countries with relatively young ECAs, for example in Ukraine, Armenia, and Malawi, are to establish a full guarantee in addition to an efficient legal setup , sufficient capital, and sound risk management of the respective agency. Without full faith and credit, policy goals of fostering economic growth through foreign trade fall short.
Language
English
Keywords
trade promotion
trade finance
export credit
export credit agency
export-import bank
full faith and credit
government guarantee
Start page
789
End page
808
Pages
10
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Name
Klasen and Janus, Full Faith.pdf
Size
106.36 KB
Format
Adobe PDF
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