In the case of poor countries, where it seems probable the buyer has a lower administrative capacity, GIEK is particularly careful to ensure that the transaction will benefit development.
GIEK follows the OECD principles of sustainable lending. Briefly, this means that GIEK will not guarantee commercial loans in respect of projects which are contrary to the economic and social strategy of the recipient country. GIEK will also ensure that the case is not in conflict with the country’s obligations to the IMF/World Bank. This policy applies to about 60 countries and covers transactions with public buyers and state owned companies and transactions with a government guarantee.
Background
Thanks to the HIPC programme, and with the assistance of creditor countries, IMF and the World Bank, a number of countries have been released from a great deal of their debt. Since the programme started in 1996, 18 countries have completed the process and had their debts reduced. Reduction in debt and improving economic cycles and raw materials prices have brought markedly improved credit worthiness to many developing countries. As a follow up to the programme, the OECD’s export credit group has devised guidelines for the assessment of new credits to countries which are thought to have a limited capacity to take up new loans. Applying these principles will ensure that government guaranteed export credits are not used for unproductive purposes, that the project is endorsed in the country’s development plans and that the IMF and World Bank’s recommended limits for loans on commercial terms are respected. Non-OECD countries are invited to follow the same principles.
More information
For more information regarding sustainable lending, please contact:
Mr Johan Mowinckel
Tel. +47 22 87 62 51
E-mail: johan.mowinckel@giek.no
