Export Credit Guarantee Department

Export Credit Guarantee

A guarantee of payment made by an export credit agency (ECA). ECAs are government or semi-government agencies that provide guarantees and insurance for exports, and occasionally for imports as well. An export credit guarantee ensures that an exporter receives payment for goods shipped overseas in the event the customer defaults, reducing the risk to the exporter's business and allowing it to keep its prices competitive. The use of export credit guarantees is controversial; critics allege that their existence negatively impacts international development, as developing countries cannot compete with such insured exports. Proponents argue that they enable developing countries to import products they otherwise would not be able to afford.

Export Credit Guarantee Department (ECGD)

the former UK government department which UNDERWRITES (insures) UK EXPORTS sold on CREDIT against nonpayment by foreign customers whether this is due to insolvency of the customer or, for example, the imposition of exchange controls by foreign governments, etc.

Until 1991 the ECGD provided both short-term and long-term export credits. Guarantees covering 90-95% of the loss of sales revenue were available for most exports sold on up to 6 months' credit, while extended cover is provided for certain exports (for example production engineering products) sold on up to 5 years' credit terms. In addition, the ECGD provides long-term cover (normally up to 15 years) for certain FOREIGN INVESTMENT projects against political risk.

In 1991 the provision of short-term export credits was taken over by a private sector concern, NCM. The ECGD itself is was transformed (2001) into a commercial concern outside immediate government control. See FACTORING.

Export Credit Guarantee Department (ECGD)

a UK government office that provides insurance cover for British exporters against the risk of nonpayment by overseas customers as a means of encouraging exports.