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Export credit guarantee is a system that protects
exporters of national commodities and services from
risks of non-payment by providing them with compensation
for losses incurred as a result of the occurrence of
these risks.
The Exporter, through his frequentation of foreign
markets, is exposed to a number of risks that result in
non- payment for his exports through no fault of his
own. Such risks may be commercial or non - commercial.
The term "Commercial Risks" refers to risks attributable
to the buyer such as his refusal to receive the goods,
his refusal or inability to pay for the goods after
receipt, his bankruptcy, insolvency, or even his
procrastination in paying his dues.
The term "Non - Commercial Risks" refers to risks that
are not attributable to either the Explorer or Buyer.
These risks result from procedures undertaken by the
authorities in the Buyer's country which may prevent the
Exporter from obtaining his dues from the buyer, or may
lead to losses that he cannot charge the buyer with.
Examples of these risks include the cancellation of the
import license after shipment of the goods, refusal to
allow the goods into the state, interdiction for the
goods to cross a territory, confiscation of the goods or
their seizure, or the issuance of a decision, decree, or
regulation that prohibits or delays payments on external
debts. Other examples include the sequestration of the
buyer's establishment, the prohibition of the buyer's
country's authorities to transfer the exporter's due,
the imposition of a of a preferential exchange rate
against the Exporter's interests, or the emergence of a
state of war that may result in non - payment to the
Exporter.
Recognizing the importance of guarantees as an incentive
for the development of exports, countries seeking to
promote their exports have adopted national programs
that provide credit guarantees for export operations.
Such programs have become popular in both industrialized
and non - industrialized countries.
In Egypt, the government endorsed the "National program
for Guarantee" by issuing law no. 21 of the year 1992,
thereby establishing the Export Credit Guarantee Company
of Egypt and entrusting it with the task of managing the
Egyptian Program for Export Credit Guarantees.
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The goal of the program was defined as "the
encouragement and development of Egyptian exports
and the cooperation in promoting the agricultural,
industrial, commercial, and service exports
sectors".
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The program was designed to achieve the following:
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Provide guarantees on export operations dealing
in national commodities and services against
commercial risks through insurance policies
issued by the company and payable to banks and
other financing sources.
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Provide reinsurance on all policies issued by
the company by means of agreements concluded by
it in the national or international markets for
insurance and guarantees.
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Have the company assume the role of reinsurer by
having it accept to reinsure operations carried
out by parties having similar activities.
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Participate in or contribute to national or
foreign organizations, establishments, and
companies engaged in activities that are
similar, complementary or related to the
company's, or the aim at the realization of the
company's goals
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