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System of Export Support in the Russian Federation

This article provides detailed insights into the Russian Export Credit System (RECS), covering legal provisions, support instruments, involved institutions, and development status. It explains state guarantees, insurance, export credits, and interest rate support. Key institutions like the Ministry of Finance and Vnesheconombank are highlighted. The resolution details eligibility requirements, conditions, and coverage percentages, offering a comprehensive guide for exporters.

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System of Export Support in the Russian Federation

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  1. System of Export Support in the Russian Federation

  2. Key issues covered 1.General provisions of Russian export credit system (hereinafter RECS) • Legal Basis 2. Instruments of official support to industrial exports inRussia • Schemes of official support • Decision making principles 3. Institutions, involved in providing export credits support 4. Further Developments • Development of RECS – state of play

  3. RECS – Legal Basis

  4. Concept of development of official financial export support of industrial goods basically defines possible instruments of providing official support to industrial exports in Russia: 1. State guarantees 2. State insurance 3. Export Credits 4. Support of interest rates ORDER OF THE GOVERNMENT No. 1493-R as of 14 OCTOBER 2003

  5. RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008 State guarantees (issued by the Ministry of Finance of the Russian Federation) Scheme No.1 b) a) Ministry of Finance guarantee guarantee Russian bank (including Russian bank with foreign capital) Exporter Exporter credit Foreign bank Importer Foreign State

  6. RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008 State guarantees (issued by the Ministry of Finance of the Russian Federation) Scheme No. 2 guarantee Ministry of Finance Bank Russian Eximbank credit credit Foreign bank Exporter Importer Foreign State

  7. State guarantees (issued by the Ministry of Finance of the Russian Federation) Scheme No.3 RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008 Ministry of Finance obligations guarantee performance bonds, bid bonds, etc. Russian Eximbank obligations Exporter Importer

  8. State guarantees (issued by the Ministry of Finance of the Russian Federation) Requirements for application for State guarantee (part 1): RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008 No.1Counter-guarantee issued by the importer’s State is obligatory. Except if Russian bank provides credit to : a) the foreign state (sovereign buyer) b) the buyer, which has sovereign rating or better c) the central bank of the importer’s state d) the buyer, which has investment rating, and resident of a State with investment rating e) the Russian exporter

  9. State guarantees (issued by the Ministry of Finance of the Russian Federation) Requirements (part 2): RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008 No.2 Importer’s country has to be in the list of eligiblecountries No.3 Exporting goods have to be in the list of eligible industrial goods No.4 Export contract needs to be approved by the Russian Eximbank

  10. State guarantees (issued by the Ministry of Finance of the Russian Federation) Conditions: RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008 • Coverage: • 95% of exposure (Category I countries) • 90% of exposure (Category II countries) • 85% of exposure (Category III countries) • Terms: • from 5 to 20 year depending on the type of goods

  11. Insurances (issued by Vnesheconombank according to legal basis but not practically provided) RESOLUTION OF THE GOVERNMENT No. 100 as of 19 February, 2008 not covered by budget funds • Maximum coverage: • 95% for commercial risks • 100% for political risks • Conditions: • export credits eligible are to be from 2 to 15 years Vnesheconombank Exporter or Russian Bank

  12. Intergovernmental export credits (provided by the Government of the Russian Federation) Framework of providing State export credits Application of a foreign State Decision making: 1. Requirement – lack of overdue debts to Russia as of 2003 year and later 2. Creditworthiness assessment (includes but not limited to OECD criteria) Ministry of Foreign Affairs Ministry of Finance Ministry for Economic Development Russian Government Agreement between Russian Government and Foreign Government

  13. Framework of providing State export credits Intergovernmental export credits Conditions Subject to the agreement between Governments on a case by case status

  14. RESOLUTION OF THE GOVERNMENT No. 357 as of 6 June, 2008 Support of interest rate (provided by the Ministry of Industry and Trade of the Russian Federation) • Conditions: • in Russian Rubles - maximum level of compensation equals to 2/3 of the refinancing rate of the Central bank • in foreign currency – maximum level of compensation equals to 8% per annum for the credit taken by the Russian exporter • Requirements: • compensation available only for Russian exporters • exporting goods have to be in the list of eligible industrial goods

  15. Institutions involved in providing export support 1. Ministry of Finance 2. Ministry of Industry and Trade 3. Ministry of Economic Development 3. Vnesheconombank 4. Russian Eximbank Key institutions

  16. Vnesheconombank Established in 2007 100% state-owned Authorized capital - 11 bln. USD Key institutions

  17. Vnesheconombank Operates intergovernmental export credits Key institutions Provides export credits: 533 mln. USD in 2009 Provides export guarantees: 1 bln. USD in 2009 In charge of providing export insurance: not applied Budget funds are not involved

  18. Russian Eximbank Established in 1994 Affiliated body of Vnesheconombank Authorized capital - 32 mln. USD Key institutions

  19. Russian Eximbank Key institutions State agent for providing state guarantees (covered by budget funds): 282 mln. USD in 2009 Provides export credits: 100 mln.USD in 2009 Sources: 1.Own resources and borrowings 2. syndicated credit of Westdeutsche Landes Bank, covered by State guarantee of the Russian Federation 3. World Bank’s loan issued to the Russian Eximbank by the Ministry of Finance

  20. Russian Eximbank Main activities in 2009 Key institutions Guarantees: Credits State agent for Issuing 50 mln. USD state guarantee for the export credit of Vnesheconombank to Cuban Company “AviaImport C.A.”. Support of supply of 1 Russian aircraft (TU-204) State agent for Issuing 50 mln. USD export credit for Belorussian bank JSC “BPS-Bank”. Support of supply of Russian machinery in energy complex.

  21. Further Developments Development of RECS – state of play Establishment of Russian Export Credit & Investment Insurance Agency

  22. Further Developments - ECIA Establishment of Russian Export Credit & Investment Insurance Agency (hereinafter ECIA) Established in the form of a joint stock company 100% owned by Vnesheconombank Authorized capital - 1 bln. USD

  23. Further Developments - ECIA Legal basis Foreign Economic Strategy of the Russian Federation until 2020 ECIA one of the priority tasks Plan on realization of Economic Strategy of the Russian Federation until 2020 Vnesheconombank’s Supervisory Board Decision of 28 July 2010

  24. Further Developments - ECIA Legislative process - state of play Bill No 521918-5 “On introduction of changes to certain legal acts to improve commercial & political risks insurance mechanism” Approved by the Government of the Russian Federation Submitted to State Duma

  25. Further Developments - ECIA Functioning of the ECIA Key principles of providing insurances Types of insurances: STexport credit insurance against political risks MLTinsurance against commercial and political risks INVagainst political risks based on international best practicies of foreign ECA 2. Coverage of the Agency’s obligations Vnesheconombank’s guarantees Budget investments State guarantees

  26. Further Developments - ECIA Functioning of the ECIA Planning conditions of providing insurances • Maximum coverage: • 95% for commercial risks • 100% for political risks • Minimum insurance rate: • will be fixed according to OECD countries risk categories

  27. Thank you For your attention!

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