System of Export Support in the Russian Federation

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

RECS – Legal Basis

ORDER OF THE GOVERNMENT No R as of 14 OCTOBER 2003 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

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 Ministry of Finance Exporter Russian bank (including Russian bank with foreign capital) Exporter Foreign bank Foreign StateImporter a) b) guarantee credit

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 Ministry of Finance Bank Exporter Foreign bank Foreign StateImporter Russian Eximbank guarantee credit

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.3 Ministry of Finance Exporter Russian Eximbank performance bonds, bid bonds, etc. obligations Importer obligations guarantee

RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008 State guarantees (issued by the Ministry of Finance of the Russian Federation) Requirements for application for State guarantee (part 1): No.1 Counter-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

RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008 State guarantees (issued by the Ministry of Finance of the Russian Federation) Requirements (part 2): No.2 Importer’s country has to be in the list of eligible countries 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

RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008 State guarantees (issued by the Ministry of Finance of the Russian Federation) Conditions: 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

RESOLUTION OF THE GOVERNMENT No. 100 as of 19 February, 2008 Insurances (issued by Vnesheconombank according to legal basis but not practically provided) Vnesheconombank Exporter or Russian Bank 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

Framework of providing State export credits Intergovernmental export credits (provided by the Government of the Russian Federation) Ministry of Foreign Affairs Ministry of Finance Ministry for Economic Development 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) Application of a foreign State Russian Government Agreement between Russian Government and Foreign Government

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

RESOLUTION OF THE GOVERNMENT No. 357 as of 6 June, 2008 Requirements: compensation available only for Russian exporters exporting goods have to be in the list of eligible industrial goods 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

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

Key institutions Vnesheconombank Operates intergovernmental export credits 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

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

Key institutions Russian Eximbank 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

Key institutions Russian Eximbank Main activities in 2009 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) Guarantees:Credits State agent for Issuing 50 mln. USD export credit for Belorussian bank JSC “BPS-Bank”. Support of supply of Russian machinery in energy complex.

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

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

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

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

Further Developments - ECIA Functioning of the ECIA Key principles of providing insurances 1.Types of insurances: ST export credit insurance against political risks MLT insurance against commercial and political risks INV against political risks based on international best practicies of foreign ECA 2. Coverage of the Agency’s obligations Vnesheconombank’s guarantees Budget investments State guarantees

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

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