Analyzing the Nature of Financing by Export Credit Agencies

The international trade risks fall into two categories of commercial and political. Given that exports take place from one country to another, political risks are inevitable, including differences in domestic law, and political restrictions. Furthermore, failure to collect the export's compensation from the buyer, which sometimes pushes the exporter to the border of bankruptcy, is one of the essential commercial risks. These risks have made the need of supporting international exports inevitable. Apart from government support, credit institutions have taken significant steps in this regard. Export Credit Agencies (ECA) provide credit, guarantees, and export insurances that cover the risks facing exporters by providing credit and guarantee services, which have become a source of confidence for traders and, consequently, economic progress. Analyzing the nature of ECA contracts can help merchants to beneficially deal with these agencies while they are confident that most of their commercial and political risks are covered. What helps to reach the main description of the nature of financing by export credit agencies is their objectives and their main goals which is supporting exports, facilitating trade, covering trade risks, especially political risks, in order to support exporters to trade with more confidence and earning multilateral profits in the field of free trade. ECA in each country offer different types of contracts depending on domestic goals, which can be defined by the legal system of each country and the existing legal frameworks, representing the macro-commercial goals of the country that intends to increase its exports.