The Bank will assist only exports of goods and services containing at least 50 percent U.S. content. Under short term insurance, coverage applies to the value of the entire shipment. Under medium and long-term programs, if a U.S. export product contains foreign made components, Ex- Im Bank will cover up to 100 percent of the U.S. content provided Ex-Im Bank's support does not exceed 85 percent of the export price.
Ex-Im Bank requires a reasonable assurance of repayment for all transactions. In order to determine the likelihood of repayment, Ex-Im Bank considers the economic condition of the importing country, the size and nature of the transaction, and the individual borrower.
Under law, the Bank must deny financing for projects that cause direct injury to U.S. production and employment. Therefore, before providing any financing, Ex-Im Bank is required to assess whether its loan or guarantee is likely to have adverse impact on U.S. industry.
Medium and long-term transactions generally involve large industrial machinery and capital equipment and services. Ex-Im Bank can insure medium-term transactions and offer guarantees and loans for both medium and long-term transactions.
Although most guarantees provide comprehensive coverage of both political and commercial risks, guarantees covering only political risks also are available. Political-risk-only guarantees are often used when the overseas buyer is an affiliate or subsidiary of the exporter.
Any responsible party may apply for an Ex-Im Bank offer of financing, or preliminary commitment. Adequate information must be provided. A preliminary commitment outlines the amounts, fees, and other terms and conditions of a guarantee or loan that Ex-Im Bank is prepared to authorize for a potential export. (Note: Ex-Im Bank letters of interest are not available for the NIS.)
Ex-Im Bank has two main concerns regarding working capital guarantees: the exporter's capability to perform satisfactorily and a reasonable assurance of payment for the sale.
Ex-Im Bank has agreements with these banks whereby Ex-Im Bank notifies them upon receipt of an application and the NIS banks indicate their interest in issuing a guarantee/Irrevocable Letter of Credit (ILC) before Ex-Im Bank will process the transaction. Therefore, you may submit an application to Ex-Im Bank, but it is also important to have your buyer approach the NIS bank for a guarantee/ILC. The current designated NIS banks are listed for each republic.
Project financing and financing under the oil and gas framework agreement, neither of which require sovereign guarantees, are also available for Russia.
The contacts at VEB in Moscow are Alexander Zhitnik at +7-095- 204- 6509 and Ludmila Rybakova at 204-6384 (fax +7-095-975-2069). Ex-Im Bank's contacts at VTB in Moscow are Ms. Tatjana Pavlova at +7-095- 928-46-38, Mr. Vladimir Litvinenko at 204-68-40 and Mr. Andrei Shipilov at 204-65-52. VTB's fax numbers are +7-095-973-20-96 or 975-21-07. VEB and VTB have a joint New York representative office headed by Mr. Oleg Enoukov (telephone 212-421-8660, fax 212-421-8677).
Ex-Im Bank is willing to consider Russian commercial bank risk on an exceptional case-by-case basis. Ex-Im Bank currently has a $15 million credit guarantee facility for medium-term financing for Tokobank by Bank of New York. The contact at Bank of New York is Ms. Natasha Gurfinkel at 212-635-8130.
Ex-Im Bank has a special program under its Oil and Gas Framework Agreement with the Ministry of Fuel and Energy and other government agencies to support financing of U.S. exports to assist in rehabilitating the Russian energy sector. The financing, made available to Russian oil production associations or refineries, would be secured by the assignment of hard currency earnings from oil or other related product exports. Applications require prior approval by the Ministry of Fuel and energy. Additional information regarding this program is available upon request.
In addition, Ex-Im Bank has signed a Memorandum of Understanding (MOU) with Gazprom that will enable Ex-Im Bank to support a potential $750 million in U.S. equipment and services to Gazprom for the rehabilitation of Russia's natural gas sector. When finalized, the framework agreement will provide Ex-Im Bank with repayment security for individual transactions from the proceeds of hard currency export sales by Gazprom. Additional information is available upon request. The contact at Gazprom is Dmitry Ermolov at +7-095-163-1184, or fax at +7-095- 164-4645.
For additional information on Ex-Im Bank's programs in the Newly Independent States, contact Ex-Im Bank at 1-800-565-EXIM, or through it's automated fax information service " Faxback": 1-800-565-EXIM, Select 1, Select 2.
| Regional Offices | Telephone | Fax |
|---|---|---|
| New York | 212-466-2950 | 212-466-2959 |
| Miami | 305-526-7425 | 305-526-7435 |
| Chicago | 312-353-8081 | 312-353-8098 |
| Houston | 713-589-8182 | 713-589-8184 |
| Los Angeles | 310-322-1152 | 310-322-2041 |
| COUNTRY | SHORT-TERM INSURANCE |
MEDIUM-TERM INSURANCE |
MEDIUM-TERM LOANS AND GUARANTEES |
LONG-TERM LOANS AND GUARANTEES |
|---|---|---|---|---|
| ARMENIA | NOT OPEN | NOT OPEN | NOT OPEN | NOT OPEN |
| AZERBAIJAN | NOT OPEN | NOT OPEN | NOT OPEN | NOT OPEN |
| BELARUS | NOT OPEN | NOT OPEN | NOT OPEN | NOT OPEN |
| GEORGIA | NOT OPEN | NOT OPEN | NOT OPEN | NOT OPEN |
| KAZAKHSTAN | OPEN * | OPEN * | OPEN * | OPEN * |
| KYRGYZSTAN | NOT OPEN | NOT OPEN | NOT OPEN | NOT OPEN |
| MOLDOVA | NOT OPEN | NOT OPEN | NOT OPEN | NOT OPEN |
| MOLDOVA | OPEN * | OPEN * | OPEN * | NOT OPEN |
| TAJIKISTAN | NOT OPEN | NOT OPEN | NOT OPEN | NOT OPEN |
| TURKMENISTAN | OPEN * | OPEN * | OPEN * | NOT OPEN |
| UKRAINE | OPEN * | OPEN * | OPEN * | NOT OPEN |
| UZBEKISTAN | OPEN * | OPEN * | OPEN * | NOT OPEN |
During the past several months, over 400 companies have registered with OPIC for insurance covering proposed investment projects in the NIS. OPIC has also organized a number of missions and conferences to promote investment in the NIS, including recent investment missions to Ukraine, Central Asia, and Siberia.
The Clinton Administration has granted OPIC with $1 billion of authority over the next year for project finance in the NIS. OPIC's direct loans, reserved for overseas investment projects, primarily involve small and medium-sized companies, and typically range from $2 to $10 million. OPIC will participate in up to 50 percent of the total project cost for a new venture, and up to 75 percent of the total cost of an expansion. The U.S. company must cover at least 25% equity in the project, or 10% of the total project cost.
OPIC is also involved in various privately managed investment funds. Additional information on the following funds can be found in section IV:
Coverage is available for new investments and for expansion and modernization of existing plant and equipment. There is no longer a cap for insurance projects in the NIS. In order to be eligible for insurance, an investor must apply for and receive an OPIC Registration Letter before the investment is made or irrevocably committed. Packages including all three coverages are available to small and medium-sized investors at reduced rates.
For more information about OPIC programs, please call:
Nicola Bradley, Investor Services Officer, NIS
Overseas Private Investment Corporation
1100 New York Ave., NW
Washington, DC 20527-0001
Tel: 202-336-8618General: 1-800-424-OPIC
OPIC InfoLine: 202-336-8799
OPIC FactsLine: 202-336-8700
TDA provides funding, in the form of non-reimbursable grants, for studies that determine the technical, economic, and financial feasibility of major projects and provide detailed data for making decisions on how to proceed with project implementation. TDA considers funding feasibility studies for both public and private sector projects, including joint ventures in which U.S. companies plan to take equity.
Potential projects may come to TDA's attention in one of several ways. A foreign government or private sector entity may approach TDA directly with a potential project. TDA may also be alerted to a project by a U.S. Embassy or Consulate, by a U.S. firm, or by an international lending institution, such as the World Bank.
Ultimately, however, an official request for TDA assistance must be made directly to TDA, or through the U.S. Embassy or Consulate, by the appropriate host country sponsoring organization (government or private sector). While no formal application form is required, a description of the proposed project and the required study should accompany the official letter of request to facilitate the TDA review process. At this stage, TDA conducts a preliminary internal review of the proposal to see whether it meets TDA criteria.
On selected projects, TDA then dispatches technical specialists on a short-term mission (Definitional Mission or DM) to visit the host country, gather additional information on the project, work with local authorities to develop a scope of work and budget for an appropriate feasibility study, and make a recommendation to TDA concerning the funding of the study. On some projects, there is already sufficient information available to allow TDA to hire a technical specialist to perform a quick review of the project without leaving the United States. This "Desk Study" substitutes for the DM. U.S. consultants interested in competing for TDA DM contracts are encouraged to keep abreast of activities currently open for bid by calling the TDA DM Line at 703-875-7447.
The DM or Desk Study ascertains whether a given project meets TDA's general funding criteria. All projects must represent a development priority for the host country; financing for the project should be identified; TDA must play a facilitating role; and potential for U.S. exports during project implementation should be significant. ( In the NIS, TDA will only consider projects with potential U.S. exports of at least $10-15 million.)
If TDA decides to provide funding for a feasibility study, it signs a grant agreement with the relevant host country entity (the grantee). After signature of the grant agreement, the grantee selects the U.S. firm to carry out the study or consultancy. Often this is done through a formal competitive selection process. Typically, this entails publication of a Request for Proposals for the study in Commerce Business Daily (CBD). Those U.S. companies interested in bidding on feasibility studies are encouraged to subscribe to CBD by calling the U.S. Government Printing Office Superintendent of Documents at 202-783-3238. Announcement in the CBD is followed by submission of qualifications to the grantee by interested U.S. firms; short listing by the grantee; submission of proposals by short-listed firms; and selection of the top-rated firm, which then negotiates a contract with the grantee.
It should be kept in mind that while the grant agreement is signed by TDA and the grantee, no funds are actually transferred to the grantee. Instead, the U.S. contractor submits its invoices to the grantee, who then approves them and forwards them to TDA.
Because of the great demand for TDA funds in this region, in many cases TDA only partially covers the cost of the feasibility study. The remainder of the cost must be borne by the U.S. company carrying out the study.
As of May 1, 1995, TDA may require a "success fee" from the U.S. company involved in the study. As part of an effort to recover costs, TDA will seek a reimbursement from the feasibility study grant from U.S. firms in situations where the project is implemented and the U.S. firm involved obtains significant economic benefit related to the project for which the study was funded.
The new policy will be applied in a way that assures TDA's mission - to help "level the playing field" for U.S. exporters - is not undermined. For the most part, a success fee will be required in private sector investor projects, co-production arrangements, and other appropriate situations in which TDA already requires cost-sharing.
Where appropriate, TDA may also provide funding for technical seminars, conferences, and orientation visits to the United States.
For additional information on TDA programs, contact Daniel Stein, Regional Director, Alison Koff, Country Manager, or Tanya Shamson, Country Manager (Tel: 703-875-4357; Fax: 703-875-4009).
Export Credit Guarantees: Since January 1991, the USDA Commodity Credit Corporation has guaranteed over $5 billion in private U.S. bank loans to the NIS under the USDA's export credit guarantee program (GSM-102). These credit guarantees have helped facilitate purchases of over 33 million metric tons of U.S. agricultural commodities, including corn, wheat, wheat flour, protein meals, soybeans, vegetable oil, poultry, tallow rice, almonds, and hops.
In fiscal 1992, Russia received almost $650 million in credit guarantees. In fiscal 1993, USDA announced $800 million in credit guarantees to Russia. However, the GSM-102 program to Russia was suspended when Russia began defaulting on payments in November 1992. This situation left approximately $385 million of these guarantees unused. The U.S. Government and Russia signed a bilateral debt rescheduling agreement on September 30, 1993 that could lead to a reinstatement of the program.
Although the GSM-102 program has been suspended for Russia, USDA has stepped up efforts to extend the program to the other NIS states. In fiscal 1993, USDA provided $90 million worth of credit guarantees for feed grain to Ukraine and $15 million for wheat purchases by Uzbekistan. USDA is currently reviewing most of the NIS countries for the fiscal 1994 GSM -102 credit guarantee program. A $5 million program for Turkmenistan for fiscal 1994 was announced on October 13, 1993, during FY94 it was raised to $10 million..
For more information on the GSM-102 export credit guarantee program for the NIS, contact Jim Higgiston, Foreign Agricultural Service, at 202-720- 5319.
Export Subsidies: As it became clear that the credit guarantee program was either inappropriate for many NIS countries or incapable of meeting their full needs, USDA found other ways to maintain exports to these markets. USDA has adapted its export subsidy programs to accommodate compensatory forms of trade -- barter, counter trade, offset arrangements, and escrow accounts. These arrangements typically involve a party in a third country that purchases goods exported from the NIS. The resources to finance the trade are in the third country, not in the NIS country.
Since September 1992, U.S. exporters have sold 1.6 million metric tons of wheat to the NIS through third country buyers. This is equal to nearly 20 percent of all U.S. wheat exports to the former Soviet Union in fiscal 1992. Exporters have also sold 20,000 metric tons of barley, 80 tons of barley malt, 112 tons of butter, and 37 tons of milk powder to the NIS through third country buyers.
For more information on these alternative export arrangements, contact Larry McElvain, Foreign Agricultural Service, at 202-720-6211.
Food Aid: The food aid programs in fiscal 1993 for the NIS involved 11 of the former republics and provided over 7 million metric tons of agricultural commodities with a commodity value of $1.5 billion. The largest USDA food aid component to date was a $700 million package signed with Russia in June 1993 under the USDA's Food for Progress Program. This package, made up mostly of medium-term concessional credit sales, included exports of corn, soybean meal, butter, wheat, high-value products, and sugar.
Once a food aid shipment is finalized, the USDA's Agricultural Stabilization and Conservation Service issues tender documents for bidding to approved U.S. agricultural suppliers. The USDA purchases the goods directly from the U.S. suppliers and handles all shipping arrangements. Interested U.S. agricultural suppliers should request that the USDA's Kansas City Commodity Office include their name on the mailing list to receive purchase announcements and invitations to bid. Requests should be addressed to:
Director, Kansas City Commodity OfficeFor more information on the U.S. Government's food aid effort for the NIS, contact Charles T. Delaplane, Foreign Agricultural Service, at 202-720- 3573.
P.O. Box 419205
Kansas City, MO 64141-6205
The SBA defines a small business as an independently owned and operated for-profit business that does not dominate the market in which it exists. To obtain SBA financing, the applicant must first seek a loan from a bank or other lending institution. If the lender is unable or unwilling to provide the financing directly, the lender should be encouraged to contact the nearest SBA field office.
To be eligible, the applicant's business generally must be operated for profit and fall within size standards set by SBA. Export trading companies and export management companies also may qualify for the SBA's business loan guarantee program. Ineligible borrowers include businesses engaged in speculation or investment in rental real estate.
Guarantees can be extended for pre-shipment working capital, post- shipment exposure, or a combination of the two. A pre-shipment guarantee is used to finance the production or acquisition of goods and services for export. A post-shipment guaranty is used to finance receivables resulting from export sales.
Under EWCP, the maximum interest rates are negotiable between the applicant and the lender.
Under this program, SBA's guarantee can extend up to $1.25 million. SBA's maximum share for facilities and equipment is $1 million; the maximum share for working capital is $750,000. Loan maturities cannot exceed 25 years, excluding the working capital portion of the loan.
Proceeds may be used to purchase or upgrade facilities or equipment, and to make other improvements that will be used within the United States to produce goods or services.
No debt payment is allowed. Proceeds can be used to buy land and building; build new facilities; renovate, improve or expand existing facilities; and purchase or recondition machinery, equipment and fixture. The working capital portion of the borrowing could be in the form of either and EWCP loan or a portion of the term loan.
Applicants must establish either of the following to meet eligibility requirements: Loan proceeds will significantly expand existing export markets or develop new ones, or; The applicant's business is adversely affected by import competition.
SBA has offices located throughout the country. For the nearest SBA office, call 1-800-8-ASK-SBA.