Exporters will have access to improved support from the New Zealand Export Credit Office under changes announced by the Government today, Finance Minister Bill English and Trade Minister Tim Groser say.
The NZECO, which is based in The Treasury, is the Government’s official export credit agency. It provides financial guarantees and trade credit insurance to exporters and banks.
The main changes announced by the ministers today will:
- Extend the maximum term of the SME loan guarantee from 12 months to 36 months; and
- Enable NZECO to issue performance guarantees directly to foreign government and public agency buyers.
“These improvements were agreed to as part of the Business Growth Agenda to support exporters in becoming more competitive,” Mr English says.
The changes have already taken effect, the ministers say.
The loan guarantee amendments will provide greater scope for NZECO to support proven exporters access contract-specific and medium-term funding facilities from participating banks, Mr Groser says.
“For example, SME exporters meeting an off-shore contract often require additional funding to cover the period from when they incur costs, to when they receive payment,” he says.
“The extension of the loan guarantee may now enable them to get additional lending from a New Zealand bank.”
“Changes to the performance guarantee will assist exporters who have foreign government buyers that seek government-to-government guarantees, rather than a bank-issued performance bond.”
NZECO has a maximum risk exposure of $740 million and the changes announced today require no extra funding. NZECO charges fees or premiums for its products so the only costs to the Crown are in the event of an unrecoverable default.
Since it was created, NZECO has underwritten more than $1.6 billion worth of exports to buyers in 62 countries.