Improving the Role of Eximbanks/ECAs in the OIC Member States
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relied on “a high level of business reciprocity from all the shareholder banks; the early introduction
of a good range of export product offerings, most with positive profit profiles; the creation of a
governing council advisory body, to permit the government to have a participatory role in the
agency’s development. None of these have been introduced nor established at the level or in the
form anticipated in the original proposals. In the absence of the above expectations, PEFG has been
unable to establish a profitable business from start of operations up to the present time.” As the
ADB notes, the current PEFG core (and only) product, (guarantees) targets solely SMEs, is by
nature high risk and expensive to implement and therefore market prices cannot recover its
cost.
In the Strategic Trade Policy Framework (STPF) 2012-15, the Government of Pakistan approved
the establishment of EXIM Bank. Subsequently the Finance Minister was pleased to announce
the establishment of EXIM bank in the Budget Speech for Financial Year 2014-15. The aim is to
reduce cost of borrowing for exporting sectors on long term basis and help reduce their risks
through export credit guarantees and insurance facilities. The Bank will provide liquidity to
exporters. Its authorized Capital will be Rs. 10 billion while the initial paid-up capital will be Rs.
6 billion. The Bank will be established as a DFI. The work is in progress and the establishment of
EXIM Bank is likely soon.
Analysis:
Pakistan is a case where there is a large market gap for ST credit insurance, which PEFG failed to
cater for due to a wrong business model. The gap is partially filled by SBP and ICIEC catering for
the needs of major textile exporters, but only a full-fledged EXIM Bank supported by the
government can do the job.
3.5.8 Turkey
Export Credit Bank of Turkey (Türk Eximbank)
Description:
Turkey adopted an export growth strategy in the early 1980s, which shifted the focus of exports
from agricultural goods to industrial goods, thereby increasing the financing needs of exporters
and putting pressure on commercial banks to provide this financing. In this context, Export
Credit Bank of Turkey (Türk Eximbank) was established in 1987 as an ECA to promote export
development by supporting foreign trade and Turkish contractors and investors abroad. The
Bank currently has a Moody’s credit ratings of Baa3.
Türk Eximbank supports Turkish exporters, contractors and investors through various credit,
guarantee and insurance programs. The Bank does not compete, but works closely with
commercial banks encouraging them to increase their support for the export sector. As well as
providing direct lending, the Bank also provides insurance and guarantees to Turkish
commercial banks to encourage them to finance export transactions backed by sales made on
deferred payment terms. In this way, Türk Eximbank channels some portion of commercial
banks’ funds into export financing. Likewise, Türk Eximbank, using credit from international
sources, such as the World Bank and EIB, lends at below market rates to SMEs with bank
guarantees.