Monthly Issue Update: December 22, 2008
Financial crisis a boon for ECAs
While hefty public bailouts of the financial and auto industries have stimulated debate on the role of governments in commercial markets, one form of government subsidy has flown beneath the proverbial radar: export credit. Confronted by an increasingly dire financial crisis, Western governments are using their export credit agencies (ECAs) to boost liquidity and rescue faltering industries. At an extraordinary World Trade Organization meeting last month, participating governments reported a 30% increase in ECA business over the previous 12 months. The WTO called for even greater reliance on public credit to lessen the burden on commercial banks. Shortly afterwards, the OECD announced an agreement with non-members, including Russia and Brazil, to provide markets with publicly-sourced export credit.