Risky Business Shining a Spotlight on Australia’s Export Credit Agency

1 Dec 2009

This report shines a spotlight on Australia’s official ‘government owned’ export credit agency— the Expor t Finance and Insurance Corporation (EFIC). It aims to generate much needed debate about the policies of EFIC and its role in supporting extractive projects in developing countries.

The report raises an array of questions about EFIC’s transparency, Policy and its responsibility to Australians and citizens of developing nations. It also probes EFIC’s use of political risk insurance (PRI) and considers the processes by which government is involved in EFIC financing decisions.

Export credit agencies (ECAs) exist to stimulate trade, making it cheaper and less risky for domestic companies to export or invest overseas, most often to markets in developing countries. Compared with official development institutions such as the World Bank, ECAs have poor transparency and weak obligations, and they have often been used to support risky and unsustainable projects. As a result, the people and environment of developing nations have often paid a heavy price for ECAbacked projects.

EFIC operates as a ‘last stop’ for Australian exporters or businesses attempting to penetrate overseas markets. It offers:

(1) medium to long-term loans and guarantees to the buyers of Australian exports; and

(2) insurance and guarantee facilities directly to Australian exporters.

EFIC has two accounts: a Commercial Account and a National Interest Account. The different accounts represent respectively, EFIC operations with minimal government involvement and EFIC operations with substantial government involvement.

Analysis of its structure and function demonstrates that EFIC is an organ of the state. It should therefore find an appropriate balance between client confidentiality and public interest.

Like other ECAs, EFIC operates in an environment of very limited transparency. Legislative and policy provisions governing the release of information by EFIC include a presumption against public disclosure.

Attached files