Legal & Regulatory News

OECD members agree to EU initiative to modernise export credits

03 April 2023

On 3 April 2023, it was announced that member countries of the Organisation for Economic Cooperation and Development (OECD) agreed in principle on an EU initiative to modernise export credit rules to better support the green transition. This follows several years of negotiation.

The decision to update the Arrangement on Officially Supported Export Credits will provide streamlined terms and conditions to ensure that government-backed export finance can better meet the needs of exporters in an increasingly competitive landscape, and to create further financial incentives for a wider range of climate friendly and green transactions.

Specifically, the agreement aims to expand the scope of green and climate friendly projects eligible for longer repayment terms under the Climate Change Sector Understanding (the CCSU). These would also include projects related to (i) environmentally sustainable energy production, (ii) CO2 capture, storage, and transportation, (iii) distribution and storage of energy, (iv) clean hydrogen and ammonia, (v) low emissions manufacturing, (vi) zero and low emissions transport and (vii) clean energy minerals and ores.

The financial terms and conditions will be amended in different ways. The maximum repayment term will be increased from 18 to up to 22 years for CCSU-eligible projects, and up to 15 years for most other projects. The minimum premium rates that export credit agencies are obliged to charge for their insurance cover will be reduced for longer repayment periods. Finally, further repayment flexibilities will be introduced.

The reform is expected to come into effect later this year, once OECD members complete their formal internal decision-making processes and agree to the new text. The Participants to the Arrangement are Australia, Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland, Türkiye, the United Kingdom and the United States.

 

Click here to access a European Commission press release.

Click here to access the statement from OECD participants.