e x p o r t c r e d i t g u a r a n t e e s a n n u a l r e p o r t 2 0 1 8
19.8 billion Goods and services worth 19.8 billion euros backed by export credit guarantees. Bring your project to … Bring your project to … MENA. Innovative event with a made-to-measure consulting approach. Positive result Positive result for export credit guarantees for the 20th consecutive time. Accrued surplus for the Federal budget: 5.7 billion euros. 86.5 billion The Federal Government’s maximum exposure under all active cover as of the end of 2018: 86.5 billion euros. 153 countries The Federal Government provided Hermes Cover for exports to 153 countries in 2018. MyAGA Exporters are increasingly using the digital application procedure.
Further development Further development of foreign trade promotion. More than 300 participants at the dialogue event in Berlin. 79% The share of small and mid-size companies remains at a high level. . R A I X E h t i w d e n g i s t n e m e e r g a k r o w e m a r F e c n a r u s n i e R 6,500 More than 6,500 consultations held across Germany. 74.3% Cover for emerging economies and developing countries accounted for 74.3% of the total. click&cover Hermes Cover click&cover: swift and simple digital cover for standardised transactions and ﬁnance. 1.3 billion Applications worth 1.3 billion euros were received for untied loan guarantees in 2018. 11 raw materials in 16 countries Over the last ﬁve years, the Federal Government has con- ﬁrmed the eligibility of raw material projects in 16 countries for 11 different raw materials in the light of raw materials supply considerations. Copper the main driver Rising market prices are driving the global develop- ment of numerous copper deposits. 3.9 billion The Federal Government’s exposure under aggregate outstanding guarantees came to 3.9 billion euros as of the end of 2018.
Dear sir or madam, German foreign trade remains on a growth trajectory but is no longer expanding as dynamically as it was in earlier years. Although “Made in Germany” is still in demand around the world, German exporters and export-ﬁnancing banks face major challenges. The global economy is not growing as swiftly and worldwide risks are mounting. In such an environment, the export credit guarantees of the Federal Government play a special role. They protect German companies from politically and economically induced payment defaults, thus allowing them to engage in export business even under adverse conditions and helping to secure wealth and growth in difﬁcult times. Last year, the Federal Government issued export credit guarantees worth 19.8 billion euros. In addition to numerous transactions by small and mid-size enterprises, the Federal Government also provided cover for a number of signiﬁcant big-ticket projects. Three quarters of the deliveries and services covered were destined for the emerging economies and developing countries. Performance is particularly encouraging in Africa, where cover rose by a good two thirds to 1.8 billion euros. This growth was also underpinned by the expanded cover for selected African countries adopted by the Federal Government in 2018. Last year, we continued to enhance export credit guarantees decisively in partnership with the business community, launching the ﬁrst digital-only products. With the introduction of special “small-ticket” cover products for exporters and banks, the Federal Government has additionally made crucial progress in implementing the plans enshrined in the coalition agreement for facilitating ﬁnance for small-scale transactions. This is an important step towards strengthening German small and mid-size enterprises. The international ﬁnance sector is exposed to ongoing and dynamic change. Modern national and international frameworks for export ﬁnance are necessary to ensure fair competition among export nations. Accordingly, the success of the German export sector hinges crucially on the targeted further development of international rules and the integration of all competitors in this system. The Federal Government is therefore emphatically in favour of a fundamental revision of the OECD rules and regula- tions and is committed to the success of the International Working Group on Export Credits. The following pages provide an overview of developments and trends in the export credit guarantee scheme and its business performance in 2018.
export credit guarantees of the federal republic of germany at a glance in million eur Statutory cover limit Cover applications (volume) * 160,000 29,115 153,000 35,144 Small and medium-sized enterprises (share of exporters supported with guarantees in %) ** 79.4 79.0 New business Covered export volume 16,862.4 19,795.6 of which for emerging economies and developing countries *** industrialised countries *** 12,697.4 4,165.0 14,717.7 5,078.0 Covered exports for EU countries 1,575.5 2,239.3 Covered exports in % of total exports 1.3 1.5 Results Revenues from Premiums and fees Recoveries from political claims from commercial claims Other income (exchange rate gains/losses) Expenses for Claims paid for political claims for commercial claims Management fee 346.9 308.8 203.2 105.6 0.3 429.3 30.9 398.4 85.1 586.1 397.4 267.2 130.2 -0.5 728.0 318.1 409.9 88.7 Annual result . . Accrued result (since 1951) Amounts subrogated to the Federal Government 5,543.4 3,863.1 5,709.7 4,048.2 * Including buyer credits ** Firms with up to 500 employees *** Classification of countries see p. 78
The tasks of the Interministerial 8 Committee The Interministerial Committee 26 in contact with stakeholders 10 Developments and trends 28 Sharing information with the German 12 Business overview – 2018 at a glance 14 Composition and tasks of the Interministerial Committee 16 Country cover policy 18 Risk management 20 New developments in the export credit guarantee scheme 20 Export credit guarantees go digital 20 Digital application form 21 3 x 5 = click&cover 22 Digital supplier credit cover 23 Digital buyer credit cover 24 Successful APG reform: wholeturnover policies on a growth track 25 Finance: ECA-speciﬁc credit agreement facilitating contract drafting 25 Further training expanded export industry 28 Dialogue event in Berlin: The digital transformation of the economy and its effects on export ﬁnancing 31 Three questions for … 32 Advisory service: competent partners never far away 33 Bring your project to … MENA 35 Interview with 37 International collaboration 37 International Working Group 37 Further development of international OECD rules 38 Consultations 39 Framework reinsurance agreement concluded with EXIAR of Russia 40 Export credit guarantees and responsibility 41 Business and human rights 41 Antibribery measures 42 Recommendation on bribery 43 A short digression: Investment guarantees – an important element of risk management for foreign projects
44 Business performance 70 Untied loan guarantees 46 New business 72 The year at a glance 47 Number and volume of applications 47 Offers of cover 48 Cover by horizon of risk and type of cover 50 Cover by country group 74 Project example 50 Emerging economies and developing countries 76 Annex – export credit guarantees 54 Industrialised countries 55 Renewable energies 55 Cover by industrial sector 57 Transport and infrastructure 58 Military goods 59 Environmental, social and human rights assessment of projects 60 Claims, recoveries and rescheduling 62 Results 64 Statutory cover limit and total commitment level 65 Outstanding risk 66 Unrecovered amounts under claims paid 68 Tables 76 Imprint 77 Design of the cover 77 Photograph credits 78 Classiﬁcation of countries Deﬁnitions and explanations on the inside of the cover ﬂap Cover This year’s cover was designed by Leon Luca Körösi, a student at the FSG Freie Schule für Gestaltung. Further details on the project can be found in the appendix on page 77.
19.8 billion 79% Goods and services worth 19.8 billion euros backed by export credit guarantees. The share of small and mid-size companies remains at a high level.
the tasks of the interministerial committee The Interministerial Committee (IMC) for Export Credit Guarantees 9 is the central decision-making body for the provision of export credit cover by the Federal Government. It also decides on cover policy for the individual countries. In 2018, the IMC deliberated on 164 transactions in twelve meetings. In addition, it enhanced the export credit products in key areas in partnership with the German export and ﬁnancial services sectors. click&cover MyAGA Hermes Cover click&cover: swift and simple digital cover for standardised transactions and ﬁnance. Exporters are increasingly using the digital application procedure.
10 developments and trends The partial rejection of multilateralism and protec- tionist tendencies in leading export and investment markets are posing major challenges for Germany as an export nation. At the same time, the digitalisa- tion of products, processes and business models is advancing. Government export ﬁnance instruments are not im- mune to the effects of these profound changes. For- eign trade and export ﬁnance are undergoing change. This can be seen in the following developments for example: @ An increasingly large proportion of global foreign trade ﬁnance is now being handled outside the OECD framework. @ The level playing ﬁeld in government export ﬁnance is coming under considerable pressure. Systematic political support and comprehensive offers of ﬁ - nance, especially from Asian competitors, are caus- ing an international imbalance. Public-sector banks from Asia offering non-standard funding conditions are increasingly acting as ﬁnanciers, especially for major infrastructure projects. @ Emerging economies and developing countries are attaching increasing importance to local manufac- turing input and making it a prerequisite for placing an order. @ Digitalised value chains, automation and platform solutions are becoming increasingly prevalent. This has implications for the international division of labour. Digitalisation is increasingly detaching pro- duction from speciﬁc locations. @ Exports, as we have known them for decades, are changing. Instead of physical transportation of goods and conventional sales contracts, exports of data or programming services as well as pay-per-use mod- els are becoming more and more common. Government export promotion schemes and interna- tional export ﬁnance rules must take this development into account in order to ensure fair competition among export nations. Buenos Aires is always susceptible to major ﬂooding. This is why the “Segundo Emisario del Arroyo Vega” project was launched to execute the construction of a drainage system and ﬂood risk management for the city. Among other things, the construction of a rainwater main collector with a total length of 8.5 km leading to the Rio de la Plata aims to ease the situation. Herrenknecht AG supplied two tunnel boring machines to Argentina for the project, utilising export credit guarantees issued by the Federal Government.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex What are export credit guarantees? 11 State export credit guarantees are an established instrument for promoting foreign trade. They protect exporters and banks from losses caused by economic and political factors. The range of products available address the entire value chain from production and delivery to payment of the final instalment. Export credit guarantees transfer a large part of the risk of a payment default to the Federal Republic of Germany. In return for this, the policyholder pays a premium calculated on the basis of the risk involved. In the event of a loss, the Federal Government indemnifies the policyholder for the amount covered. In addition to risk management, export credit guarantees play a key role in finance. In many cases, Hermes Cover is a prerequisite for bank finance. As a matter of principle, all export compa nies domiciled in Germany and all banks that finance German exports are eligible to apply for the Federal Government’s export credit guarantees regardless of their size or the type of transaction. The key criteria for the provision of cover include eligibili ty for support and the viability of the risks arising from the transaction.
business overview – 2018 at a glance 12 Mounting political and economic uncertainties in key export markets prompted an increase in interest in the Federal Government’s export credit guarantees last year. Cover rose by 17.4% over the previous year to 19.8 billion euros in 2018 (2017: 16.9 billion euros). The heightened demand for export credit guarantees related to single transaction policies as well as cov- er under wholeturnover policies and revolving cover (spread policies). Cover provided under single trans- action policies rose from 8.7 billion euros to 11.1 bil- lion euros. One major reason for the increase in this segment was the provision of cover for a number of big-ticket projects, including two cruise ships, a petro- chemical complex and the construction of an automo- tive plant. Cover under spread policies climbed from 8.2 billion euros to 8.7 billion euros. On a particularly gratifying note, cover for goods and services to Africa grew substantially, increasing by a good two thirds from 1.1 billion euros to 1.8 bil- lion euros. This growth was also underpinned by the The Dutch company Novatug ordered two CARROUSEL RAVE TUG units from Van der Velden Barkemeyer GmbH, a German subsidiary of the Dutch Damen Shipyards group. The also Hamburg-based shipyard Theodor Buschmann GmbH & Co. KG built the steel hull, while Voith GmbH & Co KGaA supplied the propellers. The ﬁnal outﬁtting was carried out at the Damen Maaskant shipyard in the Netherlands. ING Bank in Frankfurt is the lender. The Federal Republic of Germany is providing buyer credit cover for this transaction.
expanded cover for selected African countries adopt- ed by the Federal Government in 2018. There was also a substantial increase in cover for goods and services to the Middle East (up 31%) as well as East Asia (up 23%). Once again, emerging economies and developing countries ﬁgured prominently, with export credit guar- antees for these countries reaching a ﬁgure of 14.7 bil- lion euros in the year under review and thus generating 74% of new business. the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex As in the previous year, Russia accounted for the larg- est volume of new cover provided (2.5 billion euros), followed by Turkey and the United States (1.8 billion euros in both cases). 13 Demand for the Federal Government’s export cred- it guarantees remains strong. This is reﬂected in the number of applications (up 3.2%) as well as the vol- ume of cover applied for and the offers of cover as of the end of the year. At a good 42 billion euros, it was up 12% on the previous year. Indemniﬁcation provided by the Federal Government rose to 728.0 million euros in 2018 (2017: 429.3 mil- lion euros). At 409.9 million euros, payments made for commercial claims were more or less unchanged over the previous year. By contrast, however, payments for political claims and under rescheduling arrangements rose signiﬁcantly to 318.1 million euros (2017: 30.9 mil- lion euros). The decisive factor here was indemniﬁ- cation paid in connection with a loan for which the Federal Government had provided cover in 2012, the instalments for which the government of Venezuela had been unable to service since 2017 due to the pre- vailing economic situation in that country. The annual result for 2018 – which accrues in full to the German Federal budget – climbed by 18% to 166.4 million euros (2017: 141.5 million euros). The accrued result since the introduction of Hermes Cover thus increased to 5.7 billion euros. This impressively demonstrates that the Federal Government’s export credit guarantees are a self-sustaining instrument in the long term.
14 composition and tasks of the interministerial committee The Interministerial Committee (IMC) for Export Credit Guarantees is composed of representatives of the Federal Ministry for Economic Affairs and Energy, the Federal Ministry of Finance, the Federal Foreign Ofﬁce and the Federal Ministry for Economic Coopera- tion and Development. The Federal Ministry for Eco- nomic Affairs and Energy holds the lead function. Decisions on whether to provide cover for a transac- tion are made on a consensual basis by the four IMC ministries. This ensures that due account is made of economic, ﬁscal and foreign policy concerns as well as international development cooperation. interministerial committee – imc Ministries BMWi Federal Ministry for Economic Affairs and Energy – lead function – BMF Federal Ministry of Finance AA Federal Foreign Ofﬁce BMZ Federal Ministry for Economic Cooperation and Development Mandatary @ Euler Hermes Aktiengesellschaft Experts @ representatives of the exporting industries and banking sector @ KfW @ AKA Ausfuhrkredit gesellschaft mbH @ Federal Audit Ofﬁce
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex The decision-making bodies 15 Generally speaking, the IMC makes decisions on transactions with a volume of over ten million euros. The Small Interminis terial Committee (SIMC) is responsible for decisions on trans actions valued at between five and ten million euros. Euler Hermes Aktiengesellschaft as the Federal Government’s mandatary makes decisions on applications for cover of up to five million euros in accordance with the instructions issued by and under the supervision of the Federal Government (powers of representation). In special cases, responsibility may be allocated to a higher level (mandatary, SIMC, IMC). The Interministerial Committee on 18 October 2018 at the Federal Ministry for Economic Affairs and Energy in Berlin.
16 country cover policy As part of its efforts to encourage trade with Africa, the Federal Government started expanding the avail- ability of cover for transactions with selected coun- tries in sub-Saharan Africa in 2014. This course was continued in 2018. Thus, the Federal Government low- ered the uninsured portion retained by the exporter for business with public-sector buyers in certain coun- tries in Africa from ten to ﬁve percent. The reduced uninsured portion is available for cover for goods and services to Côte d’Ivoire, Sene- gal, Benin and – subject to certain conditions being met – also Ethiopia, Ghana and Rwanda. These coun- tries have signiﬁcantly improved the underlying con- ditions for private investments in connection with the G20 “Compact with Africa” initiative. Looking for- ward, the Federal Government will be including further African countries in these arrangements where this is warranted by political and economic conditions. Based on this new cover policy, the Federal Govern- ment already provided cover for two major export transactions in 2018. One of these was a project for producing and distributing power in Senegal. Over the next few years, 300 villages in that country are to be electriﬁed using distributed solar power and storage systems. In the second case, the Federal Government issued an export credit guarantee for the delivery of ambulances to Ghana. As well as this, the Federal Government made an offer of cover for a training project for road construction and the delivery of road construction machinery and vehi- cles to improve the infrastructure of rural regions in Côte d’Ivoire. In a further decision made by the Federal Govern- ment, companies do not have to pay any application fee for the ﬁrst three applications for cover for buyers in “Compact with Africa” countries provided that they have not applied for any Federal Government guaran- tees for export business with these countries in the past ten years. Compact with Africa The “Compact with Africa” is a core element of the G20 partner ship with Africa, providing for individually tailored investment partnerships (compacts) with interested African countries. The aim is to improve the underlying conditions for privatesector investment in Africa.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 17 At the end of 2018 there were “compacts” with the following African countries: Benin, Burkina Faso, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia. S+R Maschinenbau GmbH is installing “solar home systems” (SHS) for 10,000 private households and farms in the rural regions of Ethiopia. In addition to a solar module and a control and storage unit, the SHS consists of LED lighting units, USB charging stations, a satellite receiver and a television set. Surplus energy is stored in a battery. The project permits annual savings of around 450 tons of CO2 and is being supported by the Federal Government, which has issued manufacturing risk cover.
18 risk management The IMC deﬁnes an appropriate cover policy for each country on the basis of its speciﬁc risk exposure. This governs the conditions for the granting of export credit guarantees. oecd country risk categories* One important parameter for the Federal Govern- ment’s cover policy is the OECD country risk ratings. previously new Belarus Croatia Fiji Iran Nicaragua Oman Turkey 7 5 6 5 6 3 4 6 4 5 6 7 4 5 * Premium is calculated according to eight country risk groups, in seven of which (1 = lowest risk, 7 = highest risk) the calculation is based on a set formula. In countries assigned to country risk group 0 (OECD high income countries and the countries of the Eurozone) a market-oriented premium is charged. country ceilings in million eur (medium and long-term) Cuba (short-term) Cuba Dominican Republic Serbia Ukraine 50 25 200 200 250 These country ratings are binding on all export cred- it agencies in OECD member countries and form the basis for the minimum premium payable by the poli- cyholder. In 2018, the OECD recalculated the ratings of almost 150 countries. Three countries were upgraded and four downgraded as a result. Further information on the OECD rating sys- tem and a list of the current country ratings can be found at agaportal.de/en > Quick Links > Country Classiﬁcation List. A further instrument for managing risk is the establish- ment of a country ceiling. To ensure that the provi- sion of cover remains possible, the IMC sets a maxi- mum credit limit available for a given country. As of 31 December 2018, ceilings had been deﬁned for four countries.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 19 The household waste sorting plant installed by Stadler Anlagenbau GmbH at a landﬁll in Brazil sorts 500 tons of waste every day. The semi-automatic, ultra-modern plant presorts household waste mechanically into individual recyclable mate- rial fractions. This minimises work on the sorting belt. Semi- automatic sorting makes it possible to recover considerably more recyclable materials than is possible with the manual process and to preserve sources of primary raw materials. The Federal Republic of Germany provided supplier and buyer credit cover for the transaction.
new developments in the export credit guarantee scheme Export credit guarantees go digital Digital application form 20 The digital transformation of export credit guaran- tees is making headway. The Federal Government has set preliminary milestones with the myAGA customer portal and the Hermes Cover click&cover EXPORT and BANK (for supplier credit cover and buyer credit cover) digital product line. The medium-term goal is to make all standardised services and products avail- able online. “click&cover or, more accurately, the digital application guides us efficiently through the process for requesting Hermes Cover. It is simple, understand able, interactive, taking us by the hand and guiding us through a complex product. Keep up the good work.” Thorsten Kubatzki, Managing Director of HOMAG Finance GmbH Since 2018, exporters have been able to submit appli- cations online for all common types of single trans- action policies (e.g. supplier credit cover, buyer credit cover, manufacturing risk cover, contract bond cover, counter-guarantees) quickly and easily. The digital exporter application takes companies through the application process step by step. It shows which documents must be submitted, automatically checks the information for plausibility and gives an indication as to whether the transaction is eligible for cover. Signing and mailing the application are now a thing of the past. The application process is completely electronic. Applications can be saved and processed at a later date or used as a template for new applications. Infor- mation that is still missing is summarised in an over- view for the applicant. Around one third of all applications for single trans- action cover are now being submitted via the myAGA customer portal.
3 x 5 = click&cover In 2018, the Federal Government launched Hermes Cover click&cover, a digital product line that can be used to apply for cover for standardised export trans- actions quickly and efﬁciently. Three conditions must be met in order to use click&cover: The contract val- ue must not exceed 5 million euros. The maximum credit period must be no longer than 5 years. The buy- er country must have an OECD country rating of 5 or better. The range of digital products comprises cover for receivables arising from the delivery of goods and services (supplier credit cover) and for loans (buyer credit cover). Requests for cover can be submitted via the myAGA customer portal (agaportal.de > myAGA). the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 21 Theodor Determann, long-standing member of the Executive Board of Windmöller & Hölscher KG and Chief Financial Ofﬁcer of e.GO Mobile AG since 1 January 2019 “Small and mediumsized enter prises are highly dependent on efficient export financing instru ments. Without the support of export credit guarantees, they would not be able to deliver their goods and services to many regions of the world due to the absence of any finance. The digi talisation of the decisionmaking process via click&cover marks a major step in the right direction, ensuring that Hermes Cover is available for an even greater range of smallticket transactions.”
Digital supplier credit cover Hermes Cover click&cover EXPORT supplements the existing range of supplier credit cover for small tick- ets. Thanks to the standardised procedure, it enables the request for cover to be processed far more quickly than in the case of conventional supplier credit cover. The exporter beneﬁts from this in several ways: First- ly, he receives an immediate indication of the total expected costs. This provides a solid basis for plan- ning, simpliﬁes budgeting and helps the exporter in negotiations with the foreign buyer. Secondly, digital supplier credit cover makes it easier for the exporter to reﬁnance his transaction. It is easier to sell receivables to a forfaiting company, for example, when they are backed by cover provided by the Federal Government. Traditional supplier credit cover is still available for business that does not ﬁt the click&cover format. The digital application form shows customers what to do in such a case. 22 Hermes Cover click&cover EXPORT Digital supplier credit cover at a glance: What can be covered? Receivables under individual deliveries of goods and services and, optionally, the preshipment manufacturing risks. What risks are covered? Nonpayment within 6 months. Up to what order value is cover available for export transactions? An order value of a maximum of 5 million euros. What is the maximum credit period for which cover is available? A credit period of a maximum of 5 years. What is the maximum permitted proportion of foreign content in the deliveries? Maximum foreign content of 49 percent. To what extent can local costs be covered? Up to 11.5 percent of the total contract value.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 23 Hermes Cover click&cover BANK Digital buyer credit cover at a glance: What can be covered? Loan receivables. What risks are covered? Nonpayment within 1 month. Up to what order value is cover available for export transactions? An order value of a maximum of 5 million euros. What is the maximum credit period for which cover is available? A credit period of a maximum of 5 years. What is the maximum permitted proportion of foreign content in the deliveries? Maximum foreign content of 49 percent. To what extent can local costs be covered? Up to 11.5 percent of the total contract value. Digital buyer credit cover With the introduction of digital buyer credit cover Hermes Cover click&cover BANK on 1 February 2019, the Federal Government reached a further milestone in the implementation of the coalition agreement, which provides for less bureaucratic and more made- to-measure small-ticket export ﬁnance. In recent years, regulatory requirements as well as au - diting and documentation obligations have in creased the complexity for banks of ﬁnancing small-ticket transactions. In some cases, Hermes-backed ﬁnance was consequently no longer economically viable for some banks. Small and medium-sized enterprises active in foreign trade particularly complained about the limited scope for raising ﬁnance. By launching digital buyer credit cover, the Federal Government has added a new building block for reviv- ing small-ticket ﬁnance. The standardised click&cover process reduces administrative and checking work- loads for banks. Thanks to the simpliﬁed buyer credit cover, it will again be more attractive for banks to offer small-ticket ﬁnance and to apply for backing from the Federal Government.
Successful APG reform: wholeturnover policies on a growth track One year after the introduction of the new wholeturn- over policy (APG), all contracts have been migrated to the new conditions. Exporters beneﬁt from simpler handling, easier turnover and reporting procedures and heightened legal certainty. APG is the Federal Government’s main instrument for covering short-term foreign trade transactions. 555 companies use wholeturnover policies to pro- tect their business from economic and political risks. Among other things, the APG revamp contributed to the growth of the APG customer base in 2018 (up 4%). 24 Cimenfort is one of Angola’s largest cement manufacturers, currently producing up to 700,000 tonnes of cement per year. The use of roller press grinding technology and a kiln line for clinker production will boost pro- duction capacity to 1.4 million tons per year. The system is being supplied by HUMBOLDT WEDAG GmbH from Cologne. The expan- sion of production capacity will enable the African country to cover part of its demand for cement clinker locally in the future and thus achieve higher local manufacturing input. The Federal Government is supporting the transaction with manufacturing risk, supplier credit, contract bond and buyer credit cover.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 25 Finance: ECA-speciﬁc credit agreement facilitating contract drafting Working together with European legal and ﬁnancial experts, the Loan Market Association (LMA) has devel- oped a model contract for ECA-covered credit agree- ments (ECA = Export Credit Agency). Known as the Export Credit Agency Buyer Credit Facili- ty Agreement, it marks a further development of ex ist- ing LMA standard agreements by adding ECA-rele- vant aspects, including for example the requirements arising from the OECD Consensus for ECA-supported ﬁnance. Further training expanded Since 2018, Euler Hermes has been offering exporters, banks and representatives of industry associations and companies free webinars as training courses in addition to the existing sources of information. In 2018, webinars were held on topics such as “Hermes Cover click&cover EXPORT”, “medical technology” and “environmental, social and human rights assessments for state export credit guarantees”. The medical tech- nology webinar was conducted in cooperation with Germany Trade and Invest, the economic development agency of the Federal Republic of Germany. The range of seminars is being expanded continuously. The largest logistics company in Kenya is currently building a new fully automated cargo terminal at Nairobi Airport. AMOVA GmbH is supplying a storage system for 191 air freight containers under the ACUNIS brand. The system will permit space-saving and more effective sorting of containers in the future. The customer and the government of Kenya hope that the new facility will enable more efﬁcient handling of air freight containers at Nairobi Airport. The Federal Government has issued manufacturing risk, supplier credit with contract bond cover and buyer credit cover for the project.
Reinsur- ance Framework agreement signed with EXIAR. Further development Further development of foreign trade promotion. More than 300 participants at the dialogue event in Berlin.
the interministerial committee in contact with stakeholders The Interministerial Committee engages in continuous dialogue 27 with the business community. One important discussion forum is the biennial “Dialogue with Industry” event. More than 300 representatives, mainly from exporters and banks, took part this year. Information and views were also shared in numerous international consultations as well as bilateral and multilateral talks with various parties in foreign trade ﬁnance. Bring your project to … Bring your project to … MENA. Innovative event with a made-to-measure consulting approach. 6,500 More than 6,500 consultations held across Germany.
28 sharing information with the german export industry Dialogue event in Berlin: The digital transformation of the economy and its effects on export ﬁnancing At the invitation of the Federal Ministry for Economic Affairs and Energy (BMWi), more than 300 representa- tives from politics and business as well as from banks and industry associations met for a dialogue event in Berlin on 7 June 2018. At the biennial conference, the participants discussed the global challenges for foreign trade and the further development of foreign trade promotion instruments. Thomas Bareiß, Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Energy, em - phasised the importance of open markets and free, rules-based trade in goods for Germany as an export- ing nation. The partial renunciation of multilateralism and protectionist tendencies in leading export and investment markets posed a growing challenge for German companies. In such a difﬁcult environment, the Federal Government’s cover instruments were of central importance as stabilising elements in foreign trade. Some 300 participants from politics, business, banks and industry associations met on 7 June 2018 for a dialogue event at the Federal Ministry for Economic Affairs and Energy. They shared ideas on current matters of interest in intense discussions held during workshops. One particular aspect concerned the effects of digitisation on Germany as an export nation.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex At the same time, the Parliamentary State Secretary outlined measures that had been taken to strengthen the foreign trade promotion instruments. For example, Thomas Bareiß announced the additional scope for cover in sub-Saharan Africa, particularly the reduced uninsured portion on transactions with public-sector buyers in selected African countries. By reducing the uninsured portion, the Federal Government is particu- larly taking account of positive developments in the “Compact with Africa” countries. One topic that was discussed at almost all workshops was the digital transformation of the economy and its 29 effects on export ﬁnance. In this context, discussion also revolved around whether the applicable eligibil- ity criteria for cover also adequately accommodated innovative business models. Currently, one essential prerequisite for the eligibility of deliveries for cover is that the exported goods must cross the German bor- der. Looking forward, the question as to whether such a deﬁnition can also apply to cases in which data or programming services are exported rather than phys- ical goods will continue to occupy both the Federal Government and the export industry. Sandra Halver-Simons, SMS Group GmbH, and Dr. Bastian Kern, Federal Ministry for Economic Affairs and Energy (BMWi), chaired a workshop on the future of the export credit guarantee scheme.
30 However, digitisation also means simplifying exist- ing processes, products and services. Among other things, a special workshop dealing with future issues discussed ways of achieving this with regard to export credit guarantees. Thomas Bareiß stated that the introduction of the digital supplier credit guarantee Hermes Cover click&cover EXPORT was an important measure for assisting SMEs in this connection. Another focus of the event concerned changing value chain and supply chain structures. In particular, the participants discussed the scope for including a great- er proportion of local costs in the cover provided by the Federal Government. All those present expressly welcomed a corresponding initiative by the Federal Government to amend the relevant international rules. For the ﬁrst time, representatives of foreign companies were also actively involved in the event. Entitled “An Importer’s View”, one workshop provided a refresh- ingly different perspective, illuminating aspects of government export credit guarantees from a foreign buyer’s vantage point. Speakers at the event: Dr. Marcus Chromik, member of the board of managing directors of Commerzbank AG, Thomas Bareiß, Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Energy, Edna Schöne, member of the board of managing directors of Euler Hermes AG, and Prof. Dieter Kempf, president of the Federation of German Industries (Bundesverband der Deutschen Industrie e.V.) (from left).
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex Three questions for … … Thilo Brodtmann, Executive Director of the German Engineering Industry Federation (VDMA). 31 Together with Dr. Christoph Herfarth, Division Head at the Federal Ministry for Economic Affairs and Energy and chairman of the Interministerial Committee for Export Credit Guarantees, and Dr. Christian Bruch, a member of the Executive Board of Linde AG, Thilo Brodtmann moderated a workshop entitled “Digitalisation and Export Business in Germany in 2025”. Mr Brodtmann, the dialogue event took place for the 8th time in 2018. What signiﬁcance does the event have for the VDMA, whose member companies are traditionally very heavily export-oriented? I have attended the last three dialogue events and have seen that mechanical engineering com- panies in particular enjoy visiting the Federal Ministry for Economic Affairs and Technology and taking advantage of the opportunities for discussion. They particularly appreciate the opportunity of actively participating in various workshops. Digitalisation is changing everything – work processes, value chains and business models. What speciﬁc effects is the digital transformation having on German foreign trade and Germany as an export nation? Speciﬁcally, we will need less shipping space and more data lines in the future; in other words, the volume of conventional exports will decline. Increasingly, it is no longer the machine that is sold but the utilisation of the machine or the system solution. In addition, we are seeing a rapid change in value chains. Foreign customers expect project ﬁnance to include local manufacturing input, which is now possible in a completely different way thanks to digitalisation. Sourcing for foreign projects is also based on ever shorter planning horizons. Against this backdrop, what form should the Federal Government’s foreign trade promotion instruments take? Traditionally, foreign trade pro- motion is based on two pillars – exports and investments. We have to ask ourselves how we can safe- guard jobs in Germany if these concepts are no longer the right ﬁt for project business. Thanks to digitalisation, we will be experi- encing a new interplay between production and services worldwide and will therefore need project ﬁnance in the foreign market. Chi- na, in particular, is pushing its way into system solutions business and using government funding as a lever. We have to be part of this if we are to remain competitive. The increased pace of change will pose a challenge for us. For this reason, the steps which the Federal Government and Euler Hermes have initiated to digitalise the work processes for export credit guarantees are crucial for ensuring continued viability in the future.
32 Bühler Alzenau GmbH from Alzenau in Bavaria supplied a coating system for functional glass to a major Turkish manufacturer of ﬂat glass. The low-emissivity glass (Low-E glass) is to be used in both private and public buildings. It is coated with a thin, transparent metal layer. The coating reﬂects the long- wave radiation given off by heating so that heat remains in the rooms, for example. The Federal Republic of Germany is backing the proj- ect with supplier credit and buyer credit cover. The picture shows an identical plant. Advisory service: competent partners never far away The ﬁeld service offers ﬁrst-hand expertise and advice on all aspects of export guarantees and cover. Small and medium-sized enterprises (SMEs) in particular are reaching out to the advisory service. As a result, more than 6,500 telephone consultations took place, mainly with exporters and banks, last year. The advisory service assisted 1,280 companies. At 176 events, the consultants briefed exporters on the possibilities for securing their business with govern- ment guarantees. They were supplemented by consultant meetings as well as country and industry forums – partly in coop- eration with the chambers of commerce and industry and the German chambers of commerce abroad as well as banks and industry associations. Events relat- ing to the mining and raw materials industries as well as civilian security technologies and services attract- ed particular interest. The revised wholeturnover policy, which was launch- ed on 1 July 2017, was a further aspect touched upon in talks. In the second half of 2018, the focus was on the digital supplier credit guarantee Hermes Cover
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex Bring your project to ... MENA click&cover EXPORT. In addition, the field service informed more than 70 exporters directly about this digital innovation at nationwide roadshows. A webinar on this topic was attended by 199 participants. Companies or banks wishing to obtain information about the Federal Government’s services free of charge can directly contact one of the corporate con- sultants operating nationwide. Their contact addresses and details of planned events can be found here: agaportal.de > Infocenter > Veranstaltungen. How can export transactions be executed in the coun- tries of the Middle East and in what way can the Fed- eral Government support exporters and banks in this respect? More than 100 participants came to Hamburg on 1 March to discuss these and other questions dur- ing an event entitled “Bring your project to ... MENA”. This interactive event format was held for the sec- ond time in 2018. The Hamburg event was orga- nised by Euler Hermes in cooperation with Nah- und Mittelost-Verein e.V. (NUMOV) (German Near and Middle East Association). 33 The MENA region The abbreviation MENA stands for “Middle East and North Africa”. The term designates the region from Morocco to Iran. The MENA region includes Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, the Palestinian Autono mous Territories, Qatar, Saudi Arabia, Syria, Tunisia, the United Arab Emirates and Yemen. It has about 380 million inhabitants. Representatives of the Federal Ministry for Economic Affairs and Energy and the industry associations discuss concrete projects in the MENA region with exporters and banks.
34 The Egyptian central bank intends to modernise the domestic cash circulation system by 2020. It has therefore commissioned Giesecke + Devrient to develop and build a facility for the produc- tion and processing of banknotes. Exporters are able to speciﬁcally discuss how and in what form their projects can be realised. Country, risk, product and ﬁnancing specialists as well as repre- sentatives of the Federal Ministry for Economic Affairs and Energy are available to exporters and banks as discussion partners. The main purpose of “Bring your project to ...” is to ﬁnd speciﬁc solutions to individual problems. The printing plant can print about 4 billion banknotes and security papers per year. The Federal Republic of Germany is providing manufacturing risk cover and supplier credit cover for the project. The topics address such questions as how the instru- ments work, the handling, eligibility and risk-related justiﬁability of transactions, ﬁnance and very specif- ic questions related to the structuring of individual projects. Some of the transactions discussed at the event have now been submitted to the Interministerial Committee for Export Credit Guarantees and have received cover from the Federal Government.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex Interview with ... ... Franz von Consbruch, Director of Operations at E-FARM.COM Mr von Consbruch, how did you ﬁrst become aware of the Federal Government’s export credit guarantee scheme? 35 Enthusiastic about the “can do” approach In 2018, 82 companies applied for government export credit guarantees for the ﬁrst time. One of the new- comers is E-FARM.COM, a global online dealer in pre- owned agricultural machinery. The Hamburg-based start-up buys pre-owned agri- cultural machinery around the globe. It is then over- hauled in Germany and later resold. Founded in 2015, the company currently works with around 400 dealers in Europe and has sold over 200 self-propelled agricul- tural machines in over 40 countries around the world. In this interview, Franz von Consbruch, Director of Operations at E-FARM.COM, explains why he relies on the export credit guarantees provided by the Feder- al Government and what opportunities they offer his company. Initially, we had a number of transactions in Africa in the pipeline, where the issue of ﬁnancing came up again and again. This prompted us to explore various ﬁnancing options. And since we were already familiar with Hermes Cover, we obviously also took a closer look at it. How did you ﬁnd the consultations to be? From the very outset, we were impressed by the positive “can do” attitude of our contacts at Euler Hermes and felt very well advised at all times. What speciﬁc beneﬁts do you derive from the wholeturnover policy? It enables us to execute larger projects with non-European dealers, under which the dealer buys the machines from us on trade credit period terms, then resells the machines to farmers in the region and pays our invoice after the harvest, when the farmers themselves have enough money to pay for the machinery. ›››
36 ››› How can export credit guarantees help you to grow abroad? After the successful pilot project with a dealer in Kazakhstan, we are now planning to execute similar projects in other parts of the world. We are particularly concentrating on regions such as Africa, South America and China where there are currently gaps in the range of machinery. What conclusions can you draw after one year of using the export credit guarantees granted by Federal Government? We were surprised at how easy it was in the end to take out a wholeturnover policy. On the other hand, we were amazed at how complicated it is to forfeit a Hermes- covered claim. Of course, this is also partly due to our company’s status – but a solu- tion for this would deﬁnitely be desirable. Will you be taking advantage of other forms of cover provided by the Federal Government in the future, e.g. single transaction policies? This depends on how our business develops. Generally speaking, the wholeturnover policy is very good for our purposes but I would not rule out the possibility of also using other forms of government export credit guarantees in the future. Would you recommend export credit guarantees to others? And if so, why? Deﬁnitely! This form of export backing offers smaller companies in particular the opportunity of growing internationally at acceptable risk. It would be desirable if even more start-ups were able to beneﬁt from the Federal Government’s scheme. When I hear the term “export credit guarantees”, I think of ... ... international growth! E-FARM.COM trades in used agricultural machinery online. After a pilot project with a dealer in Kazakhstan, E-FARM.COM now plans to implement similar projects in other parts of the world with the support of cover provided by the Federal Government.
international collaboration the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 37 On 30 and 31 May 2018, the Korean export credit insurer K-sure held a bilateral working meeting with the German Federal Ministry for Economic Affairs and Energy (BMWi) and Euler Hermes in Berlin to further intensify their cooperation. From left: Dr. Christoph Herfarth, BMWi, Sunggoo Lee, JongChul Eun, K-sure, Jens Heitmann, Euler Hermes, Yanghyun Lim, K-sure, Sophia Renz, Franziska Löke, Euler Hermes, Christof Wegner, BMWi, Sewook Jang, Hyunno Cho, K-sure Hermes Cover is embedded in an international set of rules. The OECD Consensus is binding for ofﬁcial- ly supported export credits with credit terms of two years or more. Among other things, it deﬁnes mini- mum standards for terms of ﬁnance in order to pre- vent a downward competition spiral at the expense of national budgets. as other countries. 17 IWG meetings have now been held. Since the end of 2017, various working groups have been discussing topics such as local costs, credit periods, premium structures, interest rates and cover ratios. Further discussions will be taking place on the basis of the results of these working groups. International Working Group Further development of international OECD rules To ensure a level playing ﬁeld for all government export credit agencies, it is of crucial importance for key non-OECD trading nations to be integrated in an international set of rules. This is the purpose of the International Working Group (IWG), which was es - tablished in 2012. It comprises the EU as well as near- ly all other OECD countries plus Brazil, China, India, Indonesia, Malaysia, Russia and South Africa as well Government export credit agencies are increasingly competing with other – non-commercial – players who also ﬁnance cross-border trade. In particular, develop- ment banks operating internationally are increasingly playing an important role in this respect. In this envi- ronment, there is a growing need to modernise the international regulatory framework and to adapt it to the changes in export ﬁnance.
38 The Federal Government is aware of this challenge and is working towards a revision of the rules and regulations. In addition, it is increasingly advocating the establishment of international standards that are valid beyond the OECD. The aim is to strengthen the existing level playing ﬁeld within the OECD in the area of export ﬁnancing and to establish it outside the OECD. Consultations In 2018 there were also a number of bilateral, trilat- eral and multilateral meetings with other government agencies and government export credit insurance and export ﬁnance institutions. Speciﬁcally, consultations were held with South Korea, Japan, France, Austria, China, Morocco, the United States, Russia and Swit- zerland. The purpose of the consultations is to deepen cooper- ation between individual countries and to encourage Russia France Austria Switzerland United States Morocco South Korea Japan China
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex mutual understanding of the different guarantee sys- tems. The talks are also used to continue developing global standards for export credits. A general cooperation agreement has been in place between the German and Russian ECAs since 2012. 39 Framework reinsurance agreement concluded with EXIAR of Russia For German exporters, the new agreement represents a signiﬁcant step forward. Transactions with a not inconsiderable share of Russian deliveries can now be covered by a guarantee issued by the Federal Government with the participation of EXIAR. On 16 October 2018, the Russian Agency for Export Credit and Investment Insurance (EXIAR) and Euler Hermes Aktiengesellschaft signed a bilateral rein- surance framework agreement covering state ex - port credit guarantees. EXIAR was founded in 2011. An overview of existing cooperation and reinsurance framework agreements can be found here: agaportal.de/en > Exports > Practice > Cooperation Agreements. The bilateral consultations between the Japanese export credit insurer NEXI, the Federal Ministry for Economic Affairs and Energy (BMWi) and Euler Hermes were held in Heidelberg from 10 to 12 September 2018. The annual meeting dealt with important OECD matters and product development as well as providing an opportunity for sharing experience on individual countries and claims handling. From left: Seidai Nakamura, METI, Sonja Wittkowski, Imke Ahrens, Sophia Renz, Euler Hermes, Kei Kawahara, NEXI, Jens Heitmann, Euler Hermes, Kohei Okada, Masafumi Nakada, Manami Hori, NEXI, Dr. Christoph Herfarth, BMWi, Takayo Mikami, Mei Tsuruwa, NEXI The principle of reinsurance The primary insurer covers the credit risks arising from the export credit. In the event of any loss, the primary insurer indemnifies the policyholder in full. In its internal relationship with the primary insurer, the foreign reinsurer, in turn, assumes a proportionate share of the risk arising from the delivery of goods and services sourced in its country. If a claim is submitted, it takes a share of the indemnification payable by the primary insurer in accordance with this reinsurance quota. The exporter or the bank has only one insurer to deal with and thus benefits from the onestopshop principle.
export credit guarantees and responsibility 40 The Federal Government attaches prime importance to the observance of environmental and social stan- dards as well as human rights when granting export credit guarantees. It does not provide cover for any export transactions that violate the applicable envi- ronmental, social and human rights standards. Under the OEDC rules, the reference standards for the environmental and social impact and human rights assessment are the World Bank Operational Safeguard Policies, the Performance Standards of the Interna- tional Finance Corporation (IFC) and the World Bank Group’s Environmental, Health and Safety Guidelines. Environmental, social and human rights aspects must be reviewed in the case of projects and transac- tions coming within the scope of the OECD Common Approaches. If there is any evidence that a project may have a signiﬁcant adverse ecological or social impact or breach human rights, the transaction must be vet- ted for sustainability. The OECD Common Approaches Adopted in 2004, the Common Approaches determine the procedure and principles for reviewing environmental and social aspects as well as safeguarding the obser vance of human rights. The Common Approaches are regularly revised. The next revision will take place in 2019. The Rio Subterraneo, one of the largest water supply pipelines in Buenos Aires, is on the verge of collapsing due to subsidence. If this were to happen, water supplies for more than 1.4 million people would be jeopardised. A complete renovation of the dilapidated section is therefore urgently required. Ludwig Pfeiffer Hoch- und Tiefbau GmbH & Co. KG was awarded the contract to refurbish a 220 m long section of the Rio Subterraneo. The project poses particular technical challenges as all work must be carried out by divers working at a depth of 34 metres while the pipe continues to operate. The Federal Government has issued supplier credit cover for the project.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex Business and human rights Antibribery measures As part of the implementation of the National Action Plan for Business and Human Rights (NAP) adopted by the Federal Government in 2016, special attention is paid to human rights aspects during the review process. All transactions, including those that do not fall within the scope of the Common Approaches, are vetted for any signiﬁcant risks in line with a “watch- ful eye” approach. If there is a high probability that a project will have serious implications for human rights, the review procedure is supplemented by an in-depth examination of these aspects (human rights due diligence). Euler Hermes performed 86 assessments of envi- ronmental, social and human rights issues in 2018 (2017: 85). 41 The avoidance of any form of bribery in export busi- ness and the lead-up to transactions forms a key prerequisite for cover. The Federal Government’s anti-bribery efforts are based on a two-stage pro- cedure. In a preliminary step, exporters and banks must sign a declaration as part of an application for cover conﬁrming that the transaction has arisen without any form of bribery. The antibribery declaration for exporters and banks can be found here: agaportal.de/en > Exports > Process > Prevention of Bribery. Did you know? The environmental and social experts of the OECD government export credit agencies come together for a practi tioners’ meeting two to three times a year. The ECA representatives discuss specific projects, the interpretation of the Common Approaches, standards, current environmental, social and human rights issues, transparency aspects and matters of special interest. In addition, external experts are regularly invited to answer various questions. The meetings provide an excellent opportunity for professional sharing and for the further development of environmental, social and human rights assessments in con nection with export credit guarantees.
Recommendation on Bribery The “Recommendation on Bribery and Officially Supported Export Credits” (RoB), which was adopted at the OECD level in 2006, deﬁnes the framework for preventing and combating corruption in government export promotion. The OECD regularly evaluates the implementation of its anti-corruption guidelines in the individual mem- ber states. In 2018, the responsible auditors gave a positive assessment of the measures taken to prevent corruption in the German export credit guarantee system. 42 If there is any evidence of corruption-relevant facts, the second stage involves an in-depth investigation of corruption. This review analyses internal measures, processes and structures for preventing and combat- ing corruption among other things and also examines the background to the transaction for which cover is being sought. The procedure for the detailed review is undergoing constant development to factor in past experience as well as new developments. Thus, for example, the catalogue of questions for an extended review of transactions was updated at the end of 2017 and the process for reviewing internal compliance management systems modiﬁed. In the year under review there were 1,185 active policyholders. 29 companies underwent an in-depth corruption review. Until now, Serbia’s electricity has mainly come from lignite and hydro- power. With the construction of wind farms, the country wants to increase the share of renewable energies in national electricity production. GE Wind Energy GmbH is supplying 38 wind turbines with a total capacity of 104.5 MW for the Kovacˇica wind farm in the Serbian province of Vojvodina, about 50 km northeast of the capital city of Belgrade. Kovacˇica is one of the ﬁrst major wind farms to be installed in Serbia under the new incentive programme for renewable energies. The Federal Government has issued supplier credit and buyer credit cover for this transaction.
A short digression: Investment guarantees – an important element of risk management for foreign projects Investment guarantees have been an the chemical and pharmaceutical The main factors here are the envi established instrument for promoting sectors, followed by the energy and ronmental, social and human rights German foreign trade for decades. construction sector. The Federal impacts of the project, the impact on With their help, German companies Government’s exposure under invest employment in the host country and can effectively hedge their direct ment guarantees was valued at the contribution that the project makes investments against political risks in 33.8 billion euros at the end of 2018. to securing employment in Germany. the occasionally difficult environment that they encounter in emerging The Federal Government is constantly Applications for investment guarantees economies and developing countries. expanding its measures for promoting are approved by the Federal Ministry sustainable privatesector investment for Economic Affairs and Energy with In 2018, the Federal Government in Africa. At the end of 2018 it the consent of the Federal Ministry granted investment guarantees decided to promote German invest of Finance and in agreement with the worth 1.2 billion euros for projects ments in the twelve countries of Federal Foreign Office and the Federal in 17 countries. Of this, 61% was the “Compact with Africa” initiative Ministry for Economic Cooperation accounted for by projects in Asia to an even greater extent than before and Development in an Interministe (predominantly in China, Armenia and by adjusting the conditions for the rial Committee. Experts from German Iran) and 25% by projects in (Eastern) issue of investment guarantees. companies and banks as well as from Europe (predominantly in Belarus, the country associations of German Russia and Turkey). The share of cov The prerequisite for the granting of a industry take part in the meetings of ered projects in Africa (predominantly guarantee is sufficient legal protec the committee in an advisory capac in Algeria, Mozambique and Kenya) tion in the host country. In principle, ity. The mandate for management of rose substantially to 11%; projects in sufficient legal protection is con the investment guarantees has been South and Central America (Mexico sidered to be available if a bilateral assigned by the Federal Government and Colombia) accounted for 3%. investment promotion and protection to PricewaterhouseCoopers GmbH The proportion of small and medi agreement has been signed between Wirtschaftsprüfungsgesellschaft. umsized enterprises for which Germany and the host country. In requests were approved increased addition, the project must have posi For further details, please contact: again to 37%. This is the highest tive effects both for the host country Phone: +49 (0) 40 / 63 78 20 66 figure in the last ten years. The most and for Germany and must generally email@example.com important target industries were be con sidered to be eligible for cover. www.investitionsgarantien.de top five countries – number of approved applications commitment (exposure) 10-year oveeview by regions in million eur China PR Iran Belarus Russia Turkey Subtotal 2018: (70.0%) Total : (%) 16 9 8 8 8 49 31,021 6,450 605 10,581 32,734 6,274 357 33,423 6,218 483 12,714 13,066 36,323 6,301 2,431 14,166 34,971 4,654 2,457 36,350 4,790 2,580 35,030 33,775 3,830 2,654 4,638 2,640 14,734 15,588 15,622 15,731 27,681 6,333 721 8,054 24,272 4,330 824 7,137 11,981 12,573 13,385 13,389 13,656 13,425 13,126 13,392 12,130 11,560 Africa America Asia Europe
153 countries 74.3% The Federal Government provided Hermes Cover for exports to 153 countries in 2018. Cover for emerging economies and developing countries accounted for 74.3% of the total.
business performance At 19.8 billion euros, the volume of export credit guarantees 45 was 17.4% up on the previous year. Russia, Turkey, the United States, the United Kingdom and Vietnam led the list of the top ten countries. Indemniﬁcation payments increased by 70%, while recoveries of indemniﬁcation payments already made climbed by 29%. The year closed with a positive result of 166 million euros. Positive result Positive result for export credit guarantees for the 20th consecutive time. Accrued surplus for the Federal budget: 5.7 billion euros. 86.5 billion The Federal Government’s maximum exposure under all active cover as of the end of 2018: 86.5 billion euros
46 new business German exports rose by 3% (last year: 6.3%) over the previous year, coming to 1,317.9 billion euros in 2018 (2017: 1,279.1 bil- lion euros)1. Consequently, the previous year’s high growth in exports slowed against the backdrop of nascent signs of more mut- ed conditions in key foreign markets such as China and in the wake of the protection- ist tendencies emerging in US foreign trade policies. Mounting political and economic uncertainties in key export markets prompt- ed a further increase in interest in the Fed- eral Government’s export credit guarantees last year. New cover provided climbed by 17.4% over the previous year to 19.8 billion euros in 2018 (2017: 16.9 billion euros). Export credit guarantees were again granted for several big-ticket projects in 2018 after the small number covered in the previous year. As a result, the portion of exports cov- ered by export credit guarantees accounted for 1.5% of total German exports (previous year: 1.3%). In 2018, the total number of new single transaction policies contracted by 11.2%, although the total value of cover provided increased by 27.9% over the previous year. The number of big-ticket transactions with an order value of over 50 million euros rose from 34 to 40, accounting for a total of 77.5% of the total value of the individual transac- tions covered (2017: 73.2%). 1 Source: Foreign trade statistics of the Federal Statistical Ofﬁce development of new guarantees in billion eur 32.5 29.8 29.1 27.9 24.8 25.8 22.4 20.6 19.8 16.9 top ten markets for new guarantees in billion eur Russia Turkey United States United Kingdom Vietnam China PR Brazil India Dubai UAE Egypt 2.48 1.78 1.78 1.69 1.05 0.93 0.93 0.67 0.58 0.52 1.73 1.57 1.00 0.55 0.08 1.02 0.76 0.73 0.19 0.28 2018 2017 Subtotal 2018: (62.7%) 12.41 Total : (%) .
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex new guarantees Share in % Change in % Number of single transaction policies of which for private buyers for public buyers/guarantors 517 459 58 459 428 31 100 -11.2 93 7 -6.8 -46.6 93% of the volume of single transaction policies was for private and 7% for public buyers (2017: 83% private buyers and 17% public buyers). 47 Volume of cover in million EUR , , . Number and volume of applications of which single transaction policies volume in million EUR of which for private buyers for public buyers/guarantors 8,686 7,189 1,497 11,110 10,365 745 100 93 7 27.9 44.2 -50.2 The number of new applications increased by 3.2%, with the value of applications climbing by 20.7%. This particularly reﬂects increased demand for government cover for big-ticket transactions. applications Share in % Change in % Offers of cover Number of applications 9,379 9,679 100 3.2 of which single transaction policies wholeturnover policies 1,093 8,286 1,197 8,482 12 88 9.5 2.4 Applications in million EUR , , . funds earmarked for export credit guarantees million EUR Share in % million EUR Share in % Countries Emerging economies and developing countries 10,532.6 Industrialised countries 3,354.7 75.8 24.2 14,764.2 1,954.0 88.3 11.7 Total ,. . ,. . Offers of cover for contracts still under ne - gotiation reached a total value of 16.7 billion euros as of 31 December 2018, 20% higher than in the previous year. Although experi- ence shows that not all of the transactions earmarked for cover are in fact realised as it is still uncertain on the date on which these offers of cover are issued whether the con- tracts concerned will actually be awarded to the exporter. What can be said is that the existing offers of cover indicate that cover volume should increase again in 2019. Thus, cover has been applied for or already offered for several big-ticket projects.
48 Cover by horizon of risk and type of cover Export credit guarantees in short-term busi- ness (credit periods of up to one year) came to 9.7 billion euros, falling 9.5% short of the previous year’s high level (10.7 billion euros). The proportion in total new cover of short-term business under single-transac- tion and spread policies shrank to 48.8% (2017: 63.3%). The wholeturnover policies (APG and APG light), under which exporters are able to obtain cover for short-term credits in trans- actions with numerous buyers in differ- ent countries, posted an increase of 5.5% over the previous year. In 2018, turnover of 8.5 billion euros was covered (2017: 8.0 bil- lion euros). Russia, Turkey and Brazil were the most sought-after markets, contributing just under one third of the APG turnover cov- ered (31.2%) again. The APG revamp as well as the general eco- nomic and political development caused the number of APG and APG-light policies to increase in 2018 for the ﬁrst time since 2010. At 802, the number of policies was slightly above the multi-year average. newly covered exports by horizon of risk in billion eur Single transaction policies over 5 years Single transaction policies 1 - 5 years Single transaction policies up to 1 year Wholeturnover and revolving policies 24.8 25.8 20.6 19.8 9.7 1.0 2.8 11.3 13.6 0.7 1.7 9.8 16.9 5.7 0.5 2.5 8.2 8.8 0.4 3.3 8.1 9.6 0.6 1.0 8.7 guarantees by horizon of risk in billion eur Wholeturnover and revolving policies: Single transaction policies up to 1 year: Single transaction policies 1 - 5 years: Single transaction policies over 5 years: 8.7 1.0 0.6 9.6 Total : . 48.4% 43.9% 2.8% 4.9%
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 49 In addition to wholeturnover policies, which account for a large proportion of the short- term cover provided, the Federal Govern- ment also offers revolving speciﬁc policies for regular business with a single buyer and cover for individual projects with credit pe- riods of up to one year. Revolving speciﬁc policies rose by 50% over the previous year to 198 million euros (2017: 132 million euros). The volume of export credit guarantees for short-term single transaction policies with a credit period of up to one year declined again, dropping by more than half over the previous year (down 61.1%) and coming to 1.0 billion euros (2017: 2.5 billion euros). The proportion of medium and long-term cover in the total volume widened by just under two thirds (63.8%) to 10.1 billion euros (2017: 6.2 billion euros). Several big-ticket transactions with long-term payment peri- ods of more than ﬁve years were covered. A total of 97% of the medium and long-term cover provided was executed with ﬁnance credits (49.6% of the transactions). turnover under wholeturnover policies in million eur Russia Turkey Brazil China PR India 1,040.9 1,016.9 812.4 792.9 579.2 439.7 776.5 641.9 499.3 359.1 2018 2017 Subtotal 2018: (43.2%) 3,665.1 Total : (%) ,. short-term single transaction policies in million eur China PR Russia Turkey India Vietnam 298.2 236.0 75.5 43.9 40.3 252.2 85.2 173.5 116.9 0.0 2018 2017 Subtotal 2018: (71.4%) 693.8 Total : (%) . medium and long-term policies in million eur United States United Kingdom Russia Vietnam Turkey 2018 2017 1,777.1 1,685.7 1,180.3 936.4 889.1 995.5 552.0 606.3 0.0 616.4 Subtotal 2018: (63.8%) 6,468.6 Total : (%) ,.
50 Cover by country group Traditionally, export credit guarantees are provided for the emerging economies and developing countries1, with 74.3% of aggre- gate cover attributable to these countries (previous year: 75.3%). The fact that 4.8% (previous year: 4.2%) of German exports to emerging economies and developing coun- tries were covered by guarantees issued by the Federal Government in 2018 (14.7 billion euros; previous year: 12.7 billion euros) high- lights the importance that the availability of cover has for German exports to these coun- tries. A good three quarters (1,007.6 billion euros) of total German exports go to the indus- trialised nations. Given the lower political risks and the partial availability of private export credit insurance, the proportion of government-backed exports in total exports to industrialised countries is mostly relative- ly small. In 2018, exports to industrialised countries valued at 5.1 billion euros (0.5%) were covered by the Federal Government (2017: 4.2 billion euros). Emerging economies and developing countries At 2.4 billion euros, cover for the entire re- gion of Latin America and the Caribbean was 10.3% down on the previous year (2017: 2.7 billion euros). The share of this region in total cover contracted to 12.3% (2017: 16.1%). volume of cover by country groups in billion eur 24.8 25.8 19.3 20.7 20.6 19.8 16.9 17.0 12.7 14.7 6.5 4.1 3.6 4.2 5.1 Emerging economies and developing countries Industrialised countries cover percentage of total export volume by country groups in % volume of cover by country groups America Africa Asia Europe Industrialised countries 2018 2017 2016 7.4 7.9 3.2 6.2 0.5 8.8 4.2 2.9 5.2 0.4 9.0 17.9 2.7 8.0 0.4 volume of cover by country groups Countries * Emerging economies and developing countries million EUR Share in % million EUR Share in % Change in % 12,697.4 75.3 14,717.7 Latin America 2,711.9 Africa 1,067.6 Asia 4,718.9 Middle East 1,007.2 East Asia 2,332.5 Oceania 1.6 Europe 4,197.4 16.1 6.3 28.0 6.0 8.2 13.8 0.0 24.9 2,434.4 1,776.5 5,466.9 1,315.8 1,283.6 2,867.5 1.6 5,038.3 74.3 12.3 9.0 27.6 6.6 6.5 14.5 0.0 25.5 15.9 -10.3 66.3 15.9 30.7 -6.9 22.9 0.0 20.0 Industrialised countries 4,165.0 24.7 5,078.0 25.7 21.9 Total ,. . ,. . . thereof EU-countries 1,575.5 9.3 2,239.3 11.3 42.1 Latin America and the Caribbean Southern/Central Asia 1,379.1 1 See country allocation on page 78 * See the country list p. 78 Differences in the sums are due to rounding
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex guarantees for latin american emerging economies and developing countries in million eur Brazil Argentina Mexico Ecuador Colombia medium a. long 131.7 105.2 187.7 192.8 44.8 328.6 0.4 5.0 0.3 2.4 short 793.3 659.7 175.8 216.7 312.3 264.8 202.6 217.6 129.1 128.5 short-term Subtotal 2018: 1,613.1 364.9 medium and long-term Share 2018: (79.1%) (92.4%) Total : (%) ,. . 51 85.7% of the cover for Brazil took the form of wholeturnover policies. The largest sin- gle transaction was for beverage bottling lines. In Argentina, cover was mostly pro- vided for wind power systems. Export credit guarantees for Mexico were issued for port cranes, machinery and equipment for ﬁlm extrusion lines and an MDF (medium density ﬁbreboard) production line as well as textile machinery. The Federal Government pro- vided cover for further single transactions in Ecuador (dyeing and knitting machinery) and Colombia (dental technology). guarantees for african emerging economies and developing countries in million eur Africa Egypt South Africa Senegal Kenya Burundi medium a. long 339.4 135.0 1.9 0.0 130.9 0.0 6.4 9.9 135.1 0.0 short 177.8 145.0 204.9 196.2 14.0 3.6 137.2 117.7 0.0 0.0 short-term Subtotal 2018: 533.9 613.7 medium and long-term Share 2018: (51.3%) (83.4%) Total : (%) ,. . In 2018, the Federal Republic of Germany provided export credit guarantees worth 1.8 billion euros (2017: 1.1 billion euros) for the delivery of goods and services to Africa. This marked an increase in cover volume of 66.3%. Consequently, the share in total cov- er widened to 9.0% (2017: 6.3%). The largest project for which cover was pro- vided in Africa was a bank note printing plant including a cash centre in Egypt. Further ex - port credit guarantees were granted for the delivery of a paper bag machine to South Africa, installations for the electriﬁcation of 300 villages in Senegal, a baking plant for toast bread in Kenya and aircraft transac- tions in Burundi. Further cover in the sub- Saharan region was issued for the construc- tion of a power transmission line in Angola, the delivery of large diesel generators to Benin, beverage production plants to Nigeria and road construction machinery for Ghana.
guarantees for asian emerging economies and developing countries in million eur Vietnam China PR India Dubai UAE Saudi Arabia medium a. long 936.4 0.0 46.4 250.1 188.8 257.2 455.2 26.7 121.5 24.8 short 116.8 78.7 887.7 769.6 483.7 476.1 125.2 166.4 256.5 261.6 short-term Subtotal 2018: 1,869.9 1,748.3 medium and long-term Share 2018: (58.6%) (76.7%) Total : (%) ,. ,. guarantees for east asian emerging economies and developing countries in million eur Vietnam China PR Indonesia Philippines Taiwan medium a. long 936.4 0.0 46.4 250.1 105.8 92.3 6.2 1.2 0.0 10.0 short 116.8 78.7 887.7 769.6 202.5 305.9 131.0 128.5 114.5 103.3 short-term Subtotal 2018: 1,452.5 1,094.8 medium and long-term Share 2018: (82.3%) (99.4%) Total : (%) ,. ,. 52 Asia Cover for Asian countries1 rose by 15.9% to 5.5 billion euros in 2018 (2017: 4.7 billion euros) due to a big-ticket project in Vietnam. At 27.6%, this region’s share in total new cover thus remained steady at the previous year’s level (2017: 28.0%). Cover provided for East Asia rose by 22.9%. In Vietnam, an export credit guarantee was issued for the construction of an automo- tive factory complex. Big-ticket cover for the delivery of goods and services to China included a cardboard press and reduction furnaces for the production of silicon. Cover was provided for a ﬁlm extrusion line among other things in Indonesia and for the deliv- ery of an IT system for issuing driving licenc- es in the Philippines. Cover for deliveries to Taiwan took solely the form of wholeturn- over policies. Hermes Cover for South and Central Asia dropped by 6.9%. Export credit guarantees for India were granted for a major project in the steel sector and a cast ﬁlm extrusion line. Several large diesel aggregates, power station equipment and ﬁlm extrusion lines were covered for Bangladesh, agricultural machinery and vehicles for Turkmenistan and various spinning and carpet machines as well as the delivery of a brewery for Uzbekistan. Cover for deliveries to Kazakh- stan took solely the form of wholeturnover policies. 1 See country allocation on page 78
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 53 The total value of cover provided for the entire Middle East rose signiﬁcantly in the year under review by just under one third (30.7%) to 1.3 billion euros (2017: 1.0 billion euros). This is equivalent to 6.6% of total cover (2017: 6.0%). Export credit guarantees for Dubai entailed the delivery of aircraft, while construction machinery, equipment and a crane were cov- ered in the case of Saudi Arabia. In addition, Hermes Cover was issued for the delivery of commercial vehicles and con- struction machinery to Qatar. Cover for Abu Dhabi and Jordan comprises almost ex- clusively deliveries under spread policies (wholeturnover policies and revolving cover). Europe (excluding industrialised countries) Export credit guarantees for the delivery of goods and services to Europe (excluding industrialised countries) climbed by 20% to 5.0 billion euros (2017: 4.2 billion euros), accounting for 25.4% of the total (2017: 24.9%). At 4.3 billion euros, Russia and Turkey con- tributed 84.5% of the export credit guaran- tees granted for this region. Cover for Russia included a petrochemical complex, a pack- aging production line, the modernisation of steel production facilities and a coal loading facility among other things. Export credit guarantees for south and central asian emerging economies and developing countries in million eur India Bangladesh Turkmenistan Uzbekistan Kazakhstan medium a. long 188.8 257.2 133.4 41.4 142.5 115.9 87.1 73.0 0.0 10.1 short 483.7 476.1 63.3 129.5 1.7 3.1 22.8 79.1 58.3 57.2 short-term Subtotal 2018: 629.8 551.8 medium and long-term Share 2018: (86.9%) (98.7%) Total : (%) . . guarantees for middle eastern countries in million eur Dubai UAE Saudi Arabia Abu Dhabi UAE Qatar Jordan medium a. long 455.2 26.7 121.5 24.8 0.0 10.5 29.5 3.2 0.0 0.0 short 125.2 166.4 256.5 261.6 92.6 12.9 13.9 23.2 41.6 40.7 short-term Subtotal 2018: 529.8 606.2 medium and long-term Share 2018: (75.9%) (98.1%) Total : (%) . .
guarantees for european countries (without industrialised countries) in million eur Russia Turkey Ukraine Belarus Serbia short 1,297.6 1,119.9 892.6 953.1 326.3 426.9 101.7 97.0 99.4 98.2 medium a. long 1,180.3 606.3 889.1 616.4 125.9 1.3 52.6 83.7 0.0 112.2 short-term Subtotal 2018: 2,717.6 2,247.9 medium and long-term Share 2018: (97.5%) (99.8%) Total : (%) ,. ,. guarantees for industrialised countries in million eur United States United Kingdom Israel Switzerland Sweden medium a. long 1,777.1 995.5 1,685.7 552.0 199.6 3.2 320.5 1.8 305.7 625.7 short 0.0 0.0 0.0 0.0 187.5 176.7 0.0 0.0 0.0 0.0 short-term Subtotal 2018: 187.5 4,288.6 medium and long-term Share 2018: (31.2%) (95.8%) Total : (%) . ,. 54 guarantees for Turkey covered spinning and textile machinery, an MDF production plant, an automatic material ﬂow system for a car- go terminal and a synthetic ﬁbre production plant among other things. Cover for Ukraine was issued for the delivery of wind power systems, a tomato drying plant and a sug- ar beet harvester. Export credit guarantees for Belarus included the reconstruction of a plant for the production of sulphuric acid and machinery for the production of chocolate products, MDF boards and tableware, among other things. Deliveries of injection moulding machinery were covered for Serbia. Industrialised countries Cover granted for industrialised countries rose by just under one quarter (21.9%) in the year under review. The Federal Govern- ment issued export credit guarantees worth 5.1 billion euros in 2018 (2017: 4.2 billion euros). This is equivalent to 25.7% of total cover (2017: 24.7%). The largest single export credit guarantee was for the United States to cover a cruise ship, while cover was also provided for ship components for cruise ships and the expan- sion of a polypropylene plant. Cover was granted for a cruise ship and the construc- tion of a motor yacht for the United King- dom, for a power station for Israel, steel and other pipelines for Switzerland and a wind farm for Sweden.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 55 Renewable energies Sustainability plays a crucial role in the promotion of Germany’s foreign trade and is duly reﬂected in the country’s cover pol- icy. For example, renewable energy and climate protection projects are particularly promoted through long credit periods of up to 18 years. Cover for renewable energies came to 920 million euros in 2018 (2017: 944 million euros). In most cases, cover was provided for wind power projects. In addition to wind farms in Sweden, Turkey, Argentina and Ukraine, cover was also provided for photo- voltaic projects in Senegal, Russia and Ethi- opia and for a hydropower station in Angola. 50.0% Cover by industrial sector With cover valued at 5.6 billion euros, the transport and infrastructure sector, which traditionally entails big-ticket transactions, accounted for 28.1% of total Hermes Cover and 50% of the single transaction policies. At 3.2 billion euros, cover for ship transac- tions constituted the largest share (previous year: 2.9 billion euros). Airbus guarantees accounted for 556 million euros. Other major individual projects for which cover was pro- vided included an automotive production factory in Vietnam (933 million euros) and pipelines for a buyer domiciled in Switzer- land (321 million euros). export credit guarantees for renewables in million eur 1,084.7 972.9 943.5 920.0 827.5 Volume share of single transaction policies by industrial sectors in million eur Transport/ infrastructure: Chemical industry: Energy: Paper, timber, leather and textile industry: Manufacturing industry: Agriculture and food industry: Mining, incl. processing: Others: 5,557 1,322 1,268 1,167 1,142 375 231 48 Total : , 2.1% 0.4% 3.4% 10.3% 10.5% 11.4% 11.9%
single transaction policies by industrial sectors in million eur Transport/infrastructure Chemical industry Energy Paper, timber, leather and textile industry Manufacturing industry Agriculture and food industry Mining, incl. processing Service industry Oil and gas production incl. processing 2018 2017 5,557 1,322 1,268 1,167 1,142 375 231 25 23 3,959 313 1,476 1,147 988 260 154 31 357 Total 2017: (100%) 8,685 Total : (%) , 56 The sharp rise in export credit guarantees in the chemical sector reﬂects the cover provided for two big-ticket projects, a petro- chemical complex in Russia (937 million euros) and the expansion of a polypropyl- ene plant in the United States (222 million euros). This sector had a share of 6.7% of total cover. Export credit guarantees in the energy sec- tor declined by 14% to just under 1.3 billion euros (2017: 1.5 billion euros), thus account- ing for 6.4% of total cover. Projects in renew- able energies (920 million euros), the con- struction and supply of a gas-ﬁred power plant for Israel (197 million euros) and the electrification of 300 villages in Senegal (131 million euros) were secured with Hermes guarantees. At just under 1.2 billion euros, export cred- it guarantees in the paper, timber, leather and textile industries were up 1.7% on the previous year (1.1 billion euros), contribut- ing 5.9% to total cover. Among other things, various textile machines as well as machin- ery for packaging and chipboard production were covered.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex Transport and infrastructure Project ﬁnance In addition to conventional cover for export ﬁnance, the Federal Government also offers export credit guarantees for project ﬁnance. Project finance structures are generally selected for big-ticket projects that are kept off the balance sheets of the companies involved. Instead, a legally and economical- ly autonomous project entity is established which is responsible for generating the cash ﬂows needed to cover the operating costs and debt servicing for the project. Accord- ingly, the provision of cover for project ﬁnance is contingent upon the completion of comprehensive analyses of the economic viability of the project and its structure as well as the appropriate allocation of the risks to the parties involved in the project. In contrast to conventional export ﬁnance, country risks are largely mitigated by the proj ect and collateralisation structures im - plemented. This means that project ﬁnance is frequently also possible in countries for which restrictions on cover are in place, e.g. ceilings or limits on the size of individual transactions. 57 In 2018, the Federal Republic issued export credit guarantees worth 982 million euros for ﬁve projects (2017: 4 projects, 976 billion euros). Speciﬁcally, cover was provided for a transnational pipeline project, a gas power station in Israel, two wind farms in Argentina and one wind farm in Sweden. In addition, offers of cover were issued for nine projects entailing total ﬁnance of around 4.2 billion euros. These projects included a petrochem- ical complex in Egypt, a wind farm in Argen- tina and a gas power station in Brazil. The high demand for Hermes Cover for proj- ect ﬁnance was unabated in 2018. At around 7.6 billion euros, the value of applications submitted was almost 70% higher than in the previous year (2017: 4.5 billion euros). Regionally, the main countries for which cov- er was sought were Russia, the Middle East, Africa and Taiwan.
58 Ship business In 2018, the Federal Government issued cov- er for ship transactions worth 3.2 billion euros (2017: 2.9 billion euros). All of these were civilian shipbuilding projects. In addi- tion, offers of cover worth around 1.7 billion euros were issued for new river and ocean cruise ships, among other things. The ships for which cover was provided are characterised by high fuel efﬁciency. In creased use of waste heat and the instal- lation of dual-fuel diesel engines that can run on LNG or marine gas oil also reduce emissions compared with conventional tech- nology. In addition, the Federal Government provid- ed export credit guarantees for ship com- ponents intended for the construction of two large passenger ships in Finland. This cover was provided by means of a tailored ﬁnancing structure in close cooperation with Finnvera, the Finnish export credit insurance agency. Cover was also provided for four smaller bulk carriers for an Irish shipping company and the construction of a large yacht. Airbus cover In 2018, the Federal Government granted Airbus guarantees for deliveries of aircraft to Dubai and Rwanda. Cover provided for air- craft was valued at 556 million euros in the year under review. Accordingly, this sector fell short of the average for previous years. Military goods The Federal Government provided export credit guarantees of 5.9 million euros for military goods in the year under review (2017: 1.1 billion euros), equivalent to 0.03% of total new cover. The long-term average since 1997 is 3.7%.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 59 Environmental, social and human rights assessment of projects Projects coming within the scope of the Common Approaches must undergo envi- ronmental, social and human rights (ESHR) due diligence. This particularly includes all transactions with a credit period of more than two years. The transactions are catego- rised in accordance with their potential ESHR impact. The category determines the scope of the audit. In 2018, the Federal Govern- ment provided cover worth 8.5 billion euros for environmental category A transactions (projects which have the potential to have signiﬁcant adverse ESHR impacts which are diverse, irreversible and/or unprecedented or which may be located in or near sensitive areas and for which the buyer must take special mitigation measures to minimise the impact). In environmental category B (projects with site-speciﬁc or easily revers- ible ESHR impact), cover came to 1.4 billion euros. Under the Common Approaches, deliveries for existing plants which do not result in any material change of function or capacity only need to undergo a risk assessment. The cover provided for these transactions was valued at 700 million euros. export credit guarantess for military goods in billion eur Type of goods Egypt 0.006 Aircraft towing tractors Total . environmental, social and human rights due diligence number Volume billion EUR number Volume billion EUR Audited projects In-depth assessment Category A and B Officially supported projects Category A Officially supported projects Category B 85 50 13 34 9.4 7.0 2.2 2.3 86 56 12 22 17.6 15.8 8.5 1.4 officially supported, environmentally relevant projectsby categories and sectors Category A Category B number 1 6 2 2 1 Volume million EUR 868.0 6,619.8 33.7 966.4 40.2 Chemical industry Power generation Wood processing and paper Infrastructure Manufacturing industry Total Category A 12 8,528.1 Mining Chemical industry Power generation Wood processing and paper Infrastructure Manufacturing industry Total Category B Total 1 3 9 3 4 2 22 25.0 263.2 428.2 219.5 238.3 209.9 1,384.1 ,.
claims, recoveries and rescheduling Claims 60 Outgoing payments for claims increased by more than two thirds (69.6%) over the pre- vious year to 728.0 million euros due to the settlement of a large claim. Outgoing payments for commercial claims rose slightly by 2.9% to 409.9 million euros (2017: 398.4 million euros). In the case of Singapore, the increase over the previous year was chieﬂy due to indemniﬁcation paid for a gas power station and an offshore ship. Indemniﬁcation was paid for loans in the wind power segment, among other things, in Azerbaijan. Claims payments for Russia related to a plant for the production of con- struction materials, among other things. Outgoing payments for India rose over the previous year as a result of claims relating to textile machinery and in the steel sector. Outgoing payments for political claims in - creased from 30.9 million euros to 318.1 mil- lion euros primarily as a result of a claim in Venezuela. Further indemniﬁcation pay- ments were made for Gabon. Recoveries Recoveries of indemnification previously paid (excluding interest) climbed by a good quarter (28.7%) to 397.4 million euros. Agreed restructuring plans for large claims as well as the distribution of commercial claims payments in million eur Political risk claims 288.4 94.9 38.2 30.9 318.1 Commercial risk claims 215.5 300.1 513.6 398.4 409.9 Total . . . . . Differences in the sums are due to rounding top ten countries – claims payments under commercial risk cover in million eur Singapore Azerbaijan Russia India Ukraine Mexico Saudi Arabia Brazil Thailand Bahamas 110.8 80.4 51.6 41.6 21.9 17.9 12.7 7.5 7.3 6.4 0.0 2.3 42.2 26.2 40.5 10.7 9.1 44.0 0.0 11.3 2018 2017 Subtotal 2018: (87.4%) 358.1 Total : (%) .
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex recoveries for claims paid (excl. interest) in million eur under political risk cover thereof rescheduled amounts 181.4 153.3 803.8 203.2 267.2 147.9 146.3 279.4 178.8 264.8 under commercial risk cover 118.4 132.5 170.5 105.6 130.2 claims under management across just under 1,000 foreign debtors suggest that there will continue to be signiﬁcant recoveries in the future. 61 Total . . . . . Rescheduling Differences in the sums are due to rounding top ten countries – recoveries under commercial claims in million eur Azerbaidjan Abu Dhabi UAE Indonesia Russia Bulgaria Kazakhstan Saudi Arabia Singapore Mongolia India 19.9 18.2 17.1 10.2 9.2 7.9 7.2 5.9 5.1 4.9 Subtotal 2018: (81.1%) 105.6 Total : (%) . In 2018, the Paris Club again dealt with fun- damental issues. Among other things, partic- ular attention was paid to the problems of countries experiencing difﬁculties in meet- ing their payment obligations as a result of natural disasters. To this end, a regional conference was held in April with represen- tatives of the International Monetary Fund (IMF) and the World Bank as well as the debtor countries concerned. Subsequently, models were developed to achieve a bal- ance between the interests of debtors and creditors in the event of natural disasters which are still under consideration. In addi- tion, various initiatives were taken to inten- sify cooperation with public-sector creditors not represented in the Paris Club and with associations of private-sector creditors. The technical discussions continued on the deﬁnition of ofﬁcial government receivables in connection with the reform of the IMF’s assessment of debt problems. There were substantial recoveries under the bilateral rescheduling treaties in 2018 par- ticularly as a result of payments made by Argentina and Iraq. These were added to the Federal budget to cover earlier indemniﬁca- tion payments.
results Revenues 62 In the year under review, total revenues for the Federal budget from export credit guar- antees rose by 41.0% to 1.362 billion euros (previous year: 965.8 million euros). Income from premiums and fees climbed by 69.0% due to the increase in cover, par- ticularly for medium and long-term big-ticket transactions, for which higher premiums are normally payable. Recoveries under previously indemnified claims and debt repayment under resched- uling agreements rose by 28.7% over the previous year. The largest recoveries were received from Argentina (213.6 million euros), Azerbaijan (19.9 million euros), the United Arab Emirates (18.2 million euros), Iraq (17.4 million euros), Indonesia (17.1 mil- lion euros), Pakistan (14.1 million euros) and Russia (10.2 million euros). The interest income of 378.6 million euros (2017: 309.9 million euros) arose almost solely from rescheduling agreements. Net of exceptional currency translation loss of 0.5 million euros in connection with claims, interest income of 378.1 million euros was recorded. Expenses In the year under review, expenses climbed by 58.7% to 816.6 million euros (2017: 514.4 million euros). They comprise claims payments (728.0 million euros) and the costs for the administration of export credit guarantees (88.7 million euros). revenues in million eur Amortisation and recoveries: Premium/fees earned: Interest received: Special expenses from exchange rate losses: 397.4 586.1 378.6 -0.5 Total : ,.* * Differences are due to rounding 0.0% 27.8% 29.2% 43.0% highest interest payments in million eur Argentina Iraq Myanmar Serbia Pakistan 286.8 41.1 15.1 11.3 8.3 Subtotal 2018: (95.9%) 362.6 Total : (%) .
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex Annual result With a cash surplus of around 166 million euros, the Federal Republic of Germany’s export credit guarantee scheme achieved a positive result for the Federal budget for the 20th year running. Accordingly, the accrued total balance of export credit guarantees rose to around 5.7 billion euros (not adjusted for inﬂation) as of the end of 2018. 63 The interest income of 378.6 million euros (2017: 309.9 million euros) arising predom- inantly from rescheduling agreements was transferred to the Federal budget. This inter- est income is not included in the calculation of the annual result. financial result in million eur 1,184 Interest received Annual result excluding interest 606 519 454 581 384 99 93 115 123 111 309 256 214 398 344 379 310 142 166 annual result and results accruedof the federal export credit guarantees 1980-2018 in million eur Annual result (excluding interest) Results accrued (excluding interest) ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ – + 5,000 – 0 – - 5,000 – - 10,000 – - 15,000
64 statutory cover limit and total commitment level Export credit guarantees are granted on the basis of amounts authorised by the budget. As of the end of the year, 78.9% of the statu- tory cover limit of 153 billion euros had been utilised. Interest covered does not count towards the statutory cover limit. The Federal Government’s total commit- ment level (exposure) stood at 120.7 bil- lion euros as of 31 December 2018, thus falling slightly short of the previous year (2017: 121.0 billion euros). This ﬁgure equals the total volume of export credit guaran- tees issued (net of interest) which are still exposed to risks. Exposure is deﬁned as the actual portfolio registered by the Federal Ofﬁce of Administration (BVA). However, it does not provide any indication of the real outstanding risk as the export credit guaran- tees count towards the statutory cover limit on the basis of their full amount regardless of their execution status until liability has been discharged. In the year under review, there were additions of 11.5 billion euros for new cover but discharges of 11.9 billion euros. In addition, cover for interest came to 49.0 billion euros at the end of the year (2017: 49.6 billion euros). The Federal Govern- ment’s total commitment level including interest thus stood at 169.7 billion euros. total commitments of the federal government (exposure)breakdown by country groupsand statutory cover limit in billion eur Statutory cover limit 160.0 160.0 153.0 Uncategorisable* Emerging economies and developing countries Industrialised countries 128.6 5.4 121.0 5.3 120.7 6.1 84.2 78.6 77.3 39.0 37.1 37.3 * The „uncategorisable” exposure refers to allocations made for wholeturnover policies and securitisation guarantees under the statutory cover limit. the federal government’s statutory cover limit Law drafted by the Federal Government parliament passes Federal Budget Act determines Statutory cover limit Maximum amount for future cover in the light of existing and on risk cover monitors utilisation Federal Ofﬁce of Administration registers the maximum amounts for which liability is accepted reports new issues and the discharge of liability for extinguished risks Mandatary of the Federal Government: Euler Hermes
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 65 outstanding risk The Federal Government’s outstanding risk is derived from the future maturities of commitments under cover granted plus interest, less the percentage to be retained by the exporters and banks for their own account. This amount constitutes the the- oretical maximum outstanding risk from current Federal Government guarantees at any given time if the entire risk occurs in full. However, it does not provide any indication of the real likelihood of the risk turning into a claim and thus the Federal Government’s liability to indemnify it. total outstanding risk by industrial sectors Sector Ships Energy billion EUR 30.8 16.7 Share in % 36.7 19.9 Oil and natural gas production Manufacturing industry Aircraft Infrastructure Paper, timber, leather and textile industry Chemical industry No recording of industries * Mining Agriculture and food industry Service industry 7.8 6.7 6.3 4.9 4.2 3.5 2.9 1.3 1.1 0.4 9.3 8.0 7.5 5.9 5.0 4.2 0.3 1.6 1.3 0.5 Total . . ** * Wholeturnover policies, reschedulings ** Differences are due to rounding top ten countries – total outstanding risk in billion eur United States Russia Turkey Egypt Bermuda United Kingdom Singapore India Switzerland Vietnam 11.2 8.9 8.9 6.6 5.8 5.6 3.0 2.9 2.7 1.9 9.7 8.3 8.6 6.5 6.6 4.3 3.3 3.3 2.7 0.9 2018 2017 Subtotal 2018: (66.5%) 57.5 Total : (%) .
66 unrecovered amounts under claims paid At the end of the year, unrecovered amounts under claims paid for commercial and polit- ical loss – including rescheduled trade and loan receivables – stood at a good 4.0 bil- lion euros (2017: 3.9 billion euros). These unrecovered amounts arise from claims paid for receivables transferred to the Federal Government which might still be recovered in the future. Signiﬁcant recoveries can be expected from outstanding commercial claims totalling 2.4 billion euros due to restructuring agree- ments already entered into in respect of major claims. In the case of outstanding political claims (537 million euros), further recoveries can generally be expected. share of total outstanding risk by country in billion eur United States Russia Turkey Egypt Bermuda United Kingdom Singapore Other countries Total : 11.2 8.9 8.9 6.6 5.8 5.6 3.0 36.4 . 42.1% 12.9% 10.3% 10.3% 7.6% 3.5% 6.5% 6.7% total outstanding risk by country groups Countries * Emerging economies and developing countries million EUR Share in % million EUR Share in % 56,603.0 65.9 55,461.1 64.1 Latin America Africa 11,116.2 10,022.0 Asia ** 16,722.6 Europe 18,742.2 13.0 11.7 19.5 21.8 9,750.5 9,999.8 16,215.7 19,495.1 11.3 11.6 18.7 22.5 Industrialised countries 29,227.6 34.1 31,036.8 35.9 Total ,. . ,. . * See country classification p. 78 ** Including Oceania Difference in the sums are due to rounding total outstanding risk by maturities in billion eur Maturity up to 1 year: Maturity 1 - 5 years: Maturity more than 5 years: no fixed maturity:* Total : 10.9% 14.2% 12.3 33.2 31.6 36.5% 38.3% 9.4 . * Isolated manufacturing risk cover, contract bond cover
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 67 An outstanding amount of just under 1.1 bil- lion euros has been restructured in the Paris Club to take account of the ability of the debtor countries to meet their payment obligations and is governed by bilateral rescheduling agreements. However, there is no certainty that the repayments thus agreed will actually be received. No outstanding amounts due to the Feder- al Government were cancelled under debt rescheduling arrangements in 2018. Since the establishment of export credit guaran- tees, the Federal Republic of Germany has waived total debt of just under 4.4 billion euros owed by the poorest countries under earlier debt-rescheduling agreements. amounts outstanding in billion eur 26.6% 60.1% Commercial claims: Political risk claims: Political risk claims regulated in rescheduling agreements: Total : 2.4 0.5 1.1 . 13.3% top ten countries – debt owed to the federal government out of rescheduling agreements and political risk claims in million eur Argentina Venezuela Iraq Myanmar Pakistan Korea DPR Zimbabwe Serbia Sudan Saudi Arabia 475.8 316.6 158.1 146.0 139.4 109.1 72.1 64.0 46.8 21.0 Subtotal 2018: (96.0%) 1,548.9 Total : (%) ,.
68 new guarantees as related to total export volume; cover applications utilisation of the statutory cover limit in billion eur Year 1950 1955 1960 1965 1970 1975 1980 1985 1990* 1995** 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total export volume in of total ex billion EUR billion EUR port volume New guar percentage Cover appli cations in antees in billion EUR Covered Statutory cover limit **** Allocated amount of statutory cover limit **** Total outstand ing risk 4.3 13.1 24.5 36.7 64.1 113.3 179.2 274.6 348.0 383.2 596.9 786.2 893.6 969.1 994.9 808.2 959.5 1,060.2 1,097.4 1,093.9 1,133.5 1,195.9 1,207.0 1,279.1 0.2 1.6 2.4 2.8 4.9 10.1 14.6 15.9 13.7 17.1 19.5 19.8 20.6 17.0 20.7 22.4 32.5 29.8 29.1 27.9 24.8 25.8 20.6 16.9 3.6 12.5 9.6 7.5 7.7 8.9 8.1 5.8 3.9 4.5 3.3 2.5 2.3 1.8 2.1 2.8 3.4 2.8 2.6 2.6 2.2 2.2 1.7 1.3 1.0 5.1 8.3 10.0 12.0 55.8 64.8 54.0 29.9 29.8 21.0 24.8 33.9 *** 38.1 42.8 48.0 36.8 37.4 41.7 38.7 38.6 36.2 38.2 29.1 1,317.9 19.8 1.5 35.1 0.3 3.8 6.1 8.7 13.8 30.7 76.7 99.7 81.8 99.7 112.5 117.0 117.0 117.0 117.0 117.0 120.0 135.0 135.0 145.0 165.0 160.0 160.0 160.0 0.3 2.5 5.2 8.1 12.9 25.0 59.6 80.9 68.3 91.9 106.1 104.9 98.4 96.7 101.3 107.8 107.5 116.6 124.9 129.1 134.1 132.8 128.6 121.0 56.5 56.7 58.8 58.1 62.3 66.0 76.4 82.3 85.2 87.7 88.5 92.4 89.8 85.8 153.0 120.7 86.5 * Starting 1989, values include former Eastern Germany ** Starting 1993, a new statistical method is applied in the EU to record overall export ﬁgures *** Volume of new applications, until 2005 buisiness volume of decisions **** The column “Allocated amount of statutory cover limit“ reﬂects the overall level of exposure under the statutory limit for the respective year. However, conclusions on the amounts actually at risk cannot be drawn on the basis of these ﬁgures because they also include indemniﬁcation and other payments made in respect of reschedulings for which recoveries are still expected. For this reason, the Federal Government‘s total outstanding risk has been recorded separately since the end of 1997.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex result in million eur Year(s) Premiums/ fees earned Recoveries for claims paid and rescheduled amounts* Disburse ments for claims and reschedulings Expenses for the han dling of the export credit guarantees Annual results excluding interest Interest** 69 1950-1954 1955-1959 1960-1964 1965-1969 1970-1974 1975-1979 Subtotal 1980-1984 1985-1989 1990-1994 1995-1999 2000-2004 2005-2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 27.6 85.6 141.3 247.0 346.1 897.5 16.8 83.2 144.7 381.4 421.9 468.5 1,745.1 1,516.6 1,437.3 1,343.3 2,022.9 2,727.3 2,399.3 2,442.1 776.5 778.6 546.7 653.9 598.1 541.8 845.4 346.9 586.1 860.9 1,034.6 2,028.3 2,722.2 3,905.1 12,014.1 187.2 232.3 199.4 244.7 299.9 286.5 977.6 309.1 396.9 25.6 168.0 370.1 587.7 808.1 580.6 2,540.1 3,034.5 5,512.6 12,121.9 6,614.4 3,615.1 1,608.9 282.2 408.5 282.5 232.5 504.0 395.1 551.8 429.3 728.0 5.3 10.8 14.4 22.8 37.9 82.6 173.7 149.9 183.9 244.3 270.6 317.6 336.1 75.8 83.4 79.8 85.2 84.7 89.6 87.4 85.1 88.7 13.5 -10.0 -98.5 18.0 -77.9 702.8 547.9 -886.1 -3,318.5 -8,315.0 -1,435.5 2,371.6 12,511.2 605.6 519.0 383.8 580.9 309.3 343.7 1,183.9 141.5 166.4 482.1 238.2 760.1 1,725.6 4,143.6 5,278.6 4,746.7 92.7 115.2 123.6 111.4 214.3 256.4 397.5 309.9 378.6 Total amount 19,791.4 27,215.4 38,861.3 2,435.8 5,709.7 19,374.6 Total income 47,006.8 Total expenses Result accrued excluding interest Debt owed to the Federal Government of which regulated under reschedulings 41,297.1 5,709.7 4,048.2 1,076.7 * Recoveries for claims paid and rescheduled amounts include special revenues and exchange rate gains ** Interest received by the federal budget is exluded when calculating the ﬁnancial result since the reﬁnancing costs incurred by the Federal Government in respect of claims paid are also not included Differences are due to rounding
11 raw materials in 16 countries Over the last ﬁve years, the Federal Government has con- ﬁrmed the eligibility of raw material projects in 16 countries for 11 different raw materials in the light of raw materials supply considerations. 1.3 billion Applications worth 1.3 bil- lion euros were received for untied loan guarantees in 2018.
untied loan guarantees (ufk) The commodity markets continued to exhibit extremely strong 7171 momentum in 2018. The development of numerous mining projects, particularly for copper, was stepped up on the strength of positive price projections. This heightened activity was reﬂected in 27 inquiries for raw material projects in 2018. Eligibility for cover was conﬁrmed for six projects on the basis of raw materials supply considerations. In addition, an offer of cover was given for a pipeline project and an untied loan guarantee issued for a copper project. Exposure stood at 3.9 billion euros at the end of 2018. Copper the main driver Rising market prices are driving the global develop- ment of numerous copper deposits. 3.9 billion The Federal Government’s exposure under aggregate outstanding guarantees came to 3.9 billion euros as of the end of 2018.
72 the year at a glance As in the previous year, commodity markets were generally characterised by stable prices in 2018. In the second half of the year, however, global economic conditions, particularly as a result of the development of relations between China and the United States, the Brexit negotiations and general political uncertainty, also left traces on commodity markets. As a result of these global develop- ments, large parts of the commodity mar- kets remained flat compared with the previous year, stabi- lising at a moderate price level. With prices fundamentally stabilising over recent years, investment activity for the development or recommissioning of mining projects has increased significantly. In 2018, many projects reached an advanced stage of development in which ﬁnancing issues play a central role. This is also reﬂected in numerous requests for guarantees for untied loans. At the same time, there were isolated cases – particularly in African countries – in which national legislation was passed to restrict foreign investors’ access to mines. This trend had already become apparent in the previ- ous year and continued in 2018. In 2018, one new untied loan guarantee worth a total of 0.5 billion euros was issued. An offer of cover for 1.3 billion euros (plus cover for interest) was issued ufk enquiries – distribution among the types of raw materials Raw materials Number Minerals Energy raw materials Other raw materials Copper Lithium Graphite Bauxite Rare earths Cobalt Gold Iron ore Silicon LNG 19 8 4 1 1 1 1 1 1 1 4 4 4 Total for a further project. Four (previous year: two) appli- cations for raw material projects with a combined value of 1.3 billion euros (plus cover for interest) were received. At 27 (2017: 33), the number of inquiries remained at a high level. These concerned raw mate- rial projects in 16 different countries mostly entailing minerals (primarily copper and lithium). In 2018, plans for six of these projects (four copper, one graphite and one LNG project with a total volume equivalent to around 2.4 billion euros) had already progressed far enough for the Federal Ministry for Economic Affairs and Energy to conﬁrm their eligibility for cover in the light of raw materials supply considerations.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex ufk underwriting practice – countries 73 Canada United States Norway North Macedonia Spain Panama Guinea Peru Chile Iran Tanzania Australia South Africa Countries where raw material projects were regarded as eligible for support during the past five years. Mongolia Azerbaijan Turkey For further details, please contact: Phone: +49 (0) 40 / 88 34 90 00 firstname.lastname@example.org agaportal.de/en > raw materials All in all, the Federal Government has conﬁrmed the eligibility of 30 projects in 16 countries around the world in the light of raw materials supply consider- ations over the last ﬁve years. These projects entailed 11 different mineral and energy sources, thus under- scoring the range of raw materials and projects for which the untied loan guarantee instrument is avail- able. The Federal Government’s maximum liability (expo- sure) under the guarantees issued and still on risk – including cover for interest – stood at 3.9 billion euros at the end of 2018. Of this, raw material projects accounted for 3.5 billion euros and development-bank projects for 0.4 billion euros. Two guarantees issued for development-bank projects worth 1.9 billion euros were discharged prematurely in 2018. As of the end of the year, the portfolio comprised a total of ten guaran- tees, namely seven guarantees for raw material proj- ects and three for development-bank projects. The untied loan guarantees paid for themselves in the year under review from premiums and fees. There were no claims. The 2018 Budget Act provided for a joint statutory cov- er limit of 65 billion euros for the issue of untied loan guarantees, investment guarantees and European Investment Bank loans.
Project example: the Mina Justa copper project – mining raw materials in Peru to supply German industry 74 In 2018, the German government granted an Copper is of considerable importance for untied loan guarantee of 400 million dollars German industry. In addition to its tradi (plus interest) for the Mina Justa project in tional uses, it is also becoming increasingly Peru. A longterm supply agreement between important for future technologies made in the project company and the German company Germany. The high conductivity of copper is Aurubis AG forms the basis for the Federal particularly useful for electromobility. Looking Government’s participation in the finance for forward, this will lead to a further increase in this project. Aurubis is one of the world’s largest the share of copper used in the automotive copper producers and a leader in the production industry and by supporting this project, the of secondary copper from recycled metal scrap. Federal Government sent an strong signal on With the support of the Federal Government, the significance of industry in Germany. the company has secured supplies of copper concentrate from the mine for processing in The copper project is being developed by the copper smelter in Germany over a period of the Peruvian mining company Minsur S.A. ten years. The supply agreement thus makes and the Chilean Copec S.A. group in southern a significant contribution to the company’s Peru in the Ica region, a region known for its capacity utilisation and ensures the longterm mining industry. In addition to the construction availability of copper for German industry. of the mining operations and the necessary Visit by the ECA environ- mental, social and human rights consultants to the site of the Mina Justa cop- per mine project in Peru.
the tasks of the interministerial committee the interministerial committee in contact with stakeholders business performance untied loan guarantees (ufk) annex 75 production plant, the project also includes by a consortium of banks consisting of infrastructure investments and the expansion KfW IPEXBank, Société Générale, Crédit of a port facility. The project is being Agricole, ING Bank, Natixis and BBVA. implemented in line with international environmental, social and human rights The intergovernmental agreement estab requirements in accordance with the lishing a raw materials partnership between IFC Performance Standards. Peru and the Federal Republic of Germany came into force in 2015. Under the agree The total investment volume stands at around ment, Germany is to receive guaranteed sup 1.6 billion dollars. The project is being plies of raw materials, in return for which financed by the equity contributed by the the Peruvian raw materials sector is to be two investors as well as debt capital totalling developed on a sustained and economically 900 million dollars. In addition to the untied viable basis. The Mina Justa project is loan guarantee provided by the Federal thus helping to strengthen the bilateral Government, other ECAs including EDC relations between the two countries. (Canada), EFIC (Australia) and KEXIM (Korea) are also involved. The funding under the untied loan guarantee is being provided
76 The leadership function in the Interministerial Commit- tee, which has the underwriting responsibility for the Federal Export Credit Guarantees, is exercised by the Federal Ministry for Economic Affairs and Energy: Bundesministerium für Wirtschaft und Energie Referat VC2 Scharnhorststraße 34-37 10115 Berlin www.bmwi.de The Federal Government has appointed Euler Hermes Aktiengesellschaft, Hamburg, (Euler Hermes), to manage the ofﬁcial export credit guarantee scheme. Further details, information, documents and advice on the opportunities offered by ex port credit guarantees and the applicable pro cedures can be obtained by contacting the Head Ofﬁce of Euler Hermes Aktien- gesellschaft or one of its branch ofﬁces. Extensive information material on the ofﬁcial export guarantee scheme, e. g. current editions of the AGA Report, the General Terms and Conditions, application forms and information leaﬂets as well as the Annual Reports can also be accessed via the Internet. The “Hermes Cover Special” addresses key aspects of export credit guar- antees in detail. Further brochures are also available on the Internet. 2018: @ Duties under supplier and buyer credit cover 2017: @ Guide to forfaiting for exporters 2017: @ Principles underlying ship ﬁnance 2017: @ Indemniﬁcation procedure 2016: @ Inclusion of foreign content in Hermes Cover This report on the export credit guarantees provided by the Federal Republic of Germany is published in German and English. Rev.: May 2019 Follow Us Follow Us Watch Us
78 classiﬁcation of countries Classiﬁcation of countries into industrialised countries and emerging econ o mies and developing countries Industrialised countries: The group of industrialised countries comprises all coun tries with OECD country classification 0; these include OECD high-income countries (according to the World Bank deﬁni- tion: countries with a GNI per capita above 12,056 US dollars in 2018), member states of the European Monetary Union including their afﬁliated terri tories, as well as Singapore. Andorra, Australia, Austria, Belgium, Canada, Chile, Czech Republic, Cyprus, Denmark, Es tonia, Finland, France, Germa- ny, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Lat- via, Liechtenstein, Lithu ania, Luxembourg, Malta, Monaco, Neth erlands, New Zealand, Norway, Poland, Portugal, San Marino, Singapore, Slovak Republic, Slovenia, Spain, South Korea, Sweden, Switzerland, United Kingdom, United States, Vatican City and their dependent territories: BES Island, Ceuta and Melilla, Gibraltar, Greenland, Guade- loupe, French Guiana, Marti nique, Mayotte, Réunion, St. Pierre and Miquelon. American emerging economies and developing countries: American Virgin Islands, Anguilla, Antigua and Barbuda, Argentina, Aruba, Bahamas, Barbados, Belize, Bermuda, Bo- livia, Brazil, British Virgin Islands, Cayman Islands, Co lombia, Costa Rica, Cuba, Curaçao, Domi nica, Dominican Republic, Ecuador, El Salvador, Falkland Islands, Grenada, Gua temala, Guyana, Haiti, Honduras, Jamaica, Mexico, Montserrat, Nica- ragua, Panama, Paraguay, Peru, Puerto Rico, Sint Maarten, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago, Turks and Caicos Islands, Uruguay, Venezuela. African emerging economies and developing countries: Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cabo Verde, Central African Republic, Chad, Comoros, Congo, Congo (Democratic Republic), Côte d’Ivoire, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Lib ya, Madagascar, Malawi, Mali, Mauritania, Mau- ritius, Morocco, Mozam bique, Namibia, Niger, Nigeria, Rwanda, Sâo Tomé and Principe, Senegal, Seychelles, Sierra Leone, Somalia, South Af ri ca, South Sudan, St. Helena, Sudan, Swaziland (since 2018 Eswatini), Tanzania, Togo, Tu- nisia, Uganda, Zambia, Zimba bwe. Asian emerging economies and developing countries: @ Middle East: Bahrain, Iran, Iraq, Jordan, Kuwait, Leb a non, Oman, Palestine (au ton omous terri tories), Qatar, Saudi Ara bia, Syria, United Arab Emirates, Yemen. @ East Asia: Brunei Darussalam, Cam bo dia, China (People’s Republic), Hong Kong, Indonesia, Ko rea (Democratic People’s Republic), Laos, Macao, Ma laysia, Mongolia, Philippines, Taiwan, Thai- land, Timor-Leste, Vietnam. @ South/Central Asia: Afghanistan, Armenia, Azerbaijan, Bangla desh, Bhutan, Georgia, India, Ka zakh stan, Kyrgyzstan, Maldives, Myanmar, Nepal, Pa kistan, Sri Lanka, Tajikistan, Turkmenistan, Uzbeki- stan. @ Oceania: American Samoa, Cook Is lands, Fiji, French Polynesia, Guam, Ki ribati, Marshall Islands, Micronesia, Na uru, New Caledonia, Niue, Northern Ma riana Is lands, Palau, Papua New Guinea, Pitcairn Islands, Solomon Is lands, Samoa, Tokelau, Tonga, Tuvalu, Vanuatu, Wallis and Futuna. European countries (without industrialised countries): Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, North Macedonia, Republic of Moldova, Montenegro, Romania, Russia, Serbia, Turkey, Ukraine.
Export Credit Guarantees of the Federal Republic of Germany head ofﬁce berlin liaison ofﬁce Euler Hermes Aktiengesellschaft Gasstraße 27 22761 Hamburg Phone: +49 (0) 40 / 88 34 - 90 00 +49 (0) 40 / 88 34 - 91 75 Fax: email@example.com www.agaportal.de Friedrichstadt-Passagen Quartier 205 Friedrichstraße 69 10117 Berlin Phone: +49 (0) 30 / 72 62 - 177 50 Fax: +49 (0) 30 / 72 62 - 177 76 firstname.lastname@example.org branch ofﬁces 10117 Berlin Friedrichstraße 69 44139 Dortmund Rheinlanddamm 199 Ofﬁce Park 60549 Frankfurt MAC Main Airport Center Unterschweinstiege 2 - 14 Building D1 / 10th ﬂoor 79100 Freiburg Rehlingstraße 6 e 22761 Hamburg Gasstraße 27 50670 Köln Im Mediapark 8 81373 München Radlkoferstraße 2 90429 Nürnberg Spittlertorgraben 3 70178 Stuttgart Tübinger Straße 41/43 Caleido you can ﬁnd our products on the internet agaportal.de/en > Exports > Basics > Products For all branch ofﬁces: Phone: +49 (0) 40 / 88 34 - 90 00 +49 (0) 40 / 88 34 - 91 41 Fax: email@example.com <<< please turn overleaf for deﬁnitions and explanations
deﬁnitions and expl anations Arrangement (OECD Consensus): The Arrangement is a “Gentlemen’s Agreement” between the OECD members which lays down certain minimum and maxi- mum terms permissible for ofﬁcially supported export credits with a maturity of more than 2 years. The Arrangment aims at creating a level playing ﬁeld for the exporters and avoiding ﬁnancing competition which would place an unnecessary burden on national budgets. Ceiling: For countries where cover facilities have been restricted for risk management reasons, an amount of cover is ﬁxed which places a limit on the maximum amount for which guarantees can be issued, i. e., a ceiling is established. As a rule, such ceilings apply to transactions with repayment terms of more than 12 months. Club of London: The uncovered loans granted by commercial banks are re- scheduled by the banks on their own initiative (cf. also Paris Club). Coinsurance: When the primary supplier passes on his foreign risks to the subcontractor, e.g. if and when the latter only gets paid when the foreign buyer has paid the primary contractor, an applica- tion can be made for so-called coinsurance. Among EU mem- ber states, this is regulated by a Council Directive. There are bilateral agreements with other credit insurers. Besides this, there is the option of concluding a coinsurance agreement with other state export credit agencies covering just a single transaction. Commercial risks: Commercial risks are mainly insured under the cover given for the credit and manufacturing risks involved in export contracts with private buyers. In the case of credit risk, the insured event is the uncollectability of insured accounts re- ceivable as a result of the insolvency of the foreign buyer, as well as his simple non-payment after the expiry of a certain period (protracted default). In manufacturing risk cover, the commercial risks recognized as insured are also the occur- rence of buyer insolvency during the manufacturing period, the unlawful repudiation of the contract by the buyer as well as non-payment of cancellation costs if the contract was lawfully cancelled. ECA: Export Credit Agency which supports exports by means of state export credit insurance, direct lending, reﬁnancing or interest subsidies. Environmental, social and human rights audit: The OECD Recommendation of the Council on Common Ap- proaches for Ofﬁcially Supported Credits and Environmental and Social Due Diligence (Common Approaches) essentially forms the basis for the assessment of environmental, social and human rights risks of projects abroad, in which German exporters are involved as suppliers. Exposure: Total commitment level of the Federal Government booked against the maximum exposure limit or the commitment under an individual export credit guarantee. Interministerial Committee (IMC): Decides on matters of principle and on the availability of cover for individual transactions. The Federal Ministry for Economic Affairs and Energy takes the decisions on the cover applications with the approval of the Federal Ministry of Finance and in agreement with the Federal Foreign Ofﬁce and Federal Ministry for Economic Cooperation and Development. Representatives of the mandatary and experts are also on the IMC. Marketable risks: With effect from 2002, the political and commercial risks arising out of export transactions with credit periods of up to two years in EU countries as well as core OECD countries are considered to be marketable risks. In line with the principle of subsidiarity, state cover is therefore no longer available for such risks. The new EU Commission Communication which came into force on 1 January 2013 regulates up to 2020 the procedure under which a country may be classiﬁed as tempo- rarily non-marketable if and when sufﬁcient cover is not avail- able from the private credit insurers. Multi-sourcing projects: Projects involving exporters from different countries and, in many cases, with multinational ﬁnancing. Offer of cover: Declaration of intent to provide cover subject to the condition that the factual and legal basis of the transaction does not change (transaction earmarked for cover). Parallel insurance: When the various suppliers in a multi-sourcing project each have their own payment claims against a foreign buyer, each supplier insures his receivables against loss with his own national export credit agency.
Paris Club: International association of ofﬁcial creditors which restruc- tures the debt of countries experiencing payment difﬁculties. The debt treatment refers almost exclusively to ofﬁcially guar- anteed commercial debt, i. e. guaranteed in particular by the governments of the creditor countries and development aid loans. The Paris Club has no organisational structure with written statutes. The procedural guidelines have been devel- oped over the course of time and are amended when and as necessary (cf. “Club of London”). Political risks: The origin of political risks is to be sought in measures or events originating in the sphere of state authorities. In the case of cover for amounts due for payment, such risks are political circumstances which cause the insured accounts receivable to become uncollectible, especially the general political cause of loss, which includes legislative or regulato- ry actions and so-called chaos events such as war, civil unrest or revolution in foreign countries. The Federal Government further grants cover for the conversion and transfer risk, i. e., the risk that amounts duly paid by the foreign buyer in local currency are not converted and/or not transferred due to restrictions on the international payment system between countries. Cover is also given for the risks of frustration of contract, when it becomes impossible to fulﬁl a contract and entitlements under it are lost, as well as the risk of loss of goods before the passing of risk for reasons which can be attributed to political circumstances. If such a cause of loss seems likely – just as in the case of the general political cause of loss – and the goods are sold elsewhere in such a situation, then the risk of a shortfall in the proceeds realized is also insured. In the case of manufacturing risk cover the political risks insured comprise the political circumstances abroad which lead to the cessation of manufacture or to non-shipment, as well as embargos imposed under the export law and by any third countries which may be involved. Reinsurance: Using the reinsurance model, projects involving exporters from different countries (multi-sourcing-projects) can be covered by a single export credit insurer, so that the main supplier and the ﬁnancing bank only have to deal with one partner. The risk is shared between the parties to the reinsur- ance agreement according to the national percentages of goods delivered. Special Drawing Rights: The Special Drawing Right (SDR) is a form of artiﬁcial currency unit used by the International Monetary Fund (IMF). The ex- change rate is deﬁned by a basket of currencies comprising the US dollar, the euro, the pound sterling, the yen and the renminbi (yuan). Statutory cover limit: Maximum amount stated in the Federal Budget Act up to which liability in the form of issued export guarantees may be accepted. The Federal Ofﬁce of Administration (BVA) keeps a record of the total amount of the issued export guarantees und monitors the utilisation of the statutory cover limit. Structured ﬁnance transaction: The ﬁnancing of an export transaction in which, due to in- sufﬁcient or non-assessable creditworthiness of the foreign debtor, and because conventional security instruments (payment guarantee, letter of credit) are not available, other elements are included in the construction to ensure service of the debt, such as the proceeds of offtake agreements. Total outstanding risk of the Federal Government: The country risk statistics reﬂect the debt owed by individual countries (including interest) to the Federal Republic of Germany and the amount which would actually have to be indemniﬁed by the Federal Government under the export guarantees issued. Project ﬁnancing schemes: Are applied to complex export transactions where the project itself generates sufﬁcient income to cover the operating costs and the debt service for borrowed funds. Protracted default: Non-payment which persists for a longer period. If an amount owed by a foreign buyer is not settled within a period of, normally, six months after due date, this is considered to constitute protracted default. In the case of the buyer credit cover facility the waiting period is reduced to one month. Uninsured percentage: Exporter’s share in the loss in an event of loss, normally 5 % for political risks and 15 % for commercial risks and protract- ed default. For wholeturnover policies, it is 10 % for commer- cial risks. Until the end of 2019 the uninsured percentage agreed in supplier credit cover and wholeturnover policies for commercial risks can be reduced to 5 % against the payment of a premium surcharge. In the case of buyer credit cover, the uninsured percentage is 5 % for all risks, for manufacturing risk cover it is also 5 % and for wholeturnover policies light it is 10 % for all risks.