System of Export Support

in the Russian Federation

Key issues covered

1. General provisions of Russian export credit system (hereinafter RECS) • Legal Basis

2. Instruments of official support to industrial exports in Russia• Schemes of official support• Decision making principles

3. Institutions, involved in providing export credits support

4. Further Developments• Development of RECS – state of play

RECS – Legal Basis

ORDER OF THE GOVERNMENT No. 1493-R as of 14 OCTOBER 2003

Concept of development of official financial export support of industrial goods basically defines possible instruments of providing official support to industrial exports in Russia:

1. State guarantees 2. State insurance 3. Export Credits 4. Support of interest rates

RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008

State guarantees (issued by the Ministry of Finance of the Russian Federation)

Scheme No.1 Ministry of Finance

Exporter

Russian bank (including Russian bank with foreign capital)

Exporter

Foreign bank Foreign StateImporter

a) b)

guarantee

guarantee

credit

RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008

State guarantees (issued by the Ministry of Finance of the Russian Federation)

Scheme No. 2 Ministry of Finance

Bank

Exporter Foreign bank Foreign StateImporter

Russian Eximbank

guarantee

credit

credit

RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008

State guarantees (issued by the Ministry of Finance of the Russian Federation)

Scheme No.3 Ministry of Finance

Exporter

Russian Eximbank

performance bonds, bid bonds, etc.

obligationsImporter

obligations

guarantee

RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008

State guarantees (issued by the Ministry of Finance of the Russian Federation)

Requirements for application for State guarantee (part 1):

No.1 Counter-guarantee issued by the importer’s State is obligatory.

Except if Russian bank provides credit to :

a) the foreign state (sovereign buyer)

b) the buyer, which has sovereign rating or better

c) the central bank of the importer’s state

d) the buyer, which has investment rating, and resident of a State with investment rating

e) the Russian exporter

{

RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008

State guarantees (issued by the Ministry of Finance of the Russian Federation)

Requirements (part 2):

No.2 Importer’s country has to be in the list of eligible countries

No.3 Exporting goods have to be in the list of eligible industrial goods

No.4 Export contract needs to be approved by the Russian Eximbank

RESOLUTION OF THE GOVERNMENT No. 803 as of 1 November, 2008

State guarantees (issued by the Ministry of Finance of the Russian Federation)

Conditions:Coverage:

• 95% of exposure (Category I countries)

• 90% of exposure (Category II countries)

• 85% of exposure (Category III countries)

Terms:

• from 5 to 20 year depending on the type of goods

RESOLUTION OF THE GOVERNMENT No. 100 as of 19 February, 2008

Insurances (issued by Vnesheconombank according to legal basis

but not practically provided)

Vnesheconombank

Exporter or Russian Bank

not covered by budget funds

Maximum coverage:• 95% for commercial risks

• 100% for political risks

Conditions: export credits eligible are to be from 2 to 15 years

Framework of providing State export credits

Intergovernmental export credits (provided by the Government of the Russian Federation)

Ministry of Foreign Affairs Ministry of Finance

Ministry for Economic Development

Decision making:

1. Requirement – lack of overdue debts to Russia as of 2003 year and later

2. Creditworthiness assessment (includes but not limited to OECD criteria)

Application of a foreign State

Russian Government

Agreement between Russian Government

and Foreign Government

Framework of providing State export credits

Intergovernmental export credits Conditions

Subject to the agreement betweenGovernments

on a case by case status

RESOLUTION OF THE GOVERNMENT No. 357 as of 6 June, 2008

Requirements:

• compensation available only for Russian exporters

• exporting goods have to be in the list of eligible industrial goods

Support of interest rate (provided by the Ministry of Industry and Trade of the Russian Federation)

Conditions:

• in Russian Rubles - maximum level of compensation equals to 2/3 of the refinancing rate of the Central bank

• in foreign currency – maximum level of compensation equals to 8% per annum for the credit taken by the Russian exporter

Key institutions

Institutions involved in providing export support1. Ministry of Finance 2. Ministry of Industry and Trade 3. Ministry of Economic Development3. Vnesheconombank4. Russian Eximbank

Key institutions

Vnesheconombank

Established in 2007

100% state-owned

Authorized capital - 11 bln. USD

Key institutions

Vnesheconombank

Operates intergovernmental export credits

Provides export credits: 533 mln. USD in 2009

Provides export guarantees: 1 bln. USD in 2009

In charge of providing export insurance: not applied

Budget funds are not involved

Key institutions

Russian Eximbank

Established in 1994

Affiliated body of Vnesheconombank

Authorized capital - 32 mln. USD

Key institutions

Russian Eximbank

State agent for providing state guarantees (covered by budget funds): 282 mln. USD in 2009

Provides export credits: 100 mln. USD in 2009

Sources: 1.Own resources and borrowings

2. syndicated credit of Westdeutsche Landes Bank, covered by State

guarantee of the Russian Federation3. World Bank’s loan issued to the

Russian Eximbank by the Ministry of Finance

Key institutions

Russian EximbankMain activities in 2009

State agent for Issuing 50 mln. USD state guarantee for the export credit of Vnesheconombank to Cuban Company “AviaImport C.A.”. Support of supply of 1 Russian aircraft (TU-204)

Guarantees: Credits

State agent for Issuing 50 mln. USD export credit for Belorussian bank JSC “BPS-Bank”. Support of supply of Russian machinery in energy complex.

Further Developments

Development of RECS – state of play

Establishment of Russian Export Credit & Investment Insurance Agency

Further Developments - ECIA

Establishment of Russian Export Credit & Investment Insurance Agency (hereinafter ECIA)

• Established in the form of a joint stock company

• 100% owned by Vnesheconombank

• Authorized capital - 1 bln. USD

Further Developments - ECIA

Legal basis

• Foreign Economic Strategy of the Russian Federation until 2020 ECIA one of the priority tasks

• Plan on realization of Economic Strategy of the Russian Federation until 2020

•Vnesheconombank’s Supervisory Board Decision of 28 July 2010

Further Developments - ECIA

Legislative process - state of play

Bill No 521918-5“On introduction of changes

to certain legal acts to improve commercial & political risks insurance mechanism”

Submitted to State Duma

Approved by the Government of the Russian Federation

Further Developments - ECIA

Functioning of the ECIAKey principles of providing insurances

1. Types of insurances:• ST export credit insurance against political risks • MLT insurance against commercial and political risks• INV against political risks based on international best practicies of foreign ECA

2. Coverage of the Agency’s obligations1. Vnesheconombank’s guarantees2. Budget investments3. State guarantees

Further Developments - ECIA

Functioning of the ECIAPlanning conditions of providing insurances

Maximum coverage:• 95% for commercial risks

• 100% for political risks

Minimum insurance rate:• will be fixed according to OECD countries risk categories

Thank you For your attention!