Exports of capital goods get a broader risk coverage from KUKE
In response to slowdown in international trade due to the coronavirus pandemic, we have decided to broaden the scope of insurance coverage for projects relating to exports of capital goods.
We are taking on full 100 percent of both commercial and political risk from exporters and banks financing or refinancing export transactions. This change will affect all new export projects with credit repayment terms of two and more years. The new policy is effective as of today until the end of 2020, subject to extension.
The main reason behind introducing the new policy is to encourage banks to continue to support and finance export projects. KUKE will take on the entire transactional risk, thanks to which banks will not have to create reserves against the potential risk of default by a foreign buyer subject to the contract. Until now, the usual practice by KUKE was to cover from 90 to 95 percent of the contract value. Considering the value of such export projects, reaching tens of millions of euros, the sum of reserves to be made was also considerable.
KUKE’s portfolio of projects concerning the exports of capital goods consist mainly of deliveries of “turn key” construction projects, machines and machinery, means of transport (both rail and road), as well as contracts carried out by the ship making industry. In order to successfully acquire new export contracts in these sectors of industry it is crucial to secure adequate bank financing. This will be increasingly difficult in the unstable and volatile global economic environment.