A Pre-export Guarantee Facility in Moldova : Mitigating Political Risk in Transition
Moldovan firms wanting to export face severe financing constraints. The local banking system has neither the capital base nor the technical capacity to finance their working capital requirements. And export credit agencies either are not willing to...
| Main Authors: | , |
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| Format: | Viewpoint |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/1995/12/696851/pre-export-guarantee-facility-moldova-mitigating-political-risk-transition http://hdl.handle.net/10986/11642 |
| Summary: | Moldovan firms wanting to export face
severe financing constraints. The local banking system has
neither the capital base nor the technical capacity to
finance their working capital requirements. And export
credit agencies either are not willing to provide cover, or,
if they are, they require a full government counterguarantee
covering both commercial and political risks. Thus, to
enable viable local firms to attract private working
capital, the government of Moldova asked the World Bank to
help design a pre-export guarantee facility, with the
proviso that the facility should not require the government
to assume commercial risks. Under this facility, the
Moldovan government guarantees financiers against political
risk, and the World Bank provides a backstop guarantee of
the government's claim payment obligations. A similar
approach could be used in other transition economies, where
firms face similar constraints. This Note describes the
development of the facility and offers suggestions for
designing a "line of guarantee" modeled on it as a
way to help attract private finance for a relatively large
number of small projects. |
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