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Official Export Guarantee Schemeof the Federal Republic of Germany

Annual ReportHERMESKreditversicherungs-AGFriedensallee 254D-22763 HamburgPhone: (+49 40) 88 34-91 92Fax: (+49 40) 88 34-91 75Telex: 2 12 115 hk [email protected]

D-10117 BerlinFriedrichstadt-PassagenQuartier 205Friedrichstraße 69Phone: (+49 30) 20 94-53 10Fax: (+49 30) 20 94-53 [email protected]

HERMES HEAD OFFICE

EXPORT GUARANTEE DEPARTMENT, BERLIN

BRANCH OFFICES OF HERMES KREDITVERSICHERUNGS-AG

10117 BerlinJägerstraße 71Phone: (+49 30) 20 28 43 23Fax: (+49 30) 20 28 43 [email protected]

33602 BielefeldZimmerstraße 8Phone: (+49 5 21) 9 64 56-0Fax: (+49 5 21) 9 64 [email protected]

28195 BremenMartinistraße 34Phone: (+49 4 21)165 97-0Fax: (+49 4 21)165 [email protected]

44137 DortmundLindemannstraße 79Phone: (+49 2 31)182 99-90Fax: (+49 2 31)182 [email protected]

01129 DresdenRiesaer Straße 5Phone: (+49 3 51) 8 53 77-0Fax: (+49 3 51) 8 53 [email protected]

40472 DüsseldorfKanzlerstraße 4Phone: (+49 2 11) 9 65 76-80Fax: (+49 2 11) 9 65 [email protected]

60311 FrankfurtGroße Gallusstraße 1-7Phone: (+49 69) 13 48-159Fax: (+49 69) 13 [email protected]

79100 FreiburgBaseler Straße 61Phone: (+49 7 61) 40 07 9-39Fax: (+49 7 61) 40 07 [email protected]

20097 HamburgSachsenkamp 5Phone: (+49 40) 2 36 36-190Fax: (+49 40) 2 36 [email protected]

30159 HannoverGeorgstraße 36Phone: (+49 511) 3 64 01-90Fax: (+49 511) 3 64 [email protected]

50672 KölnHohenzollernring 31-35Phone: (+49 2 21) 9 20 60-293Fax: (+49 2 21) 9 20 [email protected]

04157 LeipzigLandsberger Straße 23Phone: (+49 3 41) 9 08 23-0Fax: (+49 3 41) 9 08 [email protected]

68161 MannheimP 7, 20-23Phone: (+49 6 21)129 05-18Fax: (+49 6 21)129 05-99 [email protected]

80339 MünchenRidlerstraße 35Phone: (+49 89) 5 43 09-143Fax: (+49 89) 5 43 [email protected]

90429 NürnbergSpittlertorgraben 3Phone: (+49 9 11) 2 44 05-15Fax: (+49 9 11) 2 44 [email protected]

66111 SaarbrückenBahnhofstraße 80Phone: (+49 6 81) 3 89 96-0Fax: (+49 6 81) 3 89 [email protected]

70579 StuttgartSchöttlestraße 10Phone: (+49 711) 9 00 49-38Fax: (+49 711) 9 00 [email protected]

OFFICIAL EXPORT GUARANTEE SCHEMEOF THE FEDERAL REPUBLIC OF GERMANY

Annual Report 2000

4

FOREWORD

The year 2000 was a particularly suc-cessful one for the official export guaran-tee scheme of the Federal Republic of

Germany. The high increase in new covergranted together with a positive financialresult for the Federal budget need no fur-ther comment. And a study has confirmedthat Federal Government export guaran-tees are in countless ways a valuable toolfor the promotion of exports and provide astable base of security for over 200,000jobs a year.

This year I would like to focus attentionon the importance accorded to ecological,social and developmental issues whendeciding whether to grant cover, aspectswhich have already long played a role inour deliberations. The high degree of con-sensus across the whole spectrum ofopinion – also in Parliament –, which hasnow brought the long and intensiveprocess of discussion to a very satisfacto-ry conclusion deserves particular mention.All those involved have recognized theoutstanding importance of Federal Gov-ernment export guarantees for the Ger-man export industry and have advocateda swift and unbureaucratic solution – also

MESSAGE FROM DR. WERNER MÜLLERFEDERAL MINISTER OF ECONOMICS AND TECHNOLOGY

5

FOREWORD

in the interests of small and medium-sizedenterprises. The Interministerial Commit-tee (IMC) drafted a paper setting forth theprocedures it follows, and passed a reso-lution on 26th April 2001 setting guidingprinciples for its future work based on this.It is now the responsibility of the four min-istries represented on the IMC to imple-ment these principles in a way whichmakes them calculable for exporting com-panies, and to concentrate on those cas-es – few in number – where criticalaspects are involved.

The new environmental guidelines arethe outward sign of responsible policy-making in the interests both of the buyercountries and German exporters. For thisreason it is especially important to filter outcritical projects using the guiding princi-ples and to make a realistic estimation ofwhat influence we have on improving theproject. Because nobody wants a situa-tion where a company which only suppliesone or two machines – which themselvescomply with the highest standards – is

forced to accept responsibility for an entireproject which was in fact initiated by oth-ers. Where the opportunity presents itselfin individual cases to bring influence tobear on sensitive projects however we will,while respecting the responsibilities of oth-ers – and where necessary after interna-tional consultations – make use of thepossibilities open to us. The procedurepractised in the IMC is in line with that ofother major OECD countries.

The Federal Government will continue topress in international organizations for abinding and practicable framework for allOECD or G8 countries with regard to envi-ronmental issues. This is the best way tosecure the level playing field so importantfor German companies competing forbusiness at the international level. Thenegotiations have already produced ahigh degree of common ground.

7

CONTENTS

8 BUSINESS OVERVIEW

9 THE INTERMINISTERIAL COMMITTEE

9 Important innovations and issues9 • Small and medium-sized enterprises

11 • Safeguarding jobs: the Prognos study 12 • Taking account of the environmental impact15 • Transparency15 • Combating bribery15 • Project financing, countertrade and other forms of structured finance17 • Aircraft business18 • International cooperation in aircraft cover18 Country cover policy19 • The CIS and the Central and Eastern European countries21 • European developing countries 22 • African developing countries23 • American developing countries23 • Asian developing countries24 • Near and Middle East 25 The outlook

26 INTERNATIONAL COOPERATION

26 Developments in the OECD26 The European Union26 The Berne Union27 Cooperation with credit insurers in other countries

29 DEVELOPMENT OF EXPORT GUARANTEE BUSINESS

29 Cover for new export business30 • Breakdown of newly covered business by country groups31 • Breakdown by horizon of risk and type of cover32 • Number/volume of applications, types of goods covered33 Claims and recoveries, rescheduled debt33 • Claims payments34 • Recoveries35 • First rescheduling agreements under the extended HIPC initiative36 • Multilateral agreements36 • Bilateral agreements37 • Looking ahead

38 PROFIT AND LOSS ACCOUNT

38 Revenues38 Expenses38 Financial result

39 EXPORT GUARANTEE PORTFOLIO

39 Statutory cover limit, total commitment level and total outstanding risk40 Regional distribution of total outstanding risk41 Funds earmarked for export guarantees at year-end41 Unrecovered claims

42 ANNEX

46 Environmental Guidelines52 Definitions and explanations54 Classification of countries

Following the sharp drop in demand forFederal Government export guaranteecover in the two preceding years, 2000brought a marked rise. Insured exportswent up by 43 % to DM 38.1bn, thusreaching the highest level since 1992. Thisrepresents a share of 3.3 % of Germany’stotal exports which were protected byFederal Government export guarantees.Due to a small number of major transac-tions, there is a particularly steep rise inthe medium- and long-term business,which is up 90.4 % to DM 17.2bn. Here,for example, cover was granted for Airbusdeliveries to the value of DM 4.2bn as wellas for project financing transactions andcountertrade in the amount of DM 2.9bn.

Exports to the developing and thresholdcountries and to the Central and EasternEuropean countries including the CISaccounted for 96.8 % of newly coveredbusiness. Federal Government exportguarantees therefore continue to be amajor factor underpinning Germanexports into these problematic markets.

With a surplus of DM 67m for the Feder-al Budget, the official export guaranteescheme of the Federal Republic of Ger-many once again posted a positive finan-cial result. This confirms the reversedtrend of recent years, which saw thescheme return to profitability with a sur-plus of DM 215m for the Federal Budget in1999 for the first time since the early 80s.

8

BUSINESS OVERVIEW

BUSINESS OVERVIEW

HÖRMANN-RAWEMA GmbHsupplied a facility including theentire ancillary equipment for theproduction of school furniture to

Russia. Besidesplanning the factory,the Chemnitz-basedcompany made useof its extensive con-structional andtechnological know-how to get the plantup and running.

Total German exports exceeded the DM 1trillion mark for the first time in 2000, reach-ing a record level of DM 1.17trillion represent-ing growth of 17 %. Germany here profitedmore than many others from the upswing inglobal trade, which went up by 13 %. This wasdriven by the economic situation in the USAand the favourable exchange rate of the Euroto the dollar, as well as by increased demandfor German products. Federal Governmentguarantees provided welcome support forexporters here. Overall, 3.3 % of Germany’sexports were insured under the state exportcredit scheme.

DEVELOPMENTS IN THEGERMAN EXPORT SITUATION

400500600700800900

1,0001,1001,200

20406080

100120140160

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00

Total export volume

Developing countries

Industrial countries

Central/Eastern Europe

REGIONAL DISTRIBUTION OFTOTAL GERMAN EXPORT VOLUME

in DM billions(OECD classification)

9

THE INTERMINISTERIAL COMMITTEE

The Interministerial Committee (IMC),chaired by the Federal Ministry of Eco-nomics and Technology, examines anddecides on all major applications for cover.It is also responsible for basic policyissues, particularly the modernisation ofthe underwriting tools and the formulationof cover policy, which sets out the scopeand conditions of cover.

Besides these functions, the furtherdevelopment of the procedures for takingecological, social and developmentalaspects into account when decidingwhether to grant cover and the particularpromotion of SMEs played an importantrole in the IMC.


Export guarantees have always been afactor of major importance for small andmedium-sized businesses. This is con-firmed by the sustained high volume ofapplications received from exporting

SMEs. Federal Government cover is anindispensable support in opening up newmarkets as well as in maintaining existingbusiness contacts with markets beset bystructural change.

Important innovations and issues

An important emphasis in the work ofthe Federal Government is the promotionof small and medium-sized businesses.This is also true of the export guaranteescheme. Information and advisory ser-vices have always been tailored to suit thespecial issues of relevance for SMEs andtheir needs. The mandatary consortiumconsisting of HERMES and PwC offers awide range of advisory activities in closecooperation with the Government and pri-vate organizations. This consultation ser-

vice has now been intensified with “begin-ners” in this sector of business especiallyin mind. HERMES Kreditversicherungs-AG is now offering a new advisory servicespecially focused on SMEs: they canobtain comprehensive advice via a specialtelephone hotline and will be sent relevantinformation material if they express inter-est. SME consultants stand ready to maketheir in-depth know-how available toanswer any questions small business mayhave concerning particular issues. This

Hotline for small and medium-sized enterprises

COMPOSITION OF THE INTERMINISTERIAL COMMITTEE

BMWIFederal Ministry of Economics and Technologylead function

BMFFederal Ministry of Finance

AAFederal Foreign Office

BMZFederal Ministry for Economic Cooperation and Development

Mandatary consortium Experts• HERMES Kreditversicherungs-AG • representatives of export industry and the banking sector• PwC Deutsche Revision AG • Kreditanstalt für Wiederaufbau (KfW)

• AKA Ausfuhrkreditgesellschaft mbH• Federal Audit Office

Small and medium-sized enterprises

10


service is open to small and medium-sizedenterprises under the number 4940/8834-9008. This means they canobtain even faster and better support infinding solutions to individual problems.

The service offered is much more thanjust a telephone hotline, however: thereare experts for Federal Governmentexport guarantees in the HERMES region-al sales offices all over Germany waiting toadvise small and medium-sized enterpris-es and to support them wherever theymay be located. SMEs can take advan-

tage of this service any time they need itand work out tailor-made solutions to theirexport guarantee cover needs with thehelp of the HERMES advisors.

The telephone hotline and the individualadvisory service are components of acomprehensive advisory scheme forsmall business. This is designed to facili-tate matters for first-time applicants, giv-ing them easy access to cover in thecontext of the many other questionswhich often confront “new” exporters forthe first time.

In order to facilitate access for small andmedium-sized enterprises to export cred-it cover or even to provide the precondi-tion for it, the Interministerial Committeehas decided on the introduction of a cov-er line facility. This is a blanket cover facil-

ity for small tied finance credits which willbe issued under a basic cover line agree-ment. The Federal Government gives adeclaration of cover in principle to thebeneficiary bank, which the bank can thenuse for granting small individual

credits. This simplifies andspeeds up the administra-tive work involved, sinceunder normal circum-stances the bank onlyneeds to notify the conclu-sion of the individual exportcredits to the Federal Gov-ernment. The financingbank therefore providesfinance for covered exporttransactions at its own dis-cretion according to rulesfixed by the Federal Gov-ernment. The maximumpermissible credit amountper individual transaction islimited to 2.5 million Euros,which ensures that the newinstrument will first and fore-most serve to promotebusiness by SMEs.

A cover line facility thus ties in with thecredit line agreements a bank has conclud-ed with a foreign borrower (a bank or animporter). Use of this new cover instrumentcan at first only be made via the Kredit-

Cover line facilities

Delivery andinstallation of afilling plant forpharmaceuticalmixtures in Koreaby KRONES AG.

In 2000 the Federal Ministryof Economics and Technologycommissioned a study fromthe Basle-based Prognos AGon the impact of Federal Gov-ernment export guarantees onthe job situation. The resultconfirmed how important andeffective this tool for exportpromotion in fact is. The study,including a short summary,can be downloaded from theinternet (www.ausfuhrge-waehrleistungen.de).

Between 1995 and 1999, anaverage of 216,000 jobs weresecured in the long termthrough the Official ExportGuarantee Scheme of theFederal Government. Abouthalf of these jobs are generat-ed in the exporting companiesthemselves, while the otherhalf stems from subcontract-ed work and the manufactureof semi-finished goods.

The result of the studyshows unequivocally that it isthe normal case that thegoods promoted are exports of integrat-ed state-of-the-art technology. Accord-ingly, it is very highly qualified jobs in sec-tors with a high intensity of research anddevelopment which are primarily safe-guarded.

Federal Government export guaranteeshave a decisive part to play for jobs insmall and medium-sized enterprises fortwo reasons: almost three quarters of the

covers granted went to this segment ofcompanies. This is a clear indicator thatthese enterprises can often only ventureonto difficult and unpredictable marketswith the help of state guarantees. A par-ticularly important, and often underesti-mated, role is played by the high propor-tion of work in major projects which issubcontracted to SMEs. Overall, at leastone third of the jobs is generated in smallbusinesses.

11


Safeguarding jobs: the Prognos study

anstalt für Wiederaufbau (KfW) and theAKA Ausfuhrkredit-Gesellschaft mbH. Ger-man exporters who wish to obtain financefor their transactions can thus approach theKfW or the AKA directly, or get in touch with

their company bank which will then go tothe AKA to get cover for the credit agree-ment. Cover under a cover line facility isonly available for business with medium-and long-term credit periods.

The new sewage treatment plantin Dalaman was commissionedafter a two-year building phase in2000. It will purify the waste waterof a town of some 60,000 inhabi-tants, eliminating more than 90 %of harmful constituents in thewater. It will thus contribute to asubstantial improvement in theenvironmental situation of theregion, which had been heavilypolluted due to the flushing ofuntreated effluent directly into theMediterranean. This considerableimprovement of water quality to comply with EUNorms is eminently important for the town,which relies heavily on income from the touristindustry, in order to secure its attractiveness fortourists and the flow of hard currency in thelong term. In addition, the sewage works canact as an example for other regions with a sim-ilar economic structure and the same ecologi-cal problems.

The project was carried out by a consortiumconsisting of Preussag Wasssertechnik GmbH,the Turkish ECE and the Austrian subcontractorHOBAS. Besides the erection of the pre-treat-

ment plant, the biological purification stage andthe sludge treatment tanks, they also expand-ed the canal system and built the necessarypumping stations. Preussag WasssertechnikGmbH was responsible for the entire electricaland mechanical equipment and for operatingthe plant for the first 12 months. Small andmedium-sized companies in the FederalRepublic of Germany were involved in this pro-ject as subcontractors for pumping stations,ventilators, pumps, conveyor systems etc.. Theproportion of equipment supplied by companiesin the new federal states amounts to over 10 %.

COMPLETION OF A TURNKEY PROJECT FOR A SEWAGE TREATMENTPLANT IN DALAMAN/TURKEY

12


In their study, Prognos AG draw atten-tion to a particularly vital circumstanceespecially for plant and infrastructure con-struction, but also for other sectors: in

order to cover the high fixed costs, includ-ing expenditure for the development ofmodern technologies, it is necessary tomaintain high capacity utilization, whichcan also be achieved through exports tothe emerging and developing economieswith their high growth rates. This is animportant precondition for enabling themanufacture and development of newproducts in Germany to stay in the prof-itability zone. The demand for export cred-it cover for these countries is particularlyhigh – even when seen in relation to thetotal exports to this part of the world. Andnot to be forgotten – HERMES guarantees

play an importantrole in getting follow-up orders or in timesof crisis – e.g. inmaintaining coverfacilities during theAsian financial crisis.

Taking account of the environmental impact

Issues of environmental compatibility aregaining increasing importance for projectsin developing and threshold countries. Inthe promotion of exports, too, the ecolog-ical aspects are given due weight in viewof the global effects of environmentaldamage. In intensive consultation andaccompanied by a fruitful exchange ofviews with all those involved, the IMC fur-ther developed on the basis of a broadconsensus its procedures for taking intoaccount ecological, social and develop-mental aspects in the year under reviewand drafted a paper setting this down. Asa basis for dealing with these issues, theIMC passed a resolution on 26th April2000 entitled Guiding principles for theconsideration of ecological, social anddevelopmental aspects when grantingexport guarantees (please refer to AnnexP. 46).

The new guidelines ensure that the eco-logical, social and developmental conse-

quences of export transactions will be rec-ognized and carefully and responsibly tak-en into account when making the decisionon cover. This means that the criteria forthe eligibility of exports for cover are notpurely economic, but must be measuredagainst an ideal of sustainable develop-ment. Overall, the procedure to be fol-lowed will remain unbureaucratic, efficientand easy to handle for small business.

The guiding principles prescribe a bind-ing two-stage assessment procedure:

First stage screening/pre-assessment:all projects from an order value of 15 mil-lion Euros and upwards with a relevantGerman portion of the overall project mustgo through a pre-assessment procedure.Where there are concrete reasons to sus-pect that the project is environmentally rel-evant, the pre-assessment procedure willbe extended to projects with a lower ordervalue. The decisive factor here is the area

Medical equipment for theoperating theatre of a cardio-logical centre in Moscow was

supplied and installed by DINADENTAMED Warenhandels

GmbH in Heidelberg. The samecompany supplied diagnostic,medical and dental equipment

to a Moscow polyclinic. Thisnot only ensures a continual

improvement in the standardsof medical treatment for the

Russian population – suchmeasures help to further

research activities in the field ofmedicine in the Russian

Federation.

13


in which the project is to be realized, i.e.how far sensitive areas such as primaryforest, biological reserves, areas populat-ed by indigenous peoples, recognizedobjects of cultural heritage, the extent towhich people must be resettled, etc. areinvolved.

Second stage review/in-depth examina-tion: when the screening process reveals aneed for further checks, an in-depthexamination follows, in the course ofwhich additional information is obtained.This takes account of issues involved inthe individual case and the nature of theproject, which may be either independentof or specific to the relevant sector. Envi-ronmental expertises bringing in addition-al aspects or going more deeply into cer-tain issues as well as reports from the Ger-man embassy in the buyer country maybe required over and above this. The envi-ronmental standards of the buyer countrymust be complied with in every case. Ifthese do not correspond to generallyaccepted international environmental reg-ulations – e.g. those of the World Bank orthe EBRD – a comparison with interna-tionally recognized standards will be madein the form of a benchmarking procedure.

After this the projectsexamined are allocated toeither Category A, B, or C.Category A indicates thatsignificant ecological, socialor developmental effectsare to be expected, whichare not locally restrictedand/or appear irreversible.These are therefore pro-jects which may entail ahigh risk or threat to theenvironment and to humanbeings with a concomitantrisk of conflict.

In these critical cases –few in number – the attempt is made,together with the exporter, his foreign busi-ness partner and the government of thehost country to remedy the problems whichhave been recognized or to mitigate themas far as possible. To the extent necessary

the IMC can make the decision to grantcover conditional on the fulfilment of envi-ronmental requirements. There is provisionfor keeping such cases under surveillancethrough special regular Monitoring Reports.

The guidelines contain an adjustmentand modification clause. This precautionwill enable the provisions to be swiftlyadapted to international developments –particularly at OECD level – and continualimprovement on the basis of the experi-ence gained in the IMC. The rigorousapplication of these guidelines will furtherenhance the underwriting instruments ofthe export guarantee scheme and act as adecisive stabilizing factor.

At the international level, too, the Feder-al Government strongly advocates the tar-

get of sustainable global development.The international credit insurers have sim-ilarly extended their cooperation withregard to environmental protection,reflecting a marked change of attitude inthe evaluation of environmental risks. The

Cover was granted to Züblin International GmbH for two tunnels along withthe necessary ancillary work for the sewage system of the Egyptian city ofCairo. One tunnel driven through rock is 3.4 kilometres long and has aninternal diameter of 4.6 metres, while the other is 1.2 kilometres long andhas a diameter of 2.4 metres. Ancillary work included building roads andsupply lines as well as five access shafts with depths between 10 and30 metres. This project brought the Greater Cairo Wastewater Project tocompletion.

IMC procedure is substantially in line withthat practised in other OECD countries.

For this reason, the Federal Governmenthas been instrumental in formulating so-called “common approaches” for theconsideration of environmental aspects inexport credit insurance within the OECDExport Credits Group. The negotiationshave already achieved a large degree ofcommon ground. The ruling on commonapproaches in identifying and assessingenvironmental aspects expected for 2001will be flanked by a package of accompa-nying measures. This will include theexchange of information in environmental-ly relevant major projects and an intensivedialogue with other international organiza-tions such as the IFC and UNEP, the sub-sidiary organizations of the World Bankand the United Nations, as well as theEBRD. There is a frequent exchange ofinformation with non-governmental orga-nizations, especially regarding specificprojects, but also on general issues.

The Federal Government plays a leadingrole in formulating and directing this ongo-ing international debate. It contributes pro-posals of its own – e.g. concerning theexchange of information – and presses withdetermination for a responsible assess-ment of environmental interests by theexport credit insurers. Positive impulses forthe process of negotiation in the OECDwere also generated by a workshop enti-tled “Energy and the Environment” initiatedby the Federal Government and organizedby HERMES Kreditversicherungs-AG.

The Federal Government pursues theobjective of internationally standardizedprocedures, since this would achieve thegoal of a level playing field for Germanexporters in international competitive ten-ders while at the same time ensuring ahigh environmental standard for the buyercountries. One example: the constructionof the Illisu hydroelectric power station inTurkey is being assessed within the frame-work of mutual coordination alreadyagreed by the credit insurers for environ-mentally relevant projects. The decision inthis case is still pending.

HERMES Kreditversicherungs-AG andPwC Deutsche Revision AG, supportedby the Kreditanstalt für Wiederaufbau,held a workshop for the OECD stateexport credit insurers on the 28th and29th September on theoccasion of the EXPO 2000under the title “Energy andthe Environment”.

Dr. Michael Kruse, who isresponsible for the exportguarantee scheme of theFederal Government in theFederal Ministry ofEconomics and Technologyand Dr. Hans Janus,Member of the Board ofManagement of HERMES Kredit-versicherungs-AG were pleased to wel-come more than 60 visitors from 21countries, including representatives ofthe scientific and research establish-ment, of exporting industryand the banks. They all tookpart in discussions based onstatements of policy andpractical case studies deal-ing with the attention givento environmental aspects instate export credit cover forprojects in the energy sec-tor.

The results achieved dur-ing this workshop will helpto promote the global process of takingenvironmental aspects into accountwhen granting state export creditcover. It is particularly important in thiscontext to likewise improve the cooper-

ation between all the parties involvedin financing a project – besides theECAs, these are the exporters them-selves, the banks, the project operatorsand the host country. At the same time

this workshop initiated by the FederalGovernment will generate positiveimpulses for the negotiations going onat the OECD. The state export creditinsurers are working there to achieve

common approaches on guiding princi-ples for the consideration of ecologicalaspects when granting export creditsor export guarantees.

WORKSHOP ON ENERGY AND THE ENVIRONMENT

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15


Transparency

Transparency in the issuance of exportguarantees is being increased, withoutjeopardizing the confidentiality of tradesecrets. In order to provide a greaterdegree of transparency towards Parlia-ment, the primarily responsible EconomicSub-Committee as well as the BudgetSub-Committee will in future be notifiedwhen export guarantees of fundamentalimportance are issued, i.e. for sensitive orlarge-scale projects. It is also in the inter-est of the exporters to contribute togreater acceptance of the project by

informing the public at an early stage inthe proceedings. Transactions given finalconfirmation of cover by the IMC with anorder value exceeding 15 million Euros willin future be published on the internet withthe permission of the applicant. In theongoing negotiations within the OECD,the Federal Government is actively pro-moting the idea of a procedure to coordi-nate the publication of information in orderto make the location and the nature ofprojects transparent at an early stage ofthe assessment process.

Combating bribery

Since early 2000, German exporters andbanks have been obliged to make a bind-ing declaration when submitting an appli-cation for cover that the export transactionconcerned was not generated by anyaction punishable by law, in particular bybribery.

The OECD Export Credits Group alsoreached agreement during 2000 on anAction Statement about the combating ofcorruption in connection with officiallysupported export credits. This ActionStatement commits the export credit

insurers to demand a declaration from theexporters and banks, subject to theirnational legal systems, that bribery had noinfluence on the concluding of the exporttransaction. If it should subsequently tran-spire that corruption was involved, theexport credit insurer is obliged to refuse tocover the transaction or to indemnify aclaim, or to demand the return of anymonies already paid out in indemnification.

This means that the same standardspractised in the German system are nowvalid for all OECD credit insurers.

Project financing, countertrade and other forms of structured finance

Project financing activities showed apositive development in the year underreview. The IMC granted cover for ten pro-jects with a value of DM 2.8bn. The newbusiness thus covered consisted predom-inantly of power station projects, whichaccounted for seven transactions.Besides plants in the Dominican Republic,the Philippines and Brazil, the mainemphasis fell on various large-scale pro-jects in Turkey. In addition, export guaran-tee cover was given in the petrochemicalsector for a major ammonia manufactur-ing plant in Trinidad and Tobago. The

spectrum was expanded with guaranteesgoing to projects in the steel industry.

The IMC gave offers of cover to the tuneof DM 622m for three further projects. Twoof these were in sectors for which projectfinancing cover had never previously beengranted. Thus a decision in principle wasmade to cover a brewery project in SouthAfrica. An offer of cover was also given forthe first time to a mobile telephone pro-ject. Increasing activities in the telecom-munications sector open up prospects ofgrowing demand for cover in this sector.

Since the introduction ofproject financing cover in1988, a total of 50 pro-jects with order values ofDM 13.3bn have beencovered. As an examplefor all those projectswhich were successful, itmay suffice to mention that two of the firstproject financing transactions covered byFederal Government guarantees, twomulti-purpose container ships (1988) andWarsaw Airport (1991), were finally paid offin 2000.

The segment of countertrade continuedto be characterized by the still noticeableafter-effects of the Russian economic andfinancial crisis. Cover was granted for anew transaction in connection with thealready insured Euro-Yamal pipeline to thevalue of DM 169m and secured by meansof gas deliveries. The low demand is prob-ably not least due to the continuing diffi-culties experienced in doing business inRussia, which sometimes resembles anadministrative and legal obstacle course.

It remains to be seen what effect thecontractually fixed restructuring of severalalready insured countertrade transactionsagreed between the German and Russianside will have on the opportunities for newcountertrade business.

But even if the number ofcountertrade transactionsin the markets of Russiaand the other CIS stateshas declined, their signifi-cance for other buyercountries all around theworld as a major factor in

other structured finance constructionshas increased. The IMC was able to givetwo offers of cover for structured financetransactions in the petrochemical sectorwith Iran in 2000 to the total value of DM618m. The size of these transactions wouldhave precluded granting them cover withnormal financing arrangements.

Structured financing constructions lookprimarily at the economic viability of aproject, and so are becoming accepted asa means for covering eligible transactionseven in countries whose economicsituation only permits a very low level ofcover for conventional business. Thus inBosnia-Herzegovina it was possible togive a firm commitment for cover to a pro-ject for modernizing an aluminium worksdespite only limited availability of cover,thanks to innovative financing construc-tions.

Structured finance schemes are also agood option for further opening up theemerging markets in Central and Eastern

16


The erection of the cold steel rolling mill Shanghai KruppStainless in the Pudong New Area of Shanghai, China (ajoint venture between Krupp Thyssen Stainless and Shang-hai Pudong Iron & Steel). The first stage of the integratedstainless steel works is due to be commissioned in Novem-ber 2001, while the entire project is to be completed in fourstages by the end of 2006. Total investment volume is1.4bn US dollars, and the total value of the German portionof the project amounts to some DM 670 million. Manymajor German enterprises as well as smaller Germanexporters are involved in the plant, which is structured as aproject financing transaction, and currently comprises thefirst stage with a total volume of 295 million US dollars.Their supplies and work are secured via a Federal Govern-ment finance credit guarantee for the KfW (Kreditanstalt für

Wiederaufbau). The green light foroperational readiness of the plant istied to compliance with all the environ-mental, health and safety standardsstipulated by the World Bank.

17


Aircraft business

The high global investment requirementfor aircraft already observable in 1999maintained its momentum. Airbus Indus-trie was able to hold its market share ofnew orders compared with Boeing; thisstood at 46 % at the end of the year. Thisis primarily attributable to the great flexibil-ity of application of the Airbus aircraft, theirhigh efficiency and also their high resalevalue.

Federal Government export guaranteesfor aircraft rose by 76 % to DM 4.2bn inthe year under review, thisfigure referring only to theGerman portion of produc-tion for Airbus aircraft. Thevolume of cover in the pre-vious year had been justover DM 2.4bn.

Together with the otherexport credit agenciesinvolved in financing Airbustransactions, ECGD in theUK and COFACE in France, cover wasgiven for a total of 118 aircraft with anorder value of 6.7bn USD – in 1999 it hadbeen 63 aircraft representing an order vol-ume of some 2.4bn USD.

Two thirds of the aircraft are the so-called narrow-body versions (standardcross-section aircraft) of the A 320 family,to which the A 318, A 319, A 320 andA 321 designs belong, seating up to 220passengers.

In all, Airbus Industrie delivered 313 air-craft during 2000, whereby here again themajority belonged to the A 320 family. Theshare of state support in the number oftotal deliveries was 38 %, considerably upon the preceding year (22 % with 294deliveries).

The lion’s share (49 %) of Airbus deliver-ies covered by credit insurers went toleasing companies, which buy the aircraftand then lease them to airlines. Theadvantage to the airlines lies in the

Europe, as is shown by the positive deci-sions taken by the IMC on transactionswith the Czech Republic and Poland.

The practice employed up to nowshows that structured finance is a partic-ularly useful instrument for the modern-ization of existing plant – often with the

underlying intention to subsequently pri-vatize the facility.

Since the volume of new cover availableon the basis of state guarantees cannotbe unlimited in the case of many coun-tries, structured finance has a very promis-ing future in this context.

The export credit insurers of France,the UK and Germany have alreadysignalled their willingness to providestate cover for the new wide-bodyAirbus model A 380.

18


International cooperation in aircraft cover

Due to the trilateral financing construc-tion for each Airbus aircraft, the extensiveexchange of information normally prac-tised between the credit insurers involvedas well as the responsible governmentagencies in the countries which build theaircraft, France, Great Britain and Ger-many, took place in the year under review.

This was devoted to coordinating andagreeing on cover policy for the individualtransactions in the year 2000. There wasin addition the announcement, importantfor Airbus Industrie, of the intention inprinciple to extend state credit insurancefacilities to the new wide-body modelA 380.

increased flexibility and the relief it pro-vides to their balance sheets. In this way,even airlines whose credit standing is rela-tively weak are able to order new aircraft.The arrangement is also to the advantageof the credit insurers, since the leasingcompanies often represent a better creditrisk than the airline in question.

Besides the newly covered transactions,the IMC gave official indications of coverfor a further 71 Airbus aircraft. The Ger-man share of the total order volumeamounting to 4.4bn USD was 1.4bn USD.Here, too, the buyers were in the mainleasing companies, which took 51 aircraft.This reflects the current trend of Airbussales.

Alongside the activities in new business,the year under review was characterized

by the continuation of the extensive nego-tiations begun by the three credit insurersin the preceding years with airlines whichhad got into financial difficulties and beenunable to fully meet their payment obliga-tions.

In this context an agreement regulatingthe restructuring of insured finance creditsfor twelve wide-body aircraft was suc-cessfully concluded with an Asian airline,in large part brokered by the three creditinsurers. At the end of the day the neces-sity to repossess the aircraft was avoided.At the same time the airline was helped tocontinue operating as a going concern. Abreakthrough was achieved in the restruc-turing negotiations with another Asian air-line at the end of 2000, so that an agree-ment on this is expected to be signed dur-ing 2001.

Country cover policy

The Interministerial Committee sets outa cover policy which takes account of therisks in the various buyer countries as thebasis for the multitude of individual deci-sions to be taken. A high priority here isthe aspect of maintaining long-term coop-eration with partner countries while keep-ing the risk within acceptable parameters.As a rule a distinction is made betweencover for short-term and extended-termbusiness.

Short-term cover with credit periods upto one year is largely exempted from anyharsh restrictions. The explanation for thisis that payment problems experienced bythe debtor countries hardly ever affect thisarea of trade debt, so that it remains virtu-ally untouched by rescheduling measures.It is only in a very few countries whichpose a particularly high risk or have unreg-ulated overdues, such as the DemocraticRepublic of the Congo, Sudan, Iraq or

Country ceilings are usedby the IMC to manage newlycovered risks on a country-by-country basis. In order toprovide a fair chance for all,these ceilings stipulated ref-erence values for the trans-actions under the ceilingwhich could only be exceed-ed in cases where there wasa good reason for doing so,such as deliveries from thenew federal states. It shouldalso be pointed out that theceilings were as a rule set ata sufficiently high level tosatisfy the demand for cover,and were in many cases notutilized to the full.

CEILINGS

For many years Russia was one of thecountries which headed the list of coverrequests. In the year under review this wasno longer the case, since up to the middleof the year the delay in signing the bilater-al rescheduling agreement regulating oldSoviet debt and two large fisheries pro-jects which had already generated claimsdue to lack of support from the Russianauthorities blocked the granting of anynew cover on the basis of Russian stateguarantees. After the signing of therescheduling agreement and an undertak-ing in principle at the political level to dealwith the claims, the IMC was able to seeits way to reopening cover facilities in July2000 subject to a ceiling of DM 1 billion.

Despite brisk demand, however, this hasnot yet led to any large number of con-firmed commitments to grant cover. Thecause of this situation is on the one handthe reluctance of the Russian side to givestate guarantees, but also the interruptionof cover facilities practised from time totime after there were payment delays atthe beginning of 2001 – meanwhilerecouped – in servicing the reschedulingagreement as well as non-rescheduled olddebt, and on top of this the final regulationof the claims mentioned above was verylong in coming (see P. 36).

If the reticence of the Russian authoritiesin granting new state guarantees is main-

19


North Korea, that the facilities for short-term cover are also suspended.

The main emphasis of country coverpolicy was on measures for managingrisk, which mainly dealt with cover forextended-term business. A tried and

tested method for mitigating the risks isthe setting of country ceilings. On top ofthis the IMC gave particular attention tocountry cover policy for a number of spe-cific countries. The availability of cover forbusiness in the various regions will bedealt with on the following pages.

A meeting of the InterministerialCommittee at HERMES Kredit-versicherungs-AG in Hamburg.From left to right: Dr. HansJanus, Board Member respon-sible for the Federal Govern-ment Export GuaranteeScheme; Dr. Benno Bunse,Federal Ministry of Economicsand Technology, Chairman ofthe Interministerial Committee;Dr. Michael Kruse, responsiblefor export finance and theexport guarantee scheme at theFederal Ministry of Economicsand Technology; Dr. ThomasSteffen, in charge of the Depart-ment of Export Guarantees atthe Federal Ministry of Finance(BMF) and representative of theBMF on the InterministerialCommittee, and Klaus Meyer,Head of the Export GuaranteeDepartment of PwC DeutscheRevision AG.

The CIS and the Central and Eastern European countries

Russia

20


tained, this will have consequences for thedevelopment of credit-financed businesswith Russia. Cover for credit-supportedbusiness is of course, just as with short-term guarantees, still possible on the

strength of the individual buyer’s creditwor-thiness, but the information gleaned fromcredit status reports and balance sheets ismostly insufficient to make a positive cred-it assessment. Another option is to involveRussian private-sector banks. This courseof action, however, is fraught with consid-erable doubts as a result of the negativeexperience made in connection with bankswhich went into liquidation in the wake ofthe banking crisis. The illegal transactionsand discrimination against foreign creditorswhich transpired during the winding-upprocess necessitate extreme caution inrenewing the recognition of Russian pri-vate-sector banks. At the moment this can

only be done as a rule on a case-by-casebasis. A situation which frequently occursis that the Russian recipient of the goodsdelivered duly meets his internal Russianpayment liabilities, but these monies end

up as part of the insolventestate, while the coveredcredit granted to the Russ-ian bank and intended tofinance the transaction inquestion remains unpaidand must be indemnifiedfrom Federal Governmentfunds. Ways must be foundto avoid this. For this reasonthe Federal Governmentdemands that the finalrecipient of the goodsshould be included in theobligation to repay the cred-it whenever Russian banksare involved. Following talksbetween German andRussian banks, a practica-

ble solution to this problem is now in sight.

German-Russian trade relations will,however, only be able to fully benefit fromthe cover facilities made available by theInterministerial Committee, includingexport guarantees for project financingand countertrade transactions, when theRussian side is at least able to guaranteemore effective supervision of the bankingindustry, makes progress towards legallysecure court proceedings and bankruptcyprocedures, and ensures that the balancesheets drawn up by Russian companiescomply with western standards of trans-parency. Given these prerequisites, theway would be open for a much strongerdegree of support for the private-sectoreconomy in Russia by means of exportguarantees, particularly since Russia’spremium category level was upgraded bythe OECD in October 2000.

Other CIS states

Due to its economic recovery,Kasakhstan was also granted an improve-ment of its premium category rating. There

is scope for the assumption of new coverunder a ceiling for Kasakhstan, Turk-menistan and Uzbekistan, as well as for

The construction of a china-clay produc-tion plant in Uzbekistan. The Ambas-sador of the Federal Republic of Ger-many, Dr. Bindseil, and the CEO of Pro-jektierung und Anlagenbau GmbH, Wil-fried Freund, were present together withother prominent guests at the commis-sioning ceremony.

21


Belarus after any overdue amounts havebeen paid by the individual company. Incontrast to this, cover available for public-sector business in the Ukraine had to besuspended as a result of a request forrescheduling. Cover is only possible for

Armenia, Azerbaijan, Georgia and Kyr-gyzstan after a thorough examination ofthe individual transaction; in the case ofTajikistan and the Moldavian Republic,cover is problematic due to negative pay-ment experience.

COUNTRY CEILINGS

Kasakhstan

Turkmenistan

Russia

Ukraine

Uzbekistan

100m

100m

1,000m

300m

300m

DM

DM

DM

DM

DM

Central and Eastern European countries

By and large, the Central and EasternEuropean countries are the object of anopen cover policy. Only Bulgaria, Croatiaand Romania have cover ceilings, whichare in line with the level of demand, how-ever. For Macedonia, there is, besidescover for short-term business, the optionof covering small-scale credit transac-tions, while project financing and otherstructured finance transactions can addi-tionally be covered in Bosnia-Herzegov-ina. It is only in Yugoslavia that no cover isavailable, due to the as yet unregulateddebt situation. All in all, the FederalRepublic of Germany has created in thisway a good set of conditions for expand-ing trade with these countries, and hasespecially made animportant contributionwithin the framework ofthe Stability Pact forSouth-East Europe. As aresult of the economicrecovery of the coun-tries, the OECD hasupgraded the premiumcategory ratings for Bul-garia, Croatia and Slo-vakia.

The majority of theCentral and EasternEuropean countriesexhibit a positive eco-nomic development, and

a favourable climate for growth with sus-tained demand is forecast for them. Inparticular, the prospects for the ten coun-tries which are preparing for EU member-ship are rated as positive.

COUNTRY CEILINGS

Bulgaria

Croatia

Romania

100m

300m

350m

DM

DM

DM

European developing countries

Far and away the most significant mar-ket for capital goods transactions withmedium and long-term credit periodsinsured by export guarantees in the year

under review was Turkey, with a volume ofDM 3.6bn. This can be attributed not onlyto a few major power plant projects, butalso to a large number of export contracts

The lignite-burning power station Maritsa East 2 in Bulgaria hasbeen retrofitted with a flue gas desulphurization system by TES-

SAG Industrie-Anlagen GmbH. Besides supplying the equipment,the programme included assembling and installing it, putting the

plant into operation and training the personnel. The level of air pol-lution through electricity production from locally mined lignite willbe considerably reduced in this way.

Retrofitting this equipment ensuresthat an economical, environmentally

beneficial and efficient system for pro-ducing electricity from cheap lignite

fuel can be established. This can helpthe country to become independentof atomic energy and imported hard

coal.

22


gained by small and medium enterprisesin the plant and machinery sector, forwhom Turkey represents one of their mostimportant markets. The basis for coverdecisions, with a reference value of DM30m which can be exceeded in the caseof particular eligibility for cover, e.g. infra-structure projects of importance for thenational economy, has remainedunchanged to date despite banking and

currency crises, trusting to the ability ofthe Turkish economy to reform itself andto the success of the support measuresintroduced by the IMF and the WorldBank. Since the massive depreciation ofthe local currency has put considerablestrain on the resources of private-sectorbanks and buyers, however, due accountmust naturally be taken of this fact whenassessing companies’ creditworthiness.

African developing countries

In several African countries, oil exportrevenues offered favourable prospects forbusiness and generated increaseddemand for cover. Sufficient cover wasavailable for the North African countries,with the sole exception of Libya. Discus-sions are at present taking place withLibya concerning the regulation of claims, in order to create the precondi-tions for reopening cover facilities. Libya’s

economic development itself is regardedas being positive. For Nigeria, too, a solu-tion to the claims problem is on the cards(see P. 36).

The Sub-Saharan states have not yetachieved the economic progress theywere hoping for. Conflicts are impactingon neighbouring countries and generallyexerting a braking influence on develop-

ment. This also affectsthe availability of cover.South Africa and someother African countrieshave been downgradedin their premium catego-ry as a consequence ofthe increased commer-cial and political risks. Inthe case of Zimbabwe,political and economicevents have led to a situ-ation where cover is forpractical purposes nolonger available.

COUNTRY CEILINGS

Algeria

Egypt

200m

400m

DM

DM

Construction of a road and a bridgewith approach ramps over the Niger in

Guinea by Strabag International GmbH.The road, 83.2 kilometres in length,was completed after two and a half

years at the end of February 2001 andhas great importance for the economic

development of the region.

23


American developing countries

Economic development in the LatinAmerican countries took different paths.Due to an improved economic climate,Mexico and Uruguay were upgraded to amore favourable premium category, whileArgentina and a number of other stateswere downgraded.

A limited amount of cover was reopenedfor the Dominican Republic. For Cuba,too, cover was made cautiously availableunder a revolving ceiling again with thesigning of a rescheduling agreement inMay after negotiations lasting for years.

For Brazil, a new ceiling in the amountof DM 500m was opened in July due tothe lively demand for cover after the origi-nal ceiling set in January had beenexhausted. The ceiling which had beenset for Argentina was continued and wasnot utilized to the full due to lack ofdemand.

Despite the slowdown in growth in theUSA and the situation in Argentina, a con-tinuing high level of demand for Germanproducts in North and Latin America ispredicted.

Asian developing countries

The Asian countries continued theprocess of getting back on their feet dur-ing the year under review. Now that thecrisis has been largely overcome andmost of the countries involved have highgrowth rates, export guarantees wereagain requested and granted for majorinfrastructure projects.

The economic development in Malaysiaand Thailand enabled them to be upgrad-ed in premium category. The Federal Gov-ernment had set a ceiling in order to mon-itor the risk in India, and this had been ful-ly utilized by June 2000. As a result of the

positive development of the country riskhere, the IMC did not set any new ceiling,but instead now operates an open coverpolicy for transactions with a credit periodexceeding 12 months. As has already longbeen the case for China, cover can now

COUNTRY CEILINGS

Argentina

Brazil

Cuba

El Salvador

400m

500m

25m

50m

DM

DM

DM

DM

COUNTRY CEILING

Vietnam DM 200m

Planning, erection andoperation of a 57 kilo-metres fast rail linkbetween the new inter-national airport atSepang and KualaLumpur Central Stationin Malaysia by SiemensAG ....

24


Near and Middle East

In several Near Eastern countries oil rev-enues provided a favourable climate forbusiness and generated increaseddemand for cover. Iraq and Syria are stilloff cover. After the successful regulation ofSyrian claims, however, the first openingof cover is on the horizon.

The Interministerial Committee hasexpanded the scope of cover available

for Iran in response to demand fromindustry for new cover. Since Iran haspromptly serviced all its payments dueunder the comprehensive reschedulingagreement, economic development thereenabled a ceiling of DM 1bn with a refer-ence value of DM 80m to be set. In addi-tion, structured finance and projectfinancing transactions can be takenunder cover. On top of this, major infra-

be granted without quantitative restric-tions for India too. A cautious cover policyis however pursued with China in the caseof the public sector. In Indonesia, busi-ness with the private sector is fraught withhigh risks, which are subjected to athorough examination.

Rather weaker growth is expected over-all for the current year on the markets in

Asia, although many sectors seem set topost the highest growth rates globally.

Even if the environment for the states ofSouth-East Asia remains difficult due todomestic economic setbacks, the slow-down in the global economy and the lackof an upswing in Japan, the region willnevertheless continue its recovery in thecurrent year.

COUNTRY CEILING

Iran DM 1,000m

... The project comprises the supplyand operation of twelve railcar trainsas well as the entire technical sup-port system. This includes check-inand check-out facilities for handlingflight passengers at the new CentralStation. The building of the“Express Rail Link” is a prerequisitefor the efficient functioning of thenew airport and for making it into ahub for Asian air traffic movements.The new rail link will substantiallyreduce journeys by car, thus cuttingemissions of harmful exhaustfumes.

25


The outlook

Global economic growth is expected tobe more sluggish in 2001 than in the yearunder review. The rise in export applica-tions in the last quarter of 2000 and theresults of the first few months of the cur-rent year give reason to expect that Ger-man exports will continue to maintain theirmomentum despite the predicted slow-down in the global growth curve. A highlevel of demand is expected in the currentyear too, especially in the telecommunica-tions, electrical and mechanical engineer-ing sectors. Since exports of these prod-ucts to the emerging markets are tradi-tionally covered by means of export guar-

antees, a positive trend in the demand forHERMES cover is to be expected.

The IMC will do everything within itspower to accompany the expansion ofbilateral economic relations in the interestsof both parties, as long as the risksinvolved are judged to be reasonablyacceptable. The Federal Ministry of Eco-nomics and Technology, which is primarilyresponsible, together with the mandataryconsortium, will advise the exporters con-cerning the individual decisions taken andkeep them informed of any changes whichmay occur.

The electrification of threestretches of the railwaynetwork – totalling 256

kilometres – in Hungary bySiemens AG. Small and

medium-sized companiesin the new federal stateswere involved in the pro-

ject as subcontractors.Through the electrification

of the lines, importantindustrial and tourist

regions will be providedwith a link to the western

European rail network.This marks a considerableimprovement in the coun-

try’s infrastructure.

structure transactions can be coveredoutside the framework of the ceiling. Abrisk demand for export guarantees forIran continues to be apparent. Thisdemand is mainly in respect of plant and

machinery, the food industry as well asthe textile and service sectors. Applica-tions have been made in the structuredfinance field for energy and petrochemi-cal infrastructure projects.

26

INTERNATIONAL COOPERATION


Developments in the OECD

Considerable importance attached tothe international cooperation betweenstate export credit insurers at multi- andbilateral levels during the year underreview.

Besides the activities of the OECDExport Credits Group on environmentalissues and on combating bribery alreadymentioned above, the work of the OECDConsensus Group during the year con-centrated on reaching a sectoral agree-ment for agricultural produce. Followingintensive negotiations, such an agreementwas successfully concluded at the end of2000 and presented for approval. Sinceagricultural produce has not up to nowbeen part of the OECD Consensus, thisagreement would for the first time set cer-tain basic standards, in particular asregards credit periods.

In the OECD Premia Group, which hasbeen meeting since 2000 under the chair-

manship of Germany, the German side iscontinuing to press for a harmonization ofthe premium supplements for buyer risksalongside the harmonization for political riskcover which has already been achieved.The commencement of negotiations onsuch expanded harmonization, vital forachieving a level playing field, has up tonow been frustrated by strong resistancefrom other participants in the Consensus.

The OECD Country Risk Experts Groupcontinued its work on setting country riskratings commensurate with the riskinvolved. The further development of theunderlying macroeconomic model will goa long way towards giving an even moredetailed picture of economic developmentin the countries concerned. This modelforms the basis for the assessment of therisks in the various countries, which in itsturn is the basis for calculating the premi-um. The current country risk rating is pub-lished on the internet.

There are 30 membercountries in the OECD(Organisation for EconomicCooperation and Develop-ment) based in Paris. Theseinclude, besides 23 Eu-ropean countries, Australia,Canada, Japan, Mexico, NewZealand, South Korea andthe USA. The OECD Con-sensus has regulated theprincipal conditions of stateexport credit cover since1978, with the intention ofproviding a level playing fieldfor the government supportof export financing byremoving or avoiding com-petitive distortions.

www.oecd.org

OECD

The European Union

In the European Union Working Groupfor policy coordination in the area of credit insurance, surety and finance cred-its, intensive preparations were carried outfor the negotiations in the OECD. After the

EU Directive on the Harmonization ofMedium-term Business came into effecton 1st January 2000, no further EU-spe-cific initiatives followed in the year justended.

The Berne Union

HERMES Kreditversicherungs-AG hasfor many years been active in the BerneUnion, the international association ofmeanwhile almost 50 predominantly state

export credit and investment insurers. Inthe year under review the Hungarianexport credit insurer MEHIB (MagyarExporthitel Biztositó Rt.) and the Sloven-

27


ian SEC (Slovene Export Corporation/Slovenska Izvozna Druzba) were admittedas full members to the BU after two yearswith observer status. Further credit insur-ers with a palette of cover including bothcommercial and political risks haveexpressed interest in joining the BU.

The new structure of the Berne Union isa response to the continuing interest ofinsurers in working within its framework. Itwas resolved in 1999 and put into prac-tice for the first time in May of the yearunder review on the occasion of the Annu-al General Meeting in Washington. Theintention is to achieve even greater effec-tivity in the coordination of procedures, inparticular by setting up smaller governingbodies focused more closely on the issuesraised by the specialities of the variouscredit and investment insurers.

An intensive exchange of views betweenthe members took place in the year underreview at seminars and workshops held inMunich, London and Oslo. The issuesthese concentrated on included recent

experience with portfolio risk managementand the various aspects of ship financing.Besides fundamental questions pertainingto the granting of cover, which involvedexamining the OECD Sector Understand-ing on Export Credits for Ships, the partic-ipants’ own experience with variousfinancing models as well as with securityconstructions and their efficacity in theevent of a claim were discussed.

The question of whether the Britishmodel of concession agreements withinthe framework of the Private Public Part-nership could be transferred to exportcredit insurance was also on the agenda.Such concession agreements are intend-ed to provide private funding for publicsector facilities (schools, hospitals etc.).

In order to further optimize the exchangeof information between members of theBU, the electronic communications linksalready in existence have been markedlyimproved through the development underthe leadership of HERMES of an extranetbased on internet technology.

Cooperation with credit insurers in other countries

The increasing significance of interna-tional cooperation was reflected in thesigning of further bilateralagreements with otherstate export credit agen-cies (ECAs). In 2000,HERMES concluded fournew reinsurance agree-

ments with other ECAs – SACE (Istitutoper i Servizi Assicurativi del Commercio

The signing of a reinsuranceagreement with the Dutch

credit insurer NederlandscheCredietverzekering

Maatschappij NV by Dr. HansJanus (l.), Member of theBoard of Management of

HERMESKreditversicherungs-AG, and

Bas D. Schepers (r.), NCM.

28


Estero) in Italy, NCM (NederlandscheCredietverzekering Maatschappij NV) inthe Netherlands, OND (Office Nationale duDucroire) in Belgium and ODL (Office duDucroire) in Luxembourg. This brought thenetwork of reinsurance agreements initiat-ed in 1998 up to eleven reinsurance part-ners in Europe. In addition, negotiationswere begun with several ECAs during2000 with a view to concluding reinsur-ance agreements, so that others shouldbe signed in 2001.

The reinsurance model enables projectsin which exporters from a number ofcountries are involved (multi-sourcing pro-jects) to be covered by a single exportcredit insurer, so that the entire adminis-tration of cover presents one face towardsthe main supplier or the financing bank.The risks are distributed among the rein-surers according to the respective nation-al portions.

The importance of this relatively newinstrument can be seen from the stronginterest in it as a means of securing trans-actions. Since 1998, cover under the rein-surance model has been requested for a

total of 68 multi-sourcing projects with anoverall order value of DM 12.7bn. Germandeliveries accounted for DM 5.3bn of thisamount.

Besides the four reinsurance agree-ments, HERMES was able to sign a fur-ther coinsurance agreement in 2000 –with the Hungarian export credit agencyMEHIB. This brings the number of bilater-al agreements on this model of coopera-tion with countries outside the EU to eight– on top of the 13 coinsurance optionswhich are already operating on the basisof the guidelines issued by the Council ofthe European Union.

COOPERATION AGREEMENTS

Austria

Belgium

Czech Republic

Denmark

Finland

France

Greece

Hungary

Italy

Japan

Luxembourg

Netherlands

Norway

Poland

Portugal

Sweden

Switzerland

Slovenia

Spain

Turkey

United Kingdom

S, C, R

S, C, R

C*

S, C, R

S, C, R

S, C, R

S, C

C

S, C, R

S*, C*

S, C, R

S, C, R

S*, C*

C*

S, C

S, C, R

S*, C*

C*

S, C, R

C

S, C, R

subcontracting deliveries accounting for 30-40% (up to40% in the case of ordervalues under 7.5m ECU)pursuant to a decision of theCouncil of the EUsubcontracting deliveries of30% according to a bilateralagreementcoinsurance agreementunder EU regulationscoinsurance under abilateral agreementreinsurance agreementon a bilateral basis

S

S*

C

C*

R

The G7 Meeting of the state export creditinsurers in March 2000 in Berlin. From leftto right: Giorgio Tellini, SACE (Italy), JamesHarmon, US Eximbank, Dr. Michael Kruse,Federal Ministry of Economics and Technol-ogy, Vivian Brown, ECGD (UK), A. IanGillespie, EDC (Canada), Fumihiko Kato,EID-Miti (Japan), Alain de Cointet, DREE(France).

29

DEVELOPMENT OF EXPORT GUARANTEE BUSINESS


The Federal Republic of Germany grant-ed cover for exports to 160 countries inthe year under review. The order valueinvolved was DM 38.1bn – a rise of DM11.5bn or 43 % over the previous year.This increase was mainly due to greater

demand for German products as well asto the favourable exchange rate of theEuro against the dollar. The stabilization ofthe emerging markets also contributed tothis result. Due to the development of therisk situation, the IMC was able to make

increased guarantee facili-ties available to meet therise in demand for cover.

In newly covered busi-ness Turkey led the field,followed by South Africaand Brazil. The ten coun-tries with the highest covervolume accounted for57.6 % of insured orders.Turkey – as one year earlier– was in first place with anincrease of 47.9 % over1999. For the first time inten years, Russia is nolonger among the Top Ten,dropping back into 13thplace.

Cover for new export business

Expansion of the mashvats in an existing

brewery in Almaty/Kazakhstan by Jacob

Carl GmbH.

Turkey

South Africa

Brazil

China P.R.

Taiwan

Bermuda

Korea

Mexico

India

Poland

2000

1999

Subtotal: DM 21.95bn (57.6%)

Total: DM 38.13bn (100%)

TOP MARKETSFOR 2000/1999 GUARANTEESIN DM BILLIONS

3.28

0.71

1.70

2.53

0.56

0.35

1.20

1.33

0.51

0.76

4.85

3.65

2.97

2.36

1.93

1.66

1.31

1.19

1.07

0.96

30


Breakdown of newly coveredbusiness by country groups

As in previous years, the lion’s share ofcover in regional terms went to the devel-oping countries, and here in particular tothe threshold countries, rising slightly to87.2 %. The share of the Central andEastern European countries went downfrom 11.7 % the year before to 9.7 %,while the industrial countries again hadthe lowest share, 3.2 % after 2 % one yearearlier.

Total exports from the Federal Republicof Germany to the developing countriesstood at DM 175.1bn. Of this, exports tothe value of DM 33.2bn were protected byFederal Government export guarantees,representing a share of 19.0 %.

Demand for cover for exports to theAsian region showed an irregular pattern:

China, Taiwan, Korea and India wereamong the ten countries with the highestnew cover amounts. While Taiwan (from15th up to 5th position) and India (from16th to 9th) jumped up the list, newly cov-ered order values for Malaysia, Indonesiaand Thailand decreased. These countrieshad ranked among the foremost in thepreceding year due to a small number ofmajor infrastructure projects.

Looking at the regional distribution ofcover for the developing countries, theemphasis lay on the Asian economiesonce again in 2000. Their share of totalcover was 35.4 %, of which East Asia* ledwith a share of 22.0 %.

(*please refer to the classification of coun-tries in Annex P. 54).




GUARANTEESBY COUNTRY GROUP

IN DM BILLIONS

38.13.7 1.233.2

37.811.2 4.422.2

39.312.1 3.523.7

33.78.1 3.622.0

33.44.4 3.525.5

33.42.9 3.726.8

3.6 5.1 35.426.7

36.86.1 2.028.7

30.26.0 0.923.3

´00

26.73.123.0 0.5

´91

´92

´93

´94

´95

´96

´97

´98

´99




COVERED PERCENTAGEOF TOTAL EXPORT VOLUMEBY COUNTRY GROUP IN %

3.4 0.119.0

5.8 0.919.9

7.5 0.318.9

6.5 0.115.9

3.6 0.115.8

´96

´97

´98

´99

´00

VOLUME OF COVER BY COUNTRY GROUP




Total

- European developing countries

- African developing countries

- Latin American developing countries

- Asian developing countries

• Near/Middle East

• Southern/Central Asia

• East Asia

Oceania

1,208.2

3,680.2

33,245.0

38,133.4

5,503.0

5,740.0

8,487.8

13,511.1

3,360.9

1,774.8

8,375.3

3.2

3.2%

9.7%

87.2%

100.0%

14.4%

15.1%

22.3%

35.4%

8.8%

4.7%

22.0%

–

520.3

3,126.9

23,010.4

26,657.6

4,065.1

2,224.2

5,301.5

11,406.6

2,206.1

899.3

8,301.1

13.1

2.0%

11.7%

86.3%

100.0%

15.2%

8.3%

19.9%

42.8%

8.3%

3.4%

31.1%

–

DM millionsDM millions % %1999 2000

VOLUME OF COVER FORCENTRAL/EASTERN EUROPE

IN DM BILLIONS

3.635

6.086

6.013

3.127

3.680

1996

1997

1998

1999

2000

31


Poland

Russia R.F.

Czech Republic

Hungary

Romania

Subtotal:

Total: DM 3,680.2m (100%)

DM 3,016.0m (82.0%)

GUARANTEES FOR CENTRAL/EASTERN EUROPE 2000 IN DM MILLIONS

958.9

711.7

665.9

403.4

276.1

Subtotal:

Total: DM 1,208.1m (100%)

DM 930m (77.0%)

GUARANTEES FORINDUSTRIAL COUNTRIES 2000 IN DM MILLIONS

Denmark

Canada

Ireland

Finland

Portugal

295.3

180.0

170.0

143.7

141.0

German exports to the Central andEastern European countries went up23.1 % year-on-year, cover for thesecountries rose by 17.7 % to DM 3.7bn.This means that the proportion of exportscovered by the Federal Governmentstands at 3.4 %. With the exception ofRussia, the Ukraine and Belarus, all theCentral and Eastern European countriesposted an increase in the level of cover.

The volume of state scheme exportguarantees requested for exports to theWestern industrial countries, which

accounted, with DM 881.5bn, for 75.5 %of total exports, is normally relatively small,due to the risk structure in these countriesand the availability of export credit coverfrom private insurers. The share of thiscountry risk group in total cover was3.2 %. This represents a proportion of0.1 % of total exports to the industrializedworld. Export guarantees for exports tothe industrial countries went up by132.2 % to DM 1,208m in the year underreview. This development is largely due tothe demand for cover for Airbus deliveriesto Denmark, Ireland and Portugal.

Breakdown by horizon of risk and type of cover

A breakdown of the newly coveredorders in the amount of DM 38.1bn byhorizon of risk and cover type is shown inthe adjacent diagram.

Short-term cover for business withcredit periods of up to one year was grant-ed in the amount of DM 20.9bn – a rise of18.7 % year-on-year. The share of totalcover accounted for by this type of coverdropped from 66 % to 54.8 % due to thesteep increase in cover for medium andlong-term business.

Differing trends were apparent for thevarious types of short-term cover.Although the number of policies fell off,turnover in wholeturnover policies wentup by 22.7 % to reach DM 16.1bn, an all-time record since this type of cover wasintroduced. The share of wholeturnoverpolicies in the volume of newly coveredbusiness was thus 42.3 %. As in the pre-ceding year, a good three quarters(77.2 %) of new short-term business wasdone on the basis of wholeturnover poli-cies.

HERMES completed the process ofconverting wholeturnover polices to thenew reformed 1998 conditions during theyear under review. No significant changeswere made to policy conditions in 2000.The portfolio at year end comprised 670wholeturnover policies, covering the glob-al export business of some 1,100 compa-nies.

The conclusion of a wholeturnover poli-cy is normally the beginning of a long-termcontractual relationship between the Fed-eral Government and the exporter. Thussome 42 % of such policies have beenrunning for more than ten years. In 2000an increased number of new policiesissued was offset by a higher number ofpolicies which expired and were notrenewed. The reason for this in most cas-es was the unsuitability of this form of cov-er for the business involved.

Turnover from revolving specific poli-cies rose by 20.8 % to DM 1.8bn. At4.7 %, they nevertheless accounted onceagain for the lowest share of total cover.

Specific policiesup to 1 year

Specific policies over 5 years

Specific policies 1 – 5 years

Wholeturnoverand revolvingpolicies

COVERED EXPORTSBY HORIZON OF RISKIN DM BILLIONS

´96

´97

´98

´99

´00 38.13.0 2.817.9 14.5

35.45.0 3.713.4 13.3

36.84.1 4.515.4 12.8

30.22.9 3.214.9 9.2

26.73.0 2.014.6 7.1

Brazil

Turkey

Poland

Israel

Korea

Subtotal:

Total: DM 16,117.1m (100%)

DM 5,031.4m (31.2%)

WHOLETURNOVER POLICIES 2000 IN DM MILLIONS

1,402.1

1,129.5

902.8

807.4

789.6

32


Short-term specific policies with creditperiods up to one year stood at DM 3bn,equalling the previous year’s figure. Thissum also includes short-term receivablesdue in respect of constructional workscontracts and under progress paymentsin other long-term business. Taiwan aloneaccounted for 46.4 % of short-term spe-cific policies, representing DM 1.4bn. Thisrelates principally to constructional workscover for a railway line under constructionfor high speed trains.

The volume of medium/long-term spe-cific policies rose steeply by 90.4 % in theyear under review due to several majortransactions and to the revival of demandin the emerging markets. Order valuesalmost doubled and stood at DM 17.2bn.The share of total cover went up to 45.2 %after 34.4 % one year earlier.

The share of tied finance credits in thecovered volume of medium and long-termspecific guarantees climbed to 81.1 %.This reflects the increase in long-terminvestments for plant and machinery,which are traditionally covered by tiedfinance credits.

The markets which accounted for thehighest turnover in medium and long-term cover were Turkey, South Africa andBermuda. The high level of turnover forTurkey is largely explained by the covergranted for large energy supply infrastruc-ture projects as well as for other medium-sized investment projects involving smalland medium-sized enterprises asinsureds. Bermuda appears here as abuyer country because cover for offshoreleasing companies registered there wasgiven in respect of Airbus aircraft.

42.3%

37.9%7.3%

7.8%

4.7%

Over 5 years:DM 14.5bn

Short-term specificpolicies: DM 3.0bn1-5 years:DM 2.8bn

Revolving policies:DM 1.8bn

Wholeturnoverpolicies:DM 16.1bn

GUARANTEES 2000 BYHORIZON OF RISK

Taiwan

China P.R.

Egypt

India

Korea

Subtotal:

Total: DM 2,986.1m (100%)

DM 2,557.9m (85.7%)

SHORT-TERM SPECIFIC POLI-CIES 2000 IN DM MILLIONS

1,385.0

521.2

415.5

126.1

110.1

Turkey

South Africa

Bermuda

Brazil

China P.R.

Subtotal:

Total: DM 17,243.5m (100%)

DM 10,426.9m (60.5%)

MEDIUM/LONG-TERM POLI-CIES 2000 IN DM MILLIONS

3,642.9

2,873.9

1,660.4

1,372.4

877.4

Number/volume of applications, types of goods covered

There was a discernible trend in theapplications submitted towards businesswith private buyers, whereby more appli-cations were in particular made for coverfor small transactions.

The number of new cover applicationsin the year under review was up by 2.3 %.This contrasted with the downturn inapplications for public buyers, which nor-mally account for a high volume. Thisresulted in a reduction of 6.7 % in the vol-ume of cover decided on.

The total number of decisions takenincluding periodic renewals for offers ofcover and requests for modification fell by6.3 % to 45,577.

A sharp rise took place in the number ofnew short and medium-term specificpolicies – they jumped by 23.3 % to1,140. This represented a plus of 68.1 %in the total volume covered. The increasewas mainly attributable to major transac-tions with order volumes exceeding DM100m. Thus 39 such major projectsaccounted for 62.7 % by volume of spe-cific policies.

The ratio between cover for public andprivate buyers changed by 8.5 percent-age points in favour of private companies.85.8 % of specific policies were in respectof private and 14.2 % of public buyers. Thepercentages of covered order values herewere 66.7 % and 33.3 % respectively.

33


The breakdown of specific policies bytype of goods covered reveals that theshare of export guarantees for machineryand equipment rose by 28.4 %. Cover foraircraft exports, too, went up steeply

again, by 76.0 % in the year under review.This gives them a share of 20.6 % of spe-cific policies and 10.9 % of all cover given(please refer to the table in Annex P. 44).

It is particularly in these sec-tors at the cutting edge ofmodern technology that inputexpenditure for research anddevelopment far exceedingnormal industry levels is vital.Thus export guarantee coversecures highly qualified jobs,as is documented by the Prog-nos AG study.

0.6%11.3%

18.1% 0.9%

33.9%

20.6%

7.3%3.8%

3.5%

SPECIFIC POLICIES 2000 BY TYPE OF GOODS

Vehicles, locomotives

Electronic,precision engineeringand optical equipment

Ships

Machinery and equipment

Plant

Aircraft

Construction services

Other services

Various

NUMBER OF APPLICATIONS/VOLUME OF COVER

20001999

Numbers of applicationsInitial decisionsincl. increases

Volume of decisionsOrder values/ limits in DM millions

Number of newspecific policies

- of which for private buyers

- of which for public buyers

Volume in DM millions

- of which for private buyers

- of which for public buyers

27,038

43,935

1,168

905

263

12,036

7,139

4,897

27,662

41,030

1,140

1,235

205

20,229

13,486

6,743

Claims and recoveries, rescheduled debt

Claims payments rose in the year underreview by 22 %. Once again, commercialclaims accounted for a third of all indem-nifications.

Payments for political claims increasedby 30 % to almost DM 1.3bn. The maincause of this was higher expenditure for

the indemnification of old Soviet debt,which accounted by itself for 71.4 % ofthis figure. This was principally due to thefact that a bilateral rescheduling agree-

ment in respect of such old Soviet debtwith maturities from 1.1.1999 to31.12.2000 (Russia V) was only signed in

Claims payments

CLAIMS PAYMENTS IN DM MILLIONS

2000

1,263.3

622.9

16.7

1,902.9

Political risk cover

Commercial risk cover

Exchange risk cover

Total

1995

3,382.3

163.0

190.2

3,735.5

1996

2,425.8

171.0

152.8

2,749.6

1997

2,387.6

403.4

83.2

2,874.2

1998

1,560.8

371.4

84.4

2,016.6

1999

978.0

543.6

39.2

1,560.8

34


mid-2000 (see P. 36). From this pointonwards it became possible to operatethe simpler and faster indemnification pro-cedure without waiting periods underrescheduling agreements, which involvesfar less administrative work. The contrac-tual maturities accrued during a period ofalmost 18 months could thus be indemni-fied within one year. This pushed the polit-ical indemnifications for the original creditcontracts in respect of the former USSRduring the year under review up by 28 %to DM 902m. Due to the expiry of thesecredit contracts, such claims will decreasesignificantly in future. Further politicalclaims paid in the amount of DM 169.7mrelated to the Ukraine, for which arescheduling agreement is envisaged, aswell as to DM 87.3m in respect of Pak-istan.

Claims payments arising from commer-cial risks went up by almost 15 % toreach DM 623m. It should be noted that,as in the previous year, this increase canbe attributed to a small number of majorprojects which are in default with repay-ments, and that indemnifications are for

the most part the result of claims madeunder finance credit guarantees. Thisexplains the rise in the number of suchclaims under finance credit guaranteesover the preceding year by more than athird, while the number of claims undercover for exporters of goods declined by agood 20 %.

A marked improvement in the results ofthe wholeturnover policies is gratifying.While claims payments tripled in 1999, theresults for 2000 show a significant decline.Payments returned to a normal level, witha volume of DM 32.5m being paid out inindemnifications, a noticeable drop fromthe previous year’s figure (DM 74.6m). Thiswas a remarkable result in view of the con-siderably increased volume of cover underwholeturnover policies.

Claims under exchange risk cover wentdown by half in the year under review toDM 16.7m. Since the Federal Governmentno longer grants this type of cover, only amuch reduced portfolio of old cover cangenerate claims. The sustained strength ofthe dollar, too, has contributed to the

decline in exchange ratelosses.

0.9%

32.7%

66.4%

Total: DM 1,902.9m

Exchange risk cover:DM 16.7m

Commercial risk cover:DM 622.9m

Political risk cover:DM 1,263.3m

CLAIMS PAYMENTS 2000

Recoveries

Recoveries under claims already indem-nified totalled DM 978.2m in the year

under review, a fall of 14.4 % year-on-year.

The Federal Government has taken the grow-ing incidence of commercial claims in extend-ed-term cover as its cue to redouble its effortsat the stage of an impending loss. In a series ofcases successful action was taken, in close col-laboration with the policyholders concerned,the exporters and the banks involved in financ-ing the business, to consolidate by means ofrisk management measures major projectswhose solvency had become shaky, thus obvi-ating (at least partially) the necessity for theFederal Government to pay a claim. The princi-pal instrument used was restructuring in the

form of payment deferrals, which the FederalGovernment supported by adapting accordinglythe cover given. Many restructurings are onlypossible if the Federal Government bases itsindemnifications on the original due date. Thisleads to a situation where a portfolio of receiv-ables accrues under commercial claims whichthe restructuring process gives every reason toexpect can be recovered, just as in bilateralrescheduling schemes. In the case of politicalclaims these recoveries are regulated withinthe framework of the Paris Club in bilateralrescheduling agreements.

LOSS MANAGEMENT

35


Payments recovered under reschedul-ing agreements, due, e.g. to the expiry ofthe rescheduling agreement with Mexicoand other expired parts of agreements,were down 10.6 %. More than 75 % of thiscame from just four countries – Brazil(DM 231m), Argentina (DM 206m), Mexico(DM 54m) and Poland (DM 49m). As in thepreceding year, the highest payments werethus from Latin America. Once again, thisshows that the high expectations of recov-eries from political claims under reschedul-ing agreements are justified.

Recoveries under other political claims– i.e. payments outside reschedulingschemes – halved to DM 118.8m, follow-

ing DM 241.8m a year before. The previ-ous year’s figure had included a sum ofDM 205m recovered under a deferralagreement concerning refinancing withIran. Iran has meanwhile promptly met allits maturities under the deferral agreementconcluded in March 1999.

Recoveries under commercial claimsrose by 64 % to DM 121m. These recov-eries were in respect of ship transactionsin the case of Indonesia and USA, whilethey related to Airbus aircraft in Mexicoand Côte d’Ivoire. Considerable furtherrecoveries under claims indemnified areexpected from an agreement with Russiaregulating claims under ship deliveries.

RECOVERIES FOR CLAIMS PAID (EXCL. INTEREST) IN DM MILLIONS

under political risk cover

- thereof rescheduled amounts

under commercial risk cover

Total

2000

857.3

738.5

120.9

978.2

1995

1,130.7

594.5

29.4

1,160.1

1996

850.5

704.4

32.3

882.8

1997

1,120.7

830.7

60.1

1,180.8

1998

880.4

770.1

73.7

954.1

1999

1,068.3

826.5

73.8

1,142.1

Russia

Indonesia

India

Korea

Mexico

Argentina

Pakistan

2000

1999

Subtotal: DM 520m (83.5%)

Total: DM 622.9m (100%)

CLAIMS PAYMENTS UNDER COMMERCIAL RISK COVER 1999/2000 IN DM MILLIONS

212.0

102.6

31.3

1.7

33.5

34.8

4.7

128.0

116.0

98.2

57.8

55.1

35.7

29.1

Total: DM 120.9m (100%)

Subtotal: DM 116.0m (95.9%)

Mexico

USA

Côte d'Ivoire

Indonesia

Philippines

Argentina

Russia R.F.

Brazil

Croatia

RECOVERIES UNDERCOMMERCIAL RISK CLAIMS 2000 IN DM MILLIONS

37.1

25.8

17.7

13.7

10.3

4.9

3.0

2.3

1.2

First rescheduling agreements under the extended HIPC initiative

2000, the “year of debt forgiveness”, gotoff to a start with the first agreement con-cluded in the Paris Club in March on theextended debt relief conditions agreed inCologne in 1999 for HIPCs (HeavilyIndebted Poor Countries). This meant for-giveness of 90 % for Mauritania on itstrade debts.

In April 2000 the Federal Chancellor tookthe EU summit on Africa as an opportuni-ty to announce that the debt relief of atleast 90 % envisaged under the HIPC ini-tiative for the poorest countries would beraised to 100 %, in order to accelerate thefight against poverty in these countries. Inthe bilateral agreement subsequentlysigned with Mauritania in June 2000, theFederal Government and the insuredexporters involved declared their readi-ness to grant 100 % debt forgiveness for

the amounts falling due during the periodcovered by the rescheduling agreement,totalling DM 6m.

In the course of the year five other coun-tries (Tanzania, Benin, Burkina Faso,Senegal and Mali) were granted 90 %debt relief in the Paris Club. The FederalGovernment will forgive 100 % of thesedebts bilaterally.

After successfully completing its com-prehensive structural adjustment pro-gramme, Uganda became the first countryto reach the so-called completion pointunder the extended HIPC initiative. In viewof its high level of indebtedness, 100 %debt forgiveness was granted multilateral-ly to this country. This means that Ugandano longer has any debts towards the Fed-eral Republic of Germany.

36


Multilateral agreements

20 multilateral agreements with avolume of US$ 32.2bn were concluded atthe Paris Club in 2000. The Federal

Republic of Germany was involved in 17 of these with a volume of some DM 9bn.

Nigeria

The most important milestone from thepoint of view of rescheduling came at themultilateral level towards the end of the yearunder review. After difficult negotiations,which had to be interrupted several times,the representatives of the creditor countriesunited in the Paris Club reached agreementon a rescheduling scheme with Nigeria inDecember. This principally regulates thebacklog of repayments accrued since 1992under earlier rescheduling agreements.

The total volume covered by the agree-ment concluded in Paris with Nigeria isUS$ 23.4bn. This includes German tradereceivables of DM 7.6bn. Repayment ofthese trade debts, inclusive of the interestalready accrued, is to be made beginningin 2004 up to 2019.

Nigeria, as the largest African oil-export-ing country, does not fulfil the criteria fordebt forgiveness.

One of the main issues under discussionwas the capacity of the country to pay,

since it wants to use the main part of itshigh windfall profits from crude oil exportsto combat poverty at home. After intensivediscussions, Nigeria made an undertakingto pay some US$ 1.7bn to the Paris Clubcountries during 2000 and 2001.

The Federal Republic of Germany isscheduled to receive a disproportionatelylarge share amounting to some US$437m in respect of trade debts out of this,since it had in the past been put at a dis-advantage by Nigeria’s sporadic pay-ments to other creditor countries. This dif-ferent treatment of creditors is to be com-pensated over the next few years by a so-called “levelling-up” procedure. Thesecompensatory payments are excludedfrom further rescheduling.

From January to April 2001 the FederalRepublic of Germany was able to bookreceipt of the first significant paymentsfrom Nigeria since 1992 on the basis ofthe agreement, amounting to some DM800m.

Subtotal: US$ 31,615m

Total: US$ 32,217m

Nigeria

Indonesia

Ecuador

Tanzania

Gabon

Kenya

VOLUME OF MULTI-LATERAL RESCHEDULING 2000

IN US$ MILLIONS

23,380

5,800

887

714

532

302

Subtotal: DM 8,955m

Nigeria

Indonesia

Ecuador

Tanzania

Gabon

Kenya

GERMAN SHARE IN VOLUME OF MULTILATERAL

RESCHEDULING 2000IN DM MILLIONS

Total: DM 9,041m

7,600

1,140

38

45

115

17

Bilateral agreements

The Federal Republic of Germany con-cluded eleven bilateral reschedulingagreements covering trade debts with a

volume of DM 10.1bn. DM 79m of thisreferred to the Heavily Indebted PoorCountries.

The largest bilateral rescheduling agree-ment in terms of volume, covering morethan DM 8bn, was signed with Russia inBerlin on 26.7.2000. The necessity for theagreement had arisen after Russia wasforced to default on its payments underthe agreement Russia IV during the finan-

cial crisis of Summer 1998. It regulatesexclusively so-called old Soviet debt, i.e.amounts falling due in 1999 and 2000from credit contracts concluded prior to1.1.1992 and covered by Federal Govern-ment export guarantees on the Germanside. The majority of the debt thus regu-

Russia

37


Subtotal: DM 10,108m

Total: DM 10,145m (11 countries)

Russia

Indonesia

Syria

Cuba

Nicaragua

Honduras

BILATERAL RESCHEDULING AGREEMENTS 2000 IN DM MILLIONS

8,000

1,140

856

59

34

19Cuba

After several difficult rounds of negotia-tions spread over three years, a bilateralrescheduling agreement was signed inMay of the year under review. Since Cubais not a member of the IMF, a correspond-ing agreement for all creditor countrieswithin the framework of the Paris Club stillremains open.

The agreement regulates debt in theamount of DM 230m. This also includesmonies due to the former GDR. The mainpart of this debt is to be repaid by the year2020. The receipt of the payment of DM4.3m due in the year under review fulfilledthe precondition for granting a limitedamount of new cover.

Syria

After protracted negotiations lasting sixyears, a bilateral rescheduling agreementwas concluded with Syria in November. Inthis, too, amounts due to the former GDRwere set off against claims on the Syrianside.

Since the basis for a Paris Club resched-uling, namely a currently operative IMF pro-gramme, was lacking in the case of Syria,

the Federal Republic of Germany followedthe example of several other creditor coun-tries on the basis of agreed “terms of refer-ence”. The agreement regulates amongother amounts HERMES-insured debt ofDM 30.4m and debts due to the formerGDR of US$ 360m. Repayment is to startin 2005 and be completed by 2020. Thefirst interest payment of DM 9.1m wasalready received at the beginning of 2001.

Mexico, Trinidad and Tobago

Following the payment of the last amor-tization instalments, the reschedulingagreements with Mexico and with Trinidadand Tobago have run their course accord-

ing to plan after 17 and 11 years respec-tively. The economies of both countrieshave recovered sufficiently to obviate anyneed for further rescheduling agreements.

Looking ahead

22 debtor countries reached the deci-sion point under the extended HIPC initia-tive in 2000, and about another ten will doso during the course of this year. Thismeans that at least 25 of the poorestcountries alone will come to the Paris Club

for multilateral negotiations. Ukraine andGeorgia will be the subject of discussionsin the Paris Club for the first time. Nigeriaexpects a comprehensive restructuring ofits entire indebtedness in the second halfof 2001.

With a view to improvingits public relations activities,the Paris Club decided to setup a website, which hasbeen accessible for all thoseinterested since mid-2001.The content of this internetplatform was coordinatedwith all the member coun-tries. Among other items itcontains press releases onrescheduling agreementsnegotiated, basic issuesdealt with by the Paris Club,explanations of technicalterms and complex situa-tions as well as a list ofdebtor countries. In additionthere are links to the IMFand World Bank websites. Allthe member states concur inthe expectation that thisimportant step will increaseunderstanding of the ParisClub’s activities and thusachieve greater transpar-ency.

www.clubdeparis.org

THE PARIS CLUBGOES ONLINE

lated is due for repayment by 2016, with avery small amount due up to 2020.

Without accepting actual debt forgive-ness, the agreement does contain a sig-

nificant debt relief element for Russiathrough the reorganization of amountsdue for payment by the end of 2000 asagreed with the Russian Federation in theParis Club of state creditors on 1.8.1999.

38

PROFIT AND LOSS ACCOUNT

PROFIT AND LOSS ACCOUNT

Revenues

The revenues generated for the Federalbudget by the export guarantee schemerose slightly by 3.2 % in the year underreview to reach DM 3.072bn. This sumcan be broken down as follows:

Premiums and fees received exceededthe previous year’s figure by 44.8 %. Thisincrease is higher than that of new busi-ness covered (+43 %), since the share ofmedium and long-term business, withhigher premiums, went up.

An aggregate amount of DM 978bnmust be added to the premiums received,

consisting of recoveries under claimsalready indemnified and capital repaymentunder rescheduling schemes – 14.4 %down on the preceding year.

Exchange rate gains resulting from hedg-ing transactions climbed from DM 1m toDM 3.5m despite the discontinuation of thisform of cover, due to the high exchange rateof the dollar in the remaining policies.

On top of this there were interest pay-ments – principally under reschedulingagreements – totalling DM 975m in theyear just ended (1999: DM 1.063bn).

Expenses

Expenses went up by 19.5 % in the yearunder review to DM 2.029bn. Claims pay-ments totalled DM 1.903bn and the costs

for the administration and management ofthe export guarantee scheme amountedto an additional DM 126.2m.

Financial result

With a cash surplus of DM 67.4m forthe Federal Budget, the official exportguarantee scheme of the Federal Repub-lic of Germany posted a positive financialresult once again in 2000. This confirmsthe reversed trend seen over recent years,which led to a return to profitability for thefirst time since the early 80s in 1999, whena positive result of DM 215m wasachieved.

The interest payments mostly receivedunder rescheduling agreements amount-ing to DM 975m (1999: DM 1.063m) weretransferred to the Federal budgetaccounts. For methodical reasons theseare routinely excluded when calculatingthe financial result, however, since the refi-nancing costs incurred by the FederalGovernment in respect of claims paid aresimilarly not included.

31.8%

36.3%

31.8%

0.1%

Interest received:DM 975.2m

Premiums/fees earned:DM 1,114.8m

Amortisation and recoveries:DM 978.2m

Total: DM 3,071.7m

Exchange gains:DM 3.5m

REVENUES 2000

FINANCIAL RESULTIN DM MILLIONS

Cash deficit/surplusInterest received

´94

´95

´96

´97

´98

´99

´00

´93

1,063

975

1,064

1,141

1,563

1,778

2,127

1,565

215

67

-5,104

-4,362

-1,518

-867

-583

-56

Brazil

Russia

Poland

Algeria

Argentina

Subtotal:

Total: DM 975.2m (100%)

DM 828.7m (85.0%)

HIGHEST INTEREST PAYMENTS UNDER

RESCHEDULING AGREEMENTS IN 2000

IN DM MILLIONS

269.0

179.0

158.0

112.6

110.1

39

EXPORT GUARANTEE PORTFOLIO


Statutory cover limit, total commitment level andtotal outstanding risk

The Federal Government sets a statuto-ry maximum exposure limit for exportguarantees and tied finance credits to for-eign debtors every year in its Budget Law,which defines the aggregate maximumamount of cover available. The FederalDebt Administration monitors the utiliza-tion of the statutory cover limit, registersthe maximum amounts for which itaccepts liability and deletes expired com-mitments. Cover granted for interest is notset off against the statutory limit. Thestatutory maximum exposure limit stoodat DM 220bn in 2000, of which 94.3 %had been utilized at year-end. The statuto-

ry limit for the current year has beenincreased by DM 10bn to DM 230bn. Thisensures that adequate cover is availablefor issuing new guarantees in respect ofeligible export business.

The total commitment level (exposure)under export guarantees (without interest)rose by 5 % to DM 207.5bn. This figurerepresents the exposure level recorded bythe Federal Debt Administration at the endof the year, but does not permit any con-clusions as to the amounts actually at risk,since e.g. claims already indemnifiedremain on the register although they no

TOTAL COMMITMENTS OF THE FEDERAL GOVERNMENT (EXPOSURE)BREAKDOWN BY COUNTRY GROUP/STATUTORY MAXIMUM EXPOSURE LIMIT IN DM BILLIONS

165.0

´91

180.0

´92

180.0

´93

190.0

´94

195.0

´95

195.0

´96

200.0

´97

215.0

´98

220.0

´99

220.0

´00

40.5

144.5

7.515.0

207.5

28.8

101.2

8.813.1

151.8

32.5

105.8

9.213.4

160.9

37.4

106.4

9.313.5

166.7

37.9

120.4

8.313.5

180.2

37.4

125.4

3.213.7

179.7

38.5

131.2

6.513.8

189.0

39.8

133.6

6.414.1

193.9

42.0

134.4

6.414.6

197.3

40.8

135.6

6.714.6

197.7

Statutory limit

Uncategorisable*




* The "uncategorisable" exposure refers mainly to allocations made for wholeturnover policies under the statutory maximum exposure limit.

40


The regional distribution ofthe Federal Government’stotal outstanding risk corre-sponds to the distribution ofexposure including interest(please refer to the chart in theAnnex P. 45). The highest out-standing risk, 81.5 %, wasaccounted for by the develop-ing countries, followed byCentral and Eastern Europewith 14.3 % and the industrialcountries with 4.2 %.

2000 Total: DM 65.7bn (59.4%)

2000 Outstanding Risk Total: DM 110.6bn (100%)

TOTAL OUTSTANDING RISKIN 2000/1999 IN DM BILLIONS

2000

1999

China P.R.

Russia R.F.

FSU

Indonesia

Turkey

Brazil

South Africa

India

Argentina

Mexico

Philippines

12.5

10.4

0.9

9.6

9.5

5.3

4.6

3.5

3.3

3.1

3.0

12.3

12.9

1.9

8.9

6.6

4.9

1.5

3.5

3.7

3.3

2.9

TOTAL OUTSTANDING RISK BY COUNTRYGROUP IN DM MILLIONS

Total 112,416.1106,076.2


- Asian

- African

- Latin American

- European



91,597.0

51,820.9

9,996.3

19,130.1

10,649.7

16,083.3

4,735.8

2000

82,058.7

49,178.5

6,993.6

18,311.9

7,574.7

19,313.6

4,703.9

1999

longer constitute an outstanding risk. Inthe year under review new policies in theamount of DM 25.5bn were issued whileold policies with a value of DM 15.7bnexpired.

On top of this, additional cover had beengranted at year-end for interest of DM77.3bn (1999: DM 70.4bn), which is nor-mally not set off against the statutory max-imum exposure limit, but should not bedisregarded when assessing the risk.Overall, the total commitment of the Fed-eral Government amounted to DM284.8bn.

The Federal Government’s actual out-standing risk including interest rose by4.2 % and stood at DM 110.6bn at theend of the year (see the chart in the AnnexP. 43). More than half of the total wasaccounted for by seven countries. Thefuture risk of indemnification for Russianrisks has been reduced due to a cautiouspolicy in granting new cover, to Russia’sfulfilment of its contractual payment oblig-

ations and to claims already incurred andindemnified. The final point is also respon-sible for the reduction in the outstandinglevel of risk in respect of the former SovietUnion. The countries with the highest lev-el of outstanding risk at year-end can beseen from the adjacent graph.

In total, the repayment obligations ofindividual debtor countries under transac-tions covered by Federal Governmentexport guarantees amount to DM201.3bn. This figure includes paymentsdue under debt consolidation agreementsas well as the uninsured portions.

Regional distribution of total outstanding risk

41


Funds earmarked for export guarantees at year-end

At the end of the year the InterministerialCommittee had issued offers of cover (inprinciple) for contracts under negotiationbut not yet concluded in a total value ofDM 36.3bn. Compared with the previousyear this represents an increase of DM5.6bn or 18.4 %. Once again the lion’sshare of this, DM 23.2bn or 64.1 %, goesto the developing countries. Offers of cov-er for exports to the Central and EasternEuropean countries dropped back fromDM 2.3bn in 1999 to DM 2.0bn, and had a

share of only 5.4 % at the end of the year,after 7.7 % one year before. A marked risefrom DM 1.3bn to DM 11bn was posted inoffers of cover to the industrial countries,which jumped from 4.1 % to 30.5 %.

Since it is still uncertain at the time ofissue of these offers of cover whether thecontracts will actually go to Germanexporters, only a part of the transactionsearmarked for cover in fact come tofruition.

Unrecovered claims

The total amount outstanding to theFederal Government from already indem-nified commercial and political risk claimsincluding rescheduled commercial debtwas DM 36.3bn at year-end (1999: DM35.6bn). The adjacent graph shows thedebt owed to the Federal Governmentunder rescheduling agreements and polit-ical risk claims amounting to DM 34.4bn.

DM 30.8bn of this sum has been regu-lated by bilateral rescheduling agree-ments, thus restructuring the debt of thedebtor countries in accordance with theirability to pay.

The political claims indemnified overrecent years and regulated in reschedulingagreements continue to justify high expec-tations of recovery. They cannot, however,

be completely taken for granted. Succes-sive rescheduling agreements under theHIPC initiative will, too, lead to further debtforgiveness. The level of commercial debtoutstanding in the HIPC countries is rela-tively low, however – so that this forgive-ness will hardly make any impact on thevalue of outstanding debt and the break-even objective of the scheme.

Debt relief by the Federal Government tothe tune of DM 136.7m became effective inthe year under review (1999: DM 60.2m).This was in respect of Bosnia-Herzegovina(DM 97.3m), Zambia (DM 31.6m) and Hon-duras (DM 6.2m), as well as Mauritania andGuinea. All in all, the Federal Republic ofGermany has already forgiven debt of DM511m to the poorest countries in the worldunder earlier initiatives.

Russia (FSU)

Nigeria

Brazil

Poland

Iraq

Algeria

Argentina

Cameroon

Egypt

Subtotal: DM 30.72bn (89.2%)

DEBT OWED TO FEDERAL GOVERNMENT IN 2000IN DM BILLIONS

Total: DM 34.44bn (100%)

16.81

3.34

2.47

2.00

1.99

1.52

0.99

0.88

0.72

42

ANNEX

NEW GUARANTEES AS RELATED TO TOTAL EXPORT VOLUME;COVER APPLICATIONS

* Starting 1989, values include former Eastern Germany** Starting 1993, a new statistical method is applied in the EU to record overall export figures

YearNew guaranteesin DM billions

Covered per-centage of totalexport volume

Coverapplicationsin DM billions

1950 8.4 1.91955 25.7 10.01960 47.9 4.6 9.6 16.21965 71.7 5.4 7.5 19.51966 80.6 6.5 8.1 18.11967 87.0 9.0 10.3 24.01968 99.6 7.0 7.0 19.91969 113.6 8.6 7.6 20.51970 125.3 9.6 7.7 23.41971 136.0 7.9 5.8 26.61972 149.0 6.2 4.2 28.91973 178.5 9.3 5.2 26.41974 230.5 15.2 6.6 51.01975 221.6 19.8 8.9 109.21976 256.2 26.2 10.2 120.91977 273.5 33.7 12.3 115.51978 284.6 25.9 9.1 133.71979 314.6 25.1 8.0 103.91980 350.4 28.5 8.1 126.71981 396.9 36.4 9.2 178.91982 427.7 39.2 9.2 147.91983 432.3 33.3 7.7 115.11984 488.2 32.1 6.6 95.81985 537.1 31.0 5.8 105.71986 526.4 25.2 4.8 53.71987 527.0 24.4 4.6 50.71988 567.8 26.0 4.6 42.11989* 682.1 27.5 4.3 44.91990 680.7 26.7 3.9 58.51991 665.8 37.8 5.7 117.71992 670.4 39.2 5.8 98.61993 628.4** 33.7 5.4 84.51994 690.6 33.4 4.8 61.91995 749.5 33.4 4.5 58.21996 788.9 35.4 4.5 52.31997 887.6 36.8 4.1 59.01998 955.2 30.2 3.2 45.01999 992.0 26.7 2.7 44.02000 1,167.5 38.1 3.3 41.0

Total exportvolumein DM billions

43

ANNEX

UTILIZATION OF THE STATUTORY MAXIMUM EXPOSURE LIMITAND OFFERS OF COVER IN DM BILLIONS

Year

Allocatedamount ofstatutorylimit***

Unallocatedamount of statutory limit

Offers ofcover

Totaloutstandingrisk***

1950 0.6 0.5 0.11955 7.5 4.8 2.7 1.61960 12.0 10.1 1.9 5.91965 17.0 15.9 1.1 8.71966 17.0 15.8 1.2 7.41967 19.0 18.7 0.3 10.31968 22.0 20.2 1.8 8.01969 24.0 22.5 1.5 10.31970 27.0 25.2 1.8 10.11971 33.0 27.6 5.4 13.31972 34.0 29.6 4.4 14.61973 35.0 30.7 4.3 9.61974 40.0 39.7 0.3 18.51975 60.0 48.9 11.1 57.81976 75.0 69.3 5.7 65.01977 110.0 82.2 27.8 80.01978 130.0 89.2 40.8 114.31979 145.0 102.6 42.4 96.81980 150.0 116.5 33.5 82.81981 150.0 135.8 14.2 81.21982 160.0 150.6 9.4 76.61983 185.0 156.6 28.4 78.81984 195.0 156.3 38.7 69.81985 195.0 158.3 36.7 65.11986 195.0 147.2 47.8 46.61987 195.0 139.7 55.3 48.41988 195.0 132.6 62.4 45.01989 195.0 129.6 65.4 37.21990 160.0 133.5 26.5 40.81991 165.0 151.8 13.2 65.71992 180.0 160.9 19.1 57.51993 180.0 166.7 13.3 56.01994 190.0 180.2 9.8 37.11995 195.0 179.7 15.3 30.11996 195.0 189.9 5.1 28.91997 200.0 193.9 6.1 33.4 113.41998 215.0 197.3 17.7 26.6 110.61999 220.0 197.7 22.3 30.6 106.12000 220.0 207.5 12.5 36.3 110.6

Statutorylimit

*** The column “Allocated amount of statutory limit” reflects the overall level of exposure under thestatutory limit for the respective year. On the basis of these figures, conclusions cannot, however,be drawn on the amounts actually at risk, because they include claims paid as well as disburse-ments within the scope of reschedulings, for which recoveries are still expected.For this reason, the Federal Government’s total outstanding risk is recorded separately since theend of 1997 and shown above in column 6.

44

ANNEX

TOTAL OUTSTANDING RISK BY COUNTRY

Total

12.3

12.9

1.9

8.9

6.6

4.9

1.5

3.5

3.7

3.3

2.9

43.7

106.1

11.6%

12.2%

1.8%

8.4%

6.2%

4.6%

1.4%

3.3%

3.5%

3.1%

2.7%

41.2%

100.0%

in %1999

in DM billions

12.5

10.4

0.9

9.6

9.5

5.3

4.6

3.5

3.3

3.1

3.0

44.9

110.6

11.3%

9.4%

0.8%

8.7%

8.6%

4.8%

4.2%

3.2%

3.0%

2.8%

2.7%

40.6%

100.0%

in %2000

in DM billions

China P.R.

Russia R.F.

Former Soviet Union

Indonesia

Turkey

Brazil

South Africa

India

Argentina

Mexico

Philippines

Other countries

I Plant

II Machineryand equipment

III Electronic, precisionengineering andoptical equipment

IV Ships, equipmentfor ships

V Vehicles,locomotives etc.

VI Aircraft

VII Construction services

Others

BREAKDOWN OF SPECIFIC POLICIES BY TYPE OF GOODS IN DM MILLIONS

Total

6,864

2,280

481

3,657

131

4,158

1,469

1,188

2000

20,229

5,192

4,968

2,091

2,961

1,904

2,024

1,136

2,011

1993

22,287

7,731

3,526

1,992

2,626

845

2,378

1,246

1,328

1994

21,672

6,385

4,472

1,856

893

1,116

2,727

2,735

814

1995

20,998

7,501

3,858

1,544

1,915

495

1,291

4,849

507

1996

21,960

10,467

5,145

1,995

271

524

1,239

967

786

1997

21,394

6,813

3,567

1,148

481

155

1,295

845

1,034

1998

15,338

3,021

1,776

818

2,225

228

2,364

854

750

1999

12,036

45

ANNEX

1950 – 1954

1955 – 1959

1960 – 1964

1965 – 1969

1970 – 1974

1975 – 1979

Subtotal

1980 – 1984

1985 – 1989

1990 – 1994

1995

1996

1997

1998

1999

Total income 36,203.3

Total expenses 62,357.9

Result -26,154.6

Debt owed to theFederal Government 36,266.6

of which regulatedunder reschedulings 30,774.8

* Interest received by the Federal Budget; not included in result** Including supplementary payments for previous years

Total amount 19,257.1 16,946.2 60,232.2 2,125.7 15,350.0

FINANCIAL RESULT IN DM MILLIONS

2000

54.0

167.4

276.3

483.1

677.0

1,755.4

3,413.2

2,811.2

2,627.3

3,956.5

1,157.7

1,094.6

1,206.3

1,105.6

769.9

1,114.8

32.8

162.8

283.0

746.0

825.2

916.4

2,966.2

1,683.7

2,023.5

3,967.1

1,160.2

882.8

1,181.9

956.0

1,143.1

981.7

50.1

328.5

723.8

1,149.4

1,580.5

1,135.5

4,967.8

5,934.6

10,781.8

23,708.4

3,735.5

2,749.6

2,874.2

2,016.6

1,560.8

1,902.9

**

10.3

21.1

28.1

44.5

74.1

161.6

339.7

293.1

359.6

477.8

99.9

94.6

97.2

100.7

136.9

126.2

943.0

465.9

1,486.7

3,375.0

1,571.9

1,778.1

2,126.5

1,565.2

1,062.5

975.2

Premiums/fees earnedYear(s)

Recoveries for claims paid and rescheduled amounts*

Disbursements for claims and reschedulings Cost Interest*

Developingcountries

- Asian

- African

- Latin American

- European

Central/EasternEurope


Uncategorisable

REGIONAL DISTRIBUTION OF TOTAL EXPOSURE (INCL. INTEREST) IN %

´00

70.5

34.9

10.6

18.6

6.4

20.8

3.4

5.3

´50 ´60 ´70 ´80 ´90

74.0 79.0 75.9 77.8 74.3

10.0 26.2 28.2 33.6 29.3

4.0 11.0 12.0 21.5 17.4

40.0 26.3 22.5 16.7 21.7

20.0 15.5 13.2 6.0 5.9

8.0 8.3 14.5 15.2 12.1

10.0 6.8 6.4 3.8 5.8

8.0 5.9 3.2 3.2 7.8

´96

69.2

34.6

12.2

17.5

4.9

22.1

3.2

5.5

´97

69.2

35.2

11.3

17.5

5.2

22.3

3.1

5.4

´98

68.1

35.1

11.2

16.6

5.2

23.3

3.0

5.6

´99

69.1

34.7

10.6

18.3

5.4

22.3

3.2

5.5

46

ANNEX

1. The purpose of the Export Guaranteesprovided by the Federal Government(HERMES cover) is to support Germanexports. It is one of the main goals to cre-

ate a level playing field for Germanexporters towards their competitors fromother countries on an international marketwith keen competition.

Guiding Principles for the consideration of ecological, socialand developmental aspects when issuing Federal ExportGuarantees

A. PRINCIPLES

2. The promotion of German exportsforms an important part of Germany’s for-eign trade and payments policy and canonly be carried out within the provisions ofthe framework of currently valid ForeignTrade and Payments Law, in particular theexport control regulations. In otherrespects the general laws (e.g. the provi-sions for criminal law) as well as the legalprovisions of intergovernmental institu-tions and relevant international arrange-ments with direct binding effects in theFederal Republic of Germany shouldapply (e.g. regulations to safeguardagainst hazardous chemicals). In additionto this the Political Principles of the Feder-

al Government, effective 19th January2000 and the decisions of the FederalSecurity Council apply for the export ofwar arms and other military supplies.

Exports of nuclear technology designedfor the building of new or conversion ofexisting nuclear power plants are exclud-ed from support by the Federal Govern-ment. Depending on the individual trans-action, measures and equipment relatedto the decommissioning of existing plantsor the improvement of their safety stan-dards may be eligible for support, provid-ed they are not classified nuclear technol-ogy.

3. Eligibility for support and justifiabilityof risk are basic criteria for the granting ofcover by the Federal Government. Ger-man exports are of vital importance for theFederal Republic of Germany. Therefore,they are – within the legal framework

pointed out in 2. – in general eligible forsupport. Nevertheless, in the decisionmaking process aspects that go beyondeconomic policy objectives will be takeninto account as well and given carefulconsideration.

Global sustainable development 4. Global sustainable development is oneimportant aspect and therefore a highranking goal of the Federal Republic ofGermany. With this aim in view, the Gov-ernment endeavours to contribute to sucha development in foreign countries by pro-moting socially and ecologically sustain-able projects, esp. renewable energies,through its export guarantees. Besidesthe commercial effects of an export trans-action in Germany (e.g. creating and/ormaintaining jobs, paying special attention

to the 5 new German Laender (states), aswell as the promotion of small and medi-um sized enterprises), further importantaspects of eligibility for promotion aretherefore also environmental aspects in abroader sense. This means that ecologi-cal, social and developmental impacts(in the following called: environmentalaspects) of the transaction in the hostcountry will be assessed and evaluated.Should environmental risks be identified,they may not only be decisive in determin-

Legal framework

Export is eligible for supportunder normal circumstances

Ecological, social and developmental aspects

47

ANNEX

ing whether a project is eligible for supportbut also could have an impact on the jus-tifiability of the risk when carrying out thecredit analysis for the granting of cover.

In this connection it is also quite importantto which extent the applicant is involved inthe overall project. His influence on the

project is subject to his share of the over-all project. Due to the fact that exportguarantees for an overall project are theexception to the rule, the analysis of anapplication will be made in the firstinstance on a case by case basis withregard to the German portion of the pro-ject.

Criteria

5. The Federal Republic of Germany alsosupports the goal of global sustainabledevelopment on the international level. Bytaking an active part in the standardisationof the procedural principles of internation-al export credit insurers in the OECD, the

Federal Government helps to achieve aresponsible consideration of environmen-tal aspects by all OECD export creditinsurers and thus to ensure equal chancesfor German exports in comparison to theirforeign competitors.

6. These guiding principles describe theprocedure for identifying environmentalimpacts of a project during the applicationprocessing so that they can be consid-ered in the later decision making process.In the interests of a smooth and promptprocedure, transparency of the decision-making process is an objective of the Fed-eral Government. This is intended to offerthe opportunity for the applicant to take

relevant environmental aspects into con-sideration at an early stage. Theseaspects could already be described indetail when submitting the application,when appropriate for instance within theframework of the Memorandum. In thisway, the decision making process couldbe expedited, which would also be in theinterests of the applicant.

7. The environmental procedure will beadjusted according to the experiencewhich is gained with it and according to

international developments in a timelymanner, especially within the framework ofthe OECD.

B. SCREENING

1. A screening procedure is used for theidentification of adverse environmentaleffects.

Within the scope of this screening proce-dure all projects that typically qualify formedium and long terms of payment withan order value exceeding EUR 15 millionhave to undergo a preliminary examinationif the portion of the German supplieraccounts for a relevant part of the entireproject.

If there are concrete indications that aproject is likely to cause significant

adverse environmental effects, a prelim-inary examination will take place even ifthe order value goes below the amountstated above. In this context, particularlythe project environment e.g. a very sensi-tive location, has to be taken into consid-eration. In any case further audits are nec-essary should there be any indicationsthat nature reserves (e.g. primary forestwith a high biodiversity) or settlementareas of indigenous peoples or recognisednational cultural heritage are affected bythe project or if large-scale resettlementsshould be implied.

Share of the overall project

International development

Environmental aspects and theapplication process

Timely adjustment

Project environment

48

ANNEX

Should other official export credit agen-cies be involved in the project, anexchange of information according to the

arrangements of the OECD will take placeduring the ongoing procedure (see alsoC.1 and C.4).

Expert opinions/environmentalassessments

2. Generally excluded from the screeningprocedure are projects on normal shortterm payments (e.g. consumer goods),the supply of means of transportation (e.g.aircraft, ships and trucks), and telecom-munication projects because the environ-mental impacts of these projects are

already sufficiently known. Replacementof old equipment by new with the same oreven beneficial environmental impacts andexports not related to any particular pro-ject are also excluded from the further pro-cedure.

3. The applications for cover will then beallocated to one of the following sectors: • Mining, gas and oil• Power generation and transmission

(including hydroelectric power plants)• Infrastructure and technological projects

(including dams)• Agriculture industry, forestry and fishery• Metal producing and processing• Mineral processing industry• Food industry• Pulp, paper, wood, leather and textile

industry• Chemical and petrochemical industry

After allocation to a sector it remains to beclarified whether the project meets thetypical requirements regarding the ecolog-ical, social and developmental criteriawithin its relevant sectors. Should this notbe the case, an intensified review is nec-essary. The decision whether sufficientinformation is already available is based onthe application form and where applicableon the Memorandum. The Memorandumalso includes information about environ-mental effects.

C. REVIEW

1. Should, with reference to the screeningprocedure, further questioning be neces-sary, additional information independent ofsector as well as sector-specific informa-tion for the evaluation of the environmentaleffects of the project will be required of theapplicant. In this context, it is also ofimportance to which extent the applicantis involved in an overall project. How farthe applicant can generate all information

is subject to the extent of his involvementin the project either in a qualitative orquantitative respect. The requirement forthe exporter to supply information should,in any case, be in accordance with theprinciple of proportionality. Should otherofficial export credit agencies be involvedin this project, an exchange of informationwill take place in accordance with thearrangements of the OECD.

2. The questions to be answered by theapplicant will be posed on a case-by-case and project-related basis and willbe updated according to the latest experi-ence and in the light of current knowledge,

e.g. the report of the World Commissionon Dams (WCD). The answers of theapplicant will be analysed and will be tak-en as a basis for the decision.

3. The statements submitted about envi-ronmental aspects in expert opinions/

environmental assessments will first beexamined as to plausibility. Any unclear

Common Approach

Sectors

Information independent of sector and sector-specific

information

Transaction and project-relatedquestions

49

ANNEX

Partnership approach

4. The project has to meet the environ-mental standards of the host country.These will be compared with the basicinternationally recognised and customaryenvironmental regulations (e.g. WorldBank or EBRD standards, benchmark-ing). Should it turn out that the standardsof the host country are significantly belowinternational standards, further explana-tions from the applicant are necessary. Inthis connection it is of importance whetherthe environmental situation, compared tothe time before implementation of the pro-

ject, has improved (e.g. by conversion ormodernisation of an older plant with envi-ronmentally friendly technologies).

In those cases in which several officialcredit insurers cooperate, the FederalGovernment will, according to the OECDarrangements, initiate an exchange ofinformation. Especially their experienceconcerning the environmental standardsof the project and the consequences aris-ing out of this for granting cover will beshared.

5. In order to document the relevant envi-ronmental aspects and to enable greatercomparability of relevant environmentalprojects, after evaluation of all relevantinformation the projects will be allocatedinto one of the following categories:

Projects assumed to have strong ecolog-ical, social or developmental impacts,which in most cases appear to be notlocally limited and/or irreversible. In par-ticular this applies to projects affectingnature reserves or settlement areas ofindigenous peoples, entailing large-scaleresettlements or impacting on generallyrecognised national cultural heritage. Fora decision on category A projects, an

exhaustive description of all relevant envi-ronmental aspects – if necessary bymeans of expert opinions or audits – willbe required.

Projects assumed to have limited ecolog-ical, social or developmental impacts,which usually appear to be locally limitedand reversible. For a decision on Catego-ry B projects, plausible criteria for environ-mental relevance or generally acceptableinformation is sufficient.

Projects for which no or only insignificantecological, social or developmental im-pacts are to be expected.

aspects arising in this context should firstbe discussed with the applicant. In partic-ular cases an additional expertise or the

revaluation of an existing expert opinion by an independent expert may berequired.

6. For each review or decision to be taken,further consideration should always begiven to the fact that foreign partners andtheir governments are much more familiarwith local conditions than the Germanexporter or bank in general. Should signsfor adverse environmental effects arise,the applicant will be asked to cooperate

with the foreign partner and his govern-ment first in order to find measures toreduce or avoid them (mitigation). Againthe extent of involvement of the exporterin the overall project is important becausehis influence on the project is subject tohis share.

Compliance with standards,benchmarking

Exchange of informationbetween Export Credit Agencies

Category A

Category B

Category C

Mitigation

7. In the end it is only possible to obtainsustainable improvements of relevantenvironmental projects if they are pursuedtogether with the foreign partner and,

where appropriate, his government and ifthe special characteristics of each individ-ual case are taken into consideration.

50

ANNEX

Available information

D. ENVIRONMENTAL COVENANTS/MONITORING

1. The Federal Government can makesupport conditional on the acceptance ofenvironmental covenants to an otherwisepositive decision if the previous reviewprocedure had shown that improvementsof adverse environmental impacts are

necessary. The contents of such environ-mental covenants are subject to the influ-ence of the exporter, which againdepends on his share of the overall pro-ject.

2. Should special environmentalcovenants be the basis for granting cover,the exporter can be bound to informabout their fulfilment by means of regular

monitoring reports. In this case the guar-antee contract contains a description ofmeasures to be undertaken for monitoringand how often this needs to be done.

E. SOURCES OF INFORMATION

1. In general the applicant is required toprovide all necessary documents for theenvironmental review. It is in the interest ofthe applicant to submit all relevant infor-mation about environmental impacts ofthe project as soon as possible, as it helps

to expedite the application process. Inaddition to this it could be helpful to sub-mit already existing expert opinions and/orstudies about the ecological, social anddevelopmental impacts of the project atthe time of application.

2. The Federal Government will also takeother available sources of information intoconsideration. This especially includesreports from other export credit insurersinvolved in the project or financial institu-tions as well as the German embassies inthe host country. In addition the Federal

Government will also make use of suitableinformation from non-governmentalorganisations and the media as well asexpert opinions/environmental assess-ments, according to the conditions point-ed out in C.3.

3. The Federal Government ensures pro-fessional and competent auditing of envi-

ronmental information.

F. PUBLICATION

1. The public will be informed by the pressand by special publications (e.g. annualreports, AGA Report) about the export

credit guarantee facilities as well as aboutthe environmental aspects consideredunder this procedure.

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Transparency in Germany

2. Moreover, more transparency is to bereached in respect of the decisions taken.For this, details of the project data (appli-cant, type of goods/project, size of thetransaction, host country and credit peri-od) will be published in the Internet withthe approval of the applicant after finalcommitment. The publication of thesedata as well as other trade and business

secrets or registered information withoutapproval of the applicant would be con-trary to criminal and administrative lawregulations.

In addition, the development of a proce-dure for the publication of the location andnature of the project at the applicationstage is being discussed in the OECD.

3. Experience shows that projects can beimproved and possible resistance of thepublic in the host country – which mightpossibly lead to project delays and there-fore to a rise in costs – could either bereduced or avoided by appropriateinvolvement of the population concerned

in the host country. Where the applicanthas the chance to involve the populationconcerned in the host country, he shouldencourage and support the buyer toinvolve the local population in correspond-ing projects.

4. It is intended to publish individual Cate-gory A projects at an early stage, providedthe applicant gives his approval, since theprocess can be delayed by resistance ofthe public here in Germany, too, especial-ly in the case of controversial projects.

The applicant can contribute to generat-ing greater acceptance of the project, andtherefore avoid such delays by early infor-mation of the interested public in Germanyabout the project.

Publication of project data

Involvement of the populationconcerned

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ANNEX

ARRANGEMENT (CONSENSUS): The Arrangement is a “Gentlemen’s Agree-ment” between OECD members whichregulates the minimum and maximumterms permissible for the official support ofexports in order to avoid financing compe-titions which would place an unnecessaryburden on the national budgets. It appliesonly to transactions with repayment termsof more than two years.

CEILING: For countries where cover facilities havebeen restricted for risk management rea-sons, a limit is placed on the total volume ofcover issued, i.e. a ceiling is established.As a rule, such ceilings apply to transac-tions with repayment terms of more than12 months.

CLUB OF LONDON: The uncovered loans granted by commer-cial banks are rescheduled by the banks attheir own initiative (compare “Paris Club”).

CONSTRUCTIONAL WORKS COVERFACILITY: Refers to a type of cover specially tailoredto suit the needs of the construction indus-try, which in addition to the amounts receiv-able provides cover for other types of riskswhich may arise in connection with politicalevents during construction abroad (e.g.loss of construction equipment).

COUNTER GUARANTEES ORBONDS (BID BONDS, ADVANCEPAYMENT BONDS, PERFORMANCEBONDS): May be included in the pre-shipment risk orexport credit risk cover facilities.

COUNTERTRADE COVER FACILITY: Export guarantees for countertrade busi-ness are issued under restrictive condi-tions. This facility is restricted to exports tothe CIS states. At least 50% of the goodsexported under a contract must originatefrom the new federal states. The maincharacteristic of this type of transaction isthat instead of the government or banksecurities traditionally required as securityfor the receivable amounts, the revenuesgenerated by the saleable goods deliveredin exchange serve as security during theentire life of the loan.

COUNTRY RISK POLICY: A wholeturnover policy which offers coveronly for the political risks arising fromexport transactions with repayment termsof up to two years involving supplies toOECD countries for which the so-calledmarketable risks can be insured in the pri-vate market.

EXPORT GUARANTEES: Instruments used strategically by the Fed-eral Government to protect Germanexporters against the non-marketable risksarising in connection with export transac-tions.

EXPOSURE: Total commitment level of the Federal Gov-ernment at year’s end as recorded by theFederal Debt Administration, excludinginterest.

FINANCIAL CREDIT COVER FACILI-TY (BUYER CREDIT COVER FACILI-TY): Protects banks against the risks arising inconnection with the amounts receivableunder a credit provided to a foreign buyer.Percentage of cover: 95%.

INTERMINISTERIAL COMMITTEE: Decides on matters of principle and on theavailability of cover for individual transac-tions. The Federal Ministry of Economicsand Technology takes the decisions on thecover applications with the approval of theFederal Ministry of Finance, in agreementwith the Federal Ministries for ForeignAffairs and for Economic Cooperation andDevelopment, and with the assistance ofthe Consortium and experts.

LEASING COVER FACILITY: Protect against the political and commer-cial risks resulting from leasing transactionswith lessees abroad.

MANUFACTURING RISK COVERFACILITY: Protects against risks arising before ship-ment, i.e. against loss of the prime costsincurred to manufacture the suppliesand/or perform the services specified in theexport contract in the event that fulfilmentof the export contract becomes impossiblefor or unacceptable to the exporter.

DEFINITIONS AND EXPLANATIONS

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ANNEX

MARKETABLE RISKS: Commercial risks involving short-termtransactions with repayment terms of up totwo years and buyers in OECD countries(with the exception of Mexico, Poland,South Korea, Czech Republic, Turkey andHungary). For transactions with OECDcountries, cover facilities are offered by theprivate insurance market. Following theprinciple of subsidiarity, official export guar-antees may no longer be issued for suchrisks.

OFFER OF COVER: Declaration of intent to provide cover sub-ject to the condition that the factual andlegal basis of the transaction does notchange.

PARIS CLUB: International union of official creditorswhich reorganises the debt of countriesexperiencing payment difficulties. The debttreatment refers almost exclusively to offi-cially guaranteed commercial debt, i.e.guaranteed in particular by the govern-ments of the creditor countries (in the caseof Germany: export credits backed by fed-eral export guarantees) and developmentaid loans. The Paris Club has no organisa-tional structure with written statutes. Theprocedural guidelines have been devel-oped over the course of time and areamended when and as necessary (com-pare “Club of London”).

PRIVATE BUYER RISK GUARAN-TEES: Provide cover for the amounts due to aGerman exporter under supplies/servicescontracts concluded with private buyersabroad.

PROJECT FINANCING SCHEMES: Are applied to complex export transactionsfor which traditional securities are not avail-able, but where the project itself generatessufficient income to cover the operatingcosts and the debt service for borrowedfunds.

PROTRACTED DEFAULT: Non-payment which persists for a longerperiod. If an amount owed by a foreignbuyer is not settled within a period of, nor-mally, six months after due date, this isconsidered as a protracted default. In thecase of the financial credit cover facility(percentage of cover: 95%), the waitingperiod is reduced to three months.

PUBLIC BUYER RISK GUARAN-TEES: Provide cover for the amounts receivableunder export contracts where the contract-ing partner or guarantor is either a gov-ernment, a regional authority or a similarinstitution.

SHORT-TERM REVOLVING POLICY: In the case of recurring supplies to one andthe same foreign buyer, this type of cover isrecommended for business with privateand public buyers in order to avoid havingto submit an individual application for eachtransaction.

SPECIFIC POLICIES: May be issued within the scope of public orprivate buyer risk guarantees in respect ofindividual export transactions to cover thecredit risk emanating from an export con-tract concluded with a foreign buyer. Coverfor transactions with repayment terms ex-ceeding one year may be granted only inthe form of specific policies.

STATUTORY MAXIMUM EXPOSURELIMIT: Maximum amount up to which liability inthe form of issued export guarantees mayaccepted by the Federal Governmentunder the Federal Budget Law.

TOTAL OUTSTANDING RISK OF THEFEDERAL GOVERNMENT: The country risk statistics reflect the debtowed by individual countries to the FederalGovernment and the amount which wouldactually have to be indemnified by the Fed-eral Government under the export guaran-tees issued.

UNINSURED PERCENTAGE: Exporter’s share in the loss in an event ofloss, normally 5% for political risks and15% for commercial risks and protracteddefault.

WHOLETURNOVER POLICIES: Offer comprehensive cover for non-mar-ketable risks at reasonable premiums forsupply contracts with repayment terms ofup to one year.

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DAC CLASSIFICATION OFDEVELOPING COUNTRIES (DAC = Development Assistance Commit-tee of the OECD)

LATIN AMERICAN DEVELOPINGCOUNTRIES:Anguilla, Antigua and Barbuda, Argentina,Aruba, Bahamas, Barbados, Belize,Bermuda, Bolivia, Brazil, British VirginIslands, Cayman Islands, Chile, Colombia,Costa Rica, Cuba, Dominica, DominicanRepublic, Ecuador, El Salvador, FalklandIslands, Grenada, Guadeloupe, Guate-mala, Guyana, Haiti, Honduras, Jamaica,Martinique, Mexico, Montserrat, Nica-ragua, Netherlands Antilles, Panama,Paraguay, Peru, Puerto Rico, St. Kitts andNevis, St. Lucia, St. Pierre and Miquelon,St. Vincent and the Grenadines, Suri-name, Trinidad and Tobago, Turks andCaicos Islands, Uruguay, Venezuela

AFRICAN DEVELOPING COUNTRIES: Algeria, Angola, Benin, Botswana, Burki-na Faso, Burundi, Cameroon, CapeVerde, Central African Republic, Chad,Comoros, Congo, Congo (DemocraticRepublic), Côte d’Ivoire, Djibouti, Egypt,Equatorial Guinea, Eritrea, Ethiopia,Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Libya,Madagascar, Malawi, Mali, Mauritania,Mauritius, Mayotte, Morocco, Mozam-bique, Namibia, Niger, Nigeria, Reunion,Rwanda, Sâo Tomé and Principe, Sene-gal, Seychelles, Sierra Leone, Somalia,South Africa, St. Helena, Sudan, Swazi-land, Tanzania, Togo, Tunisia, Uganda,Zambia, Zimbabwe

ASIAN DEVELOPING COUNTRIES:• NEAR/MIDDLE EAST: Bahrain, Iran, Iraq, Israel, Jordan, Kuwait,Lebanon, Oman, Palestine (autonomousterritories), Qatar, Saudi Arabia, Syria,United Arab Emirates, Yemen

• EAST ASIA: Brunei, Cambodia, China (People’sRepublic), East Timor, Hong Kong,Indonesia, Korea, Korea (Democratic Peo-ple’s Republic), Lao People’s DemocraticRepublic, Macao, Malaysia, Mongolia,Philippines, Singapore, Taiwan, Thailand,Vietnam (Socialist Republic)

• SOUTH/CENTRAL ASIA: Afghanistan, Armenia, Azerbaijan, Bang-ladesh, Bhutan, Georgia, India, Kazakh-stan, Kyrgyzstan, Maldives, Myanmar,Nepal, Pakistan, Sri Lanka, Tajikistan,Turkmenistan, Uzbekistan

• OCEANIA: Cook Islands, Fiji, French Polynesia,Guam, Kiribati, Marshall Islands, Microne-sia, Nauru, New Caledonia, Niue, North-ern Mariana Islands, Palau, Papua NewGuinea, Pitcairn Islands, Solomon Islands,Samoa, Tokelau, Tonga, Tuvalu, Vanuatu,Wallis and Futuna

CENTRAL/EASTERN EUROPEANCOUNTRIES: Belarus, Bulgaria, Czech Republic, Esto-nia, Hungary, Latvia, Lithuania, Poland,Romania, Russian Federation, SlovakRepublic, Ukraine

INDUSTRIAL COUNTRIES:Andorra, Australia, Austria, Belgium,Canada, Canary Islands, Denmark, Ger-many, Finland, France, Greece, Green-land, Iceland, Ireland, Italy, Japan, Liecht-enstein, Luxembourg, Monaco, Nether-lands, New Zealand, Norway, Portugal,San Marino, Spain, Sweden, Switzerland,Vatican City, United States, United King-dom.

Classification of countries

55

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PAGE 1: PhotoDisc Deutschland,Hamburg

PAGE 8: HÖRMANN-RAWEMAGmbH, Chemnitz

PAGE 10: KRONES AG, Neutraubling

PAGE 11: Preussag WassertechnikGmbH, Achim

PAGE 12: DINA DENTAMED Warenhandels GmbH, Heidelberg

PAGE 13: Züblin International GmbH,Stuttgart

PAGE 14: Dirk Bartschat, Hamburg

PAGE 16: Krupp Thyssen StainlessGmbH, Duisburg

PAGE 17: Airbus Industrie,Hamburg

PAGE 19: Dirk Bartschat, Hamburg

PAGE 20: Projektierung und Anlagen-bau GmbH, Bautzen

PAGE 21: TESSAG Industrie-AnlagenGmbH, Duisburg

PAGE 22: Strabag International GmbH, Köln

PAGE 23: Siemens AG, Erlangen



PAGE 27: HERMES Kreditversicherungs-AG, Hamburg

PAGE 28: HERMES Kreditversicherungs-AG, Hamburg

PAGE 29: Jacob Carl GmbH, Göppingen

Photographs by courtesy of

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Head OfficeHERMES Kreditversicherungs-AGFriedensallee 254D-22763 HamburgMailing address:D-22746 HamburgFederal Republic of Germany

Phone: (+ 49 40) 834 992Fax: (+ 49 40) 834 975Telex: 2 12 115 hk [email protected]

This report on the official export guarantee scheme of the Federal Republic of Germanyis available in German and English.

The Federal Government has appointeda consortium formed by HERMES Kredit-versicherungs-AG, as lead partner, andPwC Deutsche Revision Aktien-gesellschaft Wirtschaftsprüfungsgesell-schaft, Hamburg, to manage the officialexport guarantee scheme. Further detailsand information may be obtained by con-tacting the Head Office of HERMESKreditversicherungs-AG in Hamburg or

one of the branch offices. Additional infor-mation on the official export guaranteescheme, e.g. current editions of the AGAReport, the General Conditions and infor-mation leaflets (only in German) as well asthe Annual Reports (in German and Eng-lish) can also be accessed via Internet.You may also request additional informa-tion material or raise your questions direct-ly via e-mail.

The leadership function in the Interminis-terial Committee, which has the under-writing responsibility for Federal Guaran-tees, is exercised by the Federal Ministryfor Economics and Technology.

Bundesministerium für Wirtschaft undTechnologie Referat V C/F 1Scharnhorststraße 34-37D-10115 Berlinwww.bmwi.de

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Official Export Guarantee Schemeof the Federal Republic of Germany

Annual ReportHERMESKreditversicherungs-AGFriedensallee 254D-22763 HamburgPhone: (+49 40) 88 34-91 92Fax: (+49 40) 88 34-91 75Telex: 2 12 115 hk [email protected]

D-10117 BerlinFriedrichstadt-PassagenQuartier 205Friedrichstraße 69Phone: (+49 30) 20 94-53 10Fax: (+49 30) 20 94-53 [email protected]

HERMES HEAD OFFICE

EXPORT GUARANTEE DEPARTMENT, BERLIN

BRANCH OFFICES OF HERMES KREDITVERSICHERUNGS-AG

10117 BerlinJägerstraße 71Phone: (+49 30) 20 28 43 23Fax: (+49 30) 20 28 43 [email protected]

33602 BielefeldZimmerstraße 8Phone: (+49 5 21) 9 64 56-0Fax: (+49 5 21) 9 64 [email protected]

28195 BremenMartinistraße 34Phone: (+49 4 21)165 97-0Fax: (+49 4 21)165 [email protected]

44137 DortmundLindemannstraße 79Phone: (+49 2 31)182 99-90Fax: (+49 2 31)182 [email protected]

01129 DresdenRiesaer Straße 5Phone: (+49 3 51) 8 53 77-0Fax: (+49 3 51) 8 53 [email protected]

40472 DüsseldorfKanzlerstraße 4Phone: (+49 2 11) 9 65 76-80Fax: (+49 2 11) 9 65 [email protected]

60311 FrankfurtGroße Gallusstraße 1-7Phone: (+49 69) 13 48-159Fax: (+49 69) 13 [email protected]

79100 FreiburgBaseler Straße 61Phone: (+49 7 61) 40 07 9-39Fax: (+49 7 61) 40 07 [email protected]

20097 HamburgSachsenkamp 5Phone: (+49 40) 2 36 36-190Fax: (+49 40) 2 36 [email protected]

30159 HannoverGeorgstraße 36Phone: (+49 511) 3 64 01-90Fax: (+49 511) 3 64 [email protected]

50672 KölnHohenzollernring 31-35Phone: (+49 2 21) 9 20 60-293Fax: (+49 2 21) 9 20 [email protected]

04157 LeipzigLandsberger Straße 23Phone: (+49 3 41) 9 08 23-0Fax: (+49 3 41) 9 08 [email protected]

68161 MannheimP 7, 20-23Phone: (+49 6 21)129 05-18Fax: (+49 6 21)129 05-99 [email protected]

80339 MünchenRidlerstraße 35Phone: (+49 89) 5 43 09-143Fax: (+49 89) 5 43 [email protected]

90429 NürnbergSpittlertorgraben 3Phone: (+49 9 11) 2 44 05-15Fax: (+49 9 11) 2 44 [email protected]

66111 SaarbrückenBahnhofstraße 80Phone: (+49 6 81) 3 89 96-0Fax: (+49 6 81) 3 89 [email protected]

70579 StuttgartSchöttlestraße 10Phone: (+49 711) 9 00 49-38Fax: (+49 711) 9 00 [email protected]

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