2 The background of the Bill

2.1 Background

The current scheme for subsidised fixed-interest loans (CIRR loans) was established in 1978 on the basis of the OECD “Arrangement on Officially Supported Export Credits”.1 The Arrangement regulates competition between OECD countries, inter alia, on interest rate and instalment conditions for state-funded loans for export of goods and services. The purpose of the scheme is to enable Norwegian exporters to compete on equal terms with other exporters with access to national export credit schemes. The scheme has been managed by Eksportfinans ASA throughout its existence.2 A more detailed account of the CIRR loan scheme is provided in section 2 of Prop. 34 S (2011–2012) Export Financing and in 2.2, below.

In the wake of the financial crisis in 2008, comprehensive international efforts were made to strengthen the solidity of financial institutions, and the EU tightened its rules for large exposures of credit institutions. This meant that Eksportfinans required a substantial increase in capital if it was to continue to have the same lending power to finance loans that are not guaranteed by the Norwegian Guarantee Institute for Export Credits (GIEK). Eksportfinans ASA and its largest owners were unable to arrive at a recapitalisation plan that would result in an export financing scheme that in the Government’s view was robust enough to meet both clients’ needs and future solidity requirements. For a more detailed account, see section 3 of Prop. 34 S (2011–2012) Export Financing.

The Government therefore proposed to the Storting that administration of state-funded export credits be continued under government auspices, and the Storting gave the Government the authority to establish an interim arrangement until a new state body for export financing was established. A more detailed account of the interim arrangement is provided in section 5 of Prop. 34 S (2011–2012) Export Financing and in Prop. 42 S (2011–2012) Amendments to Prop. 34 S (2011–2012) Export Financing.

The state as represented by the Ministry of Trade and Industry then entered into an agreement with Eksportfinans ASA on an interim arrangement whereby Eksportfinans ASA would facilitate and enter into agreements on export financing on behalf of the state and with the state as lender. The state has also entered into agreements with Eksportfinans ASA whereby certain loans disbursed by Eksportfinans ASA pending formalisation of establishment of the interim arrangement were to be transferred to the state. When Eksportkreditt Norge AS is operational, the interim arrangement will be terminated, and the responsibility for following up the loans provided or taken over by the state during the interim period will be assumed by the new company.

The state also entered into an agreement with Eksportfinans ASA to offer on termination of the interim arrangement employment in the new state body to those of Eksportfinans ASA’s employees with responsibility for CIRR-qualified loans and associated activities. The principles of the Working Environment Act regarding transfer of undertakings were adopted as a basis for the agreement, and the offer of employment at the state body was accepted by all concerned. The agreement was important in avoiding the loss by Eksportfinans ASA of staff needed for management of the interim arrangement and in ensuring that the new body receives the necessary expertise to continue the provision of export financing without interruption.

2.2 The Arrangement on Officially Supported Export Credits

State-funded export credits (export loans and guarantees) are regulated by the OECD “Arrangement on Officially Supported Export Credits”. The Arrangement is a “gentleman’s agreement” between the USA, the EU, Japan, South Korea, Switzerland, Australia, Canada, New Zealand and Norway, and regulates, inter alia, maturities, interest rates and premiums in connection with financing of export of goods and services with a payback period of two years or longer. The purpose of the Arrangement is to provide a framework for export credits and encourage competition between countries based on price and quality, and not subsidies. The Arrangement has currently four Sector Understandings, for civil aircraft, nuclear power plants, renewable energy and water projects, and ships. The Sector Understandings provide conditions adjusted to the sector in question.

Export guarantees and exports loans provided in accordance with the Arrangement are not regarded as prohibited subsidies under the WTO agreement, and therefore comply with WTO rules.

The following main rules apply to loans and guarantees under the Arrangement:

• Officially supported export financing may generally be provided for up to 85% of the value of the export contract.

• The maximum credit period is usually 5 years, exceptionally 8.5 years, subject to notification. Otherwise, the maximum credit period is 12 years for ships and new aircraft (15 years for new aircraft, subject to notification), 14 years for project finance and 18 years for renewable energy, water projects and nuclear power plants.

• Absolute minimum premiums have been defined. A new premium system entered into force in September 2011.

• A maximum of 30% of the contract value may be granted financing for deliveries from the purchasing country (local cost).

The OECD Export Credit Group also has a set of common rules for officially supported export credit in relation to environmental issues, corruption and responsible lending.

Eksportkreditt Norge AS will comply with the OECD guidelines in its management of the Norwegian scheme.

2.3 The Norwegian Guarantee Institute for Export Credits

The Norwegian Guarantee Institute for Export Credits (GIEK) is a public sector enterprise that can provide guarantees for export credit exceeding two years’ maturity. The purpose of GIEK is to promote Norwegian export of goods and services and foreign investments by providing guarantees on behalf of the Norwegian state. The Institute may provide guarantees for export of all types of goods and services throughout the world. The reason for provision of state export guarantees is to help in securing competitive terms for Norwegian industry in competition with foreign companies, and to supplement the private guarantee market.

It is intended that GIEK’s main scheme for export guarantees, the ordinary guarantee scheme, shall break even in the long term. GIEK’s guarantee scheme for investments in and export to developing countries, which can be employed when the risk is too great for the ordinary guarantee scheme, is intended to break even when government grants for loss coverage are considered. The activities of GIEK are to continue as before, and are not to be changed as a result of the establishment of Eksportkreditt Norge AS.