Government ensures credit financing for Norwegian exporters

“The Government intends to establish a state-funded scheme for export credit financing for the Norwegian export industry. The purpose is to provide financing that will ensure competitive conditions for Norwegian exporters,” says Prime Minister Jens Stoltenberg.

The Government intends to establish an interim financing scheme immediately for the period until the new permanent scheme is operational, and is presenting a bill to the Storting (the Norwegian parliament) outlining the scheme in the Council of State today, with a proposal for a loan commitment of NOK 30 billion. 

A Government Agency will assume responsibility for the permanent scheme, which will provide subsidised fixed-interest (CIRR) loans, the “108 scheme”. Currently the 108 scheme is administered by Eksportfinans, which will also administrate the interim scheme. The alternative of taking up a CIRR-qualifying loan at a commercial interest rate instead of a fixed interest rate will be continued.

“A state-funded export financing scheme should be robust, reliable and cost-effective. It will ensure competitive conditions for the Norwegian export industry,” says Mr Stoltenberg.
 
The government agency will be responsible for administering the scheme in Norway and the funds will be borrowed from the public treasury. The scheme will offer borrowers both subsidised fixed-interest and commercial interest loans. State-supported export credits play a very central role in the financing of exports of Norwegian capital goods, especially in times of financial unrest with few alternative sources of funding.

“In situations like this it is important that the Government ensures stable framework conditions for Norwegian exporters,” says the Prime Minister.

“A state-funded scheme is the best way of providing security for export companies against financial fluctuations. The current unrest in the international economy makes it especially important that financing is predictable and safe,” says Minister of Trade and Industry Trond Giske.

In the wake of the financial crisis of 2008, comprehensive international efforts were made to strengthen the solidity of financial institutions, and in response the EU tightened up its rules for large exposures of credit institutions. This means that Eksportfinans requires substantial recapitalisation if it is to continue to provide the same service as it does today. However, Eksportfinans and its largest owners have not managed to agree on a plan for recapitalisation that would ensure adequate export financing.
 
“A permanent solution will be in place at the latest by 1 July 2012. An interim scheme administered by Eksportfinans will be set up immediately. The interim scheme will ensure that loans that qualify for CIRR will be disbursed at either CIRR interest rates or commercial interest rates until the permanent state-funded scheme is in place,” says Mr Giske.
 
The interim arrangement will also provide commitments for new CIRR loans. Assets and commitments established during the interim period will be taken over by the government agency when it has been set up.