§ Mr. Wrigglesworthasked the Secretary of State for Trade whether he is satisfied that the Export Credits Guarantee Department offers adequate cover to exporters who wish to contract for payment in foreign currencies.
§ Mr. DellECGD's facilities are eqally available to such exporters as they are to those who contract in sterling.
However, since under the Export Guarantees Act 1975 ECGD cannot accept unlimited sterling liabilities, its practice in such cases has been to limit its liability to the sterling equivalent of the foreign currency at date of contract or shipment, depending on the form of cover given. This could, for example, mean that an exporter who had covered forward or borrowed funds externally against the expected receipt of foreign currency could suffer loss outside his 836W cover from ECGD in meeting his currency obligation, if payment for his exports was not received at due date and the currency had meanwhile appreciated against sterling.
I have therefore authorised ECGD to improve the cover afforded for contracts which are expressed in certain major foreign currencies, and are supported by use of the forward market or foreign borrowing, so as to bring it more nearly into line with that provided under sterling contracts. Full details will be notified to interested parties and will become operative from 1st October.
In summary, users of ECGD's comprehensive guarantees will benefit up to a specific extra margin of cover should they incur loss in the circumstances indicated above. Exporters holding extended terms guarantees will be able to obtain cover up to such extra specified margins as they wish, on payment of an additional pro-rata premium. For business on either supplier or buyer credit covered specifically, cover against this same type of risk will be available, but without a specific margin, on payment of additional premium. This last type of cover will, with the consent of the Treasury, be provided with the assistance of the exchange equalisation account. In the event of a claim arising under ECGD's guarantee, ECGD will be able to obtain from the exchange equalisation account either the necessary foreign currency at the rate of exchange prevailing on the date of the guarantee or any additional sterling that may be required to purchase foreign currency as a result of exchange rate changes since the date of the guarantee. The involvement of the exchange equalisation account will be a temporary measure, lasting only until ECGD's own powers can be suitably amended.