§ Mr. Michael McNair-Wilsonasked the Minister for Trade if he contemplates any changes in the Export Credits Guarantee Department's support for the financing of United Kingdom capital goods exports in foreign currencies.
§ Mr. Peter ReesI believe that the ECGD facilities which have been available in this connection since 1977 for financing United States dollar and deutschemark credits of two years or longer have worked well and remain a useful aid to exporters. The International Consensus on export credits permits preferentially low interest rates to be offered on credits financed in currencies for which domestic interest rates are low, and in agreement with the Japanese authorities ECGD will be extending those facilities to certain credits financed in yen as from 7 June, primarily where this is needed to enable our capital goods exporters to offer interest rates comparable to those available from competitors in Japan or other countries having like arrangements with Japan.
This extension also applies to ECGD's tender-to-contract facility, which is available for currency contracts with a minimum United Kingdom value of £5 million equivalent; but, in order to keep charges for this facility as low as possible, its terms for all new applications received after today, in respect of all the approved currencies, will provide for ECGD's trading accounts to benefit by the full amount of any exchange gains which accrue. At present ECGD does not benefit from any gains in excess of 10 per cent. of the expected sterling outturn.
From 7 June ECGD will also introduce a new forward exchange supplement facility to provide exporters who 453W win contracts of a minimum United Kingdom value of £5 million equivalent, which are invoiced in an approved foreign currency and are either on credit terms financed in that currency or are on cash payment terms, and which are insured by ECGD on a specific basis, with an assured sterling outturn if all or part of their receivables cannot be promptly sold forward in the commercial foreign exchange market. A specific premium charge will be made for this facility which will be provided on similar terms to tender-to-contract cover.
ECGD will shortly circulate fuller details of these changes to the relevant sectors of industry.