Export Insurance Agency of Armenia and Union of Employers of Armenia sign a cooperation agreement

ArmInfo. The Export Insurance Agency of Armenia (EIA) and the Republican Union of Employers of Armenia signed a cooperation memorandum on Feb 17. The signing ceremony took place during a conference in Yerevan. The conference discussed the national report "Enabling Environment for Sustainable Enterprises" prepared jointly by the International Labour Organization (ILO) and the Republican Union of Employers of Armenia (RUEA). Under the agreement, the EIA and RUEA, which includes nearly 13,000 representatives of the business community, will exert efforts to foster the development of the export potential, enhance the competitiveness of the national exporters and extend the sales markets.    

Vazgen Abgaryan, CEO of the Export Insurance Agency of Armenia, has told ArmInfo when summing up the results of the EIA for 2015, that the Agency concluded 25 contracts, with most of them financed through export factoring. Limits were set to serve up to $7 million export transactions. "Unfortunately, not all exporters who received export insurance limits made use of the service because of sharp depreciation of the Russian ruble, termination of the export contract and a number of other impartial reasons. However, the indicator for nine months inspires optimism and demonstrates that our services enjoy the exporters' demand," he stressed.

To note, the actual indicator of insured export ($1 mln) makes up almost 27% of the EIA's own capital.  The international statistical data demonstrate that this ratio against capital during the first two years of activity of similar agencies in other developing countries did not exceed 20% of the capital. This shows that the market has a potentially high demand for export insurance. "In absolute terms, this figure is not high, but the growing potential demonstrates that in a couple of years the EIA may achieve the result of a threefold multiplier, which is our mid-term goal," Abgaryan stressed.

Abgaryan recalled that the Export Promotion Council headed by the Prime Minister has adopted a program covering five priority sectors of export of Armenian products - tinned food, wine, fruit vodka, fish and fish products, as well as meat products. He stressed that the exporters have a good opportunity to not only diversify but also expand the exports. He added that today the Agency is going to introduce a new topical service in the market -pre-export financing insurance. "We see a high demand on the market of pre-export financing products. There is an export contract but an exporter is short of funds to purchase raw materials and cover other costs to make the product subject to export. At the moment, the EIA has prepared the terms of the product and the terms are currently being discussed with the commercial banks. Hopefully, we will present the product to the business by late March," he stressed. Due to the new product of pre-export financing insurance, the commercial banks will be able to provide exporters with short-term loans to finance the production of export-oriented goods. The main difference of this service from the current banking products is that no collateral is required from the borrowing company. The product covers the risk of non-redemption of the loan and the interest of the financing bank by up to 95%.

To note, Export Insurance Agency of Armenia Insurance CJSC was founded on October 23rd, 2013 by the decision of the Government of the Republic of Armenia within the framework of the export-oriented industrial policy. The Company provides insurance against the financial losses incurred as a result of non-payment for supplied goods by the Foreign Buyer or its Bank, which has a payment obligation under the Contract. The services offered by the Company are efficient solution for the control of export risks of the customers. EIA is a fully state-owned company.