ArmInfo. Throughout 2016 the Export Insurance Agency of Armenia insured export deals amounting to 2 bln drams, Minister of Economic Development and Investments of Armenia Suren Karayan stated on December 28 summing up the results of the year.
According to the Minister as of December 2016 Export Insurance Agency of Armenia has insured export deals amounting to 2 bln drams (nearly $4.1mln). This amount is 5-fold more than the same figure for 2015, the Minister noted. According to Karayan, introduction of pre-export insurance system is an important result of the year.
To note, in March 2016 the Agency has introduced a new service-insurance of pre-export financing, which will help producers in raising funds for enlarging production in case of there is guaranteed export contract. According to EIAA Executive Director Vazgen Abgaryan the new product will allow the banks and commercial organizations to significantly reduce the credit risks, while the borrowers will be able to get funds without collateral. "According to our surveys this product will need 3-5 years of institutional formation in the financial market of Armenia. For this reason we intend to activate cooperation also with other commercial banks of Armenia in the upcoming months", Abgaryan mentioned.
In order to receive insurance under pre-export financing an exporter should have paying capacity acceptable for the bank and export contract approved by EIAA and in this case on the basis of shareholders' guarantee EIAA is ready to insure up to 95% of the bank loan and interest rate. By this the borrower or exporter receives bank loan without collateral. This scheme is very beneficial also for the banks as guaranteed loan significantly reduces the risks and increases liquidity. Pre-export financing may be used only for producing a good, for purchasing raw materials, transportation and for paying customs duties. The matter concerns short-term expenses directly aimed at increasing or growing exportability of the produced products.
To recall, Export Insurance Agency of Armenia Insurance CJSC was founded on October 23, 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 our Company are efficient solution for the control of export risks of our customers. EIA is a fully state-owned company.