The Consensus - a summary The OECD has stipulated a number of guidelines for restricting statesupportad export credit competition between countries, often referred to as the 'Arrangement' or the 'Consensus'; it contains guidelines for minimum and maximum credit periods, amortization structure, minimum advance payment and, above all, minimum interest rates and minimum premium rates. The minimum credit period for which these rules apply is two years, with repayment in equal half-yearly instalments (plus interest). A minimum payment of 15 per cent has to be paid before the starting point of the credit. The maximum credit period for high-income OECD countries is up to five years; however, in exceptional circumstances this may be extended to 8.5 years after international pre-notification. For all other countries the maximum credit period is 10 years, but shorter periods may apply for certain commodities and lower contract values. the author summarizes "the consensus" what is the rationale for such consensus? The Handbook of International Trade and Finance The minimum leval for state-supported fixed interest rates is based on OECD guidelines - the CIRR rates (Commercial Interest Reference Rates), which are revised monthly, based on the assumption of what they might have been if finance had been available. The two types of CIRR are contract CIRR and pre-contract CIRR, which is 20 basis points higher. The advantage of the pre-contract CIRR for the seller is that they can submit a cost-free offer to the buyer based on a fixed interest rate at the date of the application, which can then be hald during the negotiations for up to 120 days. The contract CIRR must be applied for before signing the contract and will be the rate applicable at contract date, so in this case the parties will not know the exact rate in advance. After contract, the rates so determined will be hald for another 180 days to allow time for credit documentation. In addition to interest charges, a Minimum Premium Rate (MPR) is also to be paid, covering the ECA's credit risk and long-term operating costs and losses. The MPR is based on a number of different factors, including country risk classification, risk period and buyer risk. More detailed information can be obtained from commercial or export banks, or directly from the ECAs listed in Chapter 5. The Consensus - a summary The OECD has stipulated a number of guidelines for restricting statesupportad export credit competition between countries, often referred to as the 'Arrangement' or the 'Consensus'; it contains guidelines for minimum and maximum credit periods, amortization structure, minimum advance payment and, above all, minimum interest rates and minimum premium rates. The minimum credit period for which these rules apply is two years, with repayment in equal half-yearly instalments (plus interest). A minimum payment of 15 per cent has to be paid before the starting point of the credit. The maximum credit period for high-income OECD countries is up to five years; however, in exceptional circumstances this may be extended to 8.5 years after international pre-notification. For all other countries the maximum credit period is 10 years, but shorter periods may apply for certain commodities and lower contract values. the author summarizes "the consensus" what is the rationale for such consensus? The Handbook of International Trade and Finance The minimum leval for state-supported fixed interest rates is based on OECD guidelines - the CIRR rates (Commercial Interest Reference Rates), which are revised monthly, based on the assumption of what they might have been if finance had been available. The two types of CIRR are contract CIRR and pre-contract CIRR, which is 20 basis points higher. The advantage of the pre-contract CIRR for the seller is that they can submit a cost-free offer to the buyer based on a fixed interest rate at the date of the application, which can then be hald during the negotiations for up to 120 days. The contract CIRR must be applied for before signing the contract and will be the rate applicable at contract date, so in this case the parties will not know the exact rate in advance. After contract, the rates so determined will be hald for another 180 days to allow time for credit documentation. In addition to interest charges, a Minimum Premium Rate (MPR) is also to be paid, covering the ECA's credit risk and long-term operating costs and losses. The MPR is based on a number of different factors, including country risk classification, risk period and buyer risk. More detailed information can be obtained from commercial or export banks, or directly from the ECAs listed in Chapter 5
