OECD Consensus

The European Union and the member states of the OECD agreed new rules for state supported export finance. This agreement in principle on the reform of the OECD Consensus was published by the OECD on 3 April 2023 (see press release of the Federal Ministry for Economic Affairs and Climate Action, DE).

The modernisation of this central regulatory framework, which took effect on 15 July 2023, is an important step towards a more climate-friendly orientation of export business supported with state guarantees. Besides, German and European companies’ competitiveness will be strengthened vis-à-vis competitors from countries that refuse to subscribe a jointly agreed discipline (level playing field).

The agreement can be found on the website of the OECD:

Exporters who make use of state export credit guarantees are to be supported in their competitiveness and more climate-friendly orientation. Taking into account the Paris Agreement on climate change but also the current environment for international trade, the reform of the OECD Consensus, on the one hand, encompasses the modernisation of the general financing conditions for greater flexibility for export credit guarantees and, on the other hand, offers export-oriented companies more support in their transformation towards more climate-friendly foreign business.

The reform aims at improving the framework conditions for the European export industry, which enable it to respond to the demand for climate-friendly technologies, and to create a level playing field to prevent a unwanted race for subsidies. This is to strengthen German and European companies in their international competitiveness.

In detail, the reform of the OECD Consensus includes the following new features.

The modernised OECD Consensus lays down in particular repayment terms, minimum premium rates and minimum interest rates:

1. Harmonisation and extension of the maximum possible repayment periods:

• As a rule, credit periods of up to 15 years are permissible for all transactions which are eligible for cover; however, the economic lifetime of the exported good remains decisive in the specific individual case.
• This eliminates the current differentiation between country risk categories based on income level (OECD high income countries versus other buyer countries) and the corresponding limitation of the repayment periods to 8.5 and 10 years respectively.
• For transactions governed by the Climate Change Sector Understanding (CCSU) applies even repayment periods of up to a maximum of 22 years are eligible for cover.
• Only with regard to other oil and gas-fired power stations the limit of 12 years remains in force.

2.  More flexibility in the structuring of the repayment profile

• Officially-supported export credits can now be repaid in equal, at least annual, instalments (or annuities) – instead of semi-annual instalments so far.
• Interest payments must be made at least as frequently as redemption payments.
• In exceptional, duly justified cases as well as in in connection with project finance, a different structure is possible provided that
  • the weighted average life (WAL) amounts to
    • six years or
    • does not exceed 65% (or as per CCSU: 70%) of the repayment period;
  • the first instalment is paid, at the latest, 2 years (or as per CCSU: 3 years) after the commencement of the repayment period;
  • an individual instalment does not exceed 30% of the loan amount (or a maximum of 35% under the CCSU);
  • interest has to be paid at least annually in such a case.

3. Modification of the premium system

• If the horizon of risk exceeds ten years, a premium discount will be granted for certain country risk and buyer risk categories.
• The premium discount is primarily granted to support climate-friendly transactions with long horizons of risk.

Downloads

More detailed information on the financing terms can be found in the brochure Fees and premium rates and in the calculation tools:

The scope of application of the CCSU has been expanded. Thus, the member states of the OECD laid the foundation so that demand for export credits for climate-friendly exports can rise in future. Due to the preferential terms, state-of-the-art technology can now be better supported when entering the market.

Specifically, the CCSU was extended by the following areas of application, which can benefit from improved financing conditions, including an extended repayment period (up to 22 years), in future:

• Energy storage, power transmission and distribution
• Battery manufacturing and recycling
• Electricity generation from “clean” hydrogen
• Production of “clean” hydrogen
• Transmission, distribution and storage of hydrogen
• Production of “clean” ammonia
• Emission-free transport and the corresponding infrastructure, low-emission rail transport, low-emission heavy traffic

Transactions concerning low-emission manufacturing and mining and processing of minerals for clean energy are subject to the Common Line procedure (case-by-case assessment) and can also be financed with maximum repayment periods of up to 22 years. The existing project classes renewable energies, water projects, adaptation projects and carbon sequestration and storage will also benefit from the extended maximum repayment periods in future.

You will find more detailed information in: