Publication: A Pre-export Guarantee Facility in Moldova : Mitigating Political Risk in Transition
Date
1995-12
ISSN
Published
1995-12
Author(s)
Rühl, Onno
Watkins, Alfred
Abstract
Moldovan firms wanting to export face
severe financing constraints. The local banking system has
neither the capital base nor the technical capacity to
finance their working capital requirements. And export
credit agencies either are not willing to provide cover, or,
if they are, they require a full government counterguarantee
covering both commercial and political risks. Thus, to
enable viable local firms to attract private working
capital, the government of Moldova asked the World Bank to
help design a pre-export guarantee facility, with the
proviso that the facility should not require the government
to assume commercial risks. Under this facility, the
Moldovan government guarantees financiers against political
risk, and the World Bank provides a backstop guarantee of
the government's claim payment obligations. A similar
approach could be used in other transition economies, where
firms face similar constraints. This Note describes the
development of the facility and offers suggestions for
designing a "line of guarantee" modeled on it as a
way to help attract private finance for a relatively large
number of small projects.
Citation
“Rühl, Onno; Watkins, Alfred. 1995. A Pre-export Guarantee Facility in Moldova : Mitigating Political Risk in Transition. Viewpoint: Public Policy for the Private Sector; Note No. 64. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/6611fa03-215f-5b61-b653-d1748b72b6df License: CC BY 3.0 IGO.”
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