The British government is to go ahead with a new insurance scheme to confirm letters of credit (L/Cs) for exporters selling into developing countries.

The programme operated by the Export Credits Guarantee Department (ECGD) responds to what the government describes as a "pressing need" for more availability of export finance.

Guaranteed payment

Banks that sign up to the new scheme will be guaranteed payment when they issue confirmed L/Cs to exporters also participating in the scheme.

The initiative covers transactions that will be settled within a year.

Consultations

ECGD, Britain's official export credit agency, launched a public consultation in May on a proposal to offer a scheme to confirm L/Cs for British exports.

The scheme has received a lukewarm reaction in some quarters.

Criticisms

Several companies called for the programme to be extended to L/C tenors of up to three years.

Other critics suggested that ECGD should guarantee exports to markets beyond developing countries.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.