Exporters from the US will be able to apply for insurance cover of up to US$250 million to cover letters of credit (L/Cs) to be issued by, or on behalf of, the Trade Bank of Iraq (TBI).

The insurance will be used to support trade financing from the J P Morgan-led TBI consortium and may be available to companies seeking to export either goods or services to Iraq.

TBI programme

The insurance from the Export- Import Bank of the United States (Ex-Im Bank) was approved by its board of directors as part of the US export credit agency's (ECA's) new US$500 million short-term insurance TBI programme.

This programme provides for bank L/C and financial institution buyer credit insurance policies that, in turn, allow US companies to be assured of payment for goods exported to Iraqi buyers.

Vital role

"This financing can play a key role in helping US exporters provide the goods and services needed to revitalise the Iraqi economy," according to Ex-Im Bank Chairman Philip Merrill.

The TBI was established in July 2003 by the Coalition Provisional Authority (CPA) as an independent entity with the aim of facilitating the reconstruction of Iraq by providing trade financing services that Iraqi financial institutions are currently unable to offer.

Programme developments

Ex-Im Bank announced the US$250 million limit on insurance cover under its TBI programme on 29 December 2003.

The bank approved that programme on 25 November 2003 and it became effective when Ex-Im Bank became one of 16 national ECAs to sign framework agreements with the TBI and the CPA earlier this month (DC World News 12 December 2003).

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