Brussels, 16 March (STA) - The European Commission approved on Tuesday the Slovenian short-term export credit insurance scheme, a measure adopted by Slovenia to limit the adverse impact of the current financial crisis on export firms. The Commission authorised the measure until 31 December 2010.
The Commission found the measure to be in line with its temporary framework for state aid measures to support access to finance in the current financial and economic crisis.
The measure requires a higher remuneration than that offered by the private market and tackles the problem of the current insufficiency of short-term export credit insurance cover on the private market.
In line with the scheme, Slovenia intends to provide short-term export-credit reinsurance through the state SID export and development bank to complement the insurance cover available on the private market.
The SID bank would conclude reinsurance agreements with private credit insurers under which it would take over the part of the risk related to transactions for which private insurers had withdrawn their cover.
"The export credit insurance scheme provides Slovenia with the means to support companies in areas where the market is currently not functioning properly, while at the same time establishing safeguards to limit distortions of competition," Competition Commissioner Joaquin Almunia said.
According to the Commission, the measure complies with the EU regulations and meets two important criteria. First, Slovenia has demonstrated that the necessary cover has become insufficient or unavailable on the private insurance market as a consequence of the financial crisis.
Second, the premiums required in the scheme are above those charged in the private export credit insurance market and are thus in line with the Commission's communication on short-term export-credit insurance.
Moreover, the measure includes safeguards ensuring that financially unsound transactions and counterparties that would not obtain cover even under normal market conditions, do not unduly benefit from the measure.