Iraq gets first grain shipments on credit (25/10/05)

Grain shipments for Iraq are now aboard ships bound for and in ports in the Middle East. The shipments represent a milestone in the relationship between US grain exporters, the Export-Import Bank of the US (Ex-Im Bank), the Trade Bank of Iraq (TBI) and JP Morgan Chase Bank.

Grain shipments form part of $277 million in sales of grain

The shipments are part of the $277 million in sales of grain to the Ministry of Trade's Grain Board, the state-run buyer of wheat and rice for Iraq. These commodities are the first agricultural commodities sold to the Iraqi government on 180- day credit terms under Ex-Im Bank's $500 million short-term insurance facility for TBI, said an Ex-Im Bank report.

The sales were supported by letters of credit issued by the TBI, confirmed by Chase and insured by Ex-Im Bank for the benefit of exporters The Rice Company, ADM Rice and Cargill International.

"This financing helps create and maintain US jobs in the agricultural sector and enables the Iraqi Ministry of Trade to purchase large volumes of US commodities on a timely basis for the benefit of the Iraqi people," Ex-Im Bank chairman and president (acting) James H. Lambright said. "We look forward to financing additional sales of US goods to Iraq and continuing to build upon our experience in other parts of the world to find innovative financing structures to support Iraqi reconstruction."

Under Ex-Im Bank's facility with TBI, Ex-Im Bank will insure irrevocable letters of credit issued by TBI and confirmed by a US bank. Standard terms under the facility include a repayment period up to 180 days, a pre-presentation period of 60 days and coverage of 100 per cent of the principal and interest, said the report.

"Use of the credit facility provides the Iraqi government liquidity for buying much-needed food supplies, but just as importantly, it gives the Iraqi government the opportunity to re-establish credit in the wake of years of economic challenges," said Lambright, according to the report.

Ex-Im Bank is also willing to support US exports to Iraq through its working capital guarantee program under which it will consider applications to support pre-export activities of US subcontractors, particularly small businesses, operating under US government-funded reconstruction projects. In addition, Ex-Im Bank will consider applications for financing of US exports to Iraq under its loan guarantee, working capital, and credit insurance programs if there is a creditworthy source of repayment in a third country.

Ex-Im Bank, the official export credit agency of the United States, is in its 71st year of helping finance the sale of US exports, primarily to emerging markets throughout the world, by providing loan guarantees, export credit insurance and direct loans.

The bank has no minimum transaction size. In fiscal year 2004, Ex-Im Bank authorised financing to support $17.8 billion of US exports worldwide.

Source: TradeArabia