without reference to lines of credit. Others are made under exporter credit lines set up for U.S. exporters of certain types of capital equipment to help them maintain their established markets abroad. A total of 80 credits for $27.3 million was authorized at the request of U.S. exporters or financial institutions during the period January 1 to June 30, 1960. These "exporter" credits vary considerably in amount and relate to the exportation of a wide variety of machinery, equipment and services. The smallest new credit was for $5,700 to assist in financing the sale of road construction machinery to a firm in Buenos Aires, Argentina. The largest was for $14,100,000 to assist in financing the sale of three DC-8 jet commercial aircraft to the Spanish airline Iberia, Lineas Aereas de Espana S.A. During the period, one new exporter credit line was authorized for $150,000. On June 30, 1960, there were 122 lines outstanding having an aggregate amount of $178.5 million. Providing acceptable transactions are proposed, these lines of credit give the exporters assurance that financing will be available within agreed amounts and during a particular period. Upon approval of a specific request, the Bank will purchase or guarantee a portion of the obligations of the foreign importer. The remaining portion will be carried by the exporter, with or without the assistance of a financial institution. New procedure to expedite medium-term exporter credits In May, the Bank inaugurated a new procedure to shorten the time of processing requests for medium-term exporter credits (i.e. with maturities of more than 6 months but usually not more than 5 years). Whenever the Bank makes a loan, it must be assured of the credit worthiness of the prospective borrower abroad. Under the new procedure, the Bank will place sole reliance on the credit judg ment of the participating commercial bank provided the latter will finance as much as 10 percent of the invoice value of the sale, without recourse on the exporter, and provided the market is acceptable to both the bank and the Export-Import Bank. This procedure acts as a timesaver. The exporter in such a case deals only with his commercial bank without direct negotiation with the Export-Import Bank in Washington, since the Bank foregoes its own customary credit analysis of the prospective borrower. As of June 30, 1960, 18 transactions for exporter credits involving participations by U.S. commercial banks had been approved by the Export-Import Bank in sole reliance on the credit judgment of the commercial bank. The largest credit carried a sales invoice value of $300,000 and the smallest was $40,000. The 18 credits aggregated sales invoice values of $2.3 million. Short-term political risk guarantee program On May 23, 1960, the Export-Import Bank made available to U.S. exporters an export guarantee to protect them for 90 percent of losses due to transfer and other noncommercial (or political) risks. The specific political risks covered are nontransferability of funds, im position of foreign laws and regulations prohibiting importation, cancellation of valid import licenses, war or civil commotion, and expropriation of goods. The guarantee agreement requires monthly declaration and payment of fees on all of the exporter's eligible export business for 12 months. Commercial banks with foreign departments, and insurance coinpanies in the United States engaged in writing export credit insurance, were asked to act as agents for the Export-Import Bank in issuing the political risk guarantees directly to exporters on behalf of the Export-Import Bank. As of June 30, 1960, 128 commercial banks and two export credit insurance companies had agreed to act as agents. Up to that time, 28 guarantees had been issued providing cover on an estimated $17.2 million in exports during the ensuing 12 months. By the end of the period, a total of 647 export shipments had been made under these guarantee contracts. Private participation During the period under review, private investors participated in the Bank's activities to the extent of $45.7 million through (1) the purchase by commercial banks of early maturities in Export-Import Bank credits ($7.1 million), (2) the commercial bank portion of its own credits in which the Export-Import Bank has participated ($0.3 million), (3) loans extended concurrently with loans by the ExportImport Bank to the same borrower ($5.6 million), and (4) credits extended abroad by U.S. manufacturers and exporters concurrently with Export-Import Bank credits for the same transactions, but without the Bank's guarantee, and equity capital supplied by private investors who became stockholders in corporations abroad to which the Bank was concurrently extending credit ($32.7 million). FISCAL RESULTS During the 6 months ended June 30, 1960, the Bank authorized new dollar commitments of $258.9 million. Disbursements were $190.8 million, and the Bank received $160.3 million in repayment of principal. The gross income for this period was $65.2 million. Interest paid to the Treasury on borrowed money was $20.7 million, and operating expenses were $1.1 million. Thus, the net income was $43.4 million. In June, the Bank declared a dividend of $22.5 million on the stock of the Bank held by the Secretary of the Treasury. The Bank's reserves and undistributed earnings amounted to $613.4 million on June 30, 1960. STATUS OF BANK RESOURCES As of June 30, 1960, the total lending authority of the ExportImport Bank was $7 billion outstanding at any one time. Loans outstanding totaled $3,231.8 million, unutilized commitments were $1,570 million, and $17.2 million had been allocated to cover shortterm political risk and expropriation insurance on consigned exports of cotton and tobacco. Hence, the uncommitted lending authority of the Bank was $2,131 million on June 30, 1960. As indicated in table 8, net credits authorized by the Bank in the postwar period, July 1, 1945, through June 30, 1960, totaled in excess of $8 billion. FOREIGN CURRENCY LOANS Section 104(e) of the Agricultural Trade Development and Assistance Act of 1954, as amended, provides that up to 25 percent of the foreign currencies received from the sale of surplus agricultural com modities under this act shall be available to the Export-Import Bank for lending to (1) U.S. firms or their branches, subsidiaries, or affiliates for business development and trade expansion in the foreign country, and (2) either U.S. firms or firms of the foreign country for facilities to expand the markets for and consumption of U.S. agricultural products abroad. In the current period, sales agreements were concluded with 10 countries under which the following percentages of the proceeds will be made available for section 104 (e) loans: 25 percent in Chile, Finland, Peru, Uruguay and Vietnam; 20 percent in Israel; 15 percent in Greece and the United Arab Republic (Egypt); 10 percent in Pakistan; and 5 percent in India. In six countries-China (Taiwan), Iceland, Israel, Poland, Spain and Yugoslavia-agreements were concluded which provided no section 104(e) loan funds. The additional amounts provided for 104 (e) loans under these sales agreements total the equivalent of $45.6 million and bring the cumulative total set aside for such loans to the equivalent of $327.5 million. As of June 30, 1960, the Bank was accepting applications for loans in the currencies of Ceylon, Chile, China (Taiwan), Colombia, Ecuador, Finland, Greece, Iceland, India, Indonesia, Korea, Pakistan, the Philippines, Turkey, the United Arab Republic (both the Egyptian and Syrian regions), Uruguay and Vietnam. During the current period, the Bank authorized 25 loans in 9 countries for the equivalent of $25.0 million. Five of these loans were made to firms with no U.S. affiliation for purposes which would expand the market abroad for U.S. cotton, wheat, and feed grains. The loans were as follows: 'Text in American Foreign Policy: Current Documents, 1959, pp. 1504-1505. 405. OPERATIONS OF THE EXPORT-IMPORT BANK OF WASHINGTON DURING THE PERIOD JULY 1 TO DECEMBER 31, 1960: Report of the National Advisory Council on International Monetary and Financial Problems, September 13, 1961 (Excerpt)* LOAN AND GUARANTY OPERATIONS During the 6-month period, July through December 1960, the Export-Import Bank authorized 498 credits and guarantees totaling $617.6 million. These credits and guarantees will help to finance U.S. exports to 102 countries. They include 41 credits aggregating $452.4 million authorized at the request of overseas purchasers of U.S. products and 213 medium-term credits and guarantees totaling $71.2 million set up at the request of U.S. exporters or financial institutions, as shown in table 10. In addition the Bank issued 134 short-term political risk guarantees, under which the Bank's maximum liability was $90 million, and 110 war risk and expropriation insurance policies on consigned exports of cotton and tobacco totaling $4 million. TABLE 10.-Export-Import Bank credits, by area, terms and purpose, July 1-Dec. 31, 1960 'Part VIII of the National Advisory Council's report on its activities during the period July-Dec. 1960; H. Doc. 241, 87th Cong., Sept. 14, 1961, pp. 21-25. |