New OECD rules allow EKN to cover more local costs
OECD raises the limit on how much local content in a project that may be covered by export credit agencies. The change reflects the reality of today’s complex global value chains and the multinational sourcing in large infrastructure projects, in particular.
“I am pleased that the OECD is now aligned with the Swedish view with regard to including a larger proportion of local costs in export credit guarantees. This is particularly important when countries move from aid to trade with Sweden and require financing for their investments in, for example, railways, systems for city buses, and solar and wind power,” says Anna-Karin Jatko, Director General, EKN.
The portion of the so-called export contract value (all products and services produced outside the buyer’s country) allowed for local costs has up until now been limited to 30 percent. The new limits are 40 percent if the buyer is located in a high-income country and 50 percent in the case of low-to-medium income nations.
The new OECD rules are effective from April 20, 2021.