THE FGP PROGRAM
EXIM's medium and long-term guarantees
The GSM-102 program provides credit guarantees to encourage financing of commercial exports of U.S. agricultural products. By reducing financial risk for lenders, credit guarantees encourage exports to buyers in countries—primarily developing countries—that have sufficient financial strength to have foreign currency available for scheduled payments.
The program is available to exporters of:
high-value, consumer-facing processed products such as frozen foods, fresh produce, meat, condiments, wine and beer;
intermediate products such as hides, flour and paper products; And
bulk products such as grains, oilseeds and rice.
About the Export Credit Guarantee Program (GSM-102)
The U.S. Department of Agriculture's (USDA) Export Credit Guarantee Program (GSM-102) provides credit guarantees to encourage financing of commercial exports of U.S. agricultural products. By reducing financial risk for lenders, credit guarantees encourage exports to importers from countries, primarily developing countries, that have sufficient financial strength to have foreign exchange available for scheduled payments.
The GSM-102 program guarantees credit extended by the private financial sector in the United States (or, less commonly, by the U.S. exporter) to approved foreign financial institutions using irrevocable dollar-denominated letters of credit for product purchases American food and agriculture. by foreign importers. USDA's Foreign Agricultural Service (FAS) administers the program on behalf of the Commodity Credit Corporation (CCC), which issues the credit guarantees. GSM-102 covers credit terms of up to 18 months; Maximum durations may vary by country.
The CCC guarantees payments due from approved foreign financial institutions to exporters or financial institutions in the United States. However, financing must be obtained from normal commercial sources. Typically, 98% of the principal and a portion of the interest are covered by collateral. Any subsequent credit agreement between the foreign financial institution and the importer is negotiated separately and is not covered by the CCC guarantee. The FAS website provides information on specific country and product allocations and other program information and requirements.
FGP
Funding
The CCC-approved foreign financial institution issues an irrevocable dollar-denominated letter of credit to the U.S. seller, usually advised or confirmed by the U.S. financial institution agreeing to extend credit to the foreign financial institution. The seller may negotiate an arrangement providing for payment upon contractual events by assigning to an approved U.S. financial institution the right to proceeds that may become due under the CCC guarantee.
The FGP program
About the Installation Warranty Program
The Facilities Guarantee Program (FGP) was established to expand U.S. agricultural exports by providing payment guarantees for the improvement or creation of agricultural facilities in emerging markets . By supporting these facilities, the FGP aims to increase sales of U.S. agricultural products in emerging markets where demand may be limited due to insufficient storage, processing, handling, or distribution capacity .
The FAS administers the FGP on behalf of the Commodity Credit Corporation (CCC). The CCC guarantees payments owed by approved foreign financial institutions to exporters or financial institutions in the United States . However, financing must be obtained from conventional commercial sources. Any supplemental credit arrangements between the foreign financial institution and the importer are negotiated separately and are not covered by the CCC guarantee. The CCC will only consider providing a guarantee if a transaction primarily benefits U.S. agricultural exports .
FGP covers credit terms of up to 10 years ; maximum terms may vary depending on the country and the details of the transaction for which coverage is requested. For transactions with a term of 24 months or more, a minimum initial payment of 15% of the net contract value must be made by the buyer to the seller before credit commences . CCC can offer coverage of up to 100% of the net contract value less the initial payment. For short-term transactions with a term of less than 24 months, an initial payment is not required and the maximum coverage is 98%.
CCC's coverage may include non-U.S. goods (including certain local costs) if the seller requests it and CCC determines that U.S. goods are unavailable or impractical to use.
The FGP is operated in accordance with the requirements of the Organisation for Economic Co-operation and Development (OECD) Arrangement on Officially Supported Export Credits (the Arrangement).
Eligible destination countries
Emerging markets eligible for the FGP program are listed by the FAS. The CCC's selection of destination countries will be based on the program's statutory requirements, risk considerations, and any other factors deemed appropriate by the CCC.