New Zealand's government is extending its short-term trade credit insurance guarantee for exporters by NZD100m (USD63m), the country's Finance Minister Bill English has announced.
"This will provide relief to exporters, helping them maintain their cashflows and keep New Zealanders in jobs during the recession," Mr English explained, adding:
"The global downturn has affected the availability of both short and long-term trade credit. That has left some exporters facing cancelled orders because of a lack of trade credit insurance."
"This government has made it clear that one of the best ways to ensure New Zealand grows strongly out of the recession is to reduce borrowing and consumption and increase exports and investment. Ensuring our exports continue in the face of the global credit crunch will help achieve that."
The initiative is part of a suite of government measures aimed at making it easier for small and medium-sized firms during the recession, such as the NZD500m (USD318m) tax assistance package, announced in February. The issue of trade credit guarantees was also raised at the Jobs Summit.
The extension follows the Export Credit Office's initial NZD50m (USD31m) facility for the guarantee, established in February, which is almost completely allocated.
The temporary facility provides a guarantee to exporters or insurers against defaults on contracts with payment terms of less than 360 days. The only cost to the Crown is in the event of an unrecoverable default. This cost is offset by premiums. The facility is being provided for up to two-and-a-half years.
“The Export Credit Office has had a significant increase in inquiries and applications since the launch of this product. The NZD100m (USD63m) increase will help ensure trade opportunities are not missed. That is crucial in the current economic environment,” Mr English concluded.
The Export Credit Office is also working with private sector trade credit insurers to see how they can also continue to support exporters.
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