The Export-Import Bank yesterday approved new interest rates on its financing of U.S. export sales to be more competitive with financing provided by other countries.
The Ex-Im Bank's board of directors approved the rate schedule to conform with the new international guidelines on export credit subsidies agreed to last week by the world's leading industrial nations.
The Ex-Im Bank's interest rates on loans to purchasers in relatively wealthy countries will increase from 12 to 12.4 percent, the minimum rate allowed under the new agreement for long-term loans. Rates for intermediate countries will remain at 12 percent compared with long-term rates of 11.35 percent and 10.75 percent for certain categories under the arrangement. For the poorest countries, the Ex-Im Bank's interest rates will drop from 12 percent to 11 percent. Ten percent is the minimum rate for poor countries under the international accord.
In addition, the bank allowed purchasers to spread out payments of the bank's application fee, which is 2 percent of the amount of credit. Some countries already allow purchasers to spread out such payments over several years.
Last week the European Economic Community approved an agreement to reduce export credit subsidies significantly after months of slow negotiations.
At issue is the practice of countries providing attractive, low-interest-rate financing to purchasers of goods made by companies in their country. Such subsidies have given foreign firms advantages in contract bidding. For example, the latest export subsidy flap concerned a $650 million contract to a Canadian company for providing subway cars to New York's Metropolitan Transportation Authority subsidized at an interest rate below that already agreed upon by the industrial nations.
Ex-Im Bank Chairman William H. Draper III and Assistant Treasury Secretary Marc Leland said at a press conference yesterday said the administration hasn't decided whether to match the Canadian subsidy or when such a decision on it would be made.