The Export-Import Bank, which normally provides low-cost financing to support U.S. exports, last week offered to lend $4.2 million to U.S. investors to induce them to buy American products rather than Brazilian goods.
It was the second time ever that the Export-Import Bank offered its resources to support a domestic purchase. It said it was doing so to help a U.S. company compete for a domestic sale "against a foreign firm backed by unfairly subsidized financing from a foreign export credit agency," in this case Brazil's CACEX.
The bank is offering the loan at 6.5 percent to D/R Hydro Co. of Pittsburgh to finance the sale of turbine generators and other equipment to build a hydroelectric power project on the Youghiogheny River in western Pennsylvania.
Secretary of the Treasury James A. Baker III authorized the Ex-Im Bank to match CACEX's offer to finance a competitive bid from Voith Brasil S.A. of Sao Paulo, Brazil.
"We are concerned about Brazilian reliance on government subsidies and low-interest-rate U.S. loans to win orders in the United States," said John A. Bohn Jr., Ex-Im Bank president and chairman.
The generators and other equipment are manufactured by Allis-Chalmers Hydro Inc. of York, Pa., and Century Steel Erectors Inc. of Pittsburgh. Loss of the contract would mean a loss of nearly $5 million to the companies.
Ex-Im Bank's first domestic offer, made in March, saved an $8.2 million sale by Allis-Chalmers Hydro for equipment to be used on a Allegheny River project. A spokesman from the bank said Allis-Chalmers Hydro received the contract.
International Finance Corp.
The International Finance Corp., which lends money to private enterprises in developing companies, two weeks ago approved $10 million of financing to support the expansion of a Peruvian silver- and gold-mining company.
IFC financing, a $9 million loan and $1 million in equity, will support a $30 million expansion project of Compania de Minas Orcopampa S.A. in the southern region of Peru.