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 ERG, Export Risk Guarantee, Switzerland

Swiss ERG (Export Risk Guarantee ) is an instrument to facilitate exporters entering into contracts with purchasers in countries where uncertain political or economic conditions could jeopardise receipt of payment.

• ERG is a legally dependent self-supporting fund of the Swiss Federal Government. The fund's incomes and expenditures are not included in the Government financial accounts.
• Necessary monies can be made available by the Government. They are subject to interest charges and repayment. The fund is supervised by the Swiss federal auditors and its annual accounts, balance sheet and financial statements must be published annually.
• ERG is based on the Swiss Federal Act on the Export Risk Guarantee of September 26, 1958, the relevant Ordinance of the Swiss Federal Council of June 15, 1998, and decrees of the Federal Department of Economy. The law and ordinances have undergone a number of amendments to adapt them to the rapidly changing requirements of the export industry.
• Like all export credit agencies, ERG is also subject to international rules (Berne Union, OECD). These rules must be observed when guarantees are being issued.  top
• The principles of Switzerland’s foreign aid policy are taken into account when granting guarantees.
• ERG Coverable Risks:
  • Political risk
    The risk which results from political events abroad, such as war, revolution or civil commotion, making it impossible for the purchaser to fulfil his contractual obligations or causing the loss of exported merchandise that is still the property of the exporter.
  • Transfer risk
    The risk of the purchaser being unable to pay as a result of restrictions on currency transfers imposed by his government, i.e. where the purchaser has deposited the amount due in local currency with a bank but the Central Bank is unable to provide the required foreign currency for transfer.
    Transfer risk also includes the risk of debt consolidation, i.e. that the debt of a country in a critical financial situation will be rescheduled for repayment over an extended period as a result of an agreement between the countries concerned.
  • Commercial risk
    The risk of insolvency or refusal to pay by:
    • States, municipalities and other public bodies
    • Private entities which are wholly or predominantly owned by public bodies or which fulfil public duties (public utilities such as power stations, waste incineration plants etc.)
    • ERG-approved banks.
    Hence, this risk can also be covered for transactions with private buyers if securities are provided by an accepted guarantor.
    For project financing, the commercial risk is limited to the obligations of state or private purchasers and suppliers with a public involvement (public utilities). The commercial risk of the project itself cannot be covered.
  • Contingent currency risk (unlimited)
    Foreign currency risks arising out of the redemption of foreign currency financing, forward exchange contracts or similar arrangements after an insured loss occurs. The primary risk of exchange rate fluctuations is not covered.
  • Pre-delivery risk (manufacturing risk)
    The risk that contractually agreed delivery becomes impossible or unreasonable due to a subsequent increase in the above risks, or to a lack of transport facilities abroad.
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• For ERG to be self-supporting in the long term, each guarantee is subject to a fee appropriate to the risk. The premium relates directly to the country risk, the amount and the tenor as well as to the other risks covered.

Links ECA's:
CESCE COFACE COSEC DUCROIRE EKF ECGD EDC EKN ERG EXIM EXPORTERS FINNVERA GERLING-NCM GIEK HERMES HKECIC JBIC KEIC MIGA OeKB SACE