The USDA Commodity Credit Corporation (CCC) administers the GSM-102 and GSM-103 export credit guarantee programs to insure financing for sales of U.S. agricultural exports. This program allows foreign buyers to purchase U.S. agricultural commodities from private U.S. exporters, with U.S. banks providing financing to the importers' banks on commercial terms.

Updated March 1999

INTRODUCTION
Under the GSM-102 & 103 programs, CCC is the guarantor and does not directly finance the export of the commodities and insures up to 98 percent of the principal and a portion of the interest. Because payment is guaranteed, financial institutions in the United States can offer competitive credit terms to the foreign banks, usually with interest rates based on the London Inter-Bank Offered Rate (LIBOR). Any follow-on credit arrangements between the foreign bank and the importer are negotiated separately and are not covered by the CCC guarantee.

GSM-102 & 103 Programs
The Export Credit Guarantee Program (GSM-102) covers credit terms up to three years. The
Intermediate Export Credit Guarantee Program (GSM-103) covers longer credit terms up to 10 years. Target countries are those with high market development potential and reasonable expectation of repayment. A U.S. exporter, foreign buyer or buying agency, or foreign or U.S. bank may initiate the allocation of new country coverage under CCC's guarantee programs. Before a program is announced, however, the creditworthiness of a country and its financial institutions are evaluated.

Most programs are operated under individual bank credit limits. These limits are established by the Consolidated Farm Service Agency (CFSA), and establish the maximum amount of cumulative exposure or potential risk the CCC will assume for an individual bank. In selected cases, governments whose banks are not considered creditworthy by the CFSA may participate by providing USDA with a commitment to back obligations of individual country banks. This commitment is called a credit guarantee assurance (CGA), and may permit exposure to exceed bank limits.

If the CCC decides political and economic risks are balanced by market development potential, it will issue a program an-nouncement specifying the commodity, country, amount of coverage available, shipping deadline, and other pertinent information. If an exporter is interested in obtaining a guarantee for a commodity that is not included in a country's commodity allocation, the exporter may request that the CCC consider extending coverage.

GSM-102 & 103 Requirements
The commodity must be 100-percent of U.S. origin. Manufactured agricultural inputs such as pesticides, fertilizers, machinery, or vitamin supplements are not covered. The exporter must have a business office in the United States and not be debarred or suspended from participating in CCC programs.

CONTACTS:
For more information on the export credit guarantee program for the NIS, contact the nearest U.S. Embassy, or USDA in the United States:

Grant Pettrie, Area Manager
Foreign Agricultural Service/Export Credits
U.S. Department of Agriculture
14th and Independence Ave., SW
Rm. 4524
Washington, DC 20250-1000
Tel.: (202) 720-5319
Fax: (202) 690-0251
Home page: http://www.fas.usda.gov

Specific inquiries regarding Russia can also be addressed to the Office of Agricultural Affairs in the U.S. Embassy in Moscow, which is the official representative of the U.S. Department of Agriculture in the Russian Federation.
Home page: http://www.agmoscow.post.ru/english.htm

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)