THE METHODS FOR APPROVING AND EXPORT CREDIT INSURANCE

Crediting as an important factor that affects the competitiveness of exports is closely related to the emergence and development of export credit insurance, because a significant part of the foreign trade transactions is concluded on credit. Hence receivable arises from the foreign debtor that carries a number of

1_{The repayment period is the time from the moment of the obligation to pay for goods or services to the moment of the final payment} and depends on the type of goods and services that are exported. For the export of raw materials, intermediate goods and consumer goods, short-term credits are mainly granted with repayment period of up to one year. For the export of equipment and capital goods credits are approved with repayment period of 1-5 years, while long-term credits are approved for implementation of investment projects abroad, delivery and installation of plant investment and their repayment period is over 5 years.

risks and the inability to collect debt. There are basically three types of approval and export credit insurance, and these are:

 export financing or refinancing,  subsidizing interest rates,

 guarantee and export credit insurance

Governments of countries usually analyze the effects of interest rates on the price of export products and the competitiveness of exporters. Interest rates are subsidized most frequently, so that the bank that approved the credit charges fewer funds than exporters. This is done by a mechanism of refinancing credits granted by commercial banks.

The purpose of the insurancemechanism is that the state should provide sufficient security (reduce the debt collection risk) for the banks which finance exports and stimulate them to grant export credits. The insurance contract is defined as the contract by which the insurer with the premium charge undertakes to indemnify the insured in case of insolvency of the insured person, who is credited by the insurer within the provided coverage limits. (Radović,1989,p.39)

Credit insurance for exports is often performed by specialized agencies for credit insurance for exports through export insurance and financing. This is a case-in-point for all countries. However, these agencies may differ from country to country in terms of status and organization, as well as other characteristics. They may be state-owned, privately owned, or they may be private, but work on behalf of the state.

Export Credit Agencies (ECAs) may (in whole or in part):

 directly finance exporters for export of goods and / or services on credit;  co-finance exporter with exporter's commercial banks;

 refinance commercial banks for credits that they granted to exporters and foreign buyers for export of goods or services on credit;

 subsidize the difference in interest rates on the funds mobilized in the capital markets at commercial interest rates and lower interest rates by which export credits are approved to foreign buyers.

Some of these agencies provide cover for short-term business and some just for medium-and long-term business. Regardless of the differences in terms of ownership, state-owned agencies are more prominent. Exceptions are: Austria (OeKB), France (COFACE), Germany (Euler Hermes), Portugal (COSEC) and the Netherlands (Atradius), which have agencies for credit insurance against political and commercial risks in private ownership. Export credits with the official state support are largely conditioned by the participation of the goods of domestic origin in exports (usually a minimum of 50%) and insurance claims while respecting international credit conditions (minimum interest rates) and insurance (minimum premium amount) in order to avoid unfair competition, or subsidizing exports. Export credits with the official state support aim to facilitate and promote national exports, and therefore the national economy as a whole.

According to the operations carried out, that is, the types of instruments that are used to achieve the goals, agencies are divided into:

 Agencies that perform export credit insurance exclusively, while financing activities are left to the banking sector. Such agencies include: Office National du Ducroire (Belgium) , Serviziassicurativo del Commercio Estero - SACE (Italy) , ECGD (The UK), Guarantee Institute for Export Credit - GIEK (Norway);

 Agencies that provide export business, whose activities are supported by a special agency that finances exports. Thus in France, COFACE is a leader in credit insurance, while Natexis finances exports. In Germany, HERMES provides export business, and KfW finances exports, while in Sweden the Exportkreditnamnden - EKN is in charge of insurance, and AB SvenskExportkredit - SEK is in charge of export credits;

 Agencies that provide services of insurance and crediting of exports and issuance of guarantees in export business. These agencies are: Ex-Im Bank (The USA), Export Development Canada - EDC (Canada), Slovenian Export Corporation - SEC (Slovenia) and ATRADIUS NV (The Netherlands).(Berneunion, http://www.berneunion.org/about-the-berne-union/berne-union-members/) Another important activity of the agencies in addition to credit and export insurance is to provide information and consultancy services. This activity involves the supply of information to exporters, which in terms of breaking into a new market can be of great importance. (Kjell& Kirsten, 2005, p.676-695) In this context, agencies provide their clients with a wide range of information on the creditworthiness of customers,

banks, institutional framework and legislative regulations in the country of (potential) importer, etc. These pieces of information provide a clear picture of a particular country (foreign partner) by whichrisks are reduced to a certain extent, and therefore the hidden costs of doing business.In this sense, a positive example is the Canadian EDC (Export Development Canada), which supplies its customers with a set of databases including research of regulatory environment and economic conditions in certain countries. In addition, the EDC has the function of mediator in the sense of establishing contact between Canadian exporters and potential partners from other countries, which greatly facilitates the undertakingof initial steps of Canadian exporters on the road to conquer new markets.