ECGC Cover

ECGC has conducted a comprehensive review of the countries covered by them, based on the revised country risk methodology that has been put in place. This revised methodology aims at evaluating the country not only on the prevalent economic and political settings, but also on the correct developments that would have an impact on the future, with an increase in horizon of 12 months, as well as forecast based on the strength and weakness of the country in terms of its economic and political strength. ECGC classifies the countries into seven categories in the ascending order of risks perceived viz.,

• Insignificant Risk
• Low Risk
• Moderately Low Risk
• Moderate Risk
• Moderately High Risk
• High RiskVery High Risk

The revised country classification based on the revised model is effective from 01.12.2006. As per this revised classification, six of the twelve countries of the CIS region have been upgraded. Russian Federation is now placed in Group A2. Classification of CIS countries is given in paragraph no.6. Kazakhstan and Russia are upgraded from Group B1 to Group A2, while four countries, namely, Kyrgyzstan, Moldova, Tajikistan, and Turkmenistan moved up to C1 from high and very high risk group of C2 and D. The remaining six countries are placed in the moderate risk category of B1 and B2. In the new classification no CIS country is placed in the high risk groups of C2 and D.

Azerbaijan, Belarus, Georgia, Moldova, Kazakhstan, Russian Federation, Ukraine are placed in the open cover category which will enable policyholders to obtain cover on a more liberalized basis. For these countries ECGC cover under short term is available for political risks for all transactions irrespective of limit on individual buyer or bank. However comprehensive cover (commercial plus political risk) is available depending on ECGC’s assessment of the credit worthiness of the buyer/bank.

The remaining five countries, i.e., Armenia, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan are placed in Restricted Cover (Category I) where ECGC cover is available on a revolving limits basis, normally valid for a year on the following basis:

• Irrevocable Letters of Credit opened by confirmed by Banks listed in the Bankers Almanac or by local banks whose reports are satisfactory Cover will be 90%.
• Normal cover of 90% on DP/DA terms subject to satisfactory report on the buyer.
• None of the CIS Countries are placed in Restricted Cover (Category II-where specific approval is given on case-to-case basis).
• The current ECGC Classification for the 12 CIS countries is as under