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Loan Guarantees: Export Credit Guarantee Programs' Costs are High

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Report Type Reports and Testimonies
Report Date Dec. 22, 1992
Report No. GGD-93-45
Subject
Summary:

The cost of running the Commodity Credit Corporation's (CCC) General Sales Manager-102/103 programs, which guarantee repayment of bank-financed loans to foreign buyers, has been very high. Large costs were incurred when CCC provided higher levels of guarantees to existing program participants or added new countries to the programs. How much additional cost will be incurred in the future will depend on the characteristics of any new loan guarantees that CCC makes. "Rolling over" existing guarantees to current program participants entails little additional cost. Increasing the amounts of outstanding guarantees to most existing program participants or adding new high-risk countries to the program, however, will add substantial additional costs. At the same time, the extent of any meaningful benefits is unknown. Therefore, it is very important to pay careful attention to future program costs.

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