A key rule of the Arrangement is to charge credit risk premia that are commensurate with the risk of non-repayment; these are referred to as Minimum Premium Rates (MPRs).
The Participants’ Country Risk Classifications are a fundamental building block of the MPRs. They are meant to reflect the risk that a country will not be able to repay its external debt. Under the Participants’ system, the country risk encompasses:
- transfer and convertibility risk (i.e. the risk that a government imposes capital or exchange controls that prevent an entity from converting local currency into foreign currency and/or transferring funds to creditors located outside the country), and
- cases of force majeure (e.g. war, expropriation, revolution, civil disturbance, floods, earthquakes).
The Country Risk Classifications are made public so that all countries are in a position to provide export credits according to the rules of the Arrangement and thus benefit from the safe haven clause of the WTO’s Agreement on Subsidies and Countervailing Measures.
The Participants to the Arrangement neither endorse nor encourage their use for any other purpose.