New Zealand Export Credit Office (NZECO)
Scope of Appropriation
Implementation of the Government's Export Credit Guarantees policy and operation of NZECO.
Output Class Description
This class of outputs involves the provision of export credit guarantees and managing and operating NZECO in accordance with the delegated authority from the Minister of Finance. Outputs contribute to greater export activity within the bounds of the Government’s financial risk parameters set out in the Delegation.
Specific outputs include:
- Providing export credit insurance, bonding and working capital products to exporters. Annual performance targets for NZECO's portfolio of products are set out in the NZECO SOI.
Significant Work Completed During 2008/09
- Introduction, implementation and delivery of the short-term trade credit guarantee to address gaps in the provision of short-term trade credit insurance (and finance) in response to the global financial crisis.
- Increased education to exporters, financiers and industry organisations (both government and non-government) regarding the availability of NZECO guarantees to address key risks associated with non-payment by overseas buyers, and to provide overseas buyers with innovative solutions to exploit trade opportunities.
- Increased utilisation of NZECO guarantees by exporters and banks, with actual exposures increasing from $37 million to $155 million, supporting exports totalling $382 million.
- Achieved the 2008/09 operational targets agreed with the Minister.
| Performance Dimensions | Performance |
|---|---|
| All policy outputs comply with the Treasury's Quality Standards for Policy Advice as assessed by the Minister three times a year. Target: Rated as meeting or frequently exceeding expectations. |
Not assessed during 2008/09. Three performance reports were provided to the Minister outlining progress against the 2008/09 objectives. Invitations were extended to the Minister on each of these occasions to assess his satisfaction with the Treasury's performance. While no formal feedback was received through this mechanism, the Minister has instigated monthly meetings and reporting systems to enable more regular and timely feedback on the Treasury's work. The Quality Standards for Policy Advice were implemented across the Treasury's work portfolio, and given this was the first year in which these have been used, an external review was conducted to provide a performance benchmark for future reference and to identify areas for focus for future service performance. |
| Value of short-term trade credit guarantees. Target: $6.6m. |
Achieved: $40.7m. NZECO successfully implemented the Short-term Trade Credit Guarantee (ST-TCG) agreed by Cabinet in February 2009. Demand for the product outstripped expectations. To meet the increase in demand of the product, the facility has been increased from $50m to $150m. |
| NZECO will conform to international best practice for the provision of export credit guarantees, as specified in the OECD and World Trade Organisation Guidelines. Target: 100%. | Achieved. |
| Value of new medium- to long-term credit guarantee policies. Target: $77m. |
Not achieved: $58.6m. Owing to introduction of short-term product in February 2009, which changed focus of NZECO to respond to global financial crisis. |
| Value of new US contract bonds. Target: $24m. |
Achieved: $69.1m. New Zealand exporters successfully awarded contracts at a rate greater than anticipated. |
| Value of new non-US contract bonds. Target: $8m. |
Not achieved: $1.7m. Transaction timing delays but expect to recoup in 2009/10. |
| Value of new working capital policies. Target: $5m. |
Not achieved: $1.4m. Demand was less than anticipated as banks' appetites affected by global economic downturn. Utilisation is expected to increase in 2009/10 owing to greater marketing and greater appetite by banks as GFC issues are easing. |
| Cost | ||||
|---|---|---|---|---|
| 2008/09 Actual $000 |
Supp. Estimates - Voted $000 |
Main Estimates $000 |
2007/08 Actual $000 |
|
| Expenses | 1,919 | 2,277 | 1,594 | 1,209 |
| Funded by: | ||||
| Revenue Crown | 1,878 | 2,242 | 1,568 | 1,186 |
| Other Revenue | 41 | 35 | 26 | 23 |
This output class belongs to a multi-output class appropriation.
Actual 2008/09 output class expenditure was $358,000 or 16% under Supplementary Estimates budgets owing to less demand than anticipated for contract bond products in the 2008/09 year.
The appropriation for this output class was increased by $683,000 in the Supplementary Estimates largely owing to the establishment of the ST-TCG scheme.
