New Zealand Export Credit Office
Scope of Appropriation
Implementation of the Government's Export Credit Guarantees policy and operations of NZECO.
Significant Work Completed During 2009/10
- A total of 118 new policies were issued in 2009/10, supporting exports of $266.2 million.
- The Working Capital Guarantee has not been utilised by the banks, in light of the banks’ reduced appetite for new lending (post the global financial crisis). NZECO is working, as a matter of priority, with all the banks as we recognise that access to working capital is a key constraint on exporters’ ability to achieve growth targets, in line with the objectives of the Medium-term Growth Agenda.
- NZECO paid one claim during the period amounting to $136,370. This was in relation to the NZECO short-term trade credit guarantee. As a percentage of NZECO’s total portfolio, this claim represents 0.106%. This is well below NZECO's provisioning estimates, and is also less than the experience by the private sector or other export credit agencies.
| Performance Dimensions | Target[8] | Performance in 2009/10 |
|---|---|---|
| All policy outputs comply with the Treasury's Quality Standards for Policy Advice, as assessed by the Minister three times during the year. | Rated as meeting and frequently exceeding expectations |
Not assessed in 2009/10. Refer to page 60 for further information on the application of the policy standard during 2009/10. |
| Conform to international best practice for the provision of the export credit insurance, as specified in OECD and World Trade Organisation (WTO) guidelines. | 100% | Achieved. |
| Value of new medium- to long- term credit insurance policies. | $46 million |
Not achieved: $27.33 million. Several transactions, for which NZECO issued formal offers of support, were delayed owing to continued constrained bank appetite. |
| Value of new US contract bonds. | $82 million |
Not achieved: $8.62 million. The result is dependent on the exporters being successful with their bids. NZECO approved seven bid bonds totalling over $100 million; however, only two of these have been successful to date. |
| Value of new non-US contract bonds. | $10 million |
Achieved: $34.78 million. The demand for this year exceeded expectation. |
| Value of new working capital guarantees. | $5 million |
Not achieved: $0. The target for this output was affected by continued constrained global demand and an improved appetite by the private sector, compared to the levels anticipated on the basis of 2008/09. |
| Value of short-term trade credit guarantees. | $48.8 million |
Not achieved: $32.26 million. During the year, NZECO issued 89 policies - the exposure of $32.26 million has supported exports of $123 million. The target for this output was affected by continued constrained global demand and an improved appetite by the private sector, compared to the levels anticipated on the basis of 2008/09. |
| 2009/10 Actual $000 |
Supp. Estimates - Voted $000 |
Main Estimates $000 |
2008/09 Actual $000 |
|||
|---|---|---|---|---|---|---|
| Expenses | 2,103 | 4,144 | 1,871 | 1,919 | ||
| Funded by: | ||||||
| Revenue Crown | 2,063 | 4,093 | 1,842 | 1,878 | ||
| Other Revenue | 40 | 51 | 29 | 41 | ||
Actual 2009/10 output class expenditure was $2,041,000 or 49% under the Supplementary Estimates budget owing to lower than expected volumes of surety bond deals driving lower legal and commission fees, and some minor cost savings in personnel and other operating expenses.
The appropriation for this output class was increased by $2,251,000 in the Supplementary Estimates to provide for annual operating costs to support the increase in facility sizes of US surety bonds products, general contract bond products and export credit guarantee products.
Notes
- [8]It is difficult for NZECO to accurately estimate performance targets for outputs as the results achieved depend on contractors' success in tenders during the year.
