Russia’s Agency for Export Credit and Investment Insurance (EXIAR) has signed an agreement with the Export Guarantee Fund of Iran (EGFI) to provide export insurance for sellers in both countries.
Export insurance provides an alternative to letters of credit (L/Cs) by insuring an exporter against the risk of not being paid under an export contract or of not being able to recover the costs of performing that contract because of certain events which prevent its performance or lead to its termination.
Sanctions difficulties
Due to international sanctions, Iranian exporters have experienced difficulties obtaining L/Cs for many years while sanctions imposed on Russia this year in response to its invasion of Ukraine means Russian exporters now face similar problems.
“The agreement is signed with the aim of helping the traders of the two countries to use export insurance as an alternative to L/Cs,” according to the head of Iran’s Trade Promotion Agency, Alireza Peyman-Pak.
How it works
“Iranian businessmen working with Russian businessmen and companies, can introduce their trade partner to EGFI, so that this fund can validate and create an insurance credit limit for the Russian side and take the necessary action regarding the issuance of insurance for Iranian parties,” the TPO head said.
Russian businessmen and companies exporting products to Iran meanwhile can introduce their Iranian trading partners to EGFI and the fund will issue guarantees for them through EXIAR he added.
There is no credit limit and the signatories can issue guarantees up to US$1 billion according to Peyman-Pak.
Categories: Trade Based Financial crimes News
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