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Products & Policies | Ex-Im Bank Policies Local Cost Policy Local Cost When Ex-Im Bank provides medium- or long-term guarantee, loan, or insurance support for U.S. exports for foreign projects, it may also provide local cost support. Local costs are those project-related costs for goods and services incurred in the buyer's country. Ex-Im Bank can support up to 30% of the value of the U.S exports for locally originated and/or manufactured goods and services subject to the following availability and eligibility guidelines. Availability Ex-Im Bank offers automatic local cost support for all environmental exports, medical equipment exports, exports of products related to U.S. transportation security or foreign transportation security projects (Transportation Security Export Program (TSEP)), and project finance transactions (including medium-term transactions). Long-Term Transactions: Ex-Im Bank may provide local cost support for all long-term transactions. Medium-Term Transactions: Ex-Im Bank may provide local cost support for medium-term transactions as long as the U.S. exporter can prove either: (i) the availability of official export credit support for the local cost; or (ii) private market financing of local costs is difficult to obtain for the transaction. All transactions that receive local cost support must meet the eligibility criteria defined below. Eligibility If Ex-Im Bank provides local cost support for medium- and long-term transactions, then the local costs must be:
For limited recourse project finance transactions, the local costs may or may not be related to the U.S. exporter's scope of work. For those local costs not related to the U.S. exporter's scope of work, the local costs must be:
Note: The decision to extend local cost support is subject to budgetary and other discretionary considerations as determined by Ex-Im Bank's management. Example Of Ex-Im Bank Local Cost Support A U.S. exporter has been awarded a $130 million contract to build a gas power plant in China. The U.S. exporter is responsible for providing the turbines from the U.S. while its subsidiary in China is responsible for managing the foundation work (local concrete and local labor) for the U.S. equipment. The following example illustrates how Ex-Im Bank structures local cost financial support in conjunction with support for U.S. exports. Assumptions:
This long-term transaction is structured as follows:
* The total level of support for a U.S. supply contract will be the lesser of: (i) 85% of the value of all eligible U.S. and foreign goods and services in the U.S. supply contract; or (ii) 100% of the U.S. content in all eligible U.S. and foreign goods and services in the U.S. supply contract. ** Ex-Im Bank may support up to 30% of the U.S. export value for locally originated and/or manufactured goods and services. Last updated: June 23, 2008 |
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