MercoPress. South Atlantic News Agency

Brazil resumes export insurance scheme

The government is acting to ensure that companies are better able to export more, Alckmin said

Brazil's Ministry of Development, Industry, Foreign Trade and Services (MDIC) has resumed the post-shipment export credit insurance (SCE) mechanism, which had been discontinued in 2019.

This initiative aims to assist micro, small, and medium-sized companies with annual exports of up to US$ 3 million and turnovers of up to R$ 300 million (US$ 51.66 million) by providing protection against the risks of non-payment from foreign buyers. Additionally, pre-shipment SCE, introduced last year, offers coverage for exporters against risks before goods are shipped.

The SCE facilitates better financing conditions and enables exporters to offer attractive payment terms to foreign customers. It also helps banks finance export operations by reducing their risks. Companies eligible for the SCE benefit from lower interest rates, no minimum export value requirements, no counter-guarantees, and broad coverage for products and services.

In 2024, coverage worth US$ 9.15 million was provided to 9 companies across 13 operations. The post-shipment phase allows coverage for up to two years, while the pre-shipment phase offers coverage for up to 180 days.

“With these two guarantees, the government is acting at both ends [pre- and post-shipment] to ensure that companies are better able to export more and strengthen their presence in foreign trade. What is our goal? To encourage Brazilian micro, small, and medium-sized companies to sell their products abroad, generating quality jobs and income for our population,” said Vice President Geraldo Alckmin, who is also the Minister of Development, Industry, Trade, and Services.

Post-shipment credit insurance protects the exporter or financier against non-payment of the export. In practice, it allows the exporter to grant its foreign clients more attractive sales conditions, with payment on time. This protection also makes it easier for banks to anticipate receivables, allowing the exporter to receive payment in cash, even though they are offering payment in installments to the buyer of the goods in another country.

Similarly, in the pre-shipment modality, the financier who advances the export funds to the exporter is protected against the risk of the export not being realized and also against the risk of non-payment by the importer.

Both pre- and post-shipment, the SCE brings an additional benefit by promoting access to better financing conditions. This is because the SCE reduces the risk for banks granting credit to the exporter, either as pre-shipment working capital or as refinancing of credit to the importer in the commercialization phase. The Exporter Financing Program (Proex), also run by the federal government, accepts export credit insurance as a guarantee.

With resources from the Export Guarantee Fund (FGE), export credit insurance is operated by the Brazilian Agency of Guarantee Funds and Guarantees (ABGF), under the guidelines of the Foreign Trade Chamber (Camex), linked to the MDIC. In 2024, coverage amounting to US$ 9.15 million was approved in 13 operations, and 9 companies benefited. (Source: Agencia Brasil)