State Support of Export

The state supports export in the form of guarantee of the state for obligations arising from concluded insurance contracts, and is considered a standard tool for promoting exports with a quick return on investment, a significant pro-growth and anti-crisis tool, used to stimulate the economy in all developed countries. State supported exports are governed by the rules of OECD and the EU, ensuring that the exporters from each country do not compete with each other with the range of state support, but only with regard to the quality and price of goods and services.

One of the fundamental principles stipulated in the so-called OECD Consensus, which the insurance companies providing insurance of export credit risks must adhere to, is the principle of self-financing of their activities, meant and measured in the long term. The state should not subsidize operation of the insurance companies on a long-term basis, since it would become an illegal support. From the very beginning of its existence, i.e. since 1992, EGAP fully covers all its operating expenses, including payments of claims to clients, from revenues of its own activities, and functions as a self-sufficient, yet targeted and de-facto non-profit tool of state support for exports in the long term.

State support means in practice that EGAP with its insurance covers a market gap for which private credit insurance companies have insufficient capacity. One of the basic preconditions for provision of insurance with state support is compliance with the rules for the origin of goods.

Exports realized with state support in the form of insurance bring effect not only to exporters, but usually also to a wide network of their subcontractors, usually small and medium sized enterprises. They mean jobs for hundreds and thousands of people and in some cases they help to maintain a certain type of production with a long tradition, support employment in regions, retain highly qualified employees and valuable know-how. Another benefit of state supported insurance is that it gives exporters an opportunity to seek business opportunities outside the European Union, on the rapidly growing emerging markets of Asia, Africa and Latin America, and not only gain the necessary experience, but also references for establishing new business contacts.

For more information of the state support for export please see the Export Strategy of the Czech Republic for the period 2012 - 2020.

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