Including Untied Loan Guarantees. annual report 2015

Transcription

1 Including Untied Loan Guarantees annual report

2 federal export credit guarantees at a glance in million eur Statutory cover limit Cover applications (volume)* Small and medium-sized enterprises (share of exporters supported with guarantees in %)** New Business Covered export volume of which for emerging economies and developing economies *** industrialised countries *** Covered exports for EU countries Covered volume as % of total exports Results Revenues from Premiums and fees Recoveries from political claims from commercial claims Other income Expenses for Claims paid for political claims for commercial claims Management fee ,000 38, , , , , ,000 38, , , , , * Including buyer credits ** Firms with up to 500 employees *** Classfication of countries see p. 85 Annual Result Accrued Result (since 1951) Amounts subrogated to Federal Goverment 3, , , ,444.5

3 Export Credit Guarantees of the Federal Republic of Germany Hermes Cover annual report

4 Dear ladies and gentlemen, The German export industry remains on its growth trajectory. Last year, exports rose by 6.4 percent to a record amount of more than 1.2 trillion euros. At the same time, the German economy expanded by 1.7 percent. This is further proof of the importance which exports of goods and services have for the success of our national economy. However, conditions in numerous markets that are important for the German economy remain challenging. Economic growth has continued to slow in China. Emerging economies and developing countries that export raw materials are coming under strain from low commodity prices. Russia is facing significant capital outflows and the depreciation of the rouble. The conflict between Russia and Ukraine has not been resolved, while the EU is still imposing sanctions on Russia. At the same time, the outlook for a number of South American countries has deteriorated substantially. Then there are the challenging geopolitical developments in the Middle East. Following the historic settlement with Iran of the conflict which had been ongoing since 2002 over the country s nuclear programme and the lifting of most of the economic and financial sanctions in Europe, there is large export potential for German companies in particular. However, there are still a number obstacles standing in the way of successful resumption of the formerly so close trading relations with Iran. During these times characterised by major economic and geopolitical risks, government export credit guarantees play a particularly important role as a cover and financing instrument for export transactions. They make a decisive contribution towards maintaining stable and reliable trade ties even in difficult times. In, the Federal Government issued export credit guarantees worth 25.8 billion euros for exports of goods and services. Once again, small and mid-size companies in particular made use of Hermes Cover to protect themselves from commercially and politically induced buyer defaults. Three quarters of all applications for cover by the Federal Government were submitted by small and mid-size companies. At the same time, however, cover was also provided for a number of large-scale transactions. The fact that German companies prevailed in international bids for major contracts testifies to the competitiveness of German exporters and shows the efficacy of Hermes Cover as an instrument for promoting foreign trade. In the cover products which it offers, the Federal Government continued on the course which it had commenced in 2014 and widened the availability of cover to include further countries in sub-saharan Africa. The addition of Kenya, Senegal and Uganda not only serves the interests of German businesses but also marks an important contribution by the Federal Government to the ongoing economic development of these countries.

5 In November, the OECD countries agreed on rules for export credit guarantees aimed at ensuring that as a fundamental principle only the technologically most advanced and efficient technologies are supported for the installation and modernisation of coal-fired power stations. This supplements the corresponding national rules adopted by the Federal Government in December 2014 for financing coal. Outside the OECD, the Federal Government also continued its commitment to negotiations on the introduction of global standards for government-backed export credits in. In the International Working Group, which comprises participants from the EU and the OECD as well as representatives from Brazil, China, India, Malaysia, Russia and South Africa among others, agreement was reached at the end of to commence negotiations on comprehensive horizontal rules. This marks an important step towards achieving a crosssector and internationally consistent set of rules as a basis for furthering equal opportunities in international competition. A further new aspect concerns the inclusion of non-german deliveries of components in Hermes Cover. Exporters can now submit a preliminary inquiry to determine the availability of cover for a transaction even if it predominantly comprises foreign deliveries. The response by companies to the new preliminary inquiry instrument has been favourable and the experience gained to date consistently positive. In, government export credit guarantees received praise in several different respects. A study conducted by the ifo Institute once again confirmed the outstanding importance of government export guarantees for the national economy, underscoring the importance of Hermes Cover for securing and protecting jobs in the Germany export industry as well as the relevant components sector. The results of a representative survey of companies who had used Hermes Cover were also encouraging. 96 percent of the companies polled said that they were satisfied with the scheme, with 94 percent saying that they intended to use government export credit guarantees again in the future. Government export credit guarantees are important and accepted instruments. Together with the export industry and export-financing banks, we will continue to develop export credit guarantees to ensure that, looking forward, they retain this status. Yours, Sigmar Gabriel Federal Minister of Economic Affairs and Energy

6 The Interministerial 8 Committee Development of the 22 export credit guarantees Country cover policy and 34 special forms of cover 10 Development and trends 11 Business overview at a glance 12 The task of the Interministerial Committee 13 IMC external meeting 14 Export Credit Guarantees of the Federal Republic of Germany 16 International collaboration strengthened 16 International Working Group 17 G12 summit in Berlin annual G7 summit in Rome 18 Consultations 18 Cooperation agreements 20 Network for German exporters 21 Advice eagerly sought 24 New developments in the export credit guarantee scheme 24 Export credit guarantees in the era of global value chains 25 Federal Government extends KfW programme for refinancing Hermescovered export credit 26 Revised letter of interest 27 Revision of pre-indemnification loss management costs 27 Letter of undertaking revised 27 Federal Government widening cover for additional countries of sub-saharan Africa 28 Export credit guarantees and sustainability 29 Human rights and export credit guarantees 29 Antibribery measures 30 Government export credit guarantees in the energy sector 31 Export credit guarantees for renewable energies 32 Government export promotion for coal-fired power stations 33 General exclusion of cover for nuclear installations 33 Smart grids added to OECD sector understanding on climate change 36 Country cover policy 38 Emerging economies and developing countries 38 Latin America and the Caribbean 40 Africa 42 Asia 48 Europe (excluding industrialised countries) 50 Industrialised countries 52 Special forms of cover 52 Project finance and structured finance 54 Aircraft business 55 Ship business 56 A short digression: Investment guarantees offer protection for German investments abroad

7 58 Business development Untied loan 78 guarantees (UFK) 84 Annex 60 New business 61 Number and volume of applications 61 Offers of cover 62 Cover by country groups 63 Cover by horizon of risk and type of cover 66 Cover by industrial sectors 66 Cover for exports of military goods 67 Environmentally relevant aspects in cover for projects 68 Claims, recoveries and rescheduling 68 Claims 68 Recoveries 69 Rescheduling 70 Results 70 Revenues 70 Expenses 71 Annual result 72 Statutory cover limit and total commitment level 80 The year at a glance 82 Transparency initiative 83 The PCC Bakki project silicon production in Iceland for German industry 85 Classification of countries 85 Photograph credits 86 Products Definitions and explanations on the inside of the cover flap 73 Outstanding risk 74 Unrecovered amounts under claims paid 76 Tables

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9 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex the interministerial committee 9 the german federal government promotes german exports by providing government export credit guarantees, which are known as hermes cover. the interministerial committee for export credit guarantees decides on whether to grant cover for an export transaction. it comprises representatives of the federal ministry for economic affairs and energy, the federal ministry of finance, the federal foreign office and the federal ministry for economic cooperation and development. in, the federal government issued export credit guarantees worth 25.8 billion euros primarily to small and mid-size companies.

10 developments and trends 10 Against the backdrop of mounting geopolitical risks and more muted growth in global economic output and trade, conditions for German exports remained challenging. In particular, demand in the emerging econ - omies and developing countries was weaker than expected last year. In addition to structural problems, countries exporting raw materials, such as Brazil, Russia and Venezuela, came under pressure from lower oil and commodity prices. On the other hand, there was a stronger focus on other markets such as Egypt, with exporters also increasing - ly discovering the countries in sub-saharan Africa as potential markets. However, German exporters are particularly paying attention to the Middle East, especially Iran, following the historic agreement to settle the conflict over that country s nuclear programme, which first broke out in Yet, it is not only the markets which are transforming; in addition, there has been a fundamental change in the structure of global trade. Globalisation and the relocation of production facilities in foreign countries are prog ressing. Mounting international competition and the networking of the economy are spurring the emergence of global value chains. What is more, national rules are increasingly calling for a certain proportion of local manufacturing content in imported goods. Finding the right response to cover for foreign content forms a material challenge for export credit guarantees. In this connection, the Federal Government took a decisive step forward last year to enhance Hermes Cover as an instrument without, however, questioning the underlying principle of promoting employment within Germany. Brückner Maschinenbau GmbH & Co. KG from South-East Bavaria shipped a facility for the production of biaxially oriented polypropylene film to Turkey. Fitted with ultramodern technology, the system is characterised by minimal maintenance requirements and achieves lower energy consumption and greater raw material efficiency than conventional machinery. With the new production line, the large Turkish plastic film producer Polibak Plastik Film is able to produce more than 50,000 t of polypropylene film a year, thus expanding its annual capacity to more than 130,000 t. Around 80 German mechanical and electrical engineering companies are involved in the project. The Federal Government is supporting the transaction with a supplier credit guarantee plus buyer credit cover.

11 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex business overview at a glance Many matters concerning the German export industry and the cover provided by the Federal Government can no longer be addressed at a national level but call for international agreements. This applies to the granting of export credit guarantees in individual sectors as well as the modification of environmental and social standards. The Federal Government is committed to the implementation of global standards in both areas. Last year, Hermes Cover again helped exporters to maintain business relations even in politically and economically challenging times and to enter new markets. Without export credit guarantees, numerous transactions would not have been possible in a number of countries and regions. Last year, the German Federal Government issued export credit guarantees worth 25.8 billion euros covering exports to 161 countries (2014: 24.8 billion euros, 164 countries). This represents 2.2% (2014: 2.2%) of aggregate German exports of around 1,196 billion euros (2014: 1,134 billion euros). The consistently high volume of cover provided reflects the importance of export credit guarantees as a crucial instrument in the promotion of foreign trade. Small and mid-size companies (SMEs) 1 in particular made use of the opportunity of shielding their exports from political and commercial risks. 75.4% of all applications were submitted by SMEs (2014: 74.2%). 1 Companies with up to 500 employees 11

12 the tasks of the interministerial committee 12 Once again, most of the cover provided was for the emerging economies and developing countries, with the Federal Government issuing export credit guarantees for exports worth 19.3 billion euros (previous year: 20.7 billion euros) for these countries. Accordingly, they accounted for 75% of new business (2014: 84%). Disaggregated by country, Russia ranked highest with 3.6 billion euros (2014: 2.2 billion euros), followed by the United States with 2.6 billion euros (2014: 1.2 billion euros) and Egypt, for which the Federal Government provided cover of 2.4 billion euros (2014: 433 million euros). Of the total export credit guarantees, single transaction cover accounted for 16 billion euros (2014: 13.5 billion euros) and spread policies for 9.8 billion euros (2014: 11.3 billion euros) in. Cover for transactions with credit periods of more than 360 days constituted 14.3 billion euros of new business (2014: 10.6 billion euros). Government cover for short-term credit periods (up to 360 days) was valued at 11.5 billion euros (2014: 14.1 billion euros). Following a significant rise in the wake of the financial crisis, the volume of short-term cover has returned to normal. Amounts paid out for claims dropped to 395 million euros in (2014: 504 million euros). Revenue from handling fees and premiums for the assumption of risks came to 542 million euros last year (2014: 598 million euros). Including recoveries under previously indem - nified claims of 286 million euros (2014: 300 million euros), the annual result for the Federal budget came to 344 million euros (2014: 309 million). The Federal Government defines its cover policy via the Interministerial Committee (IMC) for Export Credit Guarantees. The IMC discusses and makes decisions on questions of fundamental importance and on the granting of cover for individual export transactions on the basis of general guidelines. Besides, it constantly enhances the government export guarantee system. In addition to the Federal Ministry for Economic Affairs and Energy, which holds the lead function, the IMC comprises representatives of the Federal Ministry of Finance, the Federal Foreign Office and the Federal Ministry for Economic Cooperation and Development. interministerial committee imc BMWi Federal Ministry for Economic Affairs and Energy lead BMF Federal Ministry of AA Federal Foreign BMZ Federal Ministry for Economic Cooperation and Development Euler Hermes PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft representatives of the exporting industries and the banking AKA Ausfuhrkredit - gesellschaft Federal Audit Office

13 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex imc external meeting Decisions are made on a consensual basis to ensure consistency in economic, fiscal and foreign policy as well as international development work. The IMC makes decisions on cover for transactions valued at over 10 million euros. Responsibility for export transactions valued between 5 and 10 million euros is delegated to the Small Interministerial Committee for Export Credit Guarantees. The mandataries act as ser - vice providers and make decisions on applications for cover of up to 5 million euros in accordance with the instructions issued by the Federal Government and under its supervision. In particular cases, responsibility may be allocated to a higher level (mandataries, Small Committee, Full Committee). In, the Interministerial Committee held its tra - ditional external meeting in the velvet and silk city of Krefeld, combining it with a visit to German technology supplier Siempelkamp and piping producer Europipe. The external meeting provides a good opportunity of talking to export companies and municipal politicians, sharing experience gained with the scheme and discussing future expectations. During a tour of the company, Dr. Ing. Hans W. Fechner, management chairman of the Siempelkamp Group, demonstrated the production processes at the factory to the Committee members. The company supplies press lines and full-scale production equipment for the wood-based products industry, the metal shaping industry and the composite and rubber industry around the world. 13 The Interministerial Committee met on 3 September at the Federal Ministry for Economic Affairs and Energy in Berlin.

14 14 Export Credit Guarantees of the Federal Republic of Germany Export credit guarantees are an important instrument used by the Federal Republic of Germany to promote foreign trade. They protect exporters from commercially or politically induced payment defaults. The risk of a default, thus, no longer lies with the exporter or the bank providing the finance but is transferred to a large degree to the Federal Republic of Germany. In return for this, the policyholder pays a premium calculated on the basis of the risk involved. Hermes Cover also simplifies the arrangement of finance for a transaction. Finance can be raised more readily and on more favourable terms in the case of transactions backed by the Federal Government compared with those for which no government cover is provided. Export credit guarantees are a demand-oriented promotion instrument. As a matter of principle, all German export companies are able to apply for Hermes Cover. Transactions which strengthen the position of small and medium-sized enterprises (SMEs) are especially considered to be eligible for cover. There are no rules on the size of the company or the volume of the transaction for which cover may be sought. Nor are any industrial sectors excluded a priori from Hermes Cover. That said, export credit guarantees are available for nuclear transactions in only a small number of exceptional cases, e.g. for plant decommissioning. Hermes Cover is provided in accordance with national and international rules and is contingent upon specific conditions being met. The key criteria for the provision of cover include eligibility for support and justifi abil ity of the risks arising from the transaction. Apart from the general interest in executing the export transaction, a further precon - dition for eligibility is the absence of any bribery in the lead-up to the transaction. In addition, the impact on human rights and the environment is taken into consideration.

15 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex 15 Justifiable risk means that there is a high probability that the transaction will be executed without any insured loss arising. Accordingly, the country risk as well as the buyer s creditworthiness and any collateral that may be available are analysed up front. The financial risk arising from the provision of cover is assumed by the Federal budget, which conversely receives the revenue from the export credit guarantees. As risk premiums are payable, Hermes Cover is financially self-supporting and therefore does not constitute a subsidy. Responsibility for managing and coordinating the government export credit guarantees is assigned to Euler Hermes and PwC (mandataries), who act as service providers for the Federal Government. MUEG Mitteldeutsche Umwelt- und Entsorgung GmbH is implementing one of the largest environmental projects in Latvia: The mid-size company is executing the environment-friendly disposal of acid tar deposits at two landfills. This includes activities such as remediation planning, the instal - lation of the treatment and waste gas purification system and groundwater purification. Based in Braunsbedra in the German state of Saxony-Anhalt, the company is also responsible for removing, treating and transporting the acid tar. The landfills, which are located 30 km east of Riga, were used between 1950 and 1980 to deposit production waste from oil and lubricant processing. They pose substantial risks to the environment as they are contaminating the soil, groundwater and surface water due to the absence of any sealing in the pits. For this reason, the acid tar must be urgently removed and the soil and water reha - bilitated. MUEG Mitteldeutsche Umwelt- und Entsorgung GmbH has since treated the planned volume of 30,200 t of acid tar in accordance with the terms of the contract. 70% of the project is being funded by the European Union. In addition, the Federal Republic of Germany is supporting the project with supplier credit cover and cover for services.

16 16 Introduction to government export credit guarantees international collaboration strengthened Hermes Cover is embedded in an international set of rules. Export credit agencies in the OECD member states observe the requirements of the oecd consensus. Within the OECD, the EU member states adopt a uniform and harmonised position. Representatives of the EU countries determine their joint approach in monthly meetings of the eu council working group on export finance and insurance matters. A brief video explains in simple fashion how government export credit guarantees work. Cover, finance, risk transfer, eligibility for support and subsidiarity these are just some of the aspects that are described in greater detail in the video. Primarily directed at small and mid-size companies that have previously not used Hermes Cover, it can be found on the Internet at (German version only). international working group In 2012, the United States and China came to an agreement to enter into negotiations concerning the introduction of global standards for government-backed export credits. In addition to the EU, all other OECD Consensus participants as well as Brazil, China, India, Malaysia, Russia and South Africa, among others, participate in this international working group. The Federal Government plays an active role in the negotiations of the International Working Group, exerting influence on its development. As of the end of, this working group had held nine meetings. Success was achieved at the October meeting in Washington. Following on from intensive discussions on sector-specific rules for the ships and medical technology, negotiations were commenced on cross-sector horizontal rules.

17 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex This development marks an important step forward towards establishing an international set of rules which is binding on all sectors. Uniform standards going be - yond the OECD make an important contribution to a level playing field in international competition. This is why the Federal Government remains strongly committed to such rules. German capital for two days to discuss current developments and challenges relating to export credit business. In October, the G7 countries held their annual summit in Rome, likewise discussing topics of current interest and trends of relevance for export credit business in a smaller setting. 17 g12 summit in berlin annual g7 summit in rome Held at the end of March in Berlin, the G12 summit provided a forum for sharing opinions and experience. The chairpersons of the export credit agencies of the G7 countries, the BRIC nations and Korea met in the Current trends and challenges facing export credit guarantees were some of the topics discussed by delegates from twelve export credit agencies at their annual meeting, which was hosted by the Federal Ministry for Economic Affairs and Energy in Berlin on 23 March. From left: David Godfrey, UKEF, Alexey Tyupanov, EXIAR, Alessandro Castellano, SACE, Charles Sarrazin, TRESOR, Dr. Hans-Joachim Henckel, BMWi, Marcelo Pinheiro Franco, ABGF, Geetha Muralidhar, ECGC, Edna Schöne, Euler Hermes, Fred Hochberg, US EXIM, Luo Xi, SINOSURE, Benoit Daignault, EDC, Yanghyun Lim, K-sure, Dr. Ernst Röder-Messell, BMWi, Kazuhiko Bando, NEXI, Dr. Matthias Koehler, BMWi

18 consultations 18 In addition to regular talks at the EU, OECD and Berne Union level, a number of bilateral, trilateral and multilateral consultations were held with other government bodies and institutions active in export credit insurance and export finance in. They included meetings The berne union comprises 49 public and privatesector credit and investment insurers from OECD and non-oecd countries as well as three multilateral orga - nisations. with representatives from Brazil, China, Italy, Japan, Korea, Austria and Switzerland. A delegation from India cooperation agreements visited Germany. The purpose of the consultations is to strengthen joint activities with other countries, share information on best practices in government-sponsored export credit insurance and encourage the establishment of global standards for export-credit finance. This is also the purpose of work within the Berne Union. The internationalisation of trade, cross-border links and the growing importance of global value chains are strengthening the need for cross-border agreements. To date, 24 reinsurance framework agreements have been signed with other export credit insurers. A meeting was held on 24 June between representatives of the Indian export credit insurer ECGC and the mandataries at Euler Hermes AG in Hamburg. The purpose was to intensify the cooperation and the work of the International Working Group. From left: V. Dharmarajan, ECGC, Jens Heitmann, PwC, A. K. Jain, ECGC, Robert Imiela, PwC, Svenja Grell, PwC, Dr. Eckhardt Moltrecht, Euler Hermes, Nirdosh Chopra, ECGC, Catrin von Hesberg, Michael Schröder, Hannelore Bergs, Euler Hermes

19 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex cooperation agreements Australia Austria Belarus Belgium Brazil Bulgaria Canada China Cyprus Czech Republic Denmark Estonia Finland France Greece Hungary India Israel Italy Japan Latvia Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Romania Russia Slovak Republic Slovenia South Korea Spain Sweden Switzerland Turkey United Kingdom United States S S S S S S S S S S S S S* S S S S S S* S S S S S S S S* S C C C C C C C C C C C C C C C C C C* C C C C C C C C* C* C R R R R R R R R R R R R R R R R R R R R R R R R B B B B B B B B In preparation of possible reinsurance treaties, cooperation agreements were signed in with the Chinese export credit agency Sinosure, the Brazilian Export Credit Insurance Agency (ABGF) and the Export- Import Insurance Company of the Republic of Belarus (Eximgarant of Belarus). The table sets out the cooperation agreements in force with other countries. A bilateral meeting was held in Kyoto on 11 and 12 November between Japanese export credit agency NEXI and the German Federal Ministry for Economic Affairs and Energy together with Euler Hermes and PwC. The purpose was to enhance the cooperation. 19 S deliveries from subcontractors accounting for 30-40% can be included pursuant to the decision of the Council of the EU (up to 40% in the case of order values up to a maximum of 7m EUR) S* deliveries from subcontractors up to 30% can be included according to bilateral agreement C coinsurance agreement under EU regulations C* coinsurance under bilateral agreement R reinsurance agreement on a bilateral basis B bilateral cooperation agreement From left (standing): Kyoko Kojima, Yoshitaku Fukushima, Masaru Kanke, Tetsuya Koizumi, NEXI, Dr. Eckhardt Moltrecht, Euler Hermes. From left (sitting): Jens Heitmann, PwC, Kazuhiko Bando, NEXI, Dr. Hans-Joachim Henckel, BMWi, Takeshi Yasuraoka, METI, Christof Wegner, BMWi

20 network for german exporters 20 The African economy is increasingly growing in importance for the German economy, something which was reflected in the strong interest shown by companies as well as representatives of banks and associations at the Spotlight on Africa conference held on 31 March in Hamburg. Organised in conjunction with the German-African Business Association, it was attended by around 170 participants. Africa a market of the future? Making use of opportunities and limiting risks with Hermes Cover was the title of the presentation held by Oliver Hunke of the Federal Ministry for Economic Affairs and Energy during the conference. In its efforts to improve the Hermes instrument, the Federal Government relies on a network of experts. In addition to business and banking associations, it particularly maintains an intensive and constructive dialogue with exporters and notably also with small and mid-size companies. An additional important forum for dialogue with the business community outside the Interministerial Committee is the brains trust for export credit guarantees which was set up in 2010 and comprises repre - sentatives of the ministries, exporters, banks and the mandataries. The brains trust meets twice a year and provides a platform for sharing expert information on the use of export credit cover.

21 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex advice eagerly sought Given recent developments in Russia, Ukraine and the Middle East as well as the new expanded availability of cover for sub-saharan Africa, local exporters sought advice far beyond normal levels last year. Even without these factors, there was a large number of requests for advice. In the year under review, company advisors held more than 9,200 talks in person and over the phone on a cross-customer and cross-subject basis The utilisation of export promotion instruments in the light of local conditions was the theme of a conference held in Istanbul on 26 March. Representatives of Euler Hermes and PwC together with KfW IPEX-Bank GmbH and Commerzbank AG updated participants on the latest developments in export credit and investment guarantees. (2014: 8,000). At the exporter s request, company advisors also provided assistance in negotiations with financing banks. Working in conjunction with associations, banks, chambers of commerce and industry, chambers of foreign trade and Germany Trade & Invest, the governmentowned German business development agency, the mandataries held presentations on the various foreign trade promotion instruments at 136 events in Germany and abroad last year (2014: 154). Such events were held throughout Germany as well as in Rio de Janeiro, Hong Kong, Istanbul and Johannesburg, among other places. During these presentations in other countries, many local companies and banks as well as attorneys and consulting companies made use of this opportunity to talk to experts. 21

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23 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex development of the export credit guarantees 23 the federal government is continuously working on improving the export credit guarantees and adjusting them in the light of changing political and economic conditions. thus, for example, it substantially widened the scope of cover available for deliveries of goods and services to selected subsaharan countries in africa in. in addition, it extended the term of the kfw programme for refinancing hermescovered export credits and revised the rules for federal government participation in loss management costs. a further new service is the non-binding and cost-free preliminary inquiry on the inclusion of foreign deliveries of components in cover.

24 new developments in the export credit guarantee scheme export credit guarantees in the era of global value chains 24 Over the last few years, there has been a fundamental change in the structure of global trade. National production processes are increasingly being replaced by global value chains. In the case of goods purportedly made in Germany, the proportion of local content has been declining for years. Global value chains offer additional opportunities but pose a particular challenge for Hermes Cover. As an instrument for promoting German exports and for creating and protecting jobs in Germany, Hermes Cover is available only for transactions in which the predominant share of goods is Germany-sourced. In consultation with businesses, the Federal Government took a decisive step forward in towards permitting a larger foreign-sourced share. At the same time, the Federal Government has been working on systematically expanding the reinsurance network. With this instrument, it is possible for foreign-sourced content to be reinsured, thus allowing a greater proportion to be covered. To date, 24 reinsurance framework agreements have been signed with other export credit agencies. In addition, the Federal Government is exploring the extent to which this risk-sharing model can also be applied to the private insurance market. Under a three-tier model or via reinsurance with another state export credit agency, it is already possible to obtain cover for transactions with a foreign-sourced proportion of over 49%. The three-tier model is now being improved to give exporters a preliminary indication before they submit an application as to whether the planned transaction is eligible for Hermes Cover despite the fact that the export transaction comprises mostly foreign-sourced content. This preliminary inquiry does not require any particular form and can be submitted free of charge. In, twelve preliminary inquiries were received, all of which received positive decisions. In addition, three transactions with a foreign-sourced element of over 49% were approved by the IMC in the absence of a preliminary inquiry. Three-tier model Under the three-tier model for covering foreign-sourced content, foreign goods and services with a proportion of up to 30% of the transaction are automatically covered (Tier 1) and up to 49% provided that certain conditions are met (Tier 2). In justified ex - ceptions, cover may also be provided for transactions with a foreign-sourced component of more than 49% (Tier 3).

25 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex federal government extends kfw programme for refinancing hermes-covered export credits The Federal Government has extended the term of the programme offered by development bank Kreditanstalt für Wiederaufbau (KfW) for refinancing Hermes-covered export credits until the end of 2020 on unchanged terms. Via this programme, the KfW Bank group funds the loans provided by commercial banks to finance German exports which are backed by an export credit guarantee issued by the Federal Government. Studies indicate that the programme is having a positive effect on the export finance provided by commercial banks. The kfw programme can be utilised by all German and non-german banks with access to buyer credit cover for funding Hermes-covered buyer credits and aircraft finance on matching-maturities terms provided that the buyer is domiciled outside the territory of the European Union. In addition, the loan contract must have a term of more than three years. 25 Reinsurance The principle underlying reinsurance is this: the primary insurer covers the risk of default in respect of the whole amount of the export credit. In the event of any loss, the primary insurer indemnifies the policyholder in full. The foreign reinsurer in turn bears the risk commensurate with the proportion of the content sourced in its country and contributes to the indemni - fication payable by the primary insurer on the basis of this ratio. Reinsurance arrangements simplify cover for export business with a high foreign content (multi-sourcing projects). The policyholder also benefits as it only has to deal with a single credit insurer ( one-stop shop ).

26 26 In June, more than 6,000 athletes from 50 countries travelled to Baku, the capital of Azerbaijan, to take part in the European Games. Organised by the European Olympic Commit - tees, the games took place for the first time. Euracom Group GmbH supplied 202 coaches for the major sports event for use as transportation for the athletes and delegates during the com - petition. Produced by MAN, the buses are fully air-conditioned and fitted with modern exhaust purification systems. The transaction included the shipment of the buses, driver training and technical instruction. The financing of the transaction was backed by buyer credit cover provided by the Federal Republic of Germany. revised letter of interest In a letter of interest (LOI), the Federal Government confirms without assuming any binding legal obligation that it is fundamentally willing to consider whether it can provide cover for the transaction for which an application has been submitted. In response to a suggestion submitted by exporting companies, the LOI has now been modified. As a result, it is now more meaningful and specifically addresses the transaction for which cover is being sought. The availability of cover by the Federal Government expressed in the LOI is an important competitive factor for exporters during the bidding process.

27 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex revisions to pre-indemnification loss management costs The Federal Government has specified in greater detail the conditions under which it is prepared to share preindemnification loss management costs. The Federal Government refunds part of the costs incurred by the bank provided that the expense is reasonable, the measures are taken with the approval or at the instigation of the Federal Government and these measures are extraordinary and involve considerable costs. With these revisions, the Federal Government is supporting appropriate and necessary measures for early loss management. letter of undertaking revised A letter of undertaking must be submitted by the ex - porter/manufacturer as a condition for the granting of buyer credit cover regardless of whether it is provided on a stand-alone basis or combined with supplier credit cover. The letter of undertaking was revised substantially last year. The wording was made more precise, the scope of the undertaking reduced and a special letter of undertaking introduced for globally active companies. The brochure Letter of undertaking explanatory notes provides exporters with an additional source of information setting out in simple terms its use and purpose. federal government widening cover for additional countries of sub-saharan africa In, the Federal Government widened the scope of cover available for the sub-saharan countries of Senegal and Uganda. At the same time, the restrictions applicable to Kenya for cover for public-sector buyers were lifted. Cover can be granted for credit transactions with the public sector in these countries provided that collateral is provided by the national ministry of finance or the central bank. In addition, an uninsured percentage of at least 10% applies. The extent to which cover is available from the Federal Government is determined on the merits of the individual case. Depending on requirements, the Federal Government is also willing to review its cover policy for other sub- Saharan countries. 27

28 export credit guarantees and sustainability 28 As a fundamental rule, the Federal Government does not provide any cover for transactions which are liable to have serious negative ecological or social ramifications. In accordance with the environmental and social guidelines of the OECD Common Approaches, all projects and transactions coming within their scope (transactions with a credit period of more than two years and with a value of at least 15 million euros) are system - atically reviewed to ensure compliance with the applicable reference standards of the World Bank Group. These reference standards are the World Bank Operational Safeguard Policies, the Performance Standards of the International Finance Corporation (IFC) and the World Bank Group s Environmental, Health and Safety Dieffenbacher GmbH is assembling a turn-key plant for the production of 172,000 m³ of medium-density and high-density fibreboard (MDF and HDF) per year in the state of Tabasco in South-East Mexico. The German company is responsible for the overall technical plan including the machinery for shredding spars, producing the glue and packaging the final products. It is also supplying a gas turbine for the production of electricity, the waste heat from which will be fed back into in the MDF facility. The fibreboard is produced with minimum raw materials and energy. Previously, Mexican furniture producers and wholesalers have had to cover almost all of their MDF requirements with imports from the United States or Chile. This will now change thanks to the new plant. Mexican company Proteak the operator s parent company will be sourcing the wood required for the fibreboard from its own eucalyptus plantations with an area of 8,000 ha. Proteak has been certified by the Forest Stewardship Council (FSC) and manages all areas in accordance with the FSC sustainability requirements. 700 new local jobs are being created. The structured finance for this project is being backed by manufacturing risk as well as supplier and buyer credit cover.

29 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex antibribery measures Guidelines. In justified cases, on-site inspections of the projects may be performed, the local German foreign missions involved and external consultants called in. If there is any evidence of serious environmental or social risks, the transaction is reviewed regardless of the credit period and the value of the order. human rights and export credit guarantees The avoidance of any form of bribery in export business forms a key prerequisite for cover. If any evidence of bribery is discovered after cover has been granted, the exporter or bank will not receive any indemnification in the event of a claim. Germany has implemented the OECD s Recommendation on Bribery and Officially Supported Export Credits of 18 December 2006 in a two-step procedure. 29 The Federal Government does not support any exports which can be proven to disregard human rights or contribute to a violation of human rights. The observance of human rights forms a key aspect of the environmental and social risk assessment (sustainability review). The primary benchmark for reviewing export credit guarantees coming within the scope of the Common Approaches is provided by the World Bank Group s reference standards which, depending on the nature of the project, include the following aspects of rel - evance for human rights: occupational safety, health and safety of the communities concerned, land acquisition and involuntary resettlement, protection of indigenous people, protection of cultural heritages and stakeholder consultation. Transactions not coming within the scope of the Common Approaches are examined on the basis of the watchful eye approach to ensure compliance with human rights. Two-step anti-bribery process In a preliminary step, exporters and banks must sign an anti-bribery declaration as part of any application for cover. In this declaration, the company must confirm that the export or loan contract has not arisen as a result of any criminal acts. In addition, it must disclose whether any sanctions under criminal or any other law have been imposed on it in the past five years on account of bribery. If any evidence of bribery-relevant circumstances comes to light as a result of this declaration or from any other sources, a more detailed anti-bribery examination is performed in a second step.

30 government export credit guarantees in the energy sector 30 This review analyses internal measures, processes and structures for preventing and combating corruption. In addition, it illuminates the circumstances leading to the transaction and identifies the selling, commission and fee expenses involved. Pending or ongoing antibribery investigations into a company or person trigger the more detailed anti brib - ery review. In, 75 companies (including group companies) were subject to such detailed antibribery reviews. This is equivalent to 6.7% of the 1,124 policyholders submitting applications for Hermes Cover in. At the climate summit of Paris in December, the international community agreed on a joint approach for combating climate change. Signed by 195 nations, the treaty stipulates that global greenhouse emissions are not to rise any further in the medium term. The Federal Government has for a long time expressed its commitment to a global energy rethink in order to lower CO2 emissions permanently. This approach is also reflected in cover policy for the energy sector. For example, renewable energy and climate protection projects are particularly promoted through long credit periods of up to 18 years. The antibribery processes applied undergo constant review and revision. In its last assessment, OECD rated the German measures positively.

31 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex export credit guarantees for renewable energies As in previous years, the Federal Government again provided Hermes Cover for numerous projects in the renewable energies segment in. These chiefly involved the delivery of goods and services for wind power systems. In addition, export credit guarantees were provided for biomass, solar and hydropower facilities. Total cover provided in the renewable energies segment came to million euros (2014: 1.1 billion euros). Among other things, cover was provided for projects in Turkey, Uruguay and South Africa. export credit guaranties for renewables in million eur 1, , Volume In restructuring its energy system, Uruguay is placing store by renewable energies, which it is now using to cover more than half of its primary energy consumption. One of the main projects in this connection is the construction of the Pampa wind farm, which will be generating up to 640 gigawatt hours of electricity, i.e. sufficient to supply around 180,000 homes. The wind farm is being assembled in a sparsely populated region in the heart of Uruguay and will be going on line in mid Hamburg-based company Nordex SE is shipping 59 efficient wind power systems to Uruguay for the project and also handling service and maintenance for a period of at least ten years. The project is being financed by KfW IPEX-Bank and Bayern LB. The Federal Republic of Germany is backing the project, which is structured in the form of project finance, with buyer credit cover and supplier credit cover. The picture shows wind power systems of the same type.

32 32 cover available for coal-fired power stations rules valid from 1 january 2017 (simplified depiction) Size of power station > 500 MW MW < 300 MW Steam pressure > 240 bar and 593 C steam temperature or emissions < 750 g CO2/kWh Credit period 12 years Credit period 12 years Credit period 12 years Steam pressure > 221 bar and > 550 C steam temperature or emissions between 750 and 850 g CO2/kWh Ineligible Credit period 10 years, in IDA-eligible countries only (1), (2) Credit period 10 years, in IDA-eligible countries only (1), (2) Steam pressure < 221 bar or emissions > 850 g CO2/kWh Ineligible Ineligible Credit period 10 years, in IDA-eligible countries only (1) (1) IDA-eligible countries: World Bank Group country classification. It refers to developing countries whose credit rating in the international capital markets is so low that they are not eligible for any World Bank loans. As they generally only have very low per-capita income (the maximum is revised each year), they receive particularly favourable terms from the International Development Association (IDA). (2) This power plant category also includes exports to other countries provided that they have an electrification rate of < 90% according to recent data from the International Energy Agency as of the date of the application.

33 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex government export promotion for coal-fuelled power stations The sector understanding on coal-fired elec - tricity generation projects, which the OECD adopt ed in November, stipulates that export credit guarantees are only to be provided for the technologically most advanced and efficient technologies for the installation and modernisation of coal-fuelled power stations. The extent to which export credit guarantees are available for coal-fuelled power stations depends on the size of the power station, the underlying technology and the buyer country. The rules, which are illustrated in simplified form on page 32, take effect from 1 January In addition, projects may only be backed if they are consistent with the national climate protection strategy of the destination country and no alternatives with a lesser climatic impact are available. The understanding provides for exceptions in the case of energy islands and countries with an electrification rate of less than 90%. Prior to the OECD sector understanding taking effect on 1 January 2017, the delivery of goods and services in connection with coal-fuelled power stations will continue to be reviewed in accordance with the current environmental and social rules. general exclusion of cover for nuclear installations In line with previous practice, Hermes Cover is not available for the delivery of goods and services for nuclear power stations. This basic exclusion does not apply to transactions whose purpose is to enhance the safety of existing facilities or are required for the shutdown, dismantling and disposal of nuclear power stations. Likewise, goods and services not related to commercial electricity production, e.g. research reactors and nuclear medicine equipment, are exempt from this exclusion. smart grids added to oecd sector understanding on climate change Adopted in September, the rule provides for periods of up to 15 years for government-guaranteed export credits in the case of investments in smart grids. Smart grids ensure optimum grid utilisation without compromising reliability. Spending on such projects helps to reduce emissions of greenhouse gases. 33 The Federal Government did not provide any cover for the delivery of goods and services in connection with coal-fuelled power stations in (2014: around 28 million euros).

34

35 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex country cover policy and special forms of cover 35 despite numerous economic and political crises, the federal government maintained the availability of cover for the delivery of goods and services to difficult countries almost without any changes last year. cover was widened for selected countries of sub-saharan africa. the positive performance of special forms of cover over the last few years continued. once again, the export credit guarantees issued by the federal government made a valuable contribution to supporting the maritime industry in germany. the volume of cover provided for project finance grew almost three-fold.

36 country cover policy 36 The IMC defines an appropriate cover policy for each country on the basis of its specific risk. It governs the scope and the conditions for the availability of cover and forms the basis for decisions on the granting of export credit guarantees. The IMC reviews its cover policy for a country in the event of any change in its risk situation. In its cover policies, the IMC normally also distinguishes between short-term and extended-term cover as well as between public and private buyers. short-term export business with countries outside the EU and the OECD core countries with credit peri ods of up to one year can mostly be covered free of any re - strictions. However, certain forms of collateral may be necessary in individual cases. The same thing also applies to cover for the delivery of goods and services on medium and long-term payment terms. In countries for which there are limits on the availability of cover due to existing risks, risk-mitigation measures may be applied. In addition to certain oecd country risk categories Bangladesh Benin new 5 6 previously 6 7 Maledives Montenegro new 6 7 previously 7 6 Brazil Côte d Ivoire El Salvador Ghana Hungary Mozambique Romania Russia R.F. Rwanda South Africa types of collateral such as government guarantees, these may, for example, include certain benchmark indicators or special requirements with respect to the buyer s balance sheet. One proven instrument for managing risk is the establishment of a country ceiling. A ceiling is the maximum credit limit available for a given country. If it becomes evident that a ceiling will be exhausted in full, the IMC will consider whether a new one can be established. As of 31 December, ceilings had been defined for the following eight countries: Argentina, Belarus, Cuba, the Dominican Republic, Serbia, Sri Lanka, Ukraine and Uzbekistan. In contrast to conventional export business, the credit risks to which project and structured finance is exposed are usually located outside the buyer s country and depend more on the economic viability of the project or the stability of the financial collateral model than on the general country risk. The country risk is evaluated annually at an OECD level for each country. Countries are assigned to one of eight risk groups 1 on the basis of a macroeconomic model. These OECD country risk groups are binding on all OECD member states. In the year under review, the risk situation improved in six countries due to favourable economic and financial developments, as a result of which they were placed in a higher OECD country risk group 1. 1 The premium is calculated according to eight country risk groups, in seven of which (1 = best risk, 7 = worst risk) the calculation is based on a set formula. In countries assigned to country risk group 0 (OECD high income countries and the countries of the Eurozone) a market-oriented premium is charged.

37 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex Herrenknecht AG is supplying four tunnel boring machines to Mexico. Two of them are to be used in the construction of a dual tunnel with a length of 4.7 km through the Cerro de las Cruces mountain. The purpose is to ease traffic congestion between Mexico City and Toluca, a rapidly growing city located 60 km away, by building a new railway line to link the two cities. Accordingly, the project will be making a positive con - tribution to reducing emissions. 37 The two other tunnel boring machines are being used to construct a sewage tunnel in Mexico City measuring around 13 km in length to prevent the frequent flooding occurring after heavy precipitation. The new sewage tunnel will simultaneously be used as a collection drain to lower the risk of flooding in the southern and eastern parts of the megacity. The Federal Government is issuing combined buyer credit and supplier credit cover.

38 38 American emerging economies and developing countries: American Virgin Islands, Anguilla, Antigua and Barbuda, Argentina, Aruba, Bahamas, Barbados, Belize, Bermuda, Bolivia, Brazil, British Virgin Islands, Cayman Islands, Chile, Colombia, Costa Rica, Cuba, Curaçao, Dominica, Dominican Republic, Ecuador, El Salvador, Falkland Islands, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Montserrat, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sint Maarten, Suriname, Trinidad and Tobago, Turks and Caicos Islands, Uruguay, Venezuela. emerging economies and developing countries latin america and the caribbean Last year, the Federal Government issued export credit guarantees in the amount of 3.3 billion euros (2014: 6 billion euros) for the delivery of goods and services to Latin America and the Caribbean. This is equivalent to 12.6% of total cover (2014: 24.3%). This substantial decline over the previous year reflects the exceptional situation in this region arising in 2014, when the Federal Government granted cover worth 3 billion euros for the delivery of four cruise ships to Ber - muda. As no projects of a comparable scale arose in, cover for this region returned to the level seen in earlier years. As it is, this is remarkable given the deterioration of economic conditions in numerous Latin American countries. The sharp decline in the price of oil is particularly taking its toll on countries that export raw materials, such as Brazil, Mexico, Venezuela and Colombia. The country for which the highest volume of cover was granted in this region was brazil. In, transactions worth 1.1 billion euros (2014: 1.0 billion euros), including deliver - ies worth 74 million euros for the expansion and modernisation of a painting plant, were backed by Hermes Cover. uruguay was responsible for the largest single new transaction: the Federal Government provided combined supplier and buyer credit cover worth 266 million euros for the construction of a wind farm comprising 59 wind power systems. The Federal Government issued cover for other large-scale projects in argentina (tissue paper production line) and mexico (production line for medium and high-density fibreboards). new guarantees for latinamerican emerging economies and developing countries in million eur Brazil Mexico Uruguay Argentina Colombia , ,022.6 Short-term Medium and long-term Subtotal : 2,401.5 (73.5%) Total 2014: 6,018.7 Total : 3,266.2 (100%) country ceilings in million eur Argentina (private sector only) Dominican Republic Cuba (medium and long-term) Cuba (short-term)

39 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex Heidenheim-based Voith Paper GmbH & Co. KG supplied a full-scale tissue paper process line to Celulosa Argentina. The South American company already operates pulp, paper and sawmills. With the new energy-efficient production line, it will be producing around 30,000 t of toilet tissue and kitchen towels a year. This is because, looking forward, Celulosa Argentina would like to use its surplus pulp output itself rather than selling it in the market. This is also very advantageous for ecological reasons as it is no longer necessary to dehydrate the pulp and to then rehydrate it at another location. This protects the fibres and saves energy. Given the continued growth of the tissue market and the surplus pulp production, it is particularly important for Celulosa Argentina to expand its value chain. The Federal Government has issued manufacturing risk and supplier credit cover. 39

40 africa 40 African emerging economies and developing countries: Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo, Congo (Democratic Republic), Côte d Ivoire, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sâo Tomé and Principe, Senegal, Seychelles, Sierra Leone, Somalia, South Africa, South Sudan, St. Helena, Sudan, Swaziland, Tanzania, Togo, Tunisia, Uganda, Zambia, Zimbabwe. In, the Federal Republic of Germany granted cover amounting to 3.6 billion euros (2014: 1.7 billion euros) for the delivery of goods and services to Africa. This corresponds to 14% of total cover (2014: 6.8%). This doubling in the volume of cover compared with the previous year is chiefly due to guarantees issued for a large-scale project in egypt. The Federal Government provided supplier and buyer credit cover worth 1.4 billion euros for the construction of a gas and steam power station. Offers of cover were also provided for the delivery of 100 locomotives and a further two gas and steam power stations in Egypt. In sub-saharan africa, the Federal Government widened the scope for cover for Kenya, Senegal and Uganda in, thus marking a continuation in a development which had commenced in December As a result, export credit guarantees have been avail able for deliveries of goods and services to publicsector buyers in Ethiopia, Ghana, Mozambique, Nigeria, Tanzania, Senegal and Uganda since the end of A ceiling was lifted for angola. Cover is now available for creditbased transactions with the public and private sector in kenya free of any restrictions on the volume. Since the decision to widen the availability of cover, eight applications for Hermes Cover have been received for the delivery of goods and services to these countries. In the year under review, 62 applications for cover with a total value of around 2.4 billion euros were received for the entire sub-saharan region (including South Africa) in the year under review (2014: 61 applications, total value of 1.7 billion euros). new guarantees for african emerging economies and developing countries in million eur Egypt South Africa Algeria Tunisia Nigeria ,350.5 Short-term Medium and long-term Subtotal : 3,101.4 (85.8%) Total 2014: 1,669.1 Total : 3,614.4 (100%)

41 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex Wietmarscher Ambulanz- und Sonderfahrzeug GmbH (WAS) received another large order from Egypt. This time, the mid-size company supplied 250 ambulances based on the Mercedes-Benz Vito to the Egyptian Ministry of Health. This means that a total of some 2,800 fully equipped WAS ambulances are now in service in towns and rural regions in Egypt. The vehicles are veritable clinics on wheels: All ambulance functions including the interior climate and lighting can be set via a special control panel. In addition, they are fitted with compressed air and oxygen valves in the ceiling as well as a mediboard with connections for defibrillators, syringe pumps and monitors. The Federal Republic of Germany issued contract bond guarantees with counter-guarantees for the project. 41

42 asia 42 Asian emerging economies and developing countries: East Asia: Brunei Darussalam, Cambodia, China PR, Hong Kong, Indonesia, Korea DPR, Laos, Macao, Malaysia, Mongolia, Philippines, Taiwan, Thailand, Timor-Leste, Vietnam South and Central Asia: Afghanistan, Armenia, Azerbaijan, Bangladesh, Bhutan, Georgia, India, Kazakhstan, Kyrgyzstan, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka, Tajikistan, Turkmenistan, Uzbekistan. Middle East: Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestine (autonomous territories), Qatar, Saudi Arabia, Syria, United Arab Emirates, Yemen. In the year under review, the German Federal Government issued export credit guarantees worth 5.9 billion euros (2014: 8.1 billion eu - ros) for the delivery of goods and services to Asia. This is equivalent to 22.7% of total cover (2014: 32.6%). More than half of the cover volume (3.2 billion euros) in this region was accounted for by the countries of Eastern Asia (2014: 3.5 billion euros). In the year under review, the German Federal Government issued export credit guarantees worth 1.1 billion euros (2014: 1.6 billion euros) for the delivery of goods and services to South and Central Asia. Total cover provided for the Middle East came to 1.6 billion euros in the year under review (2014: 3 billion euros). At 1.2 billion euros in, china accounted for the greatest proportion of new business in the region as in previous years (2014: 1.4 billion euros). The largest transactions with China covered by the Federal Government included the delivery of two continuous an - nealing systems and a continuous galvanising line for a cold-rolling mill as well as guarantees for Airbus aircraft. In indonesia, the Federal Government provided cover for goods and services worth 587 million euros (2014: 303 million euros). Manufacturing risk, supplier credit and contract bond cover worth around 230 million euros was provided for the turn-key construction of a hot strip mill. new guarantees for asian emerging economies and developing countries in million eur new guarantees for east asian emerging economies and developing countries in million eur China PR India Dubai UAE Indonesia Saudi Arabia , , , ,930.8 China PR Indonesia Hong Kong Taiwan Vietnam , ,358.3 Short-term Medium and long-term Subtotal : 3,567.9 (60.9%) Total 2014: 8,064.9 Total : 5,862.6 (100%) Short-term Medium and long-term Subtotal : 2,797.9 (86.8%) Total 2014: 3,525.6 Total : 3,224.6 (100%)

43 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex Indorama Synthetics is installing a new line for the production of high-quality cotton yarn on the Indonesian island of Java. In this way, the company wants to expand production capacities by around 25% and additionally strengthen its leading position in Indonesia. The textile machinery is being supplied by German exporters Schlafhorst Zweigniederlassung der Saurer Germany GmbH & Co. KG., Trützschler GmbH & Co. KG and Rieter Ingolstadt GmbH. 43 The Federal Government is backing the project with isolated buyer credit cover. A syndicate comprising Düsseldorf bank IKB Deutsche Industriebank AG (lead manager) and Frankfurt-based bank DZ BANK is providing the finance.

44 44 Asian emerging At 273 million euros, cover provided for business with vietnam was slightly up on the pre- economies and developing countries: vious year (270 million euros). Among other things, the Federal Government issued guarantees for the delivery of two Airbus aircraft to this country. East Asia: Brunei Darussalam, Cambodia, China PR, Hong Kong, Indonesia, Korea DPR, Laos, Macao, Malaysia, Mongolia, Philippines, Taiwan, Thailand, Timor-Leste, Vietnam South and Central Asia: Afghanistan, Armenia, Azerbaijan, Bangladesh, Bhutan, Georgia, India, Kazakhstan, Kyrgyzstan, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka, Tajikistan, Turkmenistan, Uzbekistan. Middle East: Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestine (autonomous territories), Qatar, Saudi Arabia, Syria, United Arab Emirates, Yemen. Total cover provided for india dropped to 622 million euros in the year under review (2014: 1.1 billion euros). This decline is chiefly due to muted demand in the challenging steel market as well as the absence of any cover for Airbus aircraft. The Federal Government provided total cover worth 99 million euros for the delivery of goods and services to uzbekistan, almost twice the volume recorded in the previous year (2014: 54 million euros). Thus, for ex - ample, manufacturing risk, buyer credit and supplier credit cover was provided for the delivery, construction and start-up of a copper foundry. The reduction by half in cover from 3 billion euros to 1.6 billion euros is primarily due to conditions in saudi-arabia, where the volume of cover dropped from 1.9 billion euros in 2014 to 499 million euros due to the ab - sence of any major projects. By contrast, demand for government cover for deliveries of goods and services to dubai remains strong. At 616 million euros, the country accounted for roughly one third of Hermes-covered deliveries to this region. new guarantees for south and central asian emerging economies and developing countries in million eur India Uzbekistan Kazakhstan Bangladesh Azerbaijan Short-term Medium and long-term Subtotal : (90.3%) 1,119.0 Total 2014: 1,562.7 Total : 1,057.4 (100%) country ceilings in million eur Sri Lanka Uzbekistan

45 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex The pharmaceuticals industry has developed into one of the most important sectors of the Bangladesh economy. In response to the steady growth in demand, Beximco Parmaceuticals Ltd. is expanding and modernising its production facilities located close to the capital city of Dhaka. The machinery for manufacturing and packaging pharmaceutical products is being supplied by the Hamburg-based company CCC Machinery GmbH. 45 This business is considered to be particularly eligible for cover as it ensures supplies of high-quality and inexpensive pharmaceuticals to the general population. In addition, the project is creating roughly 300 new jobs and also helping to protect employment at CCC Machinery GmbH as well as many small and mid-size contractors in Germany. The Federal Government has provided combined supplier and buyer credit cover for the project.

46 46 Asian emerging The largest single transactions entailed cover for aircraft deliveries to Dubai and abu economies and developing countries: dhabi. East Asia: Brunei Darussalam, Cambodia, China PR, Hong Kong, Indonesia, Korea DPR, Laos, Macao, Malaysia, Mongolia, Philippines, Taiwan, Thailand, Timor-Leste, Vietnam South and Central Asia: Afghanistan, Armenia, Azerbaijan, Bangladesh, Bhutan, Georgia, India, Kazakhstan, Kyrgyzstan, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka, Tajikistan, Turkmenistan, Uzbekistan. Middle East: Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestine (autonomous territories), Qatar, Saudi Arabia, Syria, United Arab Emirates, Yemen. One of the most dominant issues for German exporters in the year under review concerned the future outlook for business with iran. Immediately after agreement had been reached with Iran on a comprehensive treaty to settle the conflict surrounding the Iranian nuclear programme that had originally arisen in 2002, the German Minister for Economic Affairs and Energy, Sigmar Gabriel, travelled to Teheran in July for talks with highranking political and business representatives on the post-sanction era. Since then, numerous discussions have been held at the expert level to create the technical basis for the resumption of trade relations. The Federal Government expects strong de - mand for Hermes Cover for Iran as soon as it becomes available again. Specific opportu - nities for German companies should partic - ularly arise in the automotive, mechanical engineering, energy and environmental en - gineering, water and waste management, agriculture and health care industries. There is a strong need for capital spending and demand for German goods is traditionally strong in Iran. new guarantees for middle eastern countries in million eur Dubai UAE Saudi Arabia Abu Dhabi UAE Kuwait Sharjah UAE ,930.8 Short-term Medium and long-term Subtotal : 1,426.0 (90.2%) Total 2014: 2,976.6 Total : 1,580.6 (100%)

47 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex Around 90% of Iraqi households use diesel-fuelled generators as the public grid does not offer sufficient electricity. This situation is to be remedied with the construction of the Khormala power station in northern Iraq with an total output of 1,200 megawatts. For this purpose, Siemens AG will be shipping several gas turbines and generators to Iraq. 47 The power station is to substantially reduce the frequent power outages and provide the population with a reliable and inexpensive source of electricity. This will make it possible to deactivate the environmentally harmful diesel generators. What is more, it should spur the region s economic development as the improved availability of electricity will encourage smaller companies to settle there. GTR Global Trade Review named the project Best Middle Eastern ECA Finance Deal of the Year The transaction is being supported by supplier and buyer credit cover provided by the Federal Republic of Germany.

48 europe (excluding industrialised countries) 48 European countries (without industrialised countries): Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, former Yugoslav Republic of Macedonia, Republic of Moldova, Montenegro, Romania, Russia RF, Serbia, Turkey, Ukraine. The Federal Government issued export cred - it guarantees of 6.6 billion euros (2014: 4.9 billion euros) for the delivery of goods and ser vices to Europe (excluding industrialised countries). This translates into 25.4% of total cover (2014: 19.9%). At 5.8 billion euros, Russia and Turkey ac - counted for a large part of the cover provided for this region. The large volume of cover of 3.6 billion euros provided for russia (2014: 2.2 billion euros) primarily relates to a single large project. The Federal Government provided manufacturing risk, supplier credit and contract bond cover worth 1.7 billion euros for the construction of an ethylene plant. Excluding this transaction, the volume of cover was roughly unchanged over the previous year. The decline in German exports in the wake of the muted Russian economy was almost completely offset by the increased cover requirements. Business with ukraine declined sharply, with the volume of cover dropping to 293 million euros in (2014: 518 million euros). By contrast, demand for government export credit guarantees for deliveries of goods and services to turkey remained strong last year. At 2.1 billion euros, the volume of cover was higher than in the previous year (2014: 1.8 billion euros). The largest transaction in Turkey for which an export credit guarantee was issued entailed the delivery of turbines and generators for a gas-fuelled power station. In addition, the installation of numerous wind farms was made possible with the provision of Hermes Cover. new guarantees for european countries (without industrialised countries) in million eur Russia R.F. Turkey Ukraine Belarus Serbia , , , ,613.6 Short-term Medium and long-term Subtotal : 6,377.2 (97.1%) Total 2014: 4,932.1 Total : 6,564.5 (100%) country ceilings in million eur Serbia Ukraine Belarus

49 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex With 18 hospitals and 13 day clinics, the Acibadem Clinic Group is the leading private-sector healthcare provider in Turkey. ACENDIS Handels GmbH has supplied equipment for several hospitals including a newly constructed one. In the year under review, the Hannoverbased company shipped medical and non-medical products worth 20 million euros to the Acibadem Clinic Group in Turkey, including anaesthesia, ventilation, radiology, ECG and ultrasound equipment, laboratory fittings and surgical instruments. It also supplied hospital furniture, special doors and facade panels. The transaction was backed by supplier and buyer credit cover provided by the Federal Republic of Germany. 49

50 industrialised countries 50 Industrialised countries: Andorra, Australia, Austria, Belgium, Canada, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, San Marino, Singapore, Slovak Republic, Slovenia, Spain, South Korea, Sweden, Switzerland, United Kingdom, United States, Vatican City and their dependent territories: BES Island, Ceuta and Melilla, Gibraltar, Greenland, Guadeloupe, (French) Guiana, Martinique, Mayotte, Réunion, St. Pierre and Miquelon. The subsidiarity principle (private sector be - fore public sector) applies to government ex - port credit guarantees. This is why cover traditionally tends to account for only a small portion. Hermes Cover is only available where the private sector is unable to provide comparable cover due, for example, to very long credit periods or to the scale of the project involved. Consequently, the Federal Government mostly issues export credit guarantees for transactions in developing countries and emerging markets. The Federal Government issued export credit guarantees amounting to 6.5 billion euros in (2014: 4.1 billion euros) for the delivery of goods and services to industrialised countries. This is equivalent to 25.2% of total cover (2014: 16.4%). The relatively high volume of cover compared with the previous year relates to four large-scale projects. Thus, the Federal Government provided Hermes Cover for the construction of two cruise ships each worth 1.9 billion euros for delivery to the united states and italy. new guarantees for industrialised countries in million eur United States , ,638.3 Italy 2014 South Korea 2014 Norway 2014 Switzerland ,910.5 Short-term Medium and long-term Subtotal : 5,523.6 (84.7%) Total 2014: 4,063.3 Total : 6,521.6 (100%)

51 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex In the year under review, Greek company EZA Protypos Hellenic Brewery (EZA) started up an efficient canning line for beer with a capacity of 25,000 half-litre units per hour. The supplier was KRONES AG from Neutraubling in Bavaria. In addition, the system is also to be used for canning sparkling water and refreshment drinks from The brewery has an advantageous location in central Greek close to the main transportation route linking Athens and Thessaloniki. With this investment, EZA wants to increase sales of beverages and additionally expand the proportion of its export business. The Federal Republic of Germany is supporting the project with supplier credit cover. 51

52 52 special forms of cover project finance and structured finance project finance structures are generally selected for large-scale projects which cannot or should not be carried on the balance sheets of the companies in - volved. A legally and economically independent project entity, which must be capable of generating sufficient cash flow to cover the operating costs and debt service, is established. Accordingly, the issue of an export credit guarantee for project finance is contingent upon the completion of a comprehensive analysis of the project risks as well as the economic viability of the project. In this connection, the Federal Government attaches particular importance to the banks, suppliers and investors involved in the project taking a reasonable share of the risks. In, export credit guarantees were granted for six projects with a combined value of just under 1.4 billion euros. This was a substantial increase over the previous year in which cover volume had come to million euros (three projects). New cover was provided for a silicon foundry in Iceland, a steel and milling plant in the United States and four onshore wind farm projects in Lithuania, Montenegro, Ireland and Uruguay. The six projects reflect the range of successful project finance transactions. For one thing, they comprise projects in established markets for which cover is not available in the private-sector insurance market due to their scale and the long-term nature of the credit periods (e.g. United States). For another, they include projects in emerging markets cover for which allows German exporters to enter the market. One example of this is the cover provided in for a wind farm in Montenegro, the first commercial wind power plant in this South Eastern European country. In addition to the six projects for which export credit guarantees were provided in the year under review, the Federal Government made two offers of cover with a volume of million euros for onshore wind farms in Turkey and Uruguay. The volume of new applications stood at around 2.4 billion euros at year-end. This and the large number of project presentations and inquiries (39 letters of interest in ) testify to the continued strong demand for cover for project finance transactions. Most of the ap - plications and inquiries come from the power industry particularly onshore wind farms and the petrochemicals, oil and gas sector. Regionally, they continue to concentrate on the Middle East, Central America and Eastern Europe including Turkey and Russia. The viability of these projects not least of all depends on current market trends such as the oil prices. In addition to new applications, there is also a growing focus on the part of exporters, banks and sponsors again on projects for which applications were received in the past with the expectation that they would be implemented in 2016.

53 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex With multi-sourcing projects in particular, there is scope for integrating Hermes-covered tranches in the case of German principal contractors as well as in projects in which German subcontractors supply a significant part of the goods and services to foreign principal contractors. Small and mid-size companies in particular also benefit from this. In addition to export credit guarantees for project finance, cover is also available for structured fi - nance. Structured finance allows buyers with insufficient creditworthiness to finance sizeable investment projects (e.g. large-scale investments). No new cover was provided in this segment in. One of the world s most efficient silicon plants is currently being built in Burnsville, Mississippi in the United States. An annual production capacity of around 36,000 tons of silicon is planned, equivalent to around 12% of the current US market demand. The site of the project is located very favourably in terms of infrastructure. The raw materials required for the production of silicon (particularly silica sand) are available in sufficient quantities in the neighbouring states. Raw silicon is an important commodity used primarily in the chemical industry but also for the production of aluminium and steel products. As a preliminary product for polysilicon, it is also used in the production of solar cells. In connection with this project, Düsseldorf-based company SMS group GmbH is supplying crucial technology in the form of two submerged arc furnaces for the pro duction of raw silicon, systems for handling the raw material and product and a dust extraction system. One particular feature is the rotary furnace vessels which prevent cold spots in the melt and deposits of carbides on the furnace walls. The Federal Republic of Germany is backing the project, which is structured as project finance, with manufacturing risk, buyer credit and supplier credit cover. 53

54 aircraft business 54 For the first time in five years, demand for air travel declined last year, with global airlines passenger revenues dropping by 5.7% in. The decline in freight business was even greater. Despite this, a number of airlines increased their capacities under their long-term strategies. This primarily applied to airlines in the Middle East and in Asia-Pacific. Despite the softer demand, airlines economic situation improved, with average operating margins widening to 7.7% particularly as a result of the steady decline in kerosene prices. Northern American airlines in particular achieved high profitability. The volume of Airbus finance jointly sponsored by Coface (France), ECGD (United Kingdom) and Euler Hermes (Germany) declined again last year. Given the In the year under review, Airbus supplied 635 aircraft, of which 7% were backed by an export credit guarantee issued by the Federal Republic of Germany.

55 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex high liquidity available in the commercial market, banks were able to provide long-term funding without re - course to government support. What is more, an increasing number of aircraft were financed with the involvement of leasing companies. Last year, the initial recipients of around 40% of Airbus deliveries were leasing companies, which then promptly leased their aircraft to the airlines. With this struc - ture, the airlines indirectly benefited from what in some cases was the very strong economic position of the large leasing companies and were thus able to lower their funding costs. As a result, the proportion of Airbus deliveries covered by the three European export credit agencies shrank to just 7% of the total, with most of the aircraft for which export credit guarantees were issued sold to Asian buyers. Whereas none of the aircraft financing transactions covered had been funded by bond issues in 2014, this form of finance was utilised for four transactions in with a combined total value of 388 million US dollars for which the Federal Government provided cover as reinsurer. With 1,036 new orders (2014: 1,796), Airbus currently has a total of 6,787 orders on its books (2014: 6,386). It delivered 635 aircraft in the year under review (2014: 629). Of these, 45 (2014: 51) were backed by export credit guarantees. ship business Conditions in the international ship building industry remain tense. Even so, the German maritime industry was able to assert itself impressively in particularly in its core businesses, namely passenger, special-purpose and RoRo ships. Against this backdrop, the export credit guarantees issued by the Federal Government made a further valuable contribution to supporting the maritime industry in Germany, repeating the high level recorded in In civil shipbuilding, export credit guarantees worth 4.5 billion euros were issued for new business. This was joined by cover for military shipbuilding amounting to 585 million euros, resulting in total cover of 5.1 billion euros (2014: 5.5 billion euros). In addition, there were offers of cover worth 429 million euros. Once again, Meyer Werft was awarded major large-scale contracts for the construction of cruise ships for cruise companies Carnival and RCCL, which will ensure full capacity utilisation until Neptun Werft was able to defend its market leadership in river cruise ships and strengthen its business relationship with Viking River Cruises. In special-purpose shipbuilding, the Federal Government provided cover for two offshore oil and gas supply ships and a RoRo ferry for Flensburger Schiffbau- Gesellschaft FSG. In addition to strong demand for ships built at German shipyards, there is growing interest on the part of suppliers of maritime components in the Federal Government s export credit guarantees. Thus, cover was provided for the delivery of tank systems for a tanker to be built in China. 55

56 A short digression: investment guarantees offer protection for German investments abroad 56 Given the crises and conflicts all around the world, cover for political risks plays a particularly important role in foreign investments. German investors must come to terms with a deterioration in underlying conditions even in well-established foreign markets. Against this backdrop, many companies consider government support in the form of an investment guarantee to be crucial for their activities. In, the Federal Government issued investment guarantees worth 2.6 billion euros for 77 projects in 16 countries. Given the heightened cover requirements for Russia, Eastern Europe was the most important region ahead of Asia. The main countries were Russia, China, India, Colombia and Serbia. Around one quarter of the applications approved were submitted by small and mid-size companies 1. The services sector played a particularly dominant role in. The number of applications submitted rose substantially by just under 70% over the previous year. The Federal Government s total commitment level stood at 35.0 billion euros at the end of. Investment guarantees protect German direct investments in emerging economies, developing countries and former transformation countries against political risks such as expropriation, war or conversion problems. 1 Companies with a maximum of 2,000 employees or revenues of up to 500 million euros and not members of a larger group The benefit for the companies arises from the fact that the Federal Government intervenes with the government of the target countries on behalf of the German investor in order to avert any loss. Guarantees can only be issued for investments which are eligible for cover and are viable in terms of risk. A further condition for the issue of a guarantee is the existence of legal certainty in the target country; as a rule, this is deemed to be the case if a bilateral investment promotion and protection treaty is in force between the Federal Republic of Germany and the host country of this investment. Generally speaking, the fee for the cover stands at 0.5% p.a. of the risk-exposed amounts. Applications for the issue of investment guarantees are approved by the Federal Ministry for Economic Affairs and Energy with the consent of the Federal Ministry of Finance and in agreement with the Federal Foreign Office and the Federal Ministry for Economic Cooperation and Development in an Interministerial Committee. The Federal Government has mandated a consortium consisting of PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft (PwC) (lead partner) and Euler Hermes Deutschland AG with the management of the investment guarantees. For further details, please contact: Phone: + 49 (0)40/ info@investitionsgarantien.de number of approved applications Russia R.F. 60 China PR 21 India 8 Colombia Serbia 5 5 Subtotal : 99 (83.2%) total commitments (exposure) 10-year overview by regions in million eur Africa America Asia Europe 19,614 19,954 16,804 3,817 3,753 3, ,067 7,607 6,900 6,858 5,869 7,218 8,357 24,272 4, ,137 11,981 27,681 6, ,054 12,573 31,021 6, ,581 13,385 32,734 6, ,714 13,389 36,323 34,971 33,423 6,301 4,654 6,218 2, ,431 13,066 13,656 14,166 13,425 14,734 13,126 Total : 119 (100%) '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

57 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex The difficult market conditions also sporadically impacted the transactions for which cover had been provided in earlier years. In this connection, the Federal Government was able to avert losses under the Hermes-covered buyer credits by overseeing restructuring activities last year. Despite the tense conditions in much of the global shipping market, there is a large future pipeline of ships which will be operating in profitable segments. This will provide opportunities for German shipyards, which are known for their reliability, and the solidly positioned maritime components industry, which the Federal Government will be supporting as effectively as it can in the face of international competition. River cruises are growing in popu - larity. One of the leading organisers of these cruises is Swiss shipping com pany Viking River Cruises AG. In order to modernise and expand its fleet, it placed an order with NEPTUN WERFT, Rostock, for ten new river cruise ships. With a length of around 135 m, they offer 190 passengers accommodation in 95 outside cabins and are to be used on various rivers in Europe. NEPTUN WERFT is also installing environment-friendly technology in the river cruise ships. Thus, for example, the ships possess a solar power system which feeds electricity into the on-board grid. In addition, modern diesel-electric engines and efficient power supply systems help to lower fuel consumption significantly. 57 The employment provided by the shipyard is of great importance for the Rostock region. The German manufacturing input stands at 100%. The Federal Republic of Germany is backing the transaction with combined export and buyer credit guarantees and contract bond cover.

58

59 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex business development 59 at 25.8 billion euros, the volume of export credit guarantees was up on the previous year. russia, the united states and egypt led the list of the top ten countries ahead of turkey. the proportion of cover provided for exports to emerging economies and developing countries came to 75%. claims paid contracted by 22%. the year closed with a positive result of 344 million euros. the accumulative surplus for the federal budget since the scheme was first established thus climbed to 4.2 billion euros. outstanding risk rose to 92.4 billion euros.

60 60 new business German exports rose in, reaching a re - cord level of 1,196 billion euros (2014: 1,134 billion euros) 1. The impressive growth rates for German foreign trade are being spurred by globalisation effects such as the internationalisation of production processes. New cover provided also rose by 4.4% over the previous year to 25.8 billion euros in. Consequently, the volume of cover again substantially exceeded the level prevailing prior to the economic and financial crisis. 2.2% of all German exports were secured with Hermes Cover in. There was a small shift in the ratio of new cover between public and private buyers in fa vour of public buyers. 85% of the indi - vidual cover was for private and 15% for public buyers (previous year: 87% private buyers and 13% public buyers). 1 Source: Foreign trade statistics of the Federal Statistical Office development of new guarantees in billion eur top ten markets for new guarantees in billion eur Russia R.F United States Egypt Turkey Italy China PR Brazil Dubai UAE India Indonesia Subtotal : (65.2%) Total : (100%)

61 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex number and volume of applications new guarantees Number of single transaction policies of which for private buyers of which for public buyers/guarantors Volume of cover in million EUR of which single transaction policies volume in million EUR of which for private buyers of which for public buyers/guarantors ,751 13,473 11,779 1, ,832 15,988 13,586 2,402 Share in % Change in % Application volumes remained high in again despite the decline in the number of ap plications submitted. At the same time, demand for cover for large-scale projects continued to grow. Thus, the number of largescale transactions valued over 50 million euros rose from 41 to 51 (79% of the single transaction policies issued; previous year: 70%). 61 offers of cover applications Number of applications of which single transaction policies wholeturnover policies Applications in million EUR ,979 1,517 11,462 38,615 10,832 1,261 9,571 36,156 Share in % Change in % funds earmarked for export credit guarantees Countries Emerging economies and developing countries Industrialised countries 2014 million EUR 9, ,808.1 Share in % million EUR 8, , Share in % Offers of cover for contracts still under negotiation had a total value of 9.1 billion euros as of 31 December. This was 22% lower than in the previous year. Experience shows that not all of the transactions earmarked for cover actually reach fruition as it is still un - certain on the date on which these offers of cover are issued whether the contracts concerned will actually be awarded to the ex - porters who have submitted the application. German exporters executed a whole series of large and important projects towards the end of the year under review in particular, thus prevailing over the international competition. Total: 11, ,

62 62 cover by country groups Traditionally, a large portion of Hermes Cover is provided for emerging economies and developing countries 1. In fact, these coun - tries accounted for 75% of the cover provided. The importance of this cover for the German economy is particularly reflected in the share of total exports for which guarantees are provided. 6.8% of German exports to emerging economies and developing countries were covered by guarantees issued by the Federal Government in (19.3 billion euros). Three quarters (910.4 billion euros) of German exports went to the industrialised countries. Given the lower political risks and the availability of private export credit insurance, the proportion of governmentbacked exports in total exports to industrialised countries is mostly relatively small. Of these, exports valued at 6.4 billion euros (0.7%) were covered by the Federal Government in (previous year: 4.1 billion euros). volume of cover by country groups in billion eur Emerging economies and developing countries Industrialised countries cover percentage of total export volume by country groups in % America Africa Asia Europe Industrialised countries See country allocation in the annex on page 85

63 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex cover by horizon of risk and type of cover volume of cover by country groups 2014 million Countries* EUR Emerging economies and developing countries 20,687.2 Latin America 6,018.7 Africa 1,669.1 Asia 8,064.9 Middle East 2,976.6 Southern/Central Asia 1,562.7 East Asia 3,525.6 Oceania 2.4 Europe 4,932.1 Industrialised countries Thereof EU-countries * See the country list p. 85 4,063.6 Total: 24, ,311.0 Share in % million EUR 19, , , , , , , , , , ,266.4 Share in % Change in % As in the previous years, short-term business with credit periods of less than one year continued to decline from a high level, thus reflecting the ongoing normalisation of the market after the financial crisis. The volume of cover fell by 18.5% over the previous year, coming to 45% of new cover (previous year: 57%). This trend was particularly evident with whole turnover policies (APG and APG light), under which exporters are able to ob - tain cover for short-term credits in transactions with numerous buyers in different countries. In, turnover of 9.7 billion euros was covered (previous year: 11 billion euros). Rough ly one quarter (26%) of the APG turn - over re ported was accounted for by Russia, Brazil and China. 63 covered exports by horizon of risk in billion eur Single transaction policies over 5 years Single transaction policies 1-5 years Single transaction policies up to 1 year Wholeturnover and revolving policies

64 64 Market normalisation is also mirrored in the continued decline in the number of wholeturnover policies. At just under 850 in, they hovered around their multiyear average. In addition to wholeturnover policies, which account for a large proportion of the shortterm cover provided, the Federal Government also offers revolving single transaction policies for regular business with a single buyer and cover for individual projects with credit periods of up to one year. Revolving single transaction policies fell again by 39.4%, reaching a volume of 164 million euros (previous year: 271 million euros). guarantees by horizon of risk in billion eur Wholeturnover and revolving policies: Single transaction policies up to 1 year: Single transaction policies 1-5 years: % Single transaction 52.7% policies over 5 years: % 6.6% Total : 25.8 turnover under wholeturnover policies in million eur 1,094.9 Russia R.F. 1, Brazil China PR Turkey Saudi Arabia Subtotal : 3,567.8 (36.9%) Total : 9,680.2 (100%)

65 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex short-term single transaction policies in million eur 2014 Egypt 2.6 Russia R.F. China PR 80.0 Abu Dhabi UAE India Subtotal : 1,389.9 (81.9%) Total : 1,696.4 (100%) medium and long-term policies in million eur 2014 United States Russia R.F. Italy Turkey Egypt Subtotal : 9,551.6 (66.8%) 1, , ,374.7 Total : 14,291.5 (100%) 2, , ,638.3 short-term single transaction policies with a credit period of up to one year also fell to 1.7 billion euros (previous year: 2.8 billion euros). This includes short-term receivables arising from the delivery of goods and ser - vices under construction service contracts as well as capital goods on short payment terms. The proportion of medium and long-term cover in the total volume widened significantly to 14.3 billion euros (previous year: 10.6 million). Among other things, this also re - flected heightened demand for cover for large-volume transactions with longer credit periods. The vast majority of these transactions entailed buyer credits (98% of cover). 65

66 66 cover by industrial sectors At 5.1 billion euros, cover for ship transactions was only marginally down on the very high level recorded in the previous year (5.2 billion euros). This business, which traditionally en - tails very large-scale projects, accounted for 19.7% of the total volume of Hermes Cover (previous year: 20.9%) and 32% of the single transaction policies. Aircraft contracts backed by export credit guarantees rose by one third to 2.1 billion euros, equivalent to 8.2% of total new cover (proportion of single transaction policies: 13%). cover for exports of military goods Cover worth 0.6 billion euros was provided for military goods in (2014: 1.1 billion eu - ros). This was equivalent to 2.3% of total new cover (previous year: 4.5%), i.e. below the multi-year average of 3.9% (calculated since 1997). share of single transaction policies by industrial sectors in million eur Ships: 5,085 Energy: 2,401 Manufacturing industry: 2,363 Aircraft: 2,101 Oil and gas production: 1,847 Paper, timber, leather and textile industry: 614 Infrastructure: 612 Others: 966 Total : 15,988 12% 13% 4% 4% 15% 6% 15% 32% single transaction policies by industrial sectors in million eur Ships 5,085 5,174 Energy Manufacturing industry Aircraft 2,401 1,785 2,363 1,799 2,101 1,580 Oil and gas production Paper, timber, leather and textile industry Infrastructure Service industry Agriculture and food industry Mining , Subtotal : 15,907 (99.5%) Total : 15,988 (100%) export credit guarantees for military goods in billion eur Type of goods Egypt Egypt South Africa Aircraft tow tractors for military use Building, testing and delivery of two submarines CNC portal milling machine for the production and assembly of aircraft components Total : 0.587

67 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex environmentally relevant aspects in cover for projects environmental relevance of supported projects Audited projects In-depth assessment category A and B Officially supported projects Category A Officially supported projects Category B 2014 number Volume in billon EUR number Volume in billon EUR officially supported, environmentally relevant projects in by categories and industrial sectors Category A Power generation Gas processing industry Metal processing industry Other industries Total Category A Category B Power generation and distribution of which renewables: 12 projects million EUR Wood processing and paper Infrastructure Metal processing industry Total Category B Total: Number Volume in million EUR 1, , , , , Projects coming within the scope of the common approaches must undergo environmental and social due diligence. This particularly includes all transactions with a credit period of more than two years. The transactions are categorised in accordance with their possible environmental and social impact. The category determines the scope of the audit. In, the Federal Government provided cover worth 2.9 billion euros for environmental category A transactions (projects which have the potential to have significant adverse environmental and/or social impacts which are diverse, irreversible and/or un prec - edented or which may be located in or near sensitive areas). In environmental category B (projects with local or easily reversible environmental and/or social impact), cover came to 1.1 billion euros. Under the Common Approaches, deliveries for existing plants which do not result in any material change of function or capacity do not need to undergo any detailed environmental audit; in this case, a risk assessment is sufficient. These transactions reached a volume of some 403 million euros in the year under review. 67

68 claims, recoveries and rescheduling claims 68 Outgoing payments for claims contracted by claims payments 21.6% over the previous year to million in millon eur euros. This was primarily due to the decline Political risk claims in outgoing payments for political loss for Commercial risk claims Iran to 94.2 million euros (previous year: Total: * million euros). The reduction in claims payments is particularly related to the fact that a * Differences caused by rounding large part of the outstanding receivables had already been indemnified. On the other hand, claims payments for commercial loss rose by 39.2%. The larg - est claims payments were for Russia, Ukraine and Ghana. In Russia s case this was materially due to defaults on the part of individual banks of national buyers in heavy industry as well as individual losses in the Russian banking sector. recoveries Once again, relatively high recoveries of around million euros were received on prior claims. Agreed restructuring plans for large claims as well as the broad portfolio of commercial claims under management of over 1.9 billion euros distributed across some 1,000 foreign debtors point to continued high recoveries in the future. top ten countries claims payments under commercial risk cover in million eur Russia R.F. Ukraine Ghana Brazil India Netherlands Bulgaria United Kingdom Kazakhstan Abu Dhabi UAE Subtotal : (72.5%) Total : (100%) 71.1

69 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex rescheduling recoveries for claims paid (excl. interest) in million eur under political risk cover thereof rescheduled amounts under commercial risk cover Total: * Difference caused by rounding * On the basis of the multilateral repayment agreement entered into by the paris club, the Federal Republic of Germany and Argen - tina signed a bilateral agreement on 29 Jan - uary governing the settlement of outstanding amounts of around 2.6 billion euros. Argentina paid the instalment of 210 million euros due in May within the requisite period. 69 top ten countries recoveries under commercial claims in million eur Kazakhstan Indonesia Chile Bulgaria Singapore In June, Chad was one of the last African countries to reach the completion point under the HIPC (heavily indebted poor countries) initiative, thus qualifying for full debt cancellation by the creditor countries. The promised waiver will be implemented with the signing of a bilateral agreement with the Federal Republic of Germany. Côte d Ivoire Malaysia Abu Dhabi UAE Russia R.F. India Subtotal : (85.4%) Total : (100%) At the end of, the Paris Club was able to reach an agreement with Cuba on the repayment of outstanding debts. Under the ar rangements, Cuba is to settle outstanding amounts of around 2.6 billion US dollars over a period of 18 years. As the Federal Republic of Germany had already signed a rescheduling agreement with Cuba in 2000, it merely took part as an observer in the negotiations.

70 results revenues 70 In the year under review, total revenues for revenues in million eur the Federal budget from export credit guarantees declined by 2.5%. 23.6% 0.1% 26.3% Despite the increased volume of cover, in - come from premiums and fees fell by 9.4% as the fees for medium and long-term cover are frequently only payable in later periods. recoveries under previously indemnified claims and debt repayment under re - scheduling agreements declined by 4.7% over the previous year. The largest recover - ies were received from Argentina (58.9 million euros), Kazakhstan (48.0 million euros), Egypt (41.9 million euros), Indonesia (17.9 million euros) and Iraq (16.8 million euros). The interest income of million euros (previous year: million euros) arose almost solely from rescheduling agreements. In addition, currency-translation gains of 0.8 million euros were recorded in connection with claims. Amortisation and recoveries: Premium/fees earned: Interest received: Other income: Total : 1,084.8 * * Difference caused by rounding highest interest payments in million eur Argentina Iraq Pakistan Myanmar Serbia 49.9% Subtotal : (84.9%) Total : 257.3* (100%) * Difference caused by rounding (interest and exchange rate gains) expenses In the year under review, expenses dropped by 17.7% to million euros (previous year: million euros). They comprise claims payments (395.1 million euros) and the costs for the administration of export credit guarantees (89.6 million euros).

71 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex annual result With a cash surplus of million euros, the Federal Republic of Germany s export credit guarantee scheme achieved a positive result for the Federal budget accounts for the 17th year running. Accordingly, the cumulative total balance of export credit guarantees rose to around 4.2 billion euros (not adjusted for inflation) as of the end of. The interest income of million euros (previous year: million euros) arising pre dominantly from rescheduling agreements was transferred to the Federal budget. For methodical reasons, it is excluded from the calculation of the financial result as the funding costs incurred by the Federal Government in respect of claims paid are likewise not included. 71 financial result in million eur 6,592 2,432 Interest received Annual result excluding interest '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 annual result and results accrued of the federal export credit guarantees in million eur + 5, ,000-10,000 Annual result (excluding interest) Results accrued (excluding interest) - 15,000 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '15

72 72 statutory cover limit and total commitment level Export credit guarantees are granted on the basis of amounts authorised by the federal budget. As of the end of the year, 83% of the statutory cover limit of 160 billion euros had been utilised. Interest covered does not count towards the statutory cover limit. total commitments of the federal government (exposure) breakdown by country groups and statutory maximum exposure limit in billion eur Stat. max. exp. limit The Federal Government s total commitment level (exposure) fell to billion euros (previous year: billion euros). This figure equals the total volume of export credit guarantees issued (net of interest) which are still exposed to risks. Exposure is defined as the actual portfolio registered by the Federal Office for Central Services and Unresolved Property Issues (BADV). However, it does not provide any indication of the real outstanding risk as the export credit guarantees count towards the statutory cover limit on the basis of their full amount until liability has been discharged regardless of their execution status. In the year under review, there were additions of 18.2 billion euros for new cover but discharges of 19.7 billion euros. In addition, cover for interest came to 55.4 billion euros at the end of the year (previous year: 55.8 billion euros). The Federal Government s total commitment level including in - terest thus stood at billion euros. Uncategorisable* Emerging economies and developing countries Industrialised countries * The uncategorisable exposure refers to allocations made for wholeturnover policies under the statutory maximum exposure limit. the federal government's statutory cover limit Law drafted by the Federal Government monitors utilisation BADV Federal Office for Central Services and Unresolved Property Issues registers the maximum amounts for which liability is accepted parliament passes Statutory cover limit Maximum amount for future cover in the light of existing and on risk cover report new issues and the discharge of liability for extinguished risks Federal Budget Act determines Mandataries (Euler Hermes, PwC)

73 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex outstanding risk total outstanding risk by industrial sectors Sector Ships Energy Aircraft Manufacturing industry Oil and gas production No recording of industries * Infrastructure Paper, timber, leather and textile industry Mining Chemical industry Agriculture and food industry Service industry Environmental engineering as at billion EUR Share in % The federal government s outstanding risk is derived from the future maturities of commitments under cover granted plus interest, less the percentage to be retained by the exporters and banks for their own account. This amount constitutes the theoretical max - imum outstanding risk from current Federal Government guarantees at any given time if the entire risk occurs in full. However, it does not provide any indication of the real like - lihood of the risk turning into a claim and thus the Federal Government s liability to indemnify it. 73 Total: * Wholeturnover policies, reschedulings ** Difference caused by rounding ** top ten countries total outstanding risk in billion eur Turkey United States Russia R.F. Bermuda India Switzerland United Kingdom Egypt South Korea China PR Subtotal : 53.9 (58.3%) Total : 92.4 (100%) share of total outstanding risk by country in billion eur Turkey: United States: Russia R.F.: Bermuda: India: Switzerland: United Kingdom: other countries: Total : % 10.0% 9.1% 8.4% 4.1% 50.3% 4.0% 4.0%

74 74 unrecovered amounts under claims paid At the end of the year, unrecovered amounts under claims paid for commercial and political loss including rescheduled trade and loan receivables stood at 4.4 billion euros and were thus unchanged over the previous year. These unrecovered amounts arise from claims paid for receivables transferred to the Federal Government which the Federal Government may be able to recover in the future. Significant recoveries can be expected from outstanding commercial claims totalling around 1.9 billion euros due to restructuring agreements already entered into in respect of major claims. total outstanding risk by country groups 2014 Countries * million EUR Emerging economies and 61,317.1 developing countries Latin America 13,476.5 Africa 6,602.7 Asia ** 22,583.2 Europe 18,654.7 Industrialised countries 27,150.0 Share in % Total: 88, * see country classifications p. 85 ** including Oceania total outstanding risk by maturities in billion eur million EUR 62, , , , , , ,416.3 Share in % In the case of outstanding political claims (709.7 million euros), further recoveries can generally be expected except where future multilateral debt relief measures take effect. up to 1 year: 1 to 5 years: more than 5 years: no fixed maturity*: % 12.1% 14.6% 37.2% Total : 92.4 * isolated manufacturing risk cover, contract bond cover

75 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex amount outstanding in billion eur Commercial claims: Political risk claims: Political risk claims regulated in rescheduling agreements: Total : 4.4 * Difference caused by rounding 40.5%* 16.0% 43.5%* An outstanding amount of 1.8 billion euros has been restructured in the Paris Club to take account of the ability of the debtor countries to pay and is governed by bilater - al rescheduling agreements. However, there is no certainty that the repayments thus agreed will be actually received as existing and future debt relief arrangements may ad - ditionally reduce the value of the outstanding claims. 75 top ten countries debt owed to the federal government out of rescheduling agreements and political risk claims in million eur Argentina Iran Iraq Pakistan Myanmar Korea DPR Serbia Zimbabwe Egypt Sudan ,006 No outstanding amounts due to the Federal Government were cancelled under debt re - scheduling arrangements in (previous year: 11.4 million euros). Since the establishment of export credit guarantees, the Federal Republic of Germany has waived total debt of just under 4.4 billion euros owed by the poorest countries under earlier debt-rescheduling agreements. Subtotal : 2,407 (95.9%) Total : 2,509 (100%)

76 76 new guarantees as related to total export volume; cover applications Covered Total export New percentage Cover volume guarantees of total export applications Year in billion EUR in billion EUR volume in billion EUR * ** *** , , , , , utilization of the statutory maximum exposure limit in billion eur Allocated amount of Total Stat. max. stat. max. outstanding exp. limit exp. limit**** risk**** * Starting 1989, values include former Eastern Germany ** Starting 1993, a new statistical method is applied in the EU to record overall export figures *** Volume of new applications, until 2005 business volume of decisions ****The column Allocated amount of stat. max. exp. limit reflects the overall level of exposure under the statutory limit for the respective year. On the basis of these figures conclusions cannot, however, be drawn on the amounts actually at risk, because they also include indemnification and other payments made in respect of reschedulings for which recoveries are still expected. For this reason, the Federal Government s total outstanding risk has been recorded seperately since the end of 1997.

77 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex result in million eur 77 Recoveries for Expenses for the Annual claims paid and Disbursements handling of the results Premiums/ rescheduled for claims and export credit excluding Year(s) fees earned amounts** reschedulings guarantees interest Interest* Subtotal 1, , , , , , , , , , , , , , , , , , , , , , , , , , , , , Total amount 18, , , , , ,288.6 Total income 43,544.8 Total expenses 39,326.8 Result accrued excluding interest 4,218.0 Debt owed to the Federal Government 4,444.5 of which regulated under reschedulings 1,799.7 * Interest received by the Federal Budget is exluded when calculating the financial result since the refinancing costs incurred by the Federal Government in respect of claims paid are also not included. ** Recoveries for claims paid and rescheduled amounts include special revenues and exchange rate gains Differences are due to rounding

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79 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex untied loan guarantees (ufk) 79 raw material markets were characterised by declining prices in. this led to delays in the execution of numerous natural resources projects. projects for which an untied loan guarantee was considered were also affected by this with the result that the federal government issued only one untied loan guarantee for 96 million euros in. exposure stood at 4.8 billion euros at the end of. even so, the continued intense competition in the commodities industry spurred demand for untied loan guarantees to cover raw material projects around the world. against this backdrop, a transparency initiative was launched in. among other things, this entailed a redesigned website and more intense dialogue with banks, industry and associations.

80 the year at a glance 80 In, one new untied loan guarantee worth a total of 96 million euros (including interest) was issued. This guarantee was for an untied loan granted to finance a silicon production plant in Iceland and ensures the supply of raw material for three German industrial companies. ufk enquiries distribution among the types of raw materials in Raw materials Metals Copper Ferroniobium Palladium Graphite Bauxite Aluminium Iron ore Tungsten Nickel Zinc/lead Titanium Phosphate Potassium Gold Energy raw materials Natural gas LNG LPG Foundry coke Other raw materials Number Prices hit new lows in many raw material markets during the year. However, this did not automatically lead to any change in the tight supply situation for German companies given the continued existence of multifaceted underlying raw material-sourcing risks. This was also reflected in the heightened interest in untied loan guarantees. Last year, two applications for raw material projects (previous year: one application) with a combined value of 396 million euros (plus cover for interest) were received. The number of enquiries rose substantially to 29 (previous year: 18). These concerned raw material projects in 13 different countries mostly entailing mineral resources (primarily copper). In, plans for six of these projects (three copper, two nio - bium and one graphite project with a combined value of around 1.6 billion euros) had already progressed far enough for the Federal Ministry for Economic Affairs and Energy to confirm their in principle eligibility for cover in the light of raw materials policy considerations. All in all, the Federal Government has confirmed the in principle eligibility of 26 projects in 17 countries in the light of raw materials policy considerations over the last Total : 29

81 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex five years. These projects entailed 14 different mineral and energy sources, impressively testifying to the flexibility of this guarantee instrument. The untied loan guarantees paid for themselves in the year under review from premiums and fees. There were no claims. 81 The Federal Government s maximum liability (expo sure) under the guarantees issued and still on risk including interest stood at 4.8 billion euros at the end of (previous year: 4.9 billion euros). Whereas exposure to development bank projects in various countries fell from 2.5 to 2.3 billion euros, it rose from 2.4 to 2.5 billion euros in the case of raw material projects. As of the end of the year, the portfolio comprises a total of ten guarantees, namely five guarantees for raw material projects and five for development bank projects. The Budget Act provided for a joint statutory cover limit of 65 billion euros for the issue of untied loan guarantees, investment guarantees and European Investment Bank loans. ufk underwriting practice countries Countries where raw materials projects were regarded as eligible for support during the past 5 years

82 82 transparency initiative A transparency initiative was launched in after agreement had been reached between the Federal Government, the mandataries and industry to present untied loan guarantees as an instrument for raw material projects and the related processes more transparently and comprehensibly. The core element of this initiative entailed a revised website for the untied loan guarantees on the joint website for the foreign trade promotion instruments, the AGA Portal. The revised website was presented at the second raw material dialogue on united loan guarantees, which was held in Berlin on 13 November. Participants included representatives of banks, raw material-processing companies and industry asso - ciations. The new content provided on the website in - cludes information on the UFK cover policy for raw material projects as well as the application and decision-making processes. The section on covering practice includes an overview of the countries and commodities on which the Federal Government has made positive decisions on in principle eligibility for cover in the light of raw materials policy considerations over the last five years. This provides interested parties with an indication of the types of raw material projects for which untied loan guarantees are theoretically available. The documents required and the review and decision pro cesses in the two-step application procedure are described in clear terms and the expected duration of the process is stated. The new website is being flanked by a new leaflet summarising the main information on untied loan guarantees for raw material projects and outlining the benefits for the parties involved in the project. This leaflet is available at the AGA portal. Feedback on the new website and the leaflet has been consistently positive. Participants in the raw material dialogue stressed the importance of the untied loan guarantee as it provides a reliable and significant cover instrument for German industry independent of price and economic cycles against the backdrop of intensified international competition for natural resources and raw materials. For further details, please contact: Phone: + 49 (0) 40 / info@ufk-garantien.de (from left): Sigmundur Davið Gunnlaugsson (Iceland s Prime Minister), Kristján Pór Magnússon (mayor of municipality of Nordurthing), Waldemar Preussner (owner and chairman of the board of directors of PCC SE) and Ragnheiður Elín Árnadóttir (Iceland s Minister of Industry and Commerce) at the opening ceremony on 17 September in the north of Iceland.

83 the interministerial committee development of the export credit guarantees country cover policy and special forms of cover business development untied loan guarantees annex The PCC Bakki project silicon production in Iceland for German industry A highly modern plant for the production of silicon metal has been under construction in a new industrial trading estate in the town of Húsavík in north-eastern Iceland since mid-. The main sponsor is PCC SE from Duisburg. The ultra-pure quartzite required for the plant is being supplied by the PCC Group s own mine in Poland. At least 32,000 tons of silicon metal are to be produced annually from The project will be creating around 120 direct jobs. Silicon metal is used as a preliminary product in numerous applications in the chemicals, aluminium and electronics industry and is the main input factor for the production of wafers, e.g. for solar modules. In addition to the highly pure quartzite, energy is one of the decisive input factors, accounting for around 40% of total production costs. As only around 13% of Germany s annual silicon requirements of around 280,000 t are covered by local production, there is a very strong dependence on imports of this important high-tech metal. Accordingly, reliable supplies of silicon are indispensable for numerous final and interim products manufactured in Germany. The Icelandic silicon will be sold to three renowned German industrial companies. In view of the longterm silicon deliveries to Germany, KfW IPEX-Bank was able to submit an application for the issue of an untied loan guarantee. SMS Group GmbH, an experienced German foundry engineering company, is responsible for the turn-key construction of the plant as the EPC contractor. The Federal Government has also issued an export credit guarantee for the project in accordance with an application submitted by KfW IPEX-Bank. The untied loan guarantee and the export credit guarantee were issued in May. In addition to PCC SE as the main investor, Icelandic pension funds have also contributed equity to the project. The debt capital of around 195 million US dollars is being provided in the form of project finance solely by KfW IPEX-Bank, which is performing all agency functions in addition to structuring the trans - action. The share of the finance covered by the untied loan guarantee is valued at 70 million US dollars. The portion for which the export credit guarantee has been issued stands at around 94 million US dollars. 83 The project is furthering Iceland s industrial development and also creating new local employment, as well as protecting existing jobs in Germany. In addition, it is making a significant contribution to securing supplies of silicon metal in Germany. KFW IPEX-BANK GMBH, Frankfurt am Main