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ECGD toughens project criteria

EXPORT GUARANTEE agency ECGD is toughening its stance on projects it underwrites in a bid to reduce the amount of money it has to pay out to settle unpaid loans from developing countries.

ECGD guarantees government loans to projects in the developing world, effectively bankrolling British built construction projects.

Its new approach is called 'portfolio risk management'. It involves closer assessment of project and repayment risk.

ECGD also plans to increase the number of projects it takes on by teaming up with other export credit organisations and with commercial banks. It also plans to share risk with these agencies.

The portfolio approach is seen as reducing an organisation's vulnerability to loss, enabling it make better use of its capital.

ECGD has appointed risk management consultants Berry Palmer & Lyle and Dion, Durrell & Associates to advise on export credit risks, as part of its new, tougher approach.

The portfolio approach is one of several changes that will see the establishment of a trading fund within ECGD. This will allow it to operate independently from Treasury spending constraints.

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