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SUBCOMMITTEE ON FOREIGN AGRICULTURE AMP HUNGER 



Question 2 



What is the process FAS will use to determine whether Russia 

 meets the creditworthiness recjuirements for the credit guarantee 

 programs? Who participates in the decision and what information 

 is used to make the decision? 



Response 



USDA follows the same procedures for all countries to determine 

 credit worthiness for participation in USDA's Export Credit 

 Guarantee Program. The Foreign Agricultural Service's (FAS) 

 Program Development Division (PDD) develops program allocations 

 for the Export Credit Guarantee Programs (GSM 102 and 103) using 

 input from three sources - - the Trade and Economic Division 

 (TEID) of FAS, the Commodity Marketing and Programs (C&MP) area 

 of FAS and the Financial Management Division (FMD) of the 

 Agricultural Stabilization and Conservation Service (ASCS) . 



TEID provides classified country risk assessments, which rate a 

 country's ability to repay existing and future short -to medium 

 term debt obligations. The assessments provide reports on five 

 risk categories (macroeconomic environment, balance of payments 

 situation, liquidity, foreign debt burden, debt repayment 

 history) for each participating country and offer annual risk 

 exposure guideline recommendations. 



FMD provides assessments of foreign banks . The bank assessments 

 determine which banks are eligible to participate in the 

 GSM programs and set limits for the risk exposure to CCC for each 

 bank. These bank limits may be waived if the foreign government 

 is willing to provide a Credit Guarantee Assurance (CGA) letter 

 to repay defaults of any eligible bank. 



Top officials of PDD, TEID, C&MP, FMD and other senior officials 

 within FAS sit on a committee known as the Reconciliation 

 Committee (RC) . The RC is charged with reaching a consensus on 

 the appropriate level of programming for potential country 

 participants according to sovereign and bank risk considerations 

 and market development opportunities. The committee is chaired 

 by the Assistant Administrator of the Export Credits Program 

 Area. If a consensus is reached within the RC, the 

 recommendation is presented to an interagency committee, the 

 National Advisory Council on International Monetary and Financial 

 Policy (NAC) , which must review all GSM-102 and GSM 103 

 programming decisions. 



