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On Thursday, the government gave the Minister of Economic Affairs and Communications Juhan Parts an authorisation to found a public limited company with state participation called KredEx Krediidikindlustus, which shall help companies decrease risks connected with export by offering guarantees, and makes it possible to enter new markets. According to Parts, the present situation requires the interference of the state. At the moment the market is not functioning and the export insurance of Estonian companies is weak. „To heat up the Estonian economy, an increase of export is inevitable. A survey showed that the former insurance market does not meet the needs of exporting companies, and a demand for a new state insurance company exists,“ Parts said. According to Parts, the global financial crisis significantly limited the possibilities of Estonian exporters to decrease credit risks, as the international insurance providers operating in Estonia decreased their scope of activity and the price level increased. „The new credit insurance provider is an insurance provider with a direct purpose to serve the local companies, which helps to fill the gap created,“ he added. At the moment, state export guarantees are offered to companies by KredEx. Due to the state aid regulations valid in the European Union, at the moment KredEx can guarantee export transactions mainly to third countries located outside the EU and OECD countries. The new company can offer export insurance also in the direction of the EU and OECD countries. The existing system of export guarantees is working, but does not fulfil its purpose, as the extent of transactions is too limited, and the realisation of single large risks may result in termination of offering guarantees. Additionally, there is no possibility to react quickly enough to changes in market demand, e.g. offer guarantees in countries of the EU. Two thirds of the shares of KredEx Krediidikindlustus belong to the state and one third to KredEx. 200 million kroons of the necessary share capital come from MKM and 100 million kroons from KredEx. In addition, the state guarantee reserves shall be increased by 200 million kroons from the European Regional Development Fund. Changes based on the State Export Guarantee Act (in the process of approval by Riigikogu), an increased equity capital of the founded company, and creation of a deposit of the additional reinsurer make it possible to set three million kroons instead of the former one million as the limit of export guarantees. Thereby, opportunities for state guarantees first of all for extensive transactions and those with a long credit period shall be expanded. Until the relevant activity license is obtained for the credit insurance company, KredEx shall issue guarantees, thereafter all export activity shall be directed to the credit insurance company.
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