SID Bank - Insurance - Export credit insurance - Implementation of Interest Rate Equalization Programme

Implementation of Interest Rate Equalization Programme (IREP)

The purpose of Interest Rate Equalization Programme (IREP) is to increase competitiveness of Slovene export by providing exporters of Slovene goods and services (or their buyers) with export financing at conditions more favourable than those available in the commercial market. For final borrowers, the interest rate is fixed for the entire loan period and may not be lower than the Commercial Interest Reference Rate (CIRR) and not higher than CIRR + 1.5%.

The IREP is carried out through commercial banks, which finance export of Slovene goods and services.

In order to participate in IREP, a commercial bank enters into an interest rate swap agreement, therefore fixing the interest rate. In accordance with this agreement, the commercial bank may receive the interest rate equalization amount (incentive), for each export credit granted to a foreign buyer of Slovene goods or services, in the minimum amount of 1,000,000 EUR or 1,000,000 USD, and shall transfer the entire amount to the final borrower. Consequently the cost of fixed-rate export credit is lower without affecting the market margin of banks. Annually, the incentive amounts to between 0.75% and 0.10% of the outstanding principal amount of export credit.

Conditions:

  • commercial agreement must be structured so that the advance payment of the buyer amounts to at least 15% of the contract value, and the loan amounts to maximum of 85% of contract value,
  • the maturity of the loan should not be less than 2 years and not more than 10 years,
  • the principal amount is repaid in half-yearly instalments.

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