One of the reliable and effective ways to develop the export and sale of goods and services on credit terms is granting buyer’s credit facility by some financing banks, which provides a reliable market for the export of goods and services to the target countries. The long-term repayment conditions of such credit lines increase the competitive power of Iranian goods exporters and contractors in the target country and is an effective way to penetrate a new market or stabilize in that market. Buying goods, especially capital goods, and carrying out industrial projects depend on providing the required financial resources, and the countries that are unable to provide them due to limited resources, by using financing techniques, get the funds they need from financing resources and markets. The basis of the buyer's credit mechanism is based on the credit sale method, with the difference that a bank enters into the transaction as a financer and pays for the goods/services to the seller/contractor after the export is done, and at maturity date, receives the principal plus interest of the credit it has financed. Therefore, the financing bank who enter into this post shipment finance mechanism is always under the risk of non-repayment of the loans financed by the foreign user of the credit.
Export Guarantee Fund of Iran covers the risk of the financing bank caused by the foreign user of the credit (buyer/ the government/ the foreign bank) in case of non-repayment of the instalments on the due dates against political and commercial risks involved. In other words, the credit sale risk of the exporter is transferred to the lender and finally from the lending bank to the Fund. It provides the possibility of financing by commercial or specialized banks for consumer goods (up to 100% of the amount of the commercial contract), and capital and semi-capital, and equivalent technical and engineering service projects (up to 85% of the project value).
The amount of the relevant insurance premium is calculated according to 4 different parameters:

• The destination country risk group
• The credit period (Including the construction and repayment terms) 
• The credit rating of the user of the credit or its guarantor (Sovereign, Sub-Sovereign and Private company/Bank: form Category A to Category E)
• The Franchise and the Fund’s maximum political or commercial risks under cover

Who might apply?
All the Iranian development and commercial banks who are actively involved in the post shipment finance of exports (goods or services) at the request of Iranian exporters/contractors. 

Risks covered by the buyer's credit guarantee:
•    If according to the terms of the finance agreement, of the creditor (Iranian Bank) does not succeed in collecting his receivables from the foreign buyer / bank / government (borrower/user of the credit) on maturity date or the repayment deadline, and this is due to the default of the borrower in fulfilling its obligations.
•    An example of protracted default occurs due to the occurrence of one of the following events: 

o    Any action or decision that is considered as the intervention or act of the government of the borrower's country and prevents the user of the credit to fulfill its payment obligations stated in the finance agreement.

o   Any instance of debt restructuring imposed by the government of the borrowers’ country, or any other third party’s government through which the payments included in the finance agreement are supposed to be made.

o   Political events, economic problems, or governmental or legal measures that have occurred or are being implemented outside of Iran and prevent or delay the transfer of instalments included in the repayment schedule of the finance agreement.

o   The ratification of some regulations in the country of the borrower, according to which the repayment of installments in the local currency of the country of the borrower replaces the repayment of installments in the currency agreed in the finance agreement, in such a way that due to exchange rate fluctuations, after converting the local currency of that country into the hard currency of the agreement, the financing banks faces a sharp fall in the value of the instalments received in local currency and faces a meaningful loss.

o   Any action or decision of the government of the Islamic Republic of Iran, in the form of banning trade relationships or  cooperation, which will cause problems or obstacles to the collection of creditor's receivables, and the losses caused by this case will not be compensated by the government in any other way.

o   Any instances of force majeure, including war, civil war, revolution, rebellion, civil disturbances, strikes, storms, floods, earthquakes, volcano eruptions, which occur in the borrower's country and prevent the payment of installments on the due date.