On May 13 the Federal Government announced in the Budget a capital injection of $200m to Efic to restore its capital base. This is exciting news for all of us at Efic and our export clients who depend on Efic for finance in circumstances where the private sector is either unwilling or unable to support them.
It is also a resounding confirmation by the Federal Government of Efic’s mandate and puts to rest the suggestion by the National Commission of Audit (NCA) that Efic be abolished. The Treasurer and Finance Minister made clear when releasing the report that the recommendations of the NCA do not reflect Government policy. The Budget announcement reaffirms the Government’s strong commitment to exporters and that Australia is ‘open for business’.
“The Federal Government’s Budget decision to restore Efic’s capital base is a resounding endorsement of Efic’s mandate,” said Andrew Mohl, Chairman, Efic. “A greater capital base allows Efic to provide more financial support to Australian SMEs and larger projects in emerging and frontier markets in which Australian SMEs are involved. The capital injection brings Efic back into compliance with its own internal capital based-limits for large exposures and country risk.”
Efic plans to use the $200m capital injection to provide more financial support to Australian SMEs and larger projects in emerging and frontier markets. Without this additional capital, Efic’s ability to support exporters to some countries was becoming constrained, as Efic was at or near its maximum country limits for Russia, Mongolia, Sri Lanka and Papua New Guinea.
“With 90% of our clients being SMEs, the return of capital that was announced in the Budget enables Efic to provide financial support for more Australian companies looking to win export contracts, grow internationally and achieve export success,” said Andrew Hunter, Managing Director, Efic. “As we detailed in our recent submission to the Financial System Inquiry, Australian SMES and financing transactions of scale in emerging and frontier markets are likely to remain undersupplied for finance in the foreseeable future. As a commercially run Government-owned ECA, Efic’s capital base is now sized to make available sufficient finance for the benefit of exporting SMEs and those companies, both big and small, willing to take risks and expand into emerging and frontier markets.”
The team at Efic now looks forward to providing support to substantially more exporters.