Export credit guarantee (the “guarantee”) is a commitment by INVEGA to share risks with the exporter by covering up to 90 per cent of the actual losses when a buyer fails to pay as provided for in the contract, or when a buyer goes bankrupt. This guarantee allows the exporters to sell their goods with a deferred payment option thus protecting themselves against default by a foreign buyer. The risks to be covered may be political and/or commercial.
The object of the guarantee is the payment of part of a deferred payment under a sale and purchase contract for goods originating in Lithuania in respect of which a certificate of origin has been issued by the Lithuanian Chamber of Commerce, Industry and Crafts confirming that the goods had been manufactured in Lithuania. The goods should be exported to countries of non-marketable risk or low-risk countries as seen below:
The guarantee fee shall be calculated based on the methodology for calculating export credit guarantee fees. You can calculate the preliminary guarantee fee here.
Guarantees cannot be issued in cases when goods are exported to countries of marketable risk listed in the annex to the Communication from the Commission to the Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance of 19 December 2012 (2012/C 392/01).
Guarantees cannot be issued in respect of buyers registered in any of the target territories, except for those target territories which are attributed to the priority export market groups established by the Minister of Economy of the Republic of Lithuania in the Lithuanian Guidelines of Export Development for 2014-2020 (Lithuanian language version).
INVEGA shall also not issue export credit guarantees in respect of buyers located in the following high-risk countries:
In addition, INVEGA does not provide export credit guarantees for buyers located in high-risk countries identified by the European Commission as having weaknesses in the fight against money laundering and terrorist financing, pursuant to Delegated Regulation (EU) 2016/1675 ) 2015/849, as subsequently amended:
- American Samoa
- The Bahamas
- Democratic People’s Republic of Korea
- Puerto Rico
- Saudi Arabia
- Sri Lanka
- Trinidad and Tobago
- United States Virgin Islands
The term of deferred payments cannot extend beyond 2 years. The exemption applies to agricultural products for which the deferred payment period may not exceed 18 month according to the World Trade Organization Nairobi Decision on Export Competition.
The time frame for raising invoices (the term within which the beneficiary of the guarantee may raise invoices for deliveries to buyers with a deferred payment option) cannot extend beyond 1 year.
The maximum amount of all guarantees per one exporter cannot exceed €2,000,000 (two million euros).
The maximum amount of the guarantee per one buyer chosen by the exporter cannot exceed €750,000 (seven hundred fifty euros).
The aggregate of all guarantees per one buyer across all exporters cannot exceed €2,000,000 (two million euros).
The upper limit of liability assumed by INVEGA (guarantee rate) shall be no more than 90 per cent of the aggregate of all deferred payments.
Micro, small and medium-sized enterprises (“MSMEs”) registered in Lithuania that have been operating for more than one year (from the day of registration) with an annual income of over €100,000 according to the approved annual financial statements for the last financial year.
The lifespan of an MSME shall be established as of the day of application registration at INVEGA.
The applicant cannot be an undertaking in difficulty as it is defined in the Communication from the Commission – Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (2014/C 249/01).
The applicant and the buyer cannot be affiliated companies and/or partner companies as they are defined in the Law on Small and Medium-Size Business Development of the Republic of Lithuania.
The applicant cannot have any outstanding liabilities to the state, i.e. the amount of outstanding tax, including national insurance contributions, is less than €50, or a schedule for the payment of tax in instalments is in place, or the payment of tax has been deferred by decision of the tax authority.
The applicant’s activities cannot be in violation of the OECD Council Recommendation on Bribery and Officially Supported Export Credits.
There cannot be any judicial or arbitration proceedings instituted between the applicant and the buyer.
Buyers should be registered in countries of non-marketable risk.
The buyer cannot be registered in any of the target territories, except for those target territories which are attributed to the priority export market groups established by the Minister of Economy of the Republic of Lithuania.
The buyer must be active on the market for more than two years from the date of registration.
The buyer cannot have any debts overdue and payable to the exporter.
A fee payable for the export credit guarantee will depend on the risk profile of a foreign buyer, risk group of the country of destination, amount of the guarantee and the due date of deferred payments. This fee is calculated for each declared sale of export goods (with a deferred payment option) during the applicable term for invoicing.
The guarantee fee shall be calculated based on the methodology for calculating export credit guarantee fees as approved by the Board of INVEGA. To calculate the preliminary guarantee fee follow the link to our calculator here.
Before entering into a guarantee agreement, the applicant shall be required to pay an initial margin. This initial margin is non-refundable, except when this margin has not been paid for reasons other than the buyer’s fault. Afterwards a guarantee fee shall be calculated for every subsequent declared sale of export goods (with a deferred payment option) to the buyer made during the invoicing term. The guarantee fee calculated by INVEGA shall be set off against the initial margin (balance thereof) paid by the exporter, and/or paid to INVEGA as provided for in the export guarantee agreement.
Once the initial assessment has been completed and a positive decision has been taken by INVEGA, the exporter will have to commission a report of solvency risk assessment in respect of the buyer and/or buyer’s guarantor. This report can be commissioned as follows:
- by instructing INVEGA to commission such a report from a provider of creditworthiness evaluation services (to be indicated at the time of filling in of the application); or
- by commissioning such solvency risk assessment personally within 7 calendar days from the day of dispatch of a notice by INVEGA about the positive initial assessment.
The costs of solvency risk assessment shall be borne by the applicant.
The decision whether to issue or decline the guarantee shall be taken by INVEGA within 30 calendar days from the day of receipt of the report of solvency risk assessment.
Once the decision to issue the guarantee has been taken, a draft guarantee agreement shall be sent to the exporter along with a pro-forma invoice for the initial margin payment. The initial margin must be paid within 30 calendar days from the day of dispatch of the appropriate pro-forma invoice. Once the exporter has paid the initial margin, a guarantee agreement shall be concluded. Terms and conditions of this agreement (draft agreement) can be found here (Lithuanian language version).
If the exporter fails to pay within 30 calendar days, it shall be deemed that the exporter does not wish to use the guarantee and the guarantee will not be issued.
During the guarantee term, the beneficiary of this guarantee may contact INVEGA with a request to amend terms and conditions of the guarantee agreement. Amendments may relate to the following: guarantee duration, upper limit of guarantee liability, due date of deferred payments, beneficiary under the guarantee, changes to the buyer’s guarantor and/or limit of deferred payments.
At any time, but in any event no later than the date of a guarantee event the beneficiary of the guarantee may use factoring for invoices raised under an export agreement and enter into a factoring agreement with any legal person authorised to provide factoring services under the laws of the Republic of Lithuania. If the exporter chooses to use factoring, they shall be required to contact INVEGA with a request to amend terms and conditions of the guarantee.
A deferred payment declaration is a document of prescribed form by submitting which the beneficiary of the guarantee reports to INVEGA all of the deferred payments granted over the past calendar month. The beneficiary of the guarantee shall sent to INVEGA the deferred payment declaration for the invoices raised over the past calendar month and shall do so by the 10th, i.e. an electronic version of the declaration in Excel.
A report of a guarantee event (default in part or in full on a deferred payment by the due date of the deferred payment, or in the case of a private buyer bankruptcy) shall be submitted within 60 calendar days from the due date of each deferred payment stated on the invoice, i.e. no later than within 60 calendar days from the expiry of the due date of the deferred payment. Within 10 calendar days from the date of the guarantee event report the beneficiary of the guarantee has to enter into an agreement with a debt collection agency for the recovery of deferred payment debt from the buyer.
The beneficiary of the guarantee shall have 10 calendar days from the day of the guarantee event report to enter into an agreement with a debt collection agency for the recovery of deferred payment debt from the buyer.
If a particular debt collection agency that the beneficiary of the guarantee wishes to commission is not included in the list of approved agencies produced by INVEGA, the beneficiary may contact INVEGA within 5 calendar days from the date of the guarantee event report asking INVEGA’s consent for a debt collection agreement with that particular debt collection agency. Should this be the case, INVEGA shall have 10 calendar days from the day of such request to provide its consent or disapproval. In the event that INVEGA disapproves of a particular debt collection agency, the beneficiary of the guarantee shall be required to enter into an agreement for the recovery of deferred payment debt with a debt collection agency included in the list of approved debt collection agency produced by INVEGA and shall do so within 10 calendar days.
Debt collection efforts shall last for up to 90 calendar days starting from the day of production of the guarantee event report to INVEGA.
Provided the beneficiary of the guarantee had performed all legally required and reasonable actions to collect debt stemming from a deferred payment and failed to collect this debt, the beneficiary may, within 90 calendar days from the end of debt collection efforts or in the case of the buyer’s bankruptcy, contact INVEGA with a request to make a guarantee payment. Along with this request for a guarantee payment the beneficiary shall be required to produce written data and other evidence supporting the claim, amount of the claim and compliance with the terms and conditions of export credit guarantee provision as outlines in the general part of the guarantee agreement.
Terms and conditions of guarantee disbursement shall be outlines in the guarantee agreement.