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Application

Why is coverage reasonable?

Due to recent developments in various developing and emerging countries risk awareness has increased. To safeguard the future of an enterprise abroad, an investor is well-advised to provide for the incalculable risks, i.e. political risks. Careful risk management demands measures for limiting such risks.

The use of government-backed guarantee schemes therefore is an important element of risk management. Consequently, an investment guarantee may

  • improve the credit rating
  • facilitate financing
  • collateralize refinancing
  • be the decisive factor for the bank to grant a loan.

The fact of having the German government "by one's side" helps - already in an early stage - to solve problems arising from adverse political developments in the host country. In the event of an impending loss it may strengthen the investor's own position for negotiations. The involvement of the German government may resolve the matter before an actual loss is incurred and may offer the chance that the costs of loss prevention are shared between the German government and the investor.

Who may apply for coverage?

Under the German investment guarantee scheme only entrepreneurs and companies/banks domiciled in Germany and having their centre of activity in Germany are entitled to apply for coverage.

For which periods can cover be granted?

The term of the policy is usually limited to 15 years (for equity participations as well as other rights and assets); in justified cases it may be extended to 20 years. Upon expiry, the term of the policy may be extended by another five years.

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