The European Commission approved on Monday an export-credit insurance scheme adopted by Finland to limit the adverse impact of the current financial crisis on export firms.
The commission, which polices competition policy across the European Union (EU), found the measure to be in line with its rules on for state aid measures to support access to finance in the current financial and economic crisis.
In particular, the measure requires market-oriented remuneration and tackles the problem of the current unavailability of short-term export credit insurance cover in the private market, the commission said.
Under the scheme, the Finnish state agency Finnvera would provide short term export-credit insurance coverage to companies established in Finland, which are confronted with a temporary unavailability of cover in the private market, for financially sound transactions.
Finnvera's share of risk would depend on the buyer's creditworthiness and on the level of political risk relating to the buyer's country. The maximum coverage would be 90 percent for both commercial and political risk, which means that the exporters would have to assume at least 10 percent of the underlying risk themselves.
"The export credit insurance scheme provides Finland with means of supporting firms in the areas where the market is temporarily not functioning properly while, at the same time, establishing safeguards to limit distortions of competition," said EU Competition Commissioner Neelie Kroes.
The commission authorized the Finnish measure until the end of 2010.
The commission normally prohibits state support for businesses, but has loosened its rules to help firms cope with the financial crisis and ensuing economic downturn.