Financial Statements of Export-Import Bank of United States

ID-81-44: Published: Apr 8, 1981. Publicly Released: Apr 8, 1981.

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GAO examined the statements of financial condition of the Export-Import Bank as of September 30, 1980 and 1979, the statements of income and analysis of reserve for contingencies and defaults, and changes in financial position for the years then ended.

The Bank states its income before providing a reserve for losses that may be sustained on loans, guarantees, and insurance. It retains accumulated net income after dividends as a reserve for such losses. Although the reserve increased in fiscal year 1980, the risk of incurring possible future losses increased to a larger extent. The increased risk is due primarily to loan purchases, outstanding purchase agreements, and principal and interest delinquencies. The adequacy of the reserve cannot be realistically assessed because of the uncertain nature of future foreign economic and political conditions. Any losses the Bank may incur on purchases of defaulted commercial loans covered by Bank guarantees or insurance and rescheduled under countrywide debt consolidations also are chargeable against the reserve. The reserve is subject to impairment because the Bank's current funding rates are higher than its lending rates. If this trend continues, the Bank could be in a loss position by fiscal year 1982. The reserve could be exhausted within 7 to 8 years. The differences between the Bank's borrowing and lending rates may be further aggravated as a result of an agreement between the Bank and the Private Export Funding Corporation (PEFCO) that they will share in providing export financing at fixed rates of interest quoted by the Bank to foreign borrowers. Under the agreement, the Bank has guaranteed to make up any difference between the borrowers' interest payments and PEFCO interest charges. The accompanying financial statements present fairly the financial position of the Bank.

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