Pakistan Business Day - Handelskammer Hamburg · Pakistan Business Day ... To support the economic reform program, Pakistan has negociated with IMF a ... agreement ongoing until 2024

Pakistan Business DayEconomic development, investment climate and security is sues

Marko Ringmann,Euler Hermes

Hamburg, 15.12.2016

Agenda

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Country focus: Pakistan

The German Export Credit Guarantee scheme

Export credits: Spot on Pakistan

Country focus: Pakistan

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Recent News Headlines

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Pakistan in the past: serious economic challenges

Until 2013, the country was confronted with numerous challenges:

• Structural problems mainly in the energy sector yielded low growth rates

• The tax base was low while the fiscal deficit was high

• Private investment was low

• Foreign reserves needed to be rebuilt

Pakistan implemented an ambitious reform program aimed at reversing the largefiscal deficits and fostering growth

To support the economic reform program, Pakistan has negociated with IMF a 3-year extended arrangement program of total $6.64bn (approved Sept. 4, 2013)

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2010 2011 2012 2013 2014 2015 2016* 2017**

Real GDP growth (%) 2.6 3.6 3.8 3.7 4.1 4.0 4.7 5.0

Budget balance (% of GDP) -6.0 -6.7 -8.6 -8.4 -4.9 -5.2 -4.4 -3.6

Government debt (% of GDP) 60.7 58.9 63.3 64.2 63.7 63.6 66.1 64.2

Current-account balance (% of GDP) -2.2 0.1 -2.1 -1.1 -1.3 -1.0 -0.9 -1.5

*estimate **forecastSource: IMF World Economic Outlook Database, Oktober 2016

Pakistan today: Glass half full?

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Brighter outlook for Pakistan today:

• Growth rates catching up again

• The fiscal deficit was reduced

• Gross government debt was stabilized

• Structural reforms, i.a. in the energy sector, have been implemented

Pakistan’s Fund-supported program has helped the co untry restore macroeconomic stability, reduce vulnerabilities, an d make progress in tackling key structural challenges (IMF, Sept. 2016 )

2010 2011 2012 2013 2014 2015 2016* 2017**

Real GDP growth (%) 2.6 3.6 3.8 3.7 4.1 4.0 4.7 5.0

Budget balance (% of GDP) -6.0 -6.7 -8.6 -8.4 -4.9 -5.2 -4.4 -3.6

Government debt (% of GDP) 60.7 58.9 63.3 64.2 63.7 63.6 66.1 64.2

Current-account balance (% of GDP) -2.3 0.1 -2.1 -1.1 -1.3 -1.0 -0.9 -1.5

Source: IMF World Economic Outlook Database, Oktober 2016 *estimate **forecast

German Export Credit Guaranteescheme

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Financial leeway• additional liquidity through easing of the

burden on the credit line• Collateral security through assignment,

forfaiting

Flexibility• the various types of cover can be combined as circumstances require

• sound advice

Competitive advantage• Financing options for the foreign buyer

as sales argument

Security• Protection against political and

commercial risks for the entire transaction from the beginning of the

manufacturing until the payment• political support in a loss event

Exporter‘s advantages

Advantages…of using Export Credit Guarantees

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Export Credit Insurance: Facts & figures

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New business (in € bn) Top countries 2015

Russia: Oil & Gas

USA: Shipping

Egypt: Energy

Turkey: Aircraft

Italy: Shipping

32.529.8 29.1

27.9

24.8 25.8

12.7

9.4

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5

10

15

20

25

30

35

2010 2011 2012 2013 2014 2015 20151st half

20161st half

Single transaction policies Wholeturnover policies

Total outstanding risk by top countries

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9.1

8.6

7.7

7.5

6.7

3.9

3.5

3.4

2.4

2.2

9.1

7.0

7.9

8.3

1.1

1.8

4.0

4.1

2.5

2.4

1. Turkey

2. United States

3. Bermuda

4. Russia

5. Egypt

6. United Kingdom

7. India

8. Switzerland

9. China

10. Saudi Arabia

2016 (1st half)

2015 (1st half)

in € bn*

The TOP 5 countries account for 43.8 % of the outst anding risk

* Rounding differences

Export credits: Spot on Pakistan

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Pakistan bilateral trade� Constant bilateral trade volume of yearly ≈ €0.85bn

� In 2015, German exports to Pakistan were worth > €1.0bn (back to level of 2006)

� Imports from Pakistan have grown continuously and recorded 2015 an all-time high

Main German exports Main Pakistan exports to Pakistan 2015: to Germany 2015:

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Bilateral trade (in € bn) 2012 2013 2014 2015

German exports to Pakistan 0.9 0.8 0.8 1.0

German imports from Pakistan 1.0 1.1 1.3 1.4

Leather

Other goods

Textiles

Apparel53.0%

28.1%

4.1%

14.8%

34,3%

17,7%

7,9%

6,6%

5,2%

28,3%

Machinery &equipment

Chemicals

Electrical Equipment

Pharmaceuticalproducts

IT equipment

Other goods

Spot on Pakistan

Cover policy

� Cover is available without restrictions for ST business and on a case-by-case basis for MLT transactions

� No additional securities or collaterals required

� Country category 7 (range 0-7)

� Further information on our website (www.agaportal.de)

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10

15

20

25

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20

40

60

80

100

120

140

160

180

200

2010 2011 2012 2013 2014 2015 2016(1st half)

in %in € mn

Medium/long-term

Short-term

Covered transactions as percentage of German exports to Pakistan

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Cover volume

� Cover volume volatile and dependent on large-scale projects

� ST transactions dominate the business

� Single transaction business often with short-term payment conditions

� First large MLT transaction in 1HY16 after 2008 (€49.9m)

Business characteristics

Claims & Recourse

� Relatively low level of claims

� Overall good payment experience

� Bilateral debt restructuring agreement ongoing until 2024

� Payments are made on time (last instalment received at the beginning of Dec. 2016)

Spot on Pakistan

Overview of covered transactions

Selected projects

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• Radio equipment incl. accessories and installation

2010/2011• Railway cranes• Communication equipment• Cotton cleaning machine

2012/2013

• Machinery for hydroelectric power plant• Acid treatment plant

2014

• Blown film extrusion line• Winding machines

2015

• Switchgears and transformersfor hydroelectric power plant

2016

www.agaportal.de

Marko RingmannDepartment Economic Research

Euler Hermes Aktiengesellschaft

Phone: +49 (0) 40 / 88 34 - 94 74

Mail: [email protected]

Further information is provided under:

Hotline: +49 (0) 40 / 88 34 - 90 00

[email protected]

Thank you for your attention!

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