Bank Gospodarstwa Krajowego has confirmed the largest letter of credit to date in the Government Programme Financial Support for Exports, worth nearly €19 million. Earlier it confirmed and provided financing for a letter of credit worth more than €7 million. The beneficiary of both was the Polish company Mine Master, which exports mining machinery to Egypt.

BGK has been implementing the Government Programme Financial Support for Exports since 2009, together with the Polish Export Credit Insurance Corporation (KUKE). It includes a number of financial instruments to develop the export of Polish goods and services, primarily to high-risk markets.

One such instrument is an export letter of credit. In early November, BGK confirmed a letter of credit worth €18.7 million to a Polish exporter, Mine Master from Lower Silesia. It is a manufacturer of machinery for underground mining and tunneling works. The letter of credit for Mine Master, with a 100 per cent guarantee from the Export Credit Insurance Corporation, was the largest ever confirmed by a Polish development bank in the Financial Support for Export Programme. At the same time, it was BGK's largest transaction at the bank's risk from Africa.

In Africa, larger transactions have so far been carried out by BGK only under a buyer credit structure, where the borrower was the importer's treasury directly (in Angola and Rwanda).

"As a Polish development bank, our task is to support Polish exporters, especially in high-risk markets. BGK offers a range of instruments that meet the expectations of exporters and help them internationalize their business. By confirming the letter of credit for Mine Master, as a bank we have taken on the risk of the importer's failure to pay the funds. This increases the exporter's security of receiving payment. BGK has many years of experience of cooperation with Egyptian banks, which allows us to finance transactions made by Polish companies together with them."

Karol Rozenberg, chief expert for relations in trade finance at Bank Gospodarstwa Krajowego

This is Mine Master's second export letter of credit confirmed in the Egyptian market last year. The first, in the amount of EUR 7.3 million, includes a deferred payment discount in addition to the confirmation of the letter of credit. Mine Master is improving its liquidity with this solution. Further letters of credit are also planned.

"Using the solutions offered by the Export Credit Insurance Corporation not only increases the security of transactions, but also improves liquidity and enables higher profitability from operations. Together with BGK, we are keen to support Polish exporters in high-risk markets. Egypt is currently conducting a number of infrastructure projects in which Polish suppliers of various types of internationally renowned and competitively priced capital goods can participate."

Sylwia Morawska, guarantees expert at the Export Credit Insurance Corporation