In 1997, the Participants established a methodology for assessing country credit risk and classifying countries in connection with their agreement on minimum premium fees for official export credits.
The Participants’ country risk classifications are one of the most fundamental building blocks of the Arrangement rules on minimum premium rates for credit risk. They are produced solely for the purpose of setting minimum premium rates for transactions supported according to the Arrangement, and are made public so that any country that is not an OECD Member or a Participant to the Arrangement may observe the rules of the Arrangement. Neither the Participants to the Arrangement, nor the OECD Secretariat, endorse nor encourage their use for any other purpose.
The country risk classifications are meant to reflect country risk. Under the Participants’ system, country risk encompasses transfer and convertibility risk (i.e. the risk a government imposes capital or exchange controls that prevent an entity from converting local currency into foreign currency and/or transferring funds to creditors located outside the country) and cases of force majeure (e.g. war, expropriation, revolution, civil disturbance, floods, earthquakes).
The country risk classifications are not sovereign risk classifications and therefore should not be compared with the sovereign risk classifications of private credit rating agencies (CRAs). Conceptually, they are more similar to the "country ceilings" that are produced by some of the major CRAs. Please note that no historical risk classifications exist prior to the establishment of the rules in 1997.
There are two groups of countries that are not classified:
A group of country risk experts from Export Credit Agencies meets several times a year to update the list of country risk classifications. These meetings are organised so as to guarantee that every country is reviewed whenever a fundamental change is observed and at least once a year. The list of country risk classifications is publically available and published on the OECD website after each meeting; however the meetings themselves and the exchanges and deliberations that take place are strictly confidential.
The Country Risk Classification takes place through the application of a two-step methodology:
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