Annex A
EXTERNAL REPORTS
KPMG AND NERA
Two key external reports were published alongside
the Mission and Status Review: KPMG's review of ECGD's risk management,
and National Economic Research Associates' (NERA) study of the
economic rationale for the public provision of export credit insurance.
KPMG gave ECGD's current systems a clean bill of health, but recommended
a further strengthening through a system of active portfolio management
(APM), essentially transferring parts of its risk to third parties
in order to make better use of available capital. The TISC had
sight of a draft of this NERA report and commented on its findings
in 2000.
NERA II
In the March 2003, NERA published a second study
(NERA II) into ECGD (jointly commissioned with the Treasury),
developing their earlier study by attempting to quantify the costs
and benefits of the public provision of export credits by ECGD.
NERA II's findings suggested a range of possible costs and benefits
from ECGD's business over the last ten years of between £2
million and—£47 million. NERA also noted that it is
not possible to judge whether ECGD is the most efficient provider
of export credit insurance and guarantees until ECGD competes
on equal terms with the private sector. It recommended that the
subsidy be removed by increasing prices to reflect the full costs
and benefits of the business supported. However, to avoid placing
UK companies at a competitive disadvantage the Government has
instead committed itself to removing subsidy only a multilateral
basis through international negotiations (see paragraph 60 above).
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