With each passing day we get closer and closer to the Export-Import Bank reaching its lending cap and not being able to guarantee loans. This puts in jeopardy many projects that manufacturers have planned for later this year which will impact jobs at companies of all sizes.
Yesterday Devashree Saha, senior policy analyst for Brooking Metropolitan Policy Program, blogged about the importance of the Ex-Im Bank at The New Republic, specifically singling out what it means to small and medium-sized companies.
Most important though, the Ex-Im Bank addresses a critical market failure. The bank operates as a “lender of last resort” responding to risks shunned by private sector finance. To that end, the bank focuses on exports by small- and medium-sized companies that otherwise would find it difficult to access private sector funding, including those with riskier but innovative technologies.
Saha also discusses how we are being out paced by our global competition when it comes to export financing, a fact that threatens our nation’s competitiveness.
The United States faces a tough global market for exports. ECAs of other countries–especially ECAs in emerging economies that offer aggressive below-market loans to gain an edge in the global marketplace skirting Organization for Economic Cooperation and Development (OECD) rules–provide several times more export assistance as a share of GDP than the United States does.
Given these realities, reauthorizing and reforming the Ex-Im Bank’s financing operations for exports is a priority. Without it, meeting President Obama’s National Export Initiative goal to double exports by 2015 will be difficult.
The facts are clear that the Ex-Im Bank needs to be reauthorized and the lending limit increased to continue growing exports and ensure our nation’s competitiveness.