Export insurance against failed markets has not found a lot of takers, Eksportkredits' president, Dainis Dille said. When markets were rosy, there was no interest on the part of exporters. Now that exporters need backup, Eksportkredits will not insure exporters against a known liability in Russia.
Latvian Eksportkredits is a state stock company that acts as a state agent and provides state export support policy. The agency insures against the failure of buyers to pay for goods and broken contracts.
Demand for export insurance is growing, but often the companies seek insurance after the loss has occurred, Dille said.
"Demand for insurance increases for deals with Russia and other former Soviet countries. Taking into account the political risk rating, Russia is in group D-high risk," Dille said. "It means that insurance of export payments from Russia, knowing its situation is practically impossible."
Food export marketer Ainars Lodzins agreed.
"What could the price of that insurance possibly be? How could you define when it is in force and available? What is going to happen in Russia in three months, in six months, is not very clear. Now Ukraine is following Russia. They are both going to hell," he said.
Most Baltic exporters have dropped shipments to Russia, and Lodzins said he believes that Ukraine and destinations in Central Asia, like Kazakhstan could be next.
The Latvia's Ministry of Economics has established a commission for domestic and foreign policy to find out which business sectors have taken substantial loss from the Russian financial situation and consider short-term financial support to be administered by the state and municipal organizations. The commission will increase capital to Eksportkredits, and has charge of extending tax payment schedules for enterprises with heavy export losses.
To increase opportunity for damaged businesses to repair themselves with sales in new foreign markets, the ministry will take certain measures, Agris Skuja, director of the ministry's industry policy department, said. Amendments to legislative provisions would simplify processing visas to ease business travel, and increase economic information in Latvia's embassies, with increased membership in international organizations to push Latvia's products and to attract investment. The state will continue to budget for Latvians to participate in international business and trade fairs.
Finally, the ministry desires to define main foreign policy for relations with Russia based on the current situation.