Local Cost

When EXIM Bank provides medium- or long-term guarantee, loan, or insurance support for U.S. exports for foreign projects, it may also provide local cost support. Local costs are those project-related costs for goods and services incurred in the buyer's country.

EXIM Bank can support up to 40% or 50% of the value of the US exports (i.e., US and eligible foreign content) for locally originated and/or manufactured goods and services. EXIM support is limited to 40% for OECD Category I countries; all other countries may receive support up to 50%¹.

Availability

Long-Term Transactions: EXIM Bank may provide local cost support for all long-term transactions.

Medium-Term Transactions: EXIM Bank may provide local cost support if the U.S. exporter can prove either: (i) the availability of official export credit support for the local cost; or (ii) private market financing of local costs is difficult to obtain for the transaction.

EXIM Bank offers "automatic" local cost support for all environmental exports, medical exports, transportation security exports program (TSEP) and project finance transactions (including medium-term transactions).

All transactions that receive local cost support must meet the eligibility criteria defined below.

Eligibility

If EXIM Bank provides local cost support for a long-term transaction or a medium-term limited recourse project finance transaction, then the local costs must be:

• Beneficial to the project;
• Certified by the Borrower;
• Detailed in the Acquisition List; and
• Originated/manufactured in the host country. Services must be provided by a locally registered business entity.

Note: EXIM Bank will require the Borrower to certify that the local cost support was not used to cover products that could reasonably be purchased in the U.S.

If EXIM Bank provides local cost support for medium-term (non-limited recourse project finance) transactions, then the local costs must be:

• Related to the U.S. exporter's scope of work;
• Certified by the U.S. exporter in the Exporter's Certificate; and
• Originated/manufactured in the host country. Services must be provided by a locally registered business entity.

Note: The decision to extend local cost support is subject to budgetary and other discretionary considerations as determined by EXIM Bank's management.

Example Of EXIM Bank Local Cost Support

A U.S. exporter has been awarded a $150 million contract to build a factory in Brazil. The U.S. exporter is responsible for providing the solar modules from the U.S. while its subsidiary in Brazil is responsible for managing the site work (local landscaping services and local labor).

The following example illustrates how EXIM Bank structures local cost financial support in conjunction with support for U.S. exports. Assumptions:

1. The U.S. exporter's total contract is $150 million.
2. The U.S. export value is $100 million.
3. The eligible foreign content included in the U.S. supply contract is $20 million.
4. The local costs related to the project are $50 million.

This long-term transaction is structured as follows:

page last updated 2023-Jan-20

¹Country categorizations are found at the OECD under “Maximum Repayment Terms.” Questions on country categorization should be directed to the International Relations Division of OPAIR. 
^**EXIM Bank may support up to 50% of the U.S. export value for locally originated and/or manufactured goods and services as the transaction is in an OECD Category II country. If the transaction were in a high-income OECD Country, like Germany, EXIM local cost support would be limited to 40%.