OECD country risk classification methodology

The oecd country risk classification methodology is the Arrangement process that places countries into Country Risk Categories 0 to 7 according to the likelihood that they will service their external debts. Article 22 of the January 2026 Arrangement text (TAD/PG(2026)1) states that, with the exception of High Income OECD countries and High Income Euro Area countries, countries shall be classified according to country credit risk. Classifications produced under that methodology feed Minimum Premium Rates for officially supported export credits and are published by the OECD Secretariat.

The methodology is distinct from buyer risk classification. Country risk addresses transfer, convertibility, political and force majeure elements defined in Article 22 a). Buyer risk addresses the senior unsecured standing of the obligor or guarantor under Article 24. Both layers appear in Article 21 as inputs to the applicable ECA premium floor under the OECD Arrangement.

Scope of the OECD country risk classification methodology

Article 22 a) defines five elements of country credit risk: a general moratorium on repayments decreed by the obligor's or guarantor's government or by the agency through which repayment is effected; political events and/or economic difficulties, or legislative or administrative measures, outside the notifying Participant's country that prevent or delay transfer of funds paid in respect of the credit; legal provisions in the obligor's or guarantor's country declaring local currency repayments a valid discharge of the debt even where, after exchange rate fluctuations, conversion no longer covers the credit amount at transfer; any other foreign government measure or decision that prevents repayment under a credit; and force majeure outside the notifying Participant's country, including war (including civil war), expropriation, revolution, riot, civil disturbances, cyclones, floods, earthquakes, eruptions, tidal waves and nuclear accidents.

Article 22 b) classifies countries into eight Country Risk Categories (0 to 7). MPRs have been established for Categories 1 through 7, but not for Category 0, where the level of country risk is considered negligible and credit risk is predominantly related to the risk of the obligor or guarantor. High Income OECD countries and High Income Euro Area countries are outside the ordinary country classification track for these purposes and are treated through Market Benchmark Transaction pricing under Article 21 c).

US EXIM exposure fee guidance records that Category 0 countries are High Income OECD and Euro Area markets and that OECD premium rules established minimum fees for sovereign and non-sovereign risk together with market-based pricing for Category 0 transactions.

Quantitative model and qualitative adjustment

Article 22 c) states that classification of countries is achieved through the Country Risk Classification Methodology, which comprises two components. The Country Risk Assessment Model produces a quantitative assessment of country credit risk based, for each country, on three groups of risk indicators: the payment experience of the Participants, the financial situation and the economic situation. The methodology of the Model consists of different steps including assessment of the three groups of risk indicators and the combination and flexible weighting of those risk indicator groups.

The second component is qualitative assessment of the Model results, considered country by country, to integrate political risk and/or other risk factors not taken into account in full or in part by the Model. If appropriate, that qualitative step may lead to an adjustment to the quantitative Model assessment to reflect the final assessment of country credit risk.

The Arrangement text therefore describes a two-stage process rather than a single mechanical score. The Model supplies a quantitative base from payment experience, financial and economic indicators. Qualitative review may adjust that base for political and other residual risk factors before the country is placed in a Category from 0 to 7.

Monitoring, publication and premium effect

Article 22 d) requires Country Risk Classifications to be monitored on an ongoing basis and reviewed at least annually. Changes resulting from the Country Risk Classification Methodology shall be immediately communicated by the Secretariat. When a country is reclassified in a lower or higher Country Risk Category, Participants shall, no later than five working days after the reclassification has been communicated by the Secretariat, charge premium rates at or above the MPRs associated with the new Country Risk Category. Article 22 e) requires the country risk classifications to be made public by the Secretariat.

For administrative purposes, footnote material to Article 22 states that some countries eligible to be classified into one of the eight Country Risk Categories may not be classified if they do not generally receive officially supported export credits. For such non-classified countries, Participants are free to apply the country risk classification which they deem appropriate.

Article 21 d) states that the highest risk countries in Category 7 shall, in principle, be subject to premium rates in excess of the MPRs established for that Category, determined by the Participant providing official support. Reclassification therefore changes both the published OECD country risk classification and the MPR schedule that Participants must respect within five working days of Secretariat communication.

Sovereign risk assessment alongside country classification

Article 23 requires, for countries classified through the Country Risk Classification Methodology, assessment of sovereign risk to identify, on an exceptional basis, sovereigns that are not the lowest-risk obligor in the country and whose credit risk is significantly higher than country risk. Identification follows the Sovereign Risk Assessment Methodology. The list is monitored ongoing, reviewed at least annually, communicated immediately when changed, and made public.

That sovereign list interacts with buyer risk rules. Article 24 d) allows non-sovereign classification in SOV+ where the obligor or guarantor is located in a country in which sovereign risk has been identified as significantly higher than country risk. Country classification therefore remains the primary country credit risk label, while sovereign assessment can identify exceptional sovereigns that are weaker than the country category would otherwise imply.

Use by export credit agencies

An export credit agency of a Participant uses the published country classification when calculating Arrangement MPRs for in-scope official support. The classification is a shared Participants' product under a Gentlemen's Agreement administered with OECD Secretariat support. It is not a private rating agency product and is not itself a buyer credit rating.

In MPR calculation under Article 21 e), the applicable country risk classification is that of the obligor's country unless a qualifying third-party guarantee allows use of the guarantor's country. Country category therefore travels with the credit risk entity selected for premium purposes. Product quality, cover percentage, Horizon of Risk, buyer risk category and any notified mitigation or enhancement then complete the premium determination.

The OECD country risk classification methodology is the institutional path from defined country credit risk elements through a quantitative Model and qualitative adjustment to a public Category 0 to 7 label. That label anchors Arrangement premium floors for Categories 1 to 7 and is kept current through at least annual review and immediate Secretariat communication of changes.