Down payment export credit rules explained

Down payment export credit rules in the OECD Arrangement require buyers to pay at least 15% of the export contract value in cash at or before the starting point of credit. Article 11 a) of the January 2026 Arrangement (TAD/PG(2026)1) states that Participants shall require purchasers of goods and services which are the subject of official support to make down payments of a minimum of 15% of the export contract value at or before the starting point of credit as defined in Annex XIII. Except as provided in Article 11 b) and d), official support may not exceed 85% of the export contract value, including third country supply but excluding local costs.

Down payment export credit timing and composition

The 15% test is measured against export contract value. Annex XIII defines export contract value as the total amount to be paid by or on behalf of the purchaser for goods and/or services exported, excluding local costs. For the assessment of down payments, the export contract value may be reduced proportionally if the transaction includes goods and services from a third country which are not officially supported. Financing or insurance of 100% of the premium is permissible. Premium may or may not be included in the export contract value. Retention payments made after the starting point of credit are not regarded as down payment in this context.

Article 11 b) limits official support for such down payments to insurance or guarantee against the usual pre-credit risks. Participants may not provide official financing support that funds the buyer's minimum cash down payment as if it were part of the export credit principal. Pre-credit risk cover for the exporter's manufacturing or similar exposure is the permitted form of official support around the down payment, not substitution of the cash requirement.

Maximum official support and local costs

Article 11 c) caps official support at 85% of export contract value, including third country supply but excluding local costs, except where paragraphs b) and d) apply. The arithmetic complement of the 15% down payment is therefore the maximum Arrangement support for the export contract itself. Local costs may receive additional official support under Article 11 d) up to 40% of export contract value for Category I countries and 50% for Category II countries, on terms no more favourable or less restrictive than those for the related exports, with prior notification when local-cost support exceeds 15% of export contract value.

National export credit agency practice aligns documentation to that split. UKEF's foreign content examples calculate support by reference to 85% of a content-derived base, noting alignment to international obligations requiring a 15% down payment. US EXIM's medium- and long-term content fact sheet states that the OECD Arrangement occasionally allows deviations from the standard requirement of 15% cash payment; in such cases EXIM may support more than 85% of the net contract price where the transaction is at least 85% US content. Those national statements confirm the Arrangement 15%/85% baseline and the exceptional deviation path where Participants so agree under Arrangement procedures.

Premium, notifications and starting point

ECA premium may be financed or insured at 100% under Article 11 a). Whether premium is inside or outside export contract value affects the cash base for the 15% calculation and must be stated consistently in the application, the export credit guarantee or insurance documentation, and any buyer credit facility agreement.

Annex V notification fields include down payment as a percentage of export contract value, local costs as a percentage of export contract value, and starting point of credit determined according to Annex XIII. Starting point of credit is category-specific under Annex XIII, generally keyed to the buyer taking physical possession of capital goods or, where the supplier holds commissioning responsibility, to completion of commissioning as the latest permissible starting point. Cash paid after that date as retention does not cure a short down payment.

What does not count as down payment

Retention held back against performance, commissioning or warranty milestones after the starting point of credit is excluded from the down payment definition in Article 11 a). Progress payments that are in substance financed by the officially supported credit are not buyer cash down payment. Third-country supply that is not officially supported may reduce the export contract value base for assessing the 15%, but only proportionally as the Article allows; it does not create a free-standing exemption from the cash requirement on the supported portion.

Tied-aid and Sector Understanding texts may contain specialised cash payment articles for their scopes. Aircraft Sector Understanding provisions include a dedicated down payment and maximum official support article. Desks applying a Sector Understanding should read that annex's cash payment rule alongside, or instead of, Article 11 where the Sector Understanding so provides under Article 7.

National content overlay

National content rules can reduce support below the Arrangement 85% ceiling without changing the 15% cash floor. UKEF examples size support using 85% of a UK-content-derived base while citing the international 15% down payment obligation. EXIM support is generally the lesser of 85% of eligible export contract value or 100% of US content, still alongside the Arrangement cash payment baseline except where Arrangement deviations apply. Content eligibility and down payment compliance are therefore sequential checks: cash at or before starting point of credit, then national willingness to cover foreign content inside the remaining official support envelope. Sector Understanding cash payment articles, where applicable under Article 7, must be read for aircraft and other annex-covered exports before assuming Article 11 applies unchanged.

Desk checklist

A compliant OECD Arrangement down payment analysis states: export contract value; whether premium is included; any proportional reduction for unsupported third-country supply; cash amounts paid at or before starting point of credit; confirmation that post-starting-point retentions are excluded; the resulting percentage; the 85% maximum official support on the export contract; and any separate local-cost support under Article 11 d). National content limits may further constrain how much of the 85% an ECA will actually cover, without changing the Arrangement cash floor.