Interest make up
Interest make up (also called interest equalisation or interest-rate support) is an official arrangement between a government or its agent and banks that allows fixed-rate export finance to be provided at or above the relevant CIRR. The OECD Arrangement treats Interest Rate Support as an arrangement between a government and banks or other financial institutions which allows the provision of fixed rate export finance at or above the CIRR. It is a form of official financing support, alongside direct credit/financing and refinancing.
Interest make up use on bank export finance desks
On EF desks, interest make up is the mechanism that lets a commercial bank fund a buyer credit on floating money-market terms while the overseas buyer receives a fixed CIRR-linked coupon. The export credit agency or a dedicated state financing arm enters a case-specific equalisation agreement with the bank. The bank remains responsible for documentation, administration and securities for the life of the credit; the official counterparty absorbs or hedges the interest-rate differential.
Finnvera's Finnish Export Credit Ltd (FEC) administers Finland's interest equalisation system on that model. Under the equalisation agreement the bank pays a fixed CIRR rate plus an optional margin to FEC and receives a floating rate (normally Euribor or SOFR) plus a defined margin. US Government Accountability Office material describes peer ECA interest make-up programmes in the same way: the official body pays the lender the difference between the OECD minimum fixed rate and commercial interest rates so the lender can offer fixed-rate financing without itself holding the fixed-rate mismatch.
Mechanics under the Arrangement and national schemes
Participants providing official financing support for fixed-rate loans must apply the relevant CIRRs as minimum interest rates. Official financing support must not offset or compensate for the credit-risk premium required under the Arrangement; ECA premium remains a separate charge. CIRRs are published monthly and, in Participant practice described by Finnvera, apply from the 15th of each month to the 14th of the following month.
National terms set currencies, application timing and fees. FEC states that OECD-term export credits under equalisation are arranged and funded by the financial institution, may be denominated in euro, US dollar or the buyer's currency, and that applications for financing and interest equalisation must be filed before the fixed CIRR is locked. FEC charges a case-specific margin above the base rate, a commitment fee and a handling fee for offer renewals. Credit risk may be covered by an export credit guarantee, retained by the bank, or arranged otherwise.
Boundaries versus direct lending and pure cover
Interest make up is not the same as ECA direct lending, where the government or its agent advances principal. It is also not pure cover: a guarantee or insurance alone, without interest-rate support, leaves coupon setting to the commercial lenders. Floating-rate officially supported loans sit under separate Arrangement floating-rate floors and are outside the classic make-up swap between fixed CIRR and floating bank funding.