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Purpose of Export credit guarantees is to support exporters by covering the risks as well as serving as additional security for the export transaction financing.
Issuance of Export credit guarantees are regulated by Regulation issued by Cabinet of Ministers  Short-term export credit guarantees regulation
Export credit guarantee is a commitment of Latvian Guarantee agency to pay the exporter (or bank/factoring company witch financer transaction of the exporter) for losses incurred by one of commercial or political risks (see below) where as a result foreign debtor fails to pay for delivered goods/services on conditions of deferred payment. Export credit guarantee covers up to 90% of the deferred payment, but not more than 1 million EUR or the equivalent in another currency. The deferred payment period may not exceed 2 years.
Export credit guarantee can’t be provided, if the buyer is a Member of the European Union, Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland or the United States of America.
Export credit guarantee cover for commercial risks:
• Buyer’s insolvency or the buyer's lack of assets or other circumstances which, in accordance with the buyer's state laws are the same or a similar legal effect as an insolvency (actual insolvency);
• Purchaser's refusal to make deferred payments.
Export credit guarantee cover for political risks:
The risk of loss when investing in a given country caused by changes in a country's political structure or policies, such as tax laws, tariffs, expropriation of assets, or restriction in repatriation of profits. For example, a company may suffer from such loss in the case of expropriation or tightened foreign exchange repatriation rules, or from increased credit risk if the government changes policies to make it difficult for the company to pay creditors.
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