Focus Relief Package

The Federal Government has also decided on relief measures in favour of German companies in the area of foreign trade promotion. The investment guarantees of the Federal Republic of Germany will continue to make it easier for companies to use this instrument and invest abroad with coverage. This enables German companies to secure and expand their market position in a global competitive environment.

The following relief measures have been decided and will be successively implemented over the course of this year:

Introduction of a simplified review procedure for small-volume applications

When a company applies for a guarantee, the federal government assesses the eligibility of the investment project for promotion and the justifiability of the guarantee in terms of risk. To date, the scope of the review process has not been directly related to the amount of the investment made. To relieve the burden on small and medium-sized enterprises in particular, the federal government has introduced a simplified application procedure for small-volume investments of up to EUR 5 million in non-critical investment countries*. In principle, all the information required for the application is contained in the application form. Additional documents and project information will only be required in a few exceptional cases.

*The simplified review procedure does not apply, for example, to countries that are subject to the de-risking measures of the Federal Government for investment guarantees.

Extension of the guarantee period by 10 years

An investment guarantee for an open-ended participation in a project company is usually issued with an initial term of 15 years. Up to now after the expiration of these 15 years, the guarantee term could be extended by 5 years every 5 years at the request of the guarantee holder if the eligibility for funding was (still) assessed favourably and the risk was (still) justifiable.

In practice, many guarantee holders use the investment guarantees as a permanent risk management instrument for foreign investments and therefore regularly apply for an extension of the guarantee period. Many investment guarantees have been in place for several decades. The German government has now decided to generally grant term extensions in non-critical investment countries* not just for 5 years, but for 10 years. This effectively halves the effort associated with extension applications for long-term users of the promotion instrument.

Introduction of Decisions in Principle in the Interministerial Committee

When companies build up their investment projects in several capital steps (e.g., by granting multiple shareholder loans based on the financial needs of the project company) and apply for an investment guarantee for each capital step, the Interministerial Committee (IMC), which decides on the issuance of guarantees, typically reviews each individual capital step. In the future, the IMC will have the ability to make not only decisions on individual capital steps but also decisions in principle regarding the overall investment project. Following such a decision in principle, applications for individual investment steps can then be processed more quickly and with less bureaucracy.

Elimination of partial liability amendments

When the federal government assumes an investment guarantee, the amount of the secured capital investment and the resulting maximum liability of the federal government are recorded in a guarantee document. In many cases, the amount of the secured capital investment decreases over the following years, particularly as secured loans are repaid over time. Previously, amendments to the guarantee document were regularly issued in these cases, showing the correspondingly reduced guarantee amount. These amendments had to be individually coordinated with the guarantee holders and physically retained by them.

For the traditional repayment of loans, these so-called partial liability amendments will be eliminated in the future. Instead, guarantee holders will have the option to access the current status of their secured investments through the DIA portal.

Setting a contribution period of generally two years

When a company receives an investment guarantee and has not yet made all payments on the guaranteed capital investment, a contribution period is set in the guarantee document based on the basis of the guarantee holder's project-specific plans. In the past, this contribution period was usually one year, during which the guarantee holder could report their contributions without further formal requirements.

If it becomes apparent after the guarantee is issued that this contribution period is insufficient due to project delays, the company must apply for an extension of the contribution period. In practice, it has been shown that, especially in recent years, external circumstances (e.g., the COVID-19 pandemic or the Russian invasion of Ukraine) have regularly caused project delays, leading companies to frequently submit extension applications. In light of this, the federal government has decided to grant contribution periods of generally two years in the future. This means that a large proportion of guarantee holders will no longer need to submit applications for extensions relating to the contribution period.

Reduction of regular reporting obligations

Once a guarantee has been issued, many guarantee recipients must also report annually on the environmental, social and human rights-related aspects of the project. In the future, these reporting obligations will focus on the early phase of projects, the implementation of action plans and requirements, projects with potentially increased risks in these areas (environmental category A), and special incidents. For comparatively non-critical projects (environmental category B, which includes about half of all existing investment guarantees), the regular reporting obligation will generally be eliminated. This also applies to all existing guarantees. The review of environmental, social, and human rights-related aspects of the project prior the decision to issue a guarantee remains unchanged. Small and medium-sized enterprises and first-time applicants will receive close support and assistance during this process.