Definition: Premium

Category: External debt - IMF

In the context of export credits, the amount paid, usually in advance, by the party to an export agency for its facilities. Cover will often not be fully effective until the premium has been paid. Premiums are normally calculated on the basis of the exposure, length of credit, and the riskiness of transacting with the importing country. Premium income, an important source of revenue for export credit agencies, is intended to cover the risk of nonpayment of the credit. http://ec.europa.eu/eurostat/ramon/statmanuals/files/external_debt_guide_2003_EN.pdf#page=255