Aussie underwrites cotton

Aussie underwrites cotton

CANBERRA (Reuters): Australia plans to extend about A$250
million in export guarantee assistance for cotton exporters to
Indonesia, Industry Minister John Moore said yesterday.

The assistance, to be arranged through the Export Finance and
Insurance Corporation, follows insurance cover for wheat sales to
Indonesia, announced last month and since increased to around
A$500 million.

"Some 500,000 (cotton) bales go to Indonesia, it's our major
export area, and we will be extending government insurance that
makes sure that market is maintained," Moore said in a television
interview on the Nine Network.

Without the facility, international competitors could
undermine local producers by offering more attractive credit
terms, he said.

"It'll cost something of the order of A$250 million, but it's
government-guaranteed by the Indonesian government, so the
sovereign guarantee there should protect the Australian
taxpayer," he added.

Australia's total cotton exports are forecast at about A$1.2
billion in 1997/98.

The government first announced plans in February to support
exports to financially troubled Indonesia, and has not put a cap
on the plan, saying aid would be supplied on a case-by-case
basis.