Brussels, 17/04/2008 (Agence Europe) - Following an in-depth investigation, opened in July 2007, the European Commission has decided that a planned scheme for providing short-term export credit guarantees to Hungarian exporting SMEs and their foreign clients is incompatible with EC Treaty state aid rules. Competition Commissioner Neelie Kroes commented: "The proposed Hungarian export guarantees would distort cross-border competition within the EU. This would be unacceptable within the EU's Single Market." The scheme would be operated by Magyar Export-Import Bank Zrt. (Eximbank), a Hungarian public export-credit agency. Under the scheme, Eximbank would provide short-term export-credit guarantees against the non-repayment of loans to finance exports by Hungarian SMEs with a total annual export turnover not exceeding €2 million. Eximbank also planned to give credit guarantees to exporting SMEs and foreign clients. Hungary c notified the measure to the Commission under the Communication on short-term export-credit insurance (published on p.22 of the Official Journal of 22/12/05). The Commission, however, refused approval because the measures would have been available to foreign buyers and because they would cover also domestic risks of the exporting SMEs. Both elements were not included in the Commission's communication. The proposed premium rates were too low to correspond to the risks of non-payment in a normal insurance market. In January 2007, the Commission already approved a Hungarian short-term export-credit insurance aid scheme run by Magyar Exporthitel Biztosító Zrt. which should be appropriate to tackle the alleged market failure. (C.D.)