The negative implications of a high indebtedness for the creditworthiness of a country are well known from a the sovereign debt literature. Often creditor’s main concern is not so much that a debtor may become insolvent but rather that he may be unwilling to repay. The problem is that foreign debt cannot be collateralized in the same way as domestic debt. Creditors who finance exports to foreign firms or trade organizations need the assistance of local governments to enforce repayment.
The cons of counter-trade are:
1. Each trade is organized on an ad-hoc basis with no central registry of organizations and countries wishing to engage in counter-trade.
2. Very little specific counter-trade expertise is available in third-party organizations (intermediaries) as most counter-trade is done directly between countries and large corporations.
3. There may be problems warehousing and tracking assets.
4. Difficulties in valuing, marketing and reselling traded assets.
5. Recruitment and training costs of counter-trade staff may be high.
Therefore we see the requirements for counter-trade organizations as follows:
Detailed inventory warehousing, tracking and pricing management
Centralized document and contract management
Centralized registry of wants/needs along with electronic matching services between participants
Centralized accounting for transactions where large numbers of participants exist and/or multilateral trade, or credit swaps, may take place
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About Ormita
The Ormita Commerce Network spans 5 continents, with direct representation in more than 17 countries plus additional partnerships in a further 59 countries. The business allows companies to exchange goods and services on a reciprocal trade arrangement.
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Ormita Commerce Network Australia – www.ormita.com.au
Ormita Commerce Network Canada – www.ormita.ca
Ormita Commerce Network India – www.ormita.co.in
Ormita Commerce Network Mexico – www.ormita.com.mx
Ormita Commerce Network New Zealand – www.ormita.co.nz
Ormita Commerce Network United Kingdom – www.ormita.co.uk
Ormita Commerce Network United States of America (USA) – www.ormita.com
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