International Credit

The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

International Credit


one of the forms of the movement of monetary and material means in international economic relations. It is based on the temporary provision of financial and commodity resources by a creditor to a borrower on condition of repayment at a set time and with interest. International credit is closely linked to the formation and development of the world capitalist and world socialist economic systems. The essence, forms, and functions of international credit are determined by the socioeconomic conditions under which it is applied.

Capitalist countries. Capitalist international credit is a form for the movement of loan capital between countries with the aim of obtaining the highest possible rate of profit and gaining political advantages. This form of credit was one of the levers for the initial accumulation of capital. During the period of industrial capitalism, it helped to industrialize production and exchange and to form the world market. In the era of imperialism, international credit has been turned into one of the main forms of exporting capital and into an implement for the struggle of the imperialist states for markets and for the most profitable spheres of capital investment. With the development of state-monopoly capitalism, international credit in the hands of the imperialist states became a means of political and economic expansion. The imperialist states use international credit, a form of financing international trade, to preserve an export structure advantageous to themselves in the developing countries. Since World War II, international credit has been widely used to mitigate the chronic instability of the capitalist monetary system and to support the leading capitalist currencies, above all the US dollar.

Several basic types of international credits are used, including corporate, bank, and intergovernmental credits and credits of international monetary and financial organizations. Credits may take a commodity or a monetary form. International credits can be short-term (up to one year), medium-term (from one to 5-7 years), and long-term (more than 5-7 years).

Corporate credits are usually extended in a commodity form by capitalist companies, with deliveries of strictly determined types of goods by the exporter firms; the credits are most often granted within the limits of the value of the firm’s commodity exports. The credits are basically short-term and medium-term.

Bank credits take such monetary forms as discounts of bills of exchange, commodity and other loans, contra account credits, and bank acceptances. In the 1960’s, medium-term bank credits for specific purposes became common; these were granted by the major commercial banks or consortiums of banks for financing specific projects and for purchasing large batches of equipment in the creditor states. In particular, the exports of machinery and equipment from the United States to Japan in the 1960’s were financed to a significant degree through credits and loans of private commercial banks. Bank crediting has also been widely used in financing US exports to such Western European coun-tries as Norway, Denmark, Sweden, Greece, and Spain.

With the strengthening of the state-monopoly trends in the sphere of international credit, intergovernmental credits have been widely developed. From 1948 to 1951, through a system of governmental subsidies and loans under the Marshall Plan, the United States gave $12.3 billion of “assistance” to the states of Western Europe, a program that served as a basis for a full-scale offensive by American monopolies in Western European markets. Intergovernmental credits have been widely used by the imperialist states as an implement of neocolonial policy vis-á-vis the developing countries. The credits are earmarked for strictly defined sectors of production whose development does not encroach on the interests of the monopolies in the creditor coun-tries. They are also designated for development of the infrastructure (education, communications and transport, and the other underlying economic sectors of society); the development of this sector is a necessary condition for the influx of private investments from the developed capitalist countries. The granting of credits is frequently linked with demands for commercial and monetary advantages to the foreign companies and for the participation of the developing countries in economic groupings and military-political alliances. Much of this credit is “blocked”; that is, it is granted for acquiring necessary commodities only from the creditor states. Thus, in 1967, 93.7 per-cent of the state credit going to the developing countries was blocked: 96.5 percent of the total volume of US state credits was blocked, 86.6 percent of Japan’s, 72.6 percent of Italy’s, 61.8 percent of France’s, and 57.1 percent of Great Britain’s. The monopolies of the imperialist states substantially inflated the prices for the goods to be sold on credit, which led to the worsening of the monetary position of the developing countries; at the end of the 1960’s they were losing more than $1 billion annually as a result of this price inflation.

Short-term credits of the “swap” type (the exchange of currencies between countries) are a variety of intergovernmental credits of the capitalist states and are a means of evading the chronic deficits of the balance of payments and the instability of the currencies of the leading capitalist states. Swap credits have been provided since 1962 by the central banks of the countries on the basis of bilateral international agreements. They have been widely used by the United States since 1962, by Great Britain since 1966, and by France since 1968. A specific form of inter-governmental credit is the credit granted by the capitalist coun-tries to one another within the system of “special drawing rights,” introduced on Jan. 1, 1970.

The postwar years have seen a sharp increase in the role of the credits of monetary and financial organizations, including the International Monetary Fund and the International Bank for Reconstruction and Development, with its affiliates the Inter-American Development Bank and the Asian Development Bank. These credits are used by the imperialist states as one of the means of an expansionist foreign policy.

With the constant exacerbations of the crisis in the 1960’s of the capitalist monetary system, the International Monetary Fund began to provide the central banks of the capitalist coun-tries with currency credits on the basis of bilateral agreements of “support” (reserve credits).

Socialist countries. The international credit of the socialist countries is a form of the planned mobilization and investment of the financial and commodity resources of the socialist states in the process of implementing their intergovernmental economic relations. It acts as a means for assimilating achievements of scientific and technical progress and on this basis raising the effectiveness of the international socialist division of labor.

The international credit of the socialist countries is carried out in two basic forms: intergovernmental credits on a bilateral basis and multilateral credits of the intergovernmental monetary and financial organizations of the socialist nations, the International Bank for Economic Cooperation (IBEC) and the International Investment Bank (IIB).

Bilateral credits are provided by socialist states to each other on a long-term basis in the form of commodities, products, or money. The Soviet Union is the largest creditor among the socialist states. By the start of the 1970’s the total of long-term credits and aid to the socialist states from the USSR was more than 8 billion rubles. Hundreds of industrial enterprises and other economic projects have been built with these funds. Czechoslovakia and the German Democratic Republic (GDR) have also played an important role in providing interstate credits to other socialist countries.

The IBEC credits are an important means of providing continuity in the payments between the socialist states, and they help in the continuous expansion of reciprocal trade and in the development and deepening of socialist economic integration. The volume of IBEC credits has been constantly growing. Thus, in 1972 the bank granted credits totaling 3 billion transfer rubles to the authorized banks of the members of the Council for Mutual Economic Assistance (COMECON). The IBEC also provides credits in freely convertible capitalist currencies.

Since 1971 the IIB has granted medium-term and long-term credits used primarily for the development of production specialization and cooperation among the socialist states, the expansion of the fuel and raw material base, and other purposes provided for by the bank’s charter and consistent with the aims and tasks of socialist economic integration. In early 1973 the bank had financed 26 major projects in Bulgaria, Hungary, Poland, Czechoslovakia, the GDR, and Rumania with a total value of about 280 million transfer rubles.

Developing countries. The credits of the socialist countries to the developing Asian, African, and Latin American countries are granted to provide economic and technical assistance and finance reciprocal trade. The intergovernmental credits of the socialist countries to the developing countries differ fundamentally from the intergovernmental credits to these states by the imperialist countries. The socialist credits do not have political and military preconditions but rather are intended to eliminate the economic backwardness of these countries and promote their true independence.

Intergovernmental credits and commercial credits in a commodity form are also employed. The credits are granted under preferential terms: the interest rate as a rule is 2.5 percent per annum, the loans are usually paid back by commodity deliveries of the traditional exports of the developing countries, and ex-tended terms are given for repaying the credits. The credits of the IIB in transfer rubles to the enterprises and banks of the developing countries are a new form of credit relations.

Socialist-capitalist relations. International credit in the foreign economic relations of the socialist and industrially developed capitalist countries is an important means of financing their reciprocal trade. During the prewar years (1935-40), the USSR used credits provided by Germany, Great Britain, and Sweden to purchase equipment in these countries. During World War II the members of the anti-Hitler coalition of Great Britain, the United States, and Canada extended intergovernmental credits to the USSR for Soviet purchases in these countries. During the early postwar years the socialist countries received virtually no long-term international credits from the capitalist countries. Corporate credits were the basic form of credit relations.

In the 1960’s the business circles of the industrially developed capitalist countries began to show a greater interest in developing trade with the socialist countries, and credit relationships broadened. From the second half of the 1960’s, the socialist countries widely used long-term bank credits obtained on the capitalist market for financing purchases of large batches of equipment for the motor-vehicle, chemical, metalworking, and other industrial sectors. For example, at the start of 1973, the Vneshtorgbank (Foreign Trade Bank) of the USSR obtained $172.9 million from the Export-Import Bank of the USA and one of the largest banks of the world, the Chase Manhattan Bank (United States), to finance the purchases of machinery and equipment for the Kama Truck Plant. The socialist countries have entered into relations with the industrially developed capitalist states not only as borrowers but also as creditors. In the postwar years the USSR has granted long-term international credit to Finland and Austria. The firms of capitalist countries commonly use commercial credits provided by the foreign trade organizations in the socialist states.


Lenin, V. I. “Imperializm, kak vysshaia stadiia kapitalizma.” Poln. sobr. soch., vol. 27.
Karpich, V. Bank sodruzhestva ravnykh. Moscow, 1966.
Chizhov, K. la. Mezhdunarodnye valiutno-finansovye organizatsii kapitalizma, 2nd ed. Moscow, 1968.
Tiul’panov, S. I. Ocherki politicheskoi ekonomii (Razvivaiushchiesia strany). Moscow, 1969.
Frei, L. I. Valiutnye ifinansovye raschety kapitalisticheskikh stran. Moscow, 1969.
Koptev, M. M., and M. S. Ochkov. Imperializm i razvivaiushchiesia strany. Moscow, 1970.
Mazanov, G. Mezhdunarodnye raschety stran-chenov SEV. Moscow, 1970.


The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
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