ABSTRACT
This chapter discusses the financial compensation schemes from the donor’s as well as the recipient countries’ point of view. Primarily, the effects of STABEX on stabilization, redistribution and allocation goals. Compensation is granted for shortfalls in export earnings of forty-nine agricultural products on which the ACP economies are dependent. The system applies to export earnings in trade with the EC or, upon request, to export earnings to all destinations or to other ACP countries. Hence, the compensation of earnings shortfalls for individual commodities may or may not contribute to the stabilization of national export earnings. Moreover, time-lags between shortfalls and payments as a consequence of delayed applications or insufficient means of the STABEX fund may lead to stabilizing or destabilizing effects on the national export earnings. Compensation payments are usually disbursed after a delay in the year following the shortfall.
