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IFC Approves $500 million Global Trade Finance Facility that will Benefit Small Emerging Market Companies
Washington D.C., November 18, 2004 The International Finance Corporation, the private sector arm of the World Bank Group, has approved a $500 million global trade finance program, to provide financial support to small and medium importers and exporters in emerging markets.
This is IFCs largest financing program to date and marks a new approach for the corporation to trade finance, an area where smaller companies in developing countries are often at a disadvantage and which is of critical importance to economic growth.
IFC will offer guarantees on the payment risk of local financial institutions. In most cases this will be through domestic and international banks who confirm letters of credit issued by smaller local banks to their local client companies involved in trade.
In this way, local importers, who do not have adequate access to trade finance, can access amounts as small as $10,000, that would otherwise be unavailable to them. The program is designed to be commercially responsive and efficient, with a dedicated, experienced trade finance team and a rapid response time.
This facility is designed to assist in opening trade channels and providing working capital liquidity for imports and exports. It includes a technical assistance and training component for local banks to achieve best industry standards in trade. We expect the facility to play an important role in reaching smaller, underserved clients globally and,
specifically, fostering trade between developing countries, said Mr. Jyrki Koskelo, IFC director of global financial markets.
The program will bring together networks of local, issuing banks in emerging markets with confirming banks in the developed world. It is intended that the local banks will gain experience and learn best practice in trade finance as a result.
The program aims to support local banks in responding to the demand and opportunities for financing small and medium exporters and importers. A primary target for the program will be Africa. Other areas of focus will include challenging markets in Latin America and Asia. IFC intends to cooperate with other international financial institutions to help create a coordinated global trade network which will benefit the development objectives we all share, said Mr. Koskelo.
The mission of IFC (www.ifc.org) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve peoples lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses.
From its founding in 1956 through FYO4, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFCs worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.