IFC Approves $500 million Global Trade Finance Facility

19/11/2004 | www.imf.org

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.


In Washington, DC:
Corrie Shanahan
Phone: +(202) 473-2258
Cell: +(202) 294-4697
E-mail: Cshanahan@ifc.org

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 IFC’s 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 people’s 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. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.



Related stories

  • CUBA: after 50 years, the great thaw begins

    Cuba may be 90 miles off the US coast but for many it is a complete unknown. That hasn't stopped investors lining up to figure out how best to tap into a market isolated for more than 50 years

  • No CAN-do? LatAm trade blocs under threat as China, TPP ...

    The Pacific Alliance trade bloc has made huge progress in its first three years and threatens to consign the region’s two historic trading blocs, the Andean Community and Mercosur to obscurity or even extinction.

  • OIL: Oiling up for a fall

    In the 1966 film The Good, the Bad and the Ugly, it was the Mexican Tuco Ramirez playing the not-so-good looking one. The movie title is a neat way to categorise Latin American countries’ situation in the face of a plunge in oil prices, though half a century on Mexico’s role has changed.

  • Worsening Petrobras scandal looms large over IADB meeting

    The scandal at Petrobas, the state-owned Brazilian oil companies, has led to downgrades of other industrial companies, triggering fears that it could cause increased wariness in Latin American financial markets

  • Latin America lining up to buy ticket to AIIB membership

    Reports that Brazil and Argentina will throw their weight behind the Asian Infrastructure Investment bank would prove a major boost to China’s effort to move into development lending

Editor's Picks

In Focus

  1. AFRICA IN THE INTERNATIONAL BOND MARKETS: African sovereigns go mainstream as investors shift focus away from Russia

  2. KAZAKHSTAN: Kicking Kazakhstan back into gear - Nazarbayev tries again at transformation