Through its $3 billion Global Trade Finance Program, IFC is able to play a critical role and respond to the global credit crisis by supporting trade with emerging markets.
Trade is vitally important in an integrated world, and can be an effective tool in private sector development. At times of crisis, imports are particularly critical to a country and exports can generate much-needed foreign exchange. However, during crises banks tend to reduce their exposure as a defensive measure, which results in a decrease in short-term trade lines.
The IFC Global Trade Finance Program facilitates trade by providing guarantees that cover the payment risk in trade transactions with local banks in emerging markets. This enables the continued flow of trade credit into the market. In response to the current financial crisis, an additional $1.5 billion was added to the existing $1.5 billion bringing the program's ceiling to $3 billion.
Since the inception of the program in September 2005, $3.2 billion in trade guarantees have been issued to support 2,600 transactions. Of these transactions:
- 48 percent were for banks in Africa
- 70 percent involved small and medium enterprises
- 50 percent supported trade with the world's poorest countries
- 35 percent facilitated trade between emerging markets
Last Updated: 14 Oct 2009 |
