IFC APPROVES US$30 MILLION FOR INTRA-REGIONAL TRADE WITHIN EASTERN EUROPE AND THE CIS
Amy Conran
Phone: (202) 473-9119
Fax: (202) 676-0365
E-mail: ACONRAN@Worldbank.org
VIENNA, May 7 -- The International Finance Corporation (IFC) and Raiffeisen
Zentralbank Österreich AG (RZB), a leading Austrian commercial bank, signed
an agreement in Vienna today jointly establishing the Intra-Regional Trade
Enhancement Facility (IRTEF), a US$60 million guarantee facility to promote
the use of documentary credits in trade within Central and Eastern Europe
and the CIS. Under the facility, IFC and RZB will jointly guarantee documentary
credits issued by local banks on behalf of local counterparties to trade
transactions. The facility will support letters of credit for imports and
letters of guarantee for exports.
"Locally issued documentary credits are generally not accepted by
exporters and importers operating in the region unless they are backed
by an internationally recognized institution, due to the perceived weakness
of many local banks," said Mr. Jannik Lindbaek, Executive Vice President
of IFC. "Yet support for trade finance from international banks remains
limited, and a substantial amount of intra-regional trade is still conducted
inefficiently on either a cash or barter basis. The aim of IRTEF is to
expand the capacity of local banks to offer proper credit and settlement
mechanisms for trade transactions and to provide reassurance for local
traders, thereby expanding trade within the region."
Day-to-day management of the facility will be handled by RZB. Herbert Stepic,
Deputy Chairman of RZB, stressed RZB's profound market experience in Central
and Eastern Europe and Russia, citing RZB's establishment of commercial
banks or representative offices in nine countries in the region. "Through
its know-how, RZB is an ideal partner for IFC in order to maximize the
benefit for local enterprises and banks involved in this facility,"
added Mr. Stepic.
Initially 20-30 banks within the region are expected to have access to
the facility. IFC and RZB will jointly choose the banks based on soundness
and acceptability as issuers of documentary credits. The first groups of
banks selected for participation in the facility are expected to be signed
up within the next month.
Banks from the following countries will be considered for participation
in the facility: Albania, Armenia, Azerbaijan, Belarus, Bosnia-Herzegovina,
Bulgaria, Croatia, the Czech Republic, Estonia, Georgia, Hungary, Latvia,
Lithuania, the former Yugoslav Republic of Macedonia, Moldova, Poland,
Romania, Russia, the Slovak Republic, Slovenia, and Ukraine.
This facility represents the third in a series of trade enhancement facilities
pioneered by IFC. The first is the Russian Trade Enhancement Facility and
the second the Kazak Guarantee Facility which both guarantee letters of
credit in support of western imports into Russia and Kazakstan, respectively.
IFC, a member of the World Bank Group, is the largest multilateral source
of equity and loan financing for private sector projects in developing
countries.
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