Global Trade Finance Program
Trade & Commodity Finance at IFC
The Global Trade Finance Program (GTFP) extends and complements the capacity of banks to deliver trade financing by providing risk mitigation in new or challenging markets where trade lines may be constrained. Under GTFP, IFC has issued guarantees covering over 54,000 transactions to date for more than $60 billion.
GTFP offers confirming banks partial or full guarantees covering payment risk on banks in emerging markets for trade related transactions. These guarantees are transaction-specific and may be evidenced by a variety of underlying instruments such as: letters of credit, trade-related promissory notes, accepted drafts, bills of exchange, guarantees, bid and performance bonds and advance payment guarantees. The guarantees are available for all private sector trade transactions that meet IFC's eligibility criteria. A price incentive or longer tenors may be available for equipment and projects that have clearly defined climate change benefits as part of our Climate Smart Trade initiatives or that support sustainable global value chains with Sustainable Shipment LCs.
Through the GTFP bank network, local financial institutions can establish working partnerships with a vast number of major international banks in the Program that can broaden access to finance and reduce cash collateral requirements. This enables the continued flow of trade credit into the market at a time when imports may be critical and the country’s exports can generate much-needed foreign exchange.
Among the noteworthy transactions supported by GTFP are cancer-screening equipment for women in Gaza; antiretrovirals for HIV patients in the Democratic Republic of the Congo; energy-efficient machinery for Armenia’s first and only steel production facility; turbines and other equipment for a hydroelectric dam in Honduras; and the relocation of an entire power plant to Pakistan from Germany.
GTFP offers confirming banks partial or full guarantees to cover payment risk on banks in the emerging markets. These guarantees are transaction-specific and apply to:
- letters of credit
- trade-related promissory notes and bills of exchange
- bid and performance bonds
- advance payment guarantees
- supplier credits for the import of capital goods
In addition, IFC provides funding to banks for short-term pre-export financing.
GTFP combines global reach and maximum flexibility to assist trade finance deals by:
- delivering trade solutions through a global network of participating banks
- covering large and small transactions in challenging countries
- using master agreements, which facilitate 24-48 hour response time via SWIFT for individual transactions
- having in place a dedicated trade unit to serve business needs
- offering commercial pricing with no commitment fees
- supporting all valid private sector trade transactions meeting IFC criteria
- covering up to 100 percent of transaction value
- providing tenors of up to three years to support capital goods imports.
Trade Development through Trade Finance Training
Technical training for issuing banks represents an integral part of the Global Trade Finance Program. Technical assistance modules comprise basic and intermediate courses on trade finance. On a selective basis, IFC places experienced trade finance bankers with issuing banks to help them develop trade finance and other banking skills. In addition, IFC assists in arranging training at major international trade banks for trade officers of issuing banks.
Advantages for Banks
The Global Trade Finance Program supports issuing banks by:
- providing access to a global network of confirming banks
- facilitating transactions under limited trade lines
- promoting competitive financing and responsive services
- reducing cash collateral needs
- offering technical assistance
- offering an opportunity to build a relationship with IFC and with correspondent banks
For confirming banks, the Global Trade Finance Program:
- extends the geographical coverage for export finance
- provides risk coverage for challenging trade transactions
- offers competitive terms for export clients doing business in the emerging markets
- builds correspondent bank relationships with new institutions on a low-risk basis
To date, GTFP has covered over 54,000 trade transactions and supported over $60 billion in emerging market trade, without a single loss since inception in 2005. GTFP has supported over $31 billion in trade in IDA countries and $17 billion in trade in Sub-Saharan Africa.