IFC Global Trade Finance Program Announces Fiscal Year Results: $266 million in Guarantees and Strong Development Reach
Washington, D.C., July 6, 2006—The International Finance Corporation’s Global Trade Finance Program ended its first fiscal year having issued $266.5 million in guarantees. About half the guarantees supported trade between emerging market countries, and most involved small and medium enterprise transactions.
“This is a strong start for the Global Trade Finance Program,” said Jyrki Koskelo, director of the Global Financial Markets Department. “We have developed a network of partner banks and helped second tier and smaller regional banks expand their markets, often to the benefit of small and medium importers whose trades are less than $1 million.”
IFC, the private sector arm of the World Bank Group, launched GTFP operations in October 2005. The 2006 fiscal year ended June 30. Under the $500 million initiative, IFC provides confirming banks with guarantees on trade-related payment risk taken on issuing banks in the emerging markets. The program has facilitated exports from 40 countries, the goods ranging from computer parts to auto parts to foodstuffs.
Georgina Baker, the IFC senior manager responsible for the GTFP, said, “We expect the need for our trade finance product in the next two years to grow beyond what our current $500 million program can provide.”
So far, most of the demand has been for trade involving Sub-Saharan Africa, Nigeria in particular. The region represents 70 percent of the guarantees issued under the program and is a strategic priority for IFC.
Thierry Tanoh, IFC’s director for Sub-Saharan Africa, said, “The Global Trade Finance Program is helping us establish relationships with local banks in underserved markets, which can open the door for other IFC products and help increase the volume of our investment in Africa’s financial markets.”
Latin America is the next most active region in the GTFP, with 17 percent of guarantees and three countries in the program: Argentina, Bolivia, and Brazil, with Brazil being the most active market.
Atul Mehta, IFC’s director for Latin America and the Caribbean, noted, “The Global Trade Finance Program fits well with IFC’s strategy in Latin America to support small and medium exporters and help them access new markets. Making trade finance more widely available is an essential step"
GTFP Country Coverage Expected by 2007
Africa: Angola, Benin, Cameroon, Democratic Republic of Congo, Ethiopia, Guinea Bissau, Kenya, Madagascar, Mali, Mauritania, Mozambique, Nigeria, Rwanda, Sierra Leone, Tanzania, and Uganda
East Asia: Cambodia, Indonesia, Mongolia, Philippines, and Vietnam
Central and Eastern Europe and Commonwealth of Independent States: Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Georgia, Kazakhstan, Kosovo, Macedonia, Moldova, Russia, Turkey, and Ukraine
Latin America: Argentina, Bolivia, Brazil, Dominican Republic, Ecuador, Mexico, Nicaragua, Paraguay, and Uruguay
Middle East and North Africa: Jordan, Lebanon, Pakistan, and Yemen
South Asia: Bangladesh and Sri Lanka
Examples of Trades Supported
* Pre-export financing for Brazilian small businesses exporting to Mexico, Spain, France, and the United States
* Agricultural machinery from China to Nigeria Palm oil from Indonesia to Pakistan
* Telecom equipment from Brazil to Bolivia
* Fertilizer from Morocco to Bangladesh
* Buses from Brazil to Nigeria
Trade Finance magazine’s “Best Development Bank in Trade” for 2006
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC (www.ifc.org) is to promote sustainable private sector investment in developing and transition 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 FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications.
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