ADDIS-ABABA, June 22 – The World Bank Group has introduced a new framework that expands its Global Trade Liquidity Program (GTLP), allowing guarantees from the Multilateral Investment Guarantee Agency (MIGA) to support eligible state owned banks involved in trade finance across developing countries.
The first facility approved under the new arrangement is with HSBC, a long standing partner of the World Bank Group that facilitated about $900 billion in global trade last year.
Under the framework, MIGA will provide up to $500 million in guarantees on a facility by facility basis, helping cover the risk of non payment by eligible state owned banks. The move is expected to increase the number of banks that can participate in the programme while improving access to short term trade finance for businesses.
The expanded support is aimed at narrowing the global trade finance gap, currently estimated at $2.5 trillion, with a strong focus on helping small and medium sized enterprises secure the working capital they need to import, export and grow.
Launched in 2009, the GTLP combines IFC’s expertise in emerging markets with the reach of international commercial banks to support trade in developing economies.
Since its launch, the programme has facilitated more than $103 billion in trade, working with over 400 financial institutions across 75 emerging markets, including 30 IDA countries and seven fragile and conflict affected economies.
According to the World Bank Group, the expanded framework is expected to strengthen both public and private sector participation in trade finance, supporting business activity, protecting jobs and improving the flow of trade across developing markets.
