EBRD’s trade programme to support local currency deals

The European Bank for Reconstruction and Development (EBRD) has issued its first guarantee in local currency, supporting wheat flower from Russia to Tajikistan and removing currency risks on behalf of the Russian exporters.

The guarantee covers 100% of the payment risk of a letter of credit worth R4,377,240, issued by Taiprombank to Tajikistan to Sberbank in Russia.

The EBRD’s trade facilitation programme was established in 1999, and is the forerunner of many similar schemes sent up with multilaterals and development banks around the world. It works by supporting banks build up track records with their correspondent confirming banks, reducing cash collateral requirements and freeing up clients’ working capital by providing guarantees to confirming banks for the payment of various trade finance instruments issued by local banks.

With Tajikistan, the scheme has guaranteed over 500 letters of credit from four Tajik banks, supporting imports from 20 countries in Europe, Asia and North America.

The trade facilitation programme also aims to support intra-regional trade, helping to create jobs and restore traditional trade links.

Commenting on the EBRD’s new local currency capabilities, Rudolf Putz, operation leader of the scheme, says: The EBRD’s first guarantee in roubles meets the increased demand for local currency financing in intra-regional trade and eliminates the currency risk for the Russian exporter.”