The IFC has increased the ceiling of its global trade finance programme by a further US$500mn to US$1.5bn. The increase is in part a reaction to the rocky credit markets , shrinking liquidity levels and the increasing number of bank bailouts across the globe. The IFC sees the expansion of its programme as a means of fulfilling its anti-cyclical role in international markets, helping support trade with emerging markets when other forms of liquidity are drying up.
With banks reducing their exposure, short-term trade lines could start to tighten. However, through the IFC’s trade programme the multilateral can guarantee the payment risk of issuing banks up to the full value of the transaction. This means that trade credit can be maintained in the market at a time when imports may well be of critical importance to a region, and where a country’s exports can generate much-needed foreign exchange.
”The extended capacity of the programme comes at a critical time of severe credit constraints in the market, making IFC a highly valued partner in trade financing,” comments Georgina Baker, short-term finance, global financial markets department.
To date, 126 issuing banks in 66 countries and over 145 confirming banks in 70 countries are members of the IFC programme. In its first three years of operation, over 2,300 guarantees have been issued for over US$3bn in commitments.
Last Updated October 09, 2008
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