The Asian Development Bank (ADB) has signed new trade financing agreements with three Sri Lankan banks – Bank of Ceylon, Vardhana Bank and NDB Bank.
The agreements are part of ADB's trade finance facilitation programme (TFFP) and will give the banks additional room to provide essential financing to Sri Lanka's exporters and importers. At the same time, the agreements will help the banks develop relationships with their international peers, which should promote partnerships.
The signing marked the Bank of Ceylon’s first agreement under the programme while Vardhana Bank and NDB Bank expanded their existing relationships with ADB.
The TFFP works with international and local banks to provide the support they require to ensure their importing and exporting clients get the loans and guarantees they need to do business.
"Trade is a key tool for promoting economic expansion. Stronger economic growth translates into jobs and higher incomes which, in turn, helps to reduce poverty," says Philip Erquiaga, director general of ADB's private sector operations department.
ADB's ‘Asian Development Outlook 2009’, released in September, forecast that Sri Lanka's economy would grow by 4% this year and 6% in 2010. At the same time, the report predicts the country to have a current account deficit of 3% of gross domestic product this year and a 5% shortfall next year.
"Sri Lanka's banks and companies will benefit enormously from greater access to international trading and banking networks as the Sri Lankan economy emerges from the turmoil of a conflict that has restrained investment and growth for several decades," says Robert van Zwieten, director of ADB's private sector capital markets division, of which the trade finance programme is a part.
Under the US$1bn TFFP, which began operating in 2004 and was expanded earlier this year, ADB provides finance and guarantees through and in conjunction with international and developing member country banks to support trade deals in developing countries. Since trade finance can roll over and as the programme attracts private sector support, the programme can provide US$3bn in finance every year.
Reader Comments