The Asian Development Bank (ADB) and the Inter-American Development Bank (IADB) have agreed to share access to their trade finance programmes to promote south-south trade flows. This will link more than 100 financial institutions, and support trade between companies in Asia and the Pacific and Latin America and the Caribbean.
The agreement to link financial institutions that participate in the ADB and IADB trade finance facilitation programmes (TFFPs) should bolster trade, until now very low, between their respective regions. In turn, increased commercial flows will provide a foundation for further economic growth, job creation and poverty reduction.
"By linking the programmes, we will help participating banks and their customers to diversify their business along a south-south axis, which is especially important at a time when the North American and European economies are facing difficult times," says Philip Erquiaga, director general of the ADB's private sector operations department.
Hans Schulz, general manager of the IADB's structured and corporate finance department, says: "This is an important step in our efforts to further strengthen cooperation among multilateral development banks as it will leverage the benefits of our trade finance programmes across the Pacific."
The trade finance facilitation programmes provide loans and guarantees for export-import operations. ADB and the IADB recently expanded their respective programs to US$1bn in response to a decline of trade finance in the broader market. By attracting private-sector capital through risk-sharing, and because the lending can be rolled over, the support offered under the TFFPs is multiplied several times.
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