Banco Patagonia has joined the Asian Development Bank’s trade finance programme (TFP). Through the TFP, the Argentinian bank will receive guarantees covering payment risk from Asian banks backing trade transactions, supporting south-south trade.
“I did a little research into Asian-Latin America bank-to-bank relationships and was really surprised to discover that outside of the People’s Republic of China, India, Japan, Korea, Malaysia and Singapore, there are virtually no direct banking relationships between the two continents. To say the least, this suggests that the potential for trade (and its delivery of growth, jobs, and poverty reduction) is not being maximised,” writes Steven Beck, ADB’s head of trade finance, in a post on the matter.
The programme will introduce Banco Patagonia to banks throughout Asia, and support Asia-Latin America trade under the TFP’s AAA-rated guarantees. “Imminent drops in transport and communications costs, along with the Trans-Pacific Partnership and other trade agreements, present opportunities, but for these opportunities to be seized upon, banks, companies and multilaterals need to work together to forge new relationships to create more growth and jobs,” says Beck.
Ever since the 2001 debt crisis crippled the country’s economy, Argentina has been struggling with reduced access to international credit markets, limited foreign currency reserves, and exports duties. The new government elected in November has promised more reform and economic openness, and has already scrapped taxes on some agricultural goods like beef and grain.