The Multilateral Investment Guarantee Agency (Miga) has launched a US$500mn guarantee framework for trade financing originated by IDB Invest, a move it says aims to stimulate economic growth in Latin America and the Caribbean.

The guarantee will provide up to 95% coverage to banks in Latin America and the Caribbean for eligible deals originated under IDB Invest’s Trade Finance Facilitation Program.

The guarantees guard against non-payment risk for trade finance loans and guarantees. They are open to businesses of all kinds, but are expected to help MSMEs, women-led businesses, and food security and green finance deals in particular.

Miga, part of the World Bank Group, says the deal aims to narrow the US$350bn trade finance gap in Latin America and the Caribbean by combining the two bodies’ resources, and that the framework “leverages complementary institutional strengths”.

“Miga’s guarantee in partnership with IDB Invest will spur trade and boost growth in the Latin America-Caribbean region,” says Hiroshi Matano, executive vice-president of Miga.

“This collaboration will help address the trade finance gap, support MSMEs, and promote sustainable economic development in the region. We look forward to expanding our partnership with IDB Invest to further enhance access to finance and mobilise additional private sector capital in the region.”

IDB Invest is the investment arm of the Inter-American Development Bank.

Recent funds disbursed have included financing for micro and small businesses in Peru, developing wind energy in El Salvador and improving biodiversity in Ecuador.

IDB Invest’s chief executive, James Scriven, says the collaboration with Miga “strengthens our ability to support strategic clients while promoting transparency, integrity and sustainability in regional trade operations”.