With the Uzbek economy struggling in the wake of coronavirus, the European Bank for Reconstruction and Development (EBRD) has extended yet more trade finance support to the country.

As part of its Trade Facilitation Programme (TFP), the EBRD has upped its trade limit for the National Bank for Foreign Economic Activity of the Republic of Uzbekistan by US$70mn.

Following the move – and having struck a US$150mn trade finance facility with three other banks in Uzbekistan a few weeks ago – the EBRD has now committed a total of US$220mn in trade finance support to the country in the past month.

Global trade looks likely to be severely hit this year, as a result of government attempts to contain the spread of the deadly coronavirus.

Stay-at-home measures and travel restrictions have all invariably affected supply chains and businesses’ cash flows, as companies the world over reel from a double supply and demand shock.

But the EBRD is hoping that its latest financing will help mitigate any such disruptions in Uzbekistan, adding “this is particularly important in circumstances when the availability of commercial trade finance credit lines is likely to remain constrained”.

Explaining the reasons for this squeeze in trade financing, EBRD senior banker Kamola Makhmudova says in the current climate, global banks “don’t have a lot of appetite for international business and international trade”.

She tells GTR: “So for example, European banks, Asian banks, US banks, everybody who trades with our countries of operations, they all have strains of dealing with corporate clients in their own countries who are in difficult situations.”

Makhmudova states that the EBRD felt confident from a risk and compliance standpoint to lend to Uzbek banks, because the country is “strong”, with low levels of national debt.

Nevertheless, Rudolf Putz, head of the TFP programme at EBRD, says that such international lenders will be particularly risk averse in developing countries like Uzbekistan.

He tells GTR: “International banks expect there will also be increasing economic problems in emerging markets and they have reduced their limits for lending to emerging markets.”

Putz adds: “But it’s not only in EBRD countries of operation, it’s worldwide, and even interbank lending has been reduced. All banks are concerned that other banks will be struggling after the crisis with non-performing loans and even losses.”

The EBRD’s latest support measures for Uzbek businesses follows an announcement made by the bank in March, in which it committed to providing US$1bn to member countries as part of an emergency coronavirus support package.

This was to include “hundreds of millions” in trade finance support for companies in its countries of operation.