Trade and Development Bank of Mongolia (TDB) has joined the International Finance Corporation’s (IFC) Global Trade Finance Program, making TDB the programme’s first issuing bank in Mongolia.

Under the agreement, TDB will be able to issue various trade finance instruments guaranteed by IFC up to the amount of US$5mn for tenors up to three years, allowing the bank to be more active in financing its clients “international trade activities.

IFC is the private sector arm of the World Bank Group. Its US$500mn Global Trade Finance Program promotes trade with emerging markets worldwide by supporting flows of goods and services to and from developing countries. Through the programme, IFC provides guarantee coverage of bank risk in emerging markets, allowing recipients to expand their trade finance transactions within an extensive network of countries and banks and to enhance their trade finance coverage.

The signing of this agreement is an important part of TDB’s strategy to diversify and develop its financial services and banking products.

Randolph Koppa, TDB’s chief executive officer, says, “We are very pleased to join IFC’s Global Trade Finance Program. The availability of IFC guarantees will promote and support the development of Mongolia’s foreign trade. Our clients will also be able to receive more favorable terms and conditions for their contracts with foreign counterparties.”

Richard Ranken, IFC’s director for East Asia adds: “TDB’s participation in the Global Trade Finance Program will provide a boost to trade and investment in Mongolia. Through the programme, IFC will support Mongolia’s small and medium enterprises, which rely on imports of machinery and equipment to grow their businesses.”

IFC’s trade finance guarantee facility is the second investment it has made in TDB. In 2004, IFC made a US$1.4mn equity investment and a US$3.5mn subordinated loan to TDB.