The International Finance Corporation (IFC), a member of the World Bank Group, and Citibank have announced the signing of a 1.2 billion-US dollar risk-sharing facility to help stimulate the growth of trade in emerging markets and to support economic development. This initiative will work in partnership with global and regional banks with the goal of expanding the availability of trade at a time of reported global scarcity.
The signing marks the extension of an existing facility under IFC’s Global Trade Liquidity Programme, first launched by IFC and Citi in 2009. Since its inception, these collaborative efforts have financed a total trade volume of 29 billion US dollars, with around 4.5 billion US dollars in IDA countries (International Development Association, the World Bank Group fund for the world’s poorest countries), and 11.1 billion US dollars in low income and lower middle-income countries. This long-standing partnership has facilitated financing for 4,092 trade transactions through 163 banks in 46 emerging market countries, of which 25 are low and lower middle-income countries.
“Citi’s partnership with the IFC has been a tremendous success, helping to stimulate the recovery and growth of global trade in emerging markets,” said John Ahearn, global head of trade, Citi Treasury and Trade Solutions. “We look forward to continuing our partnership with banks, corporations, and the public sector across emerging markets to continue to stimulate global trade.”
“As we operate in an environment challenged by de-risking and continued volatility, this partnership with Citi is an important way to support and expand trade flows involving the emerging markets,” said Paulo De Bolle, IFC director of Financial Institutions Group. “Citi is a key IFC partner and we are excited to continue this partnership through the Global Trade Liquidity Program and look forward to other collaborative opportunities with Citi.”
The facility extension will expand the availability of trade credit for clients in emerging markets over a four-year span through a risk-sharing structure. IFC and partners will contribute 600 million US dollars, and Citi will provide an additional 600 million US dollars. IFC announced an extension of the GTLP program in 2012 to continue promoting international trade growth in emerging markets, including many IDA countries.
Citi will use the funding to originate and fund trade finance transactions in Africa, Asia, Central and Eastern Europe, Latin America, and the Middle East, enabling its bank clients to extend financing to local importers and exporters. The funding is expected to support emerging market trade flows of more than 5 billion US dollars through 2022. Combining a strong track record, a broad array of capabilities, and most importantly, advisory experience gained from working closely with leading companies around the globe, Citi is one of the market leaders in supporting client needs. Through a legacy of over 15 years of Supply Chain Finance experience, Citi also supports over 2,300 buyers and 70,000 suppliers to extend the working capital cycle.
IFC’s Trade and Commodity Finance programs offer guarantees, risk-sharing facilities, loans and other structured products to support trade in emerging markets. Through these various products, IFC has supported more than 400 financial institutions and thousands of underlying companies in more than 90 countries across all regions of the globe. Trade finance is a priority for IFC owing to the high development impact it can have on developing countries.