The International Finance Corportation (IFC) has doubled the ceiling in its Global Trade Finance Programme (GTFP), allowing the World Bank affiliate to guarantee trade finance in emerging markets up to a total amount of US$1 billion on a revolving basis.

The additional US$500 million in the programme is subject to the same terms as those applied to the US$500 million ceiling approved by the IFC board in November 2004.

Participants

Under the GTFP, the IFC guarantees the payment risk of local financial institutions in emerging markets worldwide. In most cases, the underlying transaction is a letter of credit (L/C).

At least 87 international commercial banks now act as confirming banks in the programme and serve as potential trading partners for around four-dozen local issuing banks in emerging markets targeted by the IFC.

Into Africa

The primary focus for the GTFP so far has been what the IFC describes as "under-served markets in Africa".

The GTFP also has a keen focus on improving small- and medium-sized enterprises' access to trade finance.

Training component

The programme also includes a training and technical assistance component aimed at institution building. It began in June 2006 and has already reached 90 bankers in 18 countries, primarily in Africa.

According to the IFC, the programme has enabled it to engage for the first time in some of the most challenging, and post-conflict countries in Africa.

Global rollout

Outside Africa, the IFC aims to introduce the GTFP into European and Central Asian countries such as Armenia, Belarus, Bosnia and Herzegovina and Russia while in Latin America target countries include Argentina, Brazil and the Dominican Republic.

The IFC also hopes the programme will take root in countries in the Middle East and North Africa such as Egypt, Jordan and Libya and in East and South Asia in countries including Bangladesh, Cambodia and Vietnam.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.