The European Bank for Reconstruction and Development (EBRD) says that financing under its letter of credit (L/C) oriented Trade Facilitation Programme (TFP) last month topped EUR 500 million (US$546 million) for the first time.

The EBRD is continuing to deliver record levels of support for trade as it steps in to protect emerging economies across its regions from the economic impact of the coronavirus pandemic.

Unprecedented demand

In April, the bank delivered an unprecedented EUR 503.5 million in trade finance via 179 trade transactions, compared with EUR 385.6 million for 144 operations in March 2020, which itself had already been a new record.

Global trade flows are one of the prominent victims of the virus, with the World Trade Organisation predicting a contraction of anywhere between 13 and 32 per cent this year, a greater impact on commerce than from the global financial crisis a decade ago.

Complex supply routes

As importers and exporters grapple with increasingly complex supply routes, there has been a rapid rise in demand for trade finance that is vital to keeping open the channels of trade.

The EBRD has responded to this rising demand with record levels of support for trade finance that it provides across its regions, which stretch from central and south-eastern Europe, across to Central Asia and to the Middle East and North Africa.

L/C support

Through the TFP, EBRD provides guarantees to international confirming banks, taking the political and commercial payment risk of international trade transactions undertaken by banks in its countries of operations.

EBRD guarantees payment under trade finance instruments issued or guaranteed by local issuing banks to international confirming banks.

Trade finance instruments include L/Cs and other types of guarantees, bills of exchange or promissory notes, performance bonds and bid bonds.

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