The Inter-American Development Bank (IDB) and the OPEC Fund for International Development (OFID) have signed a co-lending agreement with the aim of improving access to trade finance in Latin America and the Caribbean.

The partnership builds on the work of the IDB's Trade Finance Facilitation Program (TFFP), which features loans and guarantees to cover letters of credit (L/Cs).

Programme outline

The co-lending partnership is a collaborative effort to provide financing to eligible Latin American and Caribbean banks. Both IDB and OFID intend to co-fund trade financing transactions associated with export from or import to an IDB borrowing member country.

In addition, the partnership will help raising the credit capacity and liquidity of banks in the region.

Benefits

By using IDB's network in and knowledge of the region, the partnership should allow banks to borrow on commercial terms to meet the needs of under-served trade clients.

The IDB and OFID aim to close the trade financing gap and further trade by ensuring stable and reliable sources of financing for the region's many trade finance clients.

Service provision

As well as providing loans and guarantees to cover L/Cs, the TFFP offers bills of exchange, promissory notes, bid bonds, performance bonds, advance payment bonds and other instruments used in international trade finance transactions.

The TFFP includes a network of 301 confirming banks from 64 countries around the world, and 102 issuing banks in 21 countries in the Latin American and Caribbean region.

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