Supporting International Trade Finance

27.02.2013

Trade finance drives an estimated USD14 trillion in annual global commerce and is fundamental to the international movement of goods at all stages of the supply chain. While the impact of the current crisis is being felt throughout the global economy, the poorest countries are often those who are most affected by reduced growth, income, liquidity, and critical goods. To counter this trend, the International Finance Corporation (IFC), a member of the World Bank, has established the Global Trade Liquidity Programme (GTLP) in order to foster and support trade flows.

“The GTLP programme was conceived to channel liquidity quickly to targeted markets by providing trade credit lines and refinancing portfolios of trade assets held by selected banks,” explains Margrith Lutschg Emmenegger, President of Malta-based trade finance institution FIMBank plc.  “It is a unique, efficient and excellently coordinated global initiative that raises funds from international finance and development institutions, governments and banks, and works through global as well as regional banks to extend trade finance to importers and exporters in developing countries”. The programme has been extremely successful, and since its inception, it has supported USD20 billion worth of trade through 13,000 transactions with 600 partner banks, without a single loss.

As a trade finance specialist, FIMBank sees support to trade flows to and from emerging markets as being fundamental to the growth of global trade, and in view of its role, it has also been able to benefit from the GTLP.  As a matter of fact, FIMBank recently signed an agreement within the GTLP for USD30 million, which will go towards offering trade financing to companies importing and exporting food, consumer goods and machinery. The loan agreement between FIMBank and the IFC, which also happens to be a shareholder in the Bank, is specifically designed to increase cross-border trade between Europe, the Middle East and Africa, as well as towards supporting private sector development in those regions. As a result of this facility, numerous importers and exporters, as well as small- and medium-sized enterprises, will be in a position to achieve sustainable growth by financing investment and mobilizing capital.

“FIMBank has recognised the benefits of this programme and we consider it an innovative structure which can help infuse much needed liquidity into the trade finance market, thereby catalysing global trade growth” Ms Lutschg Emmenegger elaborates. “The agreement with the IFC as part of the GTLP also reflects the Corporation’s confidence in FIMBank’s capability, as a trade finance specialist, to leverage its international network, particularly in the Middle East and Africa, in order to channel liquidity and credit into these emerging markets and effectively help to revitalize trade flows”.

 

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