BAKU, Azerbaijan, April 1. The International Finance Corporation (IFC) in collaboration with DBS Bank Limited (DBS), has launched a groundbreaking US$500 million facility aimed at boosting trade flows in emerging markets, Trend reports with reference to IFC.
This initiative, established under IFC’s Global Trade Liquidity Program (GTLP), seeks to facilitate capital and trade movements across Asia, Africa, the Middle East, and Latin America. The program is set to address the staggering US$2.5 trillion global trade finance gap and expedite economic advancement in these regions.
Under the terms of the agreement, IFC and DBS will evenly share the risk on a portfolio of trade-related assets totaling up to US$500 million. This arrangement is expected to bolster DBS' capacity to provide increased trade financing, including Letters of Credit, to businesses engaged in trade with counterparts in emerging markets. Additionally, it will enable quicker turnaround times while effectively managing risks.
Recognizing the pivotal role of emerging markets in fostering a low-carbon future, the facility has allocated 20 percent of its resources to climate-eligible trade transactions. These transactions will encompass activities such as the trading of renewable energy equipment, energy-efficient technology, and climate-smart agricultural commodities.
Part of IFC’s GTLP, this initiative is designed to address the chronic shortage of trade financing in emerging markets by empowering banks to expand their credit limits, mitigate risks, and bolster trade support across under-served developing markets. Notably, this marks IFC’s first GTLP collaboration with a Southeast Asian bank and represents the inaugural long-term investment project between IFC and DBS.
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