IFC partners Citi to create US$800M facility to boost trade finance in emerging markets

GLOBAL —IFC, a member of the World Bank Group, and Citi Bank have established an US$800 million facility to facilitate trade finance in emerging markets.

The historic facility by IFC and Citi will also help in supporting trade flows in developing countries and assist businesses to cope with the devastation caused by the Coronavirus (COVID-19) pandemic.

IFC said in a statement that the facility with Citi will help to support the flow of critical commodities in countries where businesses face financing challenges and the disruption of cash flows due to the COVID-19 pandemic.

IFC explained that it will share the risk in an US$800 million portfolio of trade-related assets with Citi Bank on a 50-50 basis.

Earlier this year, IFC’s Board of Directors approved US$8 billion in fast-track financing to help companies affected by the outbreak.

The bulk of that financing, will go to client banking institutions, enabling them to continue to offer trade financing, working-capital support and medium-term financing to private companies.

“Across the globe, the COVID-19 pandemic is disrupting supply chains, decreasing demand, and causing overall market anxiety. Many businesses—especially SMEs—are being forced to close their doors,” said Paulo de Bolle, Global Director of IFC’s Financial Institutions Group.

“By rapidly increasing our capacity to deliver trade finance, IFC and Citi can help businesses maintain their operations during the current crisis and speed their recovery when the pandemic eases. “

 “Citi’s partnership with the IFC on this transaction will help enable the recovery of trade flows in the emerging markets,” Ebru Pakcan, Global Head of Trade, Citi Treasury and Trade Solutions.

Pakcan further noted that the facility will also contribute in “mitigating the extended disruption to the supply chains of many industries across the globe”.

The signing marks the extension of an existing facility under IFC’s Global Trade Liquidity Program, bringing the size of the facility to US$2 billion.

Since the facility was created in 2009, it has financed a total trade volume of $35 billion, with around $3.5 billion in IDA countries and $13 billion in low-income and lower middle-income countries.

IFC says that this long-standing partnership has facilitated financing for 4,600 trade transactions through 185 banks in 48 emerging market countries.

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