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ADB Boosts Support for Trade Finance with $350 Million Additional Headroom

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The Asian Development Bank's (ADB) of Directors has approved $350 million in additional headroom to further expand the scope and impact of its Trade Program (TFP), helping to close large market gaps for trade that impede growth and job creation.

Supporting more than 12,000 small and medium-sized enterprises (SMEs) in developing since 2009, TFP helps reduce market gaps for trade by providing loans and guarantees to financial institutions to support trade activities in the region. The additional financing will increase TFP's limit to $1.35 billion, keeping up with the increasing market demand for from the program, which grew over 50% in 2017. TFP is able to support trade financing well above its limit over the course of a yearbut not breaching the limit at any one point in timeby recycling transactions with short maturities and leveraging cofinancing.

The increased headroom approved today by ADB's of Directors will help us meet the huge surge we've seen in market demand for our products, said ADB's of Trade and Supply Chain Finance Mr. It is an exciting time for the team, which is known for its excellent client services, including in 24-48 hours.

Financial institutions in support of trade as well as SMEs play an important role in closing the global gap, which amounts to $1.5 trillion globally, 40% of which is coming from the and Pacific region, according to ADB's latest survey. Trade finance is also an important component for countries to achieve the Sustainable Development Goals, as identified by the United Nations' Addis Ababa Declaration on Financing for Development.

TFP has guaranteed or funded 5,583 transactions in 2016 and 2017 alone, valued at $7.6 billion, with cofinancing reaching $4.6 billion.

The program's transaction growth remained robust in the first four months of 2018comprised of 1,453 transactions valued at over $2 billion, $1.3 billion of which was cofinanced with the private sector. Mobilizing private sector resources is an important metric for ADB as it leverages resources and multiplies the bank's ability to reduce market gaps that impede growth and job creation in its developing member countries.

The additional financing to TFP will complement the $100 million in additional support approved by ADB's of Directors in March to extend and expand the scope of the bank's Supply Chain Finance Program, which helps SMEs and boosts their contribution to the region's economic growth and development.

TFP currently operates in 21 ADB member countries, with the top five most active markets including Armenia, Bangladesh, Pakistan, Sri Lanka, and Viet Nam. Backed by ADB's AAA credit rating, it provides guarantees and loans to over 200 partner banks to support trade, enabling more companies throughout to engage in import and export activities. TFP complements its financial support with a regular series of workshops and seminars to increase knowledge and expertise in and operations, risk management, and anti-money laundering prevention.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, June 11 2018. 14:48 IST