IFC, Citi create $800 million facility to boost trade finance in emerging markets

IFC, a member of the World Bank Group, and Citi have established an $800 million facility to facilitate trade finance in emerging markets, supporting trade flows in developing countries and helping businesses cope with the devastation caused by the Coronavirus (COVID-19) pandemic.

The transaction, which is part of IFC’s emergency response to COVID-19, 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 global outbreak of the virus. IFC and Citi will share the risk in an $800 million portfolio of trade-related assets on a 50-50 basis.

“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.“
“Supporting the sustainability of the supply chains and stimulating the international trade flows have been a critical priority for us as we deal with the impact of the COVID-19 pandemic. Citi’s partnership with the IFC on this transaction will help enable the recovery of trade flows in the emerging markets while aiding in mitigating the extended disruption to the supply chains of many industries across the globe,” said Ebru Pakcan, Global Head of Trade, Citi Treasury and Trade Solutions.
The signing marks the extension of an existing facility under IFC’s Global Trade Liquidity Program, bringing the size of the facility to $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 (International Development Association, the World Bank Group fund for the world’s poorest countries), and $13 billion in low-income and lower middle-income countries. This long-standing partnership has facilitated financing for 4,600 trade transactions through 185 banks in 48 emerging market countries.
Trade is considered a critical driver of economic growth and trade finance is essential to the movement of goods at all stages of the supply chain. Before the COVID-19 pandemic, the global trade finance gap was an estimated $1.5 trillion in 2018.
On March 17, IFC’s Board of Directors approved $8 billion in fast-track financing to help companies affected by the outbreak. The bulk of that financing, including $2 billion for the Global Trade Liquidity Program, will go to client banking institutions, enabling them to continue to offer trade financing, working-capital support and medium-term financing to private companies.