About the trade facilitation programme [EBRD]

The EBRD's Trade Facilitation Programme promotes foreign trade with central and eastern Europe and the CIS. Through the programme, the EBRD provides guarantees to international confirming banks. In so doing, it takes the political and commercial payment risk of transactions undertaken by issuing banks in the countries where the EBRD operates. The programme can guarantee any genuine trade transaction associated with exports from, imports to, and between the EBRD's countries of operations. Over 80 issuing banks in the Bank's region of operations participate in the programme together with over 500 confirming banks throughout the world.

The programme is an excellent business development tool. It provides:

cover for a broad range of trade finance instruments
unconditional guarantees payable on first written demand
guarantees of up to 100 per cent of the face value of the underlying trade finance instruments
uncommitted trade finance lines and transaction approval on a case-by-case basis
attractive fee levels that are agreed separately for each transaction
a fast and simple approval procedure to issue guarantees
short-term loans to selected local banks for on-lending to local exporters and importers

Transaction instruments

Guarantees may be used to secure payment of the following instruments issued or guaranteed by issuing or confirming banks for trade transactions to, from or between the EBRD's countries of operations:

letters of credit and standby letters of credit from the issuing bank; deferred payment and "red-clause" letters of credit
advance payment guarantees and bonds, and other payment guarantees
bills of exchange and trade-related promissory notes
bid and performance bonds and other contract guarantees
longer tenors are approved where appropriate to cover finance of capital equipment and for other term guarantees
other types of trade finance instruments can also be considered.

Goods and services covered

EBRD guarantees cover a wide range of goods and services, including consumer goods, commodities, equipment, machinery, and power supply as well as cross-border engineering, construction, ship-building, technical and other services.

Some environmentally sensitive activities may be considered, although require an Environmental Due Diligence summary to be prepared. In addition, some activities, products and substances are not eligible for finance under the Trade Facilitation Programme:

Donors

Risk sharing funds

Risk sharing funds facilitate transition, helping banks to obtain access to international finance, strengthen their trade finance experience, introduce transparent banking practices, and enable staff to gain experience working with Western confirming banks.

The EBRD currently has three risk sharing funds:

South Eastern Europe initiative (SEEI)
SEEI covers Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, Romania and Serbia and Montenegro. Donors include Austria, Germany, the Netherlands, Norway and Switzerland and the fund totals EUR 13.9 million.
Central Asia Risk Sharing Special Fund (CARSSF)
CARSSF covers the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan. Donors include Germany and Switzerland and the fund totals EUR 8.6 million.
Financial Intermediary Investment Special Fund (TIISF)
TIISF covers Moldova, Armenia and Georgia. Donor contribution is EUR 9.5 million from the Netherlands.

Training and advisory services

Donors support the development of the Trade Facilitation Programme by providing funds for training and advisory services for issuing banks in the TFP. With support from Austria, France, Ireland, Taiwan and UK, the EBRD has been conducting trade finance training, targeted at issuing bank staff.

In addition, with funds provided by the Canada, Germany, Ireland, the Netherlands, Switzerland and Taiwan, the EBRD has been hiring trade finance specialists to deliver trade finance advisory services for the banks in Russia, Azerbaijan, Armenia, Georgia, Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan and Ukraine. This project helps banks to increase operational skills and improve their international trade finance services.

Risk partipation and co-operation agreements

In January 2004, the EBRD signed a framework risk participation agreement with Deutsche Investitions – und Entwicklungsgesellschaft mbH (DEG) which enables the EBRD to increase its guarantee facility limits for selected Issuing Banks under the Regional Trade Facilitation Programme (TFP). To date, DEG is sharing risk with the EBRD on the portfolio of TFP guarantee transactions with Bank of Georgia, Bank Turan Alem (Kazakhstan), First Ukrainian International Bank and the Savings Bank of the Russian Federation.

In March 2004, the EBRD and Asian Development Bank (ADB) signed a Co-operation Agreement which will enable the EBRD to increase its TFP guarantee facility limits for selected Issuing Banks under the Regional Trade Facilitation Programme (TFP) in Asia. Under this arrangement ADB will share risk with the EBRD on the portfolio of TFP guarantee transactions.