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2,000th transaction sets benchmark for EBRD trade programme
Bank smooths way for intra-regional trade in food and food commodities
The EBRD’s highly successful Trade Facilitation Programme has reached another
benchmark by signing its 2,000th transaction – a credit arrangement that will
help Moldova to import grain from Kazakhstan.
A letter of credit was issued by Mobiasbanca Moldova to Kazkommertsbank
Kazakhstan for the import of €108,000 worth of Kazakh grain by a private
Moldovan importer. Earlier this year the programme, established in 1999 to
encourage EBRD countries to trade internationally, topped the €1 billion mark
for volume financed.
The Trade Facilitation Programme supports trade to, from and within the EBRD’s
27 countries of operations. Under the TFP, the Bank guarantees payment
obligations of local issuing banks to their Western confirming counterparts in
respect of trade-finance instruments. In addition to providing trade finance
guarantees, under this programme the EBRD also extends short-term loans to
selected banks in its countries of operations to fund trade-related advances
to local companies.
More than 30 per cent of transactions under the programme are transactions for
food, food commodities, agricultural equipment and other agricultural goods,
such as grain exports from Kazakhstan and Russia to the Kyrgyz Republic and
Ukraine, agricultural machinery from Russia to Kazakhstan, tractors from
Belarus to Moldova, butter from Lithuania to Uzbekistan, meat from Hungary and
tomato paste from Uzbekistan to Moldova. Such trades would, in all likelihood,
not have occurred without the programme.
Transaction number 2,000 is a good example of how the programme promotes trade
and brings both revenue and the culture of a cross-border economy to some of
the least advanced countries of the region, said Rogers LeBaron, EBRD Director
of Bank Lending. While western banks have started to take their own risk on
major issuing banks under the programme in Russia and Kazakhstan, banks in
these countries have also begun to use TFP as confirming banks in
intra-regional trade finance transactions with less advanced countries.
This year the programme is again poised to set a new record in terms of
transactions completed. In 2002, the best year so far, the number of
transactions rose to 676 from 368 in 2001. The programme now includes over 70
issuing banks in the region with limits exceeding € 600 million and about 450
confirming banks throughout the world.
One goal of the TFP is support for intra-regional trade, helping not only job
creation but also cooperation and understanding between countries. It supports
the restoration of traditional trade links between the Bank’s countries of
operations and, since the start of the programme in 1999, the number of
intra-regional transactions has been growing constantly; with more than 100
intra-regional transactions financed in 2003.
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