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EBRD finances 4,000th trade facilitation transaction
With Kyrgyz Ineximbank’s issuance of a $391,000 letter of credit to Russia’s
Vneshtorgbank for the import of Russian KAMAZ trucks by a Kyrgyz importer, the
EBRD’s Trade Facilitation Programme reached another benchmark last week: its
4,000th transaction.
Established in 1999, the Trade Facilitation Programme supports trade to, from
and within the EBRD’s 27 countries of operations. TFP assists participating
banks in building track records with their correspondent confirming banks,
reducing cash collateral requirements and freeing clients' working capital by
providing guarantees to the confirming banks in respect of the payment of
various trade finance instruments issued by local banks. Since the start of
the programme, TFP has guaranteed letters of credit from four Kyrgyz banks,
confirmed by 16 foreign banks in 10 countries.
One goal of the programme is support for intra-regional trade, not only
helping create jobs but also supporting the restoration of traditional trade
links. Last year alone 150 such transactions were financed under TFP.
Transaction number 4,000 is a good example of the transition and graduation
process promoted by the programme, said Rudolf Putz, TFP Operation Leader at
the EBRD. While western banks have started to take risks on major issuing
banks under the programme in Russia and Kazakhstan, banks in these countries
have begun to use TFP also as confirming banks in intra-regional trade finance
transactions with less advanced countries.
This year the programme is again on course for a new record in terms of
completed transactions. In 2004, the best year so far, the number of
transactions rose to 1,089 from 939 in 2003. The programme now includes more
than 90 issuing banks in the region, with limits exceeding €1 billion in
total, and about 500 confirming banks throughout the world.
The Trade Facilitation Programme is also an important tool in the EBRD’s
initiative for Early Transition Countries to stimulate market activity in the
Bank’s poorest countries of operations by using a streamlined approach to
financing more and smaller projects.
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