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Trade Facilitation Programme reaches new benchmark
5,000th transaction marks new record for EBRD initiative
With the issuance of a €35,200 letter of credit by Tojiksodirotbank of
Tajikistan to Fortis Bank, the EBRD’s Trade Facilitation Programme (TFP) has
passed another milestone by financing its 5,000th transaction. The letter of
credit will cover the import of refrigerators and washing machines made in
Russia to Tajikistan.
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 up clients' working capital
by providing guarantees to the confirming banks for the payment of various
trade finance instruments issued by local banks.
Since the start of the programme, in Tajikistan alone, TFP has guaranteed 260
letters of credit from four Tajik banks, supporting imports from 30 countries
in Europe, Asia and North America.
One goal of the programme is support for intra-regional trade, not only by
helping to create jobs but also by supporting the restoration of traditional
trade links. In 2005, 170 such transactions were financed under TFP.
Transaction number 5,000 serves as a good example of how the initiative
supports the transition and graduation process, said Rudolf Putz, TFP
operation leader at the EBRD. Western confirming banks are also increasingly
supporting trade among EBRD countries of operations. The refrigerators and
washing machines are produced in a factory owned by Italy’s INDESIT in
Lipetsk, Russia, and imported by a small distributor of household appliances
in Dushanbe, Tajikistan.
The Trade Facilitation Programme is an important tool of the EBRD’s Early
Transition Countries initiative which aims to stimulate market activity in the
Bank’s poorest countries of operations by financing smaller projects.
Transactions benefiting small and medium-sized enterprises form the majority
of TFP business: More than 50 per cent of deals concluded since the start of
the programme cover transactions below €100,000.
This year the programme is again on course for a new record in terms of
completed transactions and business volume. In 2005, the best year so far, the
number of transactions rose to 1,204 from 1,089 in 2004. The programme now
includes more than 100 issuing banks in the region, with limits exceeding €1
billion in total, and 600 confirming banks throughout the world.
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