GENEVA — Multilateral banks and rich donor nations have earmarked $2.5 billion toward a $50 billion global trade liquidity program to assist cash-strapped importers and exporters in poor nations.
The funds, committed under the Global Trade Liquidity Program, will start to disburse through the first four participating banks — Citigroup, Standard Chartered Bank, Rabobank Nederland and Standard Bank of South Africa — providing trade finance through a network of more than 500 banks in some 70 developing nations.
“This is vital for developing countries, many of which have seen trade decrease for lack of availability and affordability of trade finance,” said Pascal Lamy, World Trade Organization director-general.
Lamy told a global forum this week the sharp reduction in available trade finance has contributed to the declining trade figures.
“In today’s market, there is a lack of transparency and an abnormally high aversion to risk,” he said.
At the G20 crisis summit in London in April, leaders pledged $250 billion to support trade finance through export credit agencies and multilateral development banks, Lamy noted. But he said the contraction of trade credit is part of the broader liquidity crisis and emphasized developing nations are reporting difficulties in obtaining bank credits to finance transactions.
“Trade finance is the oil of global commerce,” he said.
World Bank president Robert Zoellick said public investors such as the International Finance Corp., the private arm of the World Bank Group, which has committed $1 billion, have begun to come forward. Other program partners include the African Development Bank, which has put in $500 million, and the U.K. Department for International Development and the Saudi Fund for Development, which have each committed $300 million.
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