US banking giant Citi and the Asian Development Bank have agreed to jointly provide up to 1.5 billion dollars in financing to support trade in developing Asia, the ADB said Monday. Under the agreement, the two lenders "will share the risk on trade finance advanced to exporters and importers in frontier markets in Asia," an ADB statement said.
The deal supports a trade finance facilitation programme launched by Philippines-based ADB in 2004, and is aimed at providing up to 1.5 billion dollars in loans and guarantees up to 2013, the statement said. The risk sharing pact comes at a time when the global financial crisis has slowed the supply of trade finance, in particular to emerging market countries, the ADB said. Transactions under the plan can range from short-term letters of credit to maturities of up to three years.
The programme, if combined with additional private sector participation could provide "up to 15 billion dollars in trade finance by the end of 2013," it added. "Ensuring continued trade flows is key to helping developing countries boost economic growth and alleviate poverty," said ADB private sector operations department director Philip Erquiaga.
The development bank said it is also forging partnerships with other financial institutions to support trade. The ADB and the Inter-American Development Bank earlier agreed to share access to their trade programmes to spur trade between emerging Asia and the Americas, two regions that "have done very little business until now," it said.
ADB said its trade finance programme has been expanded in the past few months to support more trade in Pakistan and Vietnam, while expanding rapidly in Bangladesh, Indonesia, the Philippines, and Sri Lanka. The programme is also scheduled to eventually cover all of central Asia.
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