The World Bank last week pledged to direct $50bn into freeing up the world’s clogged trade arteries. In an announcement timed to coincide with the G-20 meeting of world leaders, the bank said it would launch an initiative that combines governments, development finance institutions and banks to boost trade in developing markets.
The Global Trade Liquidity Program (GTLP), which will launch in May, aims to reverse the catastrophic fall in trade volumes by supporting importers and exporters that have limited or no access to trade finance.
With initial commitments of $5bn from the public sector, the World Bank said the programme should eventually be able to support up to $50bn of trade. The programme has already received a commitment of $1bn from the IFC, a member of the World Bank Group, a pledge of £300m ($429m) from the UK government’s development finance arm, CDC, a promise of $200m from the Canadian government and $50m from the Dutch government.
Emerging market specialist banks Standard Chartered and Standard Bank have signed up to the programme and will receive credit lines of $500m and $400m, respectively. It is hoped that these credit lines will enable the banks to grease the wheels of trade finance in emerging markets by lending to local banks. They in turn will on-lend to their import and export clients.
World Bank president Robert Zoellick said he welcomed the tremendous degree of co-operation between public and private sector institutions. He said it was a timely and targeted solution that would “provide trade finance to support businesses across developing markets”.
