The Inter-American Development Bank today announced the approval of a permanent extension of its regional Trade Finance Facilitation Program (TFFP) and of the issuance of IDB guarantees covering up to 100 percent of eligible trade financing instruments.
Launched in 2005, the TFFP supports economic reactivation and growth throughout Latin America and the Caribbean by increasing the availability of funding for international trade.
“Today’s decision to make the TFFP permanent highlights the IDB’s commitment to support trade and regional integration and is fully consistent with the Bank’s strategy towards developing and implementing private sector-oriented, market-driven financial services and solutions,” said Hans Schulz, head of the financial markets team of the IDB’s Private Sector Department.
Under the program the IDB issues guarantees to international banks (confirming banks) to mitigate the risk from eligible Latin American and Caribbean banks (issuing banks) in export and import contracts with tenors of up to three years.
To date the TFFP has a network of approximately 20 issuing banks in 11 countries in this region and around 70 confirming banks belonging to 32 international banking groups from 25 countries around the world. Through these financial institutions the IDB has issued guarantees for nearly $70 million in support of 80 individual trade transactions totaling $95 million.
The IDB’s Board of Executive Directors also voted to raise the ceiling for guarantee coverage of individual transactions to 100 percent from 90 percent.
“Increasing the maximum guarantee coverage will help reduce entry barriers for confirming banks and will be particularly helpful for intra-regional trade and in the smaller IDB borrowing member countries,” Schulz added.