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Global Trade Liquidity Program An innovative and unique public-private partnership to revitalize global trade Presentation by German Vegarra Senior Manager.

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Presentation on theme: "Global Trade Liquidity Program An innovative and unique public-private partnership to revitalize global trade Presentation by German Vegarra Senior Manager."— Presentation transcript:

1 Global Trade Liquidity Program An innovative and unique public-private partnership to revitalize global trade Presentation by German Vegarra Senior Manager IFC Global Financial Markets, IFC

2 Historical drop in trade demanded global concerted effort 2 GLOBAL EXPORT % GROWTH Jan 08-Mar 09 DATA: International Financial Statistics & Datastream We, the leaders of the Group of Twenty, are committed to...Global Trade Liquidity Program which should provide up to $50 billion of trade liquidity support over the next three years, with significant cofinancing from the private sector London, April 2, 2009

3 The Response: The Global Trade Liquidity Program (GTLP) A.Trade finance is critical for SMEs in the developing world to gain/sustain market access for their products, therefore, a core part of IFC’s Access to Finance strategy B.Leveraging on IFC’s trade platform, IFC and a group of Governments, DFIs and global/ regional banks came together rapidly and launch the Global Trade Liquidity program in July GTLP mobilizes liquidity and guarantee public sector and the private sector GTLP partners with global, regional or local banks to channel liquidity to banks in the developing world in two ways: i) a 40% risk funded participation, and ii) short term loans C.GTLP accommodates Partners’ regional or sectoral requirement D.IFC acts as the Agent for the Program Participants

4 An Unparalleled Effort between Public and Private Sector Best Deal of 2009 Awards Commitment of US$ 2.7 billion Banks Funders

5 GTLP Reach (as of May 2010) GTLP has supported trade worth of US$4.8 bn With an average yield of 2.2% with zero losses Around 3200 Trade Transactions 84% of which are supporting SMEs About 40% of the volume supporting Lower Income Countries

6 Program adapting to shifting market conditions From liquidity to guarantees and support for agricultural trade GTLP – G o GTLP – G addresses the Strong demand for risk-mitigation support in the Lower Income Countries o GTLP - G is a portfolio-based, risk-sharing, unfunded program created in response to the increasing demand for unfunded regional solutions in Lower Income Countries. o IFC is looking to raise a pool of US$1 billion. IFC to contribute US$500 million o SIDA and OFID have already provided around US$175 million in Guarantees  GTLP – Agri o Food exports represent ½ of export earnings for about 40 developing countries and 1/3 for another 50 countries o Banks in agri-producing countries are in need of liquidity and risk-mitigation support o GTLP Agri complements the G-8 pledge to invest $18 billion in food security o GTLP Agri will make use of the existing GTLP platform to support agricultural trade and agri- businesses o IFC is looking to raise a pool of US$1 billion. IFC to contribute US$300 million in funding. OFID and Saudi Fund for Development seeding program

7 GTLP – G: Structure Model: GTLP-G Citibank (Africa) Facility size: US$500 million Target Leverage: [50:50] IFC fronts 100% of the guarantee of the US$250 million IFC retains US$50 million for its own account IFC receives counter guarantee from the other donors for their portion IFC appraises the UB on behalf of the partners IFC Role: Agent and Guarantor (fronts) IFC as an agent, supervises the program and provides quarterly reports to partners There is a great demand for guarantees in the Lower Income Countries Citi extends USD500 million in trade guarantees ([50:50] IFC Fronts 100% ($250million) of Guarantee 121 Banks in Africa Participants issue US$50 million each as counter-guarantees Funder A Funder B

8 GTLP – Agri: Structure Model: GTLP-Agri BancoGalicia Targeted Short Term loan 1-3 years Uses the existing GTLP model to support farmers, SMEs and agricultural infrastructure and logistics to increase exports Risk is on the Bank or the agri- producer IFC as an agent, supervises the program and provides quarterly reports to partners 100% Trade Finance to Agri Traders GTLP Participants US$250 million loan Funder AFunder B Agro Exporters

9 Summary An unparalleled effort between public and private sector Strong developmental impact and also financially prudent Trade is critical for development and continuous challenges require joint action.


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