ICC Banking Commission Meeting 2012

Leading regional development bank  Largest source of multilateral financing for Latin America and the Caribbean since 1959  26 Country offices in the region; 48 member countries worldwide  AAA/Aaa ratings by Standard & Poor’s and Moody’s 2

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Overarching Priorities 5 Underserved markets SMEs Affordable housing Local capital market Microfinance Reducing the footprint of Financial Institutions (Fis) Mitigating climate change while generating financial returns Loans, guarantees and training to mitigate risk and increase liquidity Expand trade financing for SMEs Financing technical assistance: greening operations and buildings financial literacy corporate governance Funds for Infrastructure Financing Social Inclusion Valuing the Environment Fostering Trade and Integration Promoting Sustainable FIs

6 LAC Economic Optimism Contribution to total global growth 14% LAC average growth 5.6% strong growth among commodity exporters in the South

Trade and Investments Facts  In 2011, more the half (57%) of the developing countries’ exports already went to markets outside Europe and the United States and according to UNCTAD, 30% of the global FDI flows are already originated in the developing economies.  More dynamism to LAC’s South-South economic relations, particularly with emerging Asia, where the growth opportunities are difficult to overestimate. Asia–LAC trade has grown by a factor of six since 2000, reaching an estimated US$438 billion in 2011 and making Asia LAC’s second trade partner (22% of LAC’s total trade) only behind the U.S. (34%). 7

8 Driver for LAC’s relationship with China LAC accounts for 7% of China’s trade China’s share of LAC’s trade stands now at 12%,

9 Free Trade Agreements 20 FTA 7 only 8 under negotiation

10 South – South Cooperation Tata Motors, India’s largest automobile company Marcopolo, the Brazil- based global leader in body-building for buses and coaches

Trade Finance Facilitation Program (TFFP)  IDB supports banks through a trusted, trade finance network that:  Reduces risks  Allows access to new capital sources  Ensures the efficient exchange of goods and services in the region  Since 2005, the TFFP has built a network of 86 Issuing Banks in 21 countries in Latin American and the Caribbean.  USD 1.72 bil  73% percent of these banks count on SME lending as their main business focus. 11

12 NameTrade Finance Facilitation Program (TFFP) NatureCredit Guarantee (“CG”) in favor of Confirming Banks to cover the risk they take on eligible trade financing instruments issued by LAC Issuing Banks ParticipantsIssuing Banks: Private or state-owned banks incorporated in IDB Borrowing Member Countries, track record in trade finance, satisfactory credit worthiness, compliance with IDB standards Confirming Banks: Any international/regional bank with recognized track record in international trade financing Applicable Exposure Limits (i) Max. total program exposure: USD 1 billion (ii) Max. country limit: USD 300mn Tenor (individual transactions) Up to 3 years Coverage LevelUp to 100% per individual transaction Eligible Transactions(i) Letters of Credit (ii) Export and import financing funded by Confirming Banks (iii) International Guarantees (Bid, Performance, Advance Payment Bonds) and Stand- by Letters of Credit CurrencyUSD, Euro, Yen and other currencies CostsNo joining costs Usually, guarantee fees equivalent to 75-85% of confirmation fee/spread on the TFFP- guaranteed amount depending on the percentage of the IDB guarantee

Transaction scheme 13

14 An efficient response to market needs During the global financial crisis, the IDB’s partnership with trade finance funds continued to provide stable and reliable financing for its clients, many of whom are SMEs, and to stimulate growth Due to growing demand in Latin America and the Caribbean, we are extending the support to existing funds to further increase access to trade finance. These funds fill a critical void in local banking sectors by providing access to finance for clients that would otherwise face unaffordable or limited financing from traditional banking outlets. The high level of demand attests to their success.

Our deal is with the future. Maria Tapia Senior Financial Officer Inter-American Development Bank