In an effort to stimulate trade in emerging market economies, Citigroup and the World Bank launched a $1.25 billion funding facility, the banks announced on June 15.
The three-year program could support estimated trade flows of up to $7.5 billion, Citigroup and the International Finance Corp (IFC), the private sector financing arm of the World Bank, said in a joint statement. Citigroup will provide 60% of the financing, or $750 million, while the IFC and other development agencies will be responsible for the remainder.
The move is an extension of the World Bank-led Global Trade Liquidity Program, which brings together governments, international development agencies and private sector banks to support trade finance to importers and exporters in the emerging markets affected by the global financial crisis.
The global program is aimed at supporting up to $50 billion of trade.
Citi will use the funding to "originate" trade finance transactions from emerging market banks in Asia, Latin America, Central and Eastern Europe, the Middle East and Africa, allowing the banks to extend financing to local importers and exporters, the statement said. This in turn will help stimulate country and regional commerce, it said.
"Global trade is facing serious challenges in today's financial environment, given the shortage of liquidity worldwide," said Lars Thunell, IFC chief executive."This program benefits small businesses in developing countries, which are a major source of jobs and have been hard-hit by the global financial crisis," Thunell said.
Copyright Agence France-Presse, 2009