Heaptalk, Jakarta — IFC and DBS Bank Limited (DBS) have signed a USD500 million facility under IFC’s Global Trade Liquidity Program (GTLP), aiming to promote capital and trade flows in emerging markets across Asia, Africa, the Middle East, and Latin America, help bridge the record US$2.5 trillion global trade finance gap and expedite economic progress across these regions.
The facility, which includes IFC and DBS sharing the risk equally on a portfolio of trade-related assets of up to US500 million, is a testament to the mutual benefits of this partnership and enhances DBS’s capacity to support more trade financing. This includes letters of credit, a faster turnaround time for businesses trading with emerging markets counterparts, better risk management, and an optimistic outlook for future growth.
As the company’s trade finance exposure to emerging markets grows, the Group Head of Global Transaction Services Product Management of DBS, Sriram Muthukrishnan, claimed it constantly seeks innovative ways to back its clients’ evolving requirements. These matters require a greater focus on strengthening supply chain resilience, diversifying business models, establishing new markets, and capitalizing on the significant increase in emerging markets trading and infrastructure activities.
Emerging markets play an essential role in achieving a low-carbon future. To accelerate the decarbonization of trade flows across emerging markets, around 20% of the facility will be allocated to climate-eligible trade transactions, such as trading renewable equipment, energy-efficient equipment, and climate-smart certified commodities.
The facility is part of IFC’s GTLP, a product specifically designed to provide a countercyclical solution to the lack of trade financing in emerging markets. It does this by helping banks grow their credit limits, manage risk, and support trade across developing markets that are frequently underserved. This is IFC’s first GTLP with a Southeast Asian bank and the first long-term investment project between IFC and DBS, underscoring the program’s strategic importance.
“The importance of supply chains cannot be overstated, as they are the foundation upon which successful businesses and thriving economies are built. We believe that IFC’s partnership with DBS will unlock opportunities for more businesses to reach new markets and expand their operations to foster economic growth,” said Nathalie Louat, Director of Trade and Supply Chain Finance at IFC.
Since its inception, GTLP, through global and regional banks, has supported more than 400 financial institutions in 69 emerging market countries with over $53 billion in international trade volume.
