Beijing
,
April 3, 2009
—The Chinese government has agreed to provide $1.5 billion to IFC, a member of the World Bank Group, to support a new global initiative designed to boost trade in developing markets and address the shortage of trade finance resulting from the global financial crisis.
The government’s contribution fulfills a pledge made by President Hu Jintao at the G-20 meetings in Washington, D.C., in November. Senior officials from the Chinese government and IFC subsequently held fruitful discussions to structure the arrangements under a private placement of IFC securities.
World Bank Group President Robert B. Zoellick expressed gratitude for “this important support by China for IFC’s efforts to address liquidity needs in the global economy.” He said: “This is a highly responsible action which reflects China’s commitment to respond to the global crisis, and it reflects the expanding partnership between China and the World Bank Group to address developmental needs in emerging markets. It is a true honor that the World Bank Group was chosen as the vehicle for executing China’s concrete steps to promote a revival of world trade.”
IFC will use the Chinese government’s funds in part to support the new Global Trade Liquidity Program, a global collaborative effort that was launched in April during the G-20 meetings in London. The program is part of IFC’s multifaceted global financial crisis response, which also includes funds for infrastructure, bank recapitalization, and other needs in Africa and Latin America.
The program is a funded trade finance program of up to $5 billion, of which $1 billion will come from IFC and the remainder from development finance institutions, governments, and private sector banks. The funds will be mobilized and disbursed in phases to provide IFC with a flexible platform from which to support the extension of funded trade financing to underserved clients globally. The GTLP will underpin up to $45 billion in trade over its planned three-year year term.
The GTLP complements the IFC Global Trade Finance Program, which was initially established in October 2005 in an amount of $1 billion to provide confirming banks with partial or full guarantees covering payment risk on banks in the emerging markets for trade-related transactions. IFC has since raised the amount of the program to $3 billion to respond to critical needs.
