The Asian Development Bank (ADB) and the OPEC Fund for International Development (OFID) signed a risk distribution agreement to support trade in emerging Asian countries under ADB’s Trade Finance Programme (TFP).
The agreement will support an estimated incremental trade flow between $800 million and $1.2 billion in countries such as Bangladesh, Mongolia, Pakistan, Sri Lanka and Uzbekistan, and other markets where financing from private financial institutions is limited.
“By supporting trade transactions in emerging Asia, OFID and ADB will help create economic growth and jobs,” said ADB's director general for Private Sector Operations Department Philip Erquiaga.
ADB's TFP fills private sector market gaps in trade finance by providing guarantees and loans through over 200 partner banks to support trade. TFP supports hundreds of small and medium-sized enterprises in developing Asia and is expected to do approximately $4 billion in annual turnover this year through more than 2,000 transactions. The Trade Finance Programme operates in 18 developing markets. The programme is targeting expansion to Myanmar, Papua New Guinea, Fiji, Vanuatu, and Timor Leste next year.
“This new partnership provides an opportunity to strengthen OFID and ADB’s longstanding cooperation,” said OFID’s acting head of the Private Sector and Trade Finance Operations Department Tareq Alnassar. “OFID is happy to team up with a like-minded institution to increase the availability of trade finance for developing Asian nations, especially in light of changing market conditions that threaten the availability of trade finance in regions where it is needed most.”
OFID’s Trade Finance Facility broadens the institution’s instruments for poverty alleviation and economic development. It aims at supporting enterprises and governments to facilitate their import and export activities and to address their stock- and working-capital requirements. As of December 31, 2011, OFID supported incremental trade totaling $4 billion, comprising 2,000 transactions in 58 countries.
OFID is a multilateral development finance institution established in 1976 by the Member States of the Organisation of the Petroleum Exporting Countries (OPEC). The primary aim of OFID is to contribute to the social and economic development of low-income countries. By the end of August 2012, OFID had committed a cumulative $14.2 billion in development financing to 132 countries spread across Africa, Asia and the Pacific, Latin America, the Caribbean and Europe.