The Inter-American Development Bank (IDB) and the OPEC Fund for International Development (OFID) have signed a co-lending agreement to catalyze further trade financing to Latin America and the Caribbean. The partnership builds on the work of the Bank´s successful Trade Finance Facilitation Program (TFFP).
Launched in 2005, the TFFP supports economic growth through the provision of stable and reliable sources of trade finance for financial intermediaries in the region.
The co-lending partnership is a collaborative effort to provide financing to eligible Latin American and Caribbean banks. Both IDB and OFID intend to co-fund trade financing transactions associated with export from or import to an IDB borrowing member country. In addition, the partnership will help raising the credit capacity and liquidity of banks in the region.
By utilizing IDB’s extensive network and knowledge of the region, the partnership will allow banks to borrow on commercial terms to meet the needs of under-served trade clients. The IDB and OFID seek to close the trade financing gap and further trade by ensuring stable and reliable sources of financing for the region’s many trade finance clients.
“This groundbreaking partnership furthers the efforts of IDB to reach out to strategic partners such as OFID in its quest to increase the amount of available financing for trade activity in LAC. Since trade is a fundamental economic driver for the region, this partnership between OFID and IDB will have far-reaching effects,” said Gema Sacristán, Chief of the IDB’s Financial Markets Division.
Commenting on the agreement, OFID Director-General Suleiman J. Al-Herbish said, “In a globalized world, we need to work together and build effective partnerships. OFID welcomes the emergence of new directions of trade and investments and of a new development cooperation landscape. A partner such as IDB with its vast range of market knowledge in LAC will enable OFID to step up its activities to reach more beneficiaries in the region.”
In order to reduce systemic risks, access new capital and strengthen competitiveness, the TFFP offers co-lending facilities, A/B loans and guarantees to cover letters of credit, bills of exchange, promissory notes, bid bonds, performance bonds, advance payment bonds and other instruments used in international trade finance transactions. The TFFP includes a network of 301 confirming banks from 64 countries around the world, and 102 issuing banks in 21 countries in LAC.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source oflong-term financing for economic, social and institutional development in Latin America and the Caribbean.The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
About the OPEC Fund for International Development
OFID is the development finance institution established by the member states of Organization of the Petroleum Exporting Countries (OPEC) in 1976 as a collective channel of aid to the developing countries. OFID works in cooperation with developing country partners and the international donor community to stimulate economic growth and alleviate poverty in disadvantaged regions of the world. It does this by providing financing to build essential infrastructure, strengthen social services delivery and promote productivity, competitiveness and trade. OFID’s work is people-centered, focusing on projects that meet basic needs such as: food, energy, clean water and sanitation, healthcare and education.
OFID ´s Trade Finance Facility (OFID TFF) targets transactions to facilitate import and export activities and to address working capital requirements in developing countries. The general principles guiding the OFID TFF include developmental impact, South-South cooperation and additionality.