MANILA, Philippines - The Asian Development Bank (ADB) expanded its trade financing program yesterday to $1 billion or nearly double the amount last year — a move that could generate up to $15 billion in much-needed trade support for Asia by the end of 2013.
The global financial downturn has caused a dramatic cut in the availability of financing that companies rely on to trade. The Manila-based lender said in a statement that developing nations have been particularly hit hard as many major international banks focus on rebuilding their capital and reducing risk.
“Access to trade finance in times of crisis is vital to cushioning the shock of the global downturn on international trade,” said Philip Erquiaga, director general of the ADB Private Sector Operations Department.
“If the world is to emerge from the current economic malaise, it will require a focus on international trade which can help fuel virtually the only growth in evidence, which is in developing countries,” he said.
Last year, the ADB provided funds and guarantees through international and local banks in its developing member countries for trade transactions worth $578 million.
Steven Beck, an ADB investment specialist, said every dollar provided by the program attracts a similar amount of private sector financing.
ADB also has increased the maximum maturity permitted under the program to three years from two years to support the efforts of developing member nations in boosting their trade competitiveness.
The program started in 2004 as a $150 million program to support trade, a key tool for boosting economic growth and reducing poverty. — AP