WTO, six others partner to boost trade finance

The four other organisations are the International Islamic Trade Finance Corporation (a member of the Islamic Development Bank Group); the International Monetary Fund (IMF); the European Bank for Reconstruction and Development; and the Financial Stability Board (FSB). The decision was taken at a special session during the annual meetings of the World Bank and International Monetary Fund (IMF) which recently took place in Indonesia.

World Trade Organisation representatives have stated that, despite the importance of trade finance, a number of problems have emerged since the financial crisis; supply and demand have become unbalanced. Perceived regulatory risk, combined with low capacity of the financial sector in some countries, has resulted in gaps in provision.

According to the World Trade Organisation, about 80%t of global trade transactions require some sort of financial credit or a guarantee – which means that to finance USD 18 trillion in annual flows of trade, there needs to be a well-functioning trade finance market of about USD 14 trillion.

The World Trade Organisation has however indicated that some significant strides have been made in recent years toward improving global trade finance, including enhancing the trade finance programmes of key institutions. Such programmes are expected to support over USD 35 billion of trade this year; which is an increase of more than 50% over two years.