KARACHI: Rogers LeBaron, international trade finance specialist of the World Bank, has advised Pakistani businessmen to benefit from the International Finance Corporation’s (IFC) Global Trade Finance Program (GTFP), which guarantees trade-related payment obligations of approved financial institutions in emerging markets across all regions of the world, a statement said on Tuesday.
Highlighting the salient features of GTFP program during his visit at the Karachi Chamber of Commerce and Industry, LeBaron said that through GTFP bank network, local financial institutions can establish working partnerships with a vast number of major international and regional banks in the program, thus, broadening access to finance, it said.
“Currently, 13 Pakistani banks are associated with GTFP network,” he said.
The World Bank’s official said that by tapping the risk mitigation provided by GTFP, international trade finance providers can enhance their global reach confidently, gain familiarity in new markets and build relations with the quality counterparty banks in growth markets around the world. “GTFP facilitates imports and exports to countries such as Cambodia, Cameroon, Uganda, Nigeria and Brazil where you might not be thinking about due to concerns about payments,” he added.
GTFP complements the capacity of banks to deliver trade finance by providing risk mitigation on a per transaction basis in challenging markets where trade lines may be limited, he said.
He also said that IFC covers import letters of credit (LCs) and standby letters of credit (SBLCs), as well as the obligation of the issuer of performance bonds, bid bonds and advance payment guarantees for unfunded trade transactions. LeBaron said that IFC covers the obligation of the issuer of a financial instrument for trade financing on-lent to its clients. Instruments such as promissory notes, standby LCs, or credit guarantees in favour of participating confirming banks that provide funds to the issuing bank can be covered under full or partial guarantees from IFC, he said.
Trade finance credit from confirming banks supports LC bill discounting or negotiation, bankers acceptance financing, pre-export or post-shipment financing and post-import financing on a trade asset portfolio or for individual trade transactions, he added. LeBaron also requested the KCCI to extend cooperation in organising a presentation at the chamber’s premises in order to highlight the features of the IMF cover, which is being provided to Pakistani importers and exporters.
KCCI President Abdullah Zaki, while appreciating IFC’s Global Trade Finance Program, said that it will certainly help Pakistani exporters and importers to fearlessly explore new markets.
Zaki also expressed concerns over high export finance rate of the State Bank of Pakistan, which resulted in raising the cost of doing business and making Pakistani goods and services uncompetitive in the international markets.
The KCCI president, while extending full support to the International Finance Corporation in raising awareness about the services offered under various programmes, said that the KCCI is looking forward to further strengthen its relation with IFC. Sarmad Ahmed Sheikh, analyst, South Asia Financial & Private Sector Development Unit of the World Bank, said that the World Bank Financial and Private Sector Development team is engaged in preparing a trade finance diagnostic report to help them better understand the scope for improvement in the trade finance landscape in Pakistan.
The objective of the trade finance knowledge product is to identify opportunities, to expand access to trade finance for Pakistan’s private sector and to finance productive activities for domestic and external markets, he said.
The findings could, therefore, feed into a dialogue with the government of Pakistan on creating a more competitive private sector by increasing opportunities to better develop export markets and linkages through access to trade finance, he added.
Source: The NEWS