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Sri Lanka in ADB trade finance deal
03 May, 2010 17:53:51
May 03, 2010 (LBO) - Sri Lanka is one of the countries included in a trade finance deal between the Asian Development Bank and Germany's Commerzbank to share risks to support increased trade in developing Asia.
According to an ADB statement, the Risk Participation Agreement – signed on the sidelines of the bank's 43rd annual meeting in Tashkent, Uzbekistan – is part of ADB's billion-dollar TradeFinance Facilitation Program (TFFP).

Under the agreement, Commerzbank, the second-largest bank in Germany, and ADB will share risks to support increased trade in developing Asia.

The countries include Bangladesh, Indonesia, Kyrgyz Republic, Mongolia, Nepal, Pakistan, Philippines, Sri Lanka, Tajikistan, Viet Nam, and other markets.

Transactions under the deal can range from short-term letters of credit to maturities of up to three years.

"Companies, particularly small- and medium-sized enterprises, in developing nations can have difficulties in accessing funds that they need to support imports or exports of critical components or final goods," the ADB said.

"Partnerships such as those established through the Trade Finance Facilitation Program are dramatically increasing the flow of trade finance," said Philip Erquiaga, Director General of ADB's Private Sector Operations Department.

"If companies can get the trade finance they need, they can expand their business and take on more workers, boosting individual incomes. Those workers will then become consumers themselves, boosting global economic growth."

The TFFP, which started operations in 2004, provides loans and guarantees through, and in conjunction with, international banks and ADB's developing member country banks to support trade.

In 2009, the TFFP provided support for 1.9 billion dollars in trade transactions, 300 percent more than in 2008.

By attracting private sector financing and because the portfolio can roll over once a year, the program could generate 15 billion dollars in trade finance through 2013, the ADB statement said.

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