Beijing, April 3, 2009—The
Chinese government has agreed to provide $1.5 billion to IFC, a member
of the World Bank Group, to support a new global initiative designed to
boost trade in developing markets and address the shortage of trade finance
resulting from the global financial crisis.
The government’s contribution fulfills a pledge made by President Hu Jintao
at the G-20 meetings in Washington, D.C., in November. Senior officials
from the Chinese government and IFC subsequently held fruitful discussions
to structure the arrangements under a private placement of IFC securities.
World Bank Group President Robert B. Zoellick expressed gratitude for “this
important support by China for IFC’s efforts to address liquidity needs
in the global economy.” He said: “This is a highly responsible action
which reflects China’s commitment to respond to the global crisis, and
it reflects the expanding partnership between China and the World Bank
Group to address developmental needs in emerging markets. It is a true
honor that the World Bank Group was chosen as the vehicle for executing
China’s concrete steps to promote a revival of world trade.”
IFC will use the Chinese government’s funds in part to support the new
Global Trade Liquidity Program, a global collaborative effort that was
launched in April during the G-20 meetings in London. The program is part
of IFC’s multifaceted global financial crisis response, which also includes
funds for infrastructure, bank recapitalization, and other needs in Africa
and Latin America.
The program is a funded trade finance program of up to $5 billion, of which
$1 billion will come from IFC and the remainder from development finance
institutions, governments, and private sector banks. The funds will be
mobilized and disbursed in phases to provide IFC with a flexible platform
from which to support the extension of funded trade financing to underserved
clients globally. The GTLP will underpin up to $45 billion in trade
over its planned three-year year term.
The GTLP complements the IFC Global Trade Finance Program, which was initially
established in October 2005 in an amount of $1 billion to provide confirming
banks with partial or full guarantees covering payment risk on banks in
the emerging markets for trade-related transactions. IFC has since raised
the amount of the program to $3 billion to respond to critical needs.