WTO joins with IFC, regional development banks and IMF to boost financial inclusion in trade
10 October, 2018, 6:22 pm
BALI, 10 OCTOBER 2018 (WTO) – The World Trade Organisation and six other international organisations have pledged to deliver greater financial inclusion in trade.
At a special session during the Annual Meetings of the World Bank and the International Monetary Fund (IMF) in Nusa Dua, Bali, Indonesia, the organisations committed themselves to finding ways to close the gaps in trade finance provision.
During the event Director-General Roberto Azevêdo said:
“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 the low capacity of the financial sector in some countries, has resulted in big gaps in provision. Today, the Asian Development Bank estimates that the global gap in trade finance is about $1.5 trillion. This gap represents a significant barrier to trade. It is of particular concern that this gap affects developing countries and smaller businesses the most. Today, 60% of trade finance requests by SMEs are rejected.
“Opportunities for growth and development are being lost. So it’s clear to me that action is needed. Over recent years we have been building a coalition to that end. Philippe (Le Houérou, CEO of the International Finance Corporation) and I joined forces and started reaching out to the heads of the regional development banks, the Chair of the Financial Stability Board, and many others. Together I think we’ve taken some important steps.”
DG Azevêdo outlined the significant progress that has already been made in recent years, including to enhance the trade finance programs of key institutions. These programs are expected to support over $35 billion of trade this year, which is an increase of more than 50% over two years. He also outlined progress in addressing the knowledge gaps in local financial institutions, and in increasing dialogue with regulators to ensure that necessary financial regulations do not have unintended consequences for trade finance, which is a very low risk form of lending. He pointed to further actions which are needed in each of these areas.
“We need to make global trade more inclusive. But trade inclusion needs financial inclusion. So we need to continue developing concrete ideas and solutions that make a real difference. Working with a range of partners – including the private sector – can help provide momentum to this work,” DG Azevêdo said.
The six organisations are; the International Finance Corporation (a member of the World Bank Group), International Islamic Trade Finance Corporation (a member of the Islamic Development Bank Group), the International Monetary Fund, the Africa Export-Import Bank, the European Bank for Reconstruction and Development and the Financial Stability Board.