MANILA — The Asian Development Bank (ADB) has approved $350 million in additional funding to expand the scope of a program that bridges gaps in trade financing for small and medium-sized enterprises (SMEs), according to the Philippine Star.
In a statement, the ADB said the additional financing would increase the program’s limit to $1.35 billion, keeping up with the increasing market demand for trade finance which grew over 50 percent in 2017.
The trade finance program provides loans and guarantees to financial institutions to support trade activities in the Asia Pacific region.
ADB said financial institutions supporting SMEs play an important role in closing the global trade finance gap, which amounts to $1.5 trillion, 40 percent of which is coming from the Asia and Pacific region.
Trade finance will also help countries achieve the Sustainable Development Goals, as identified by the United Nations’ Addis Ababa Declaration on Financing for Development.
“The increased headroom approved today by ADB’s board of directors will help us meet the huge surge we’ve seen in market demand for our trade finance products,” said Steven Beck, head of trade and supply chain finance at ADB.
ADB said the additional funding would complement the $100 million in additional support approved by the international finance institution’s board of directors in March to extend and expand the scope of the bank’s supply chain finance program.
The TFP has guaranteed or funded 5,583 transactions in 2016 and 2017, valued at $7.6 billion, with co-financing reaching $4.6 billion.
The program’s transaction growth remained robust in the first four months of the year – comprising 1,453 transactions valued at over $2 billion, $1.3 billion of which was co-financed with the private sector.
“Mobilizing private sector resources is an important metric for ADB as it leverages resources and multiplies the bank’s ability to reduce market gaps that impede growth and job creation in its developing member countries,” said the bank.