The European Bank for Reconstruction and Development (EBRD) has increased the total limit of its Trade Facilitation Program (TFP) to €3 billion, up from €2 billion in 2020 in response to record demand for trade finance amid the COVID-19 crisis.
In a statement issued on Thursday, the bank said that "it saw an unprecedented surge in requests for its services to date, as it has financed more than 1,000 foreign trade transactions with a new record business volume of €1.8 billion in 2020 and increased limits with 10 partner banks for a total of €500 million."
It added that the bank identified trade finance as a core area of intervention when the EBRD responded to the COVID-19 crisis with a solidarity package which also includes emergency working capital and liquidity injections for existing clients, investment restructuring and support for vital infrastructure services.
EBRD is expected to dedicate the entirety of its investments of up to €21 billion during the period 2020-21 to combating the economic impact of the Covid-19 crisis, according to the statement.
EBRD Acting President Jürgen Rigterink said that trade finance increase will allow the bank to keep even more vital trade going and effectively counter the economic damage caused by the pandemic.
The coronavirus pandemic is having a serious impact on trade flows and supply chains across the world, increasing the demand for trade finance as importers and exporters juggle with new and sometimes more complex supply routes, EBRD said.
As a result, financing periods have become longer, importers have to keep higher stocks, foreign exporters are requesting payment by documentary credits and demand for trade finance has increased. The delivery of goods under foreign trade contracts has been delayed, it added.