WTO joins with IFC, regional development banks and IMF to boost financial inclusion in trade

The World Trade Organization and six other international organizations pledged on 9 October 2018 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 organizations 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.”

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.

Original source: WTO
Published on 9 October 2018