MIGA-EBRD Trade Finance Facility

Project Description

This summary is for potential MIGA guarantees to be issued to the European Bank for Reconstruction and Development (EBRD) to support trade transactions conducted through State-Owned Banks (SOBs) in emerging markets and developing economies (EMDEs). MIGA would issue Trade Finance Guarantees (TFG) for up to US$200 million over a period of up to 6 years (with an initial 3-year term), against the risk of non-payment by SOBs to EBRD with respect to EBRD guarantees issued under its Trade Facilitation Programme (TFP). The first TFG under this facility would be for up to $10 million for Ukrainian SOBs. The partnership between MIGA and EBRD was Board approved on December 22, 2022.

MIGA considers the issuance of TFGs to the following SOBs:

Environmental Categorization

The MIGA-covered facility will support short-term trade transactions in EMDEs. These transactions pose minimal environmental and social (E&S) risks and impacts and as such the project has been categorized as ‘FI-3’ under MIGA’s Policy on Environmental and Social Sustainability (2013).  The applicable E&S requirement for this project is the MIGA Exclusion List.

EBRD’s TFP includes an E&S risk management process for the SOBs and underlying transactions. The due diligence process includes an assessment of each SOB’s E&S process and labor practices.  EBRD will be responsible for screening against MIGA’s Exclusion List.

Development Impact

MIGA interventions will contribute to positive development impact through the facilitation of trade. It has been widely acknowledged that trade is a driver of economic productivity and wage growth. Trade supports economic activity and employment directly through the generation of income and liquidity on the back of exports, as well as indirectly by facilitating investment (importation of capital goods and technology), importation of critical goods and goods required for basic economic function, as well as importation of intermediate and consumer goods. Through partnering with EBRD, MIGA will facilitate needed trade finance at a time of rising economic pressure and heightened geopolitical risks affecting trade, supply chain and critical imports for countries. The proposed Facility also specifically supports access to trade finance and the import of essential goods in Ukraine. These critical goods are needed to support the Ukrainian population and economy given the impacts of the war on domestic production, the displacement of local population and supply shortages.