ADB to supports Sri Lanka’s trade finance

ADB aims to attract private capital to support development in the poorest countries of Asia. Trade is an important component of economic development and ADB is working to promote trade by developing, among other things, public -private partnerships that involve risk-sharing arrangements.

The Asian Development Bank and Japan’s Sumitomo Mitsui Banking Corp. have launched a trade finance scheme for developing countries the initial phase of which will be in Sri Lanka and Pakistan.

An ADB statement said the bank and SMBC have entered a risk-sharing agreement that will enhance support for international trade in developing countries in Asia.

The ADB said these types of risk sharing agreements could be particularly important in developing intraregional trade between smaller developing countries.

The transactions covered in the scheme range from short-term letters of credit to tenors that last up to two years.

The program will be introduced in phases with the first phase being launched in Pakistan, and Sri Lanka.

Phase II will extend coverage to include financial institutions in Cambodia, Lao PDR, Mongolia, the Philippines, and Viet Nam.

Courtesy : Lankapuvath