SL signs agreement for creation of Commonwealth Trade Finance Fund for small states

Valetta: Sri Lanka’s Foreign Minister Mangala Samaraweera together with the Foreign Ministers of India, Malta and Mauritius signed a Declaration of Intent for the creation of a Commonwealth Trade Finance Facility to assist boost trade and investment flows, particularly for small and developing countries in Malta on 26 November.

Sri Lanka was one of the four countries that signed the declaration as anchor investors and has contributed to set up the facility.

The voluntary fund hopes to attract start-up capital of $ 20 million and will provide member countries facing trade challenges with the finance they need to increase their trade capacity. It is estimated for every dollar invested, the fund will generate $ 20.

The facility, structured as a guarantee fund, will cover risk for providers of trade credit in financial institutions of Commonwealth countries. It seeks to stimulate lending by major banks to smaller banks in member states and reduce risk.

Financial investment will be sought from member countries and other parties that have expressed an interest in participating. The first phase of the fund will run over three years followed by a review.

Malta will host the Facility and manage its governance structure, providing oversight for contributing member countries. It will be operated by commercial banks using existing trade finance instruments, payments arrangements and operating infrastructures.