The World Bank Group has introduced a new framework designed to increase access to trade finance in developing countries by combining the capabilities of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). The initiative expands the scope of IFC’s Global Trade Liquidity Program (GTLP) by incorporating MIGA guarantees for eligible state-owned banks, allowing a broader range of financial institutions to participate in trade financing activities. The first facility approved under the new framework involves HSBC, one of the world’s leading international banking institutions.
The enhanced framework is expected to strengthen trade flows across low- and middle-income countries by enabling banks to extend additional short-term financing to businesses engaged in international trade. By increasing both public and private sector participation, the initiative seeks to address the persistent shortage of trade finance that continues to limit economic growth and business expansion in many developing markets.
A key feature of the framework is MIGA’s commitment to provide up to $500 million in guarantees on a facility-by-facility basis. These guarantees will cover the risk of non-payment by eligible state-owned banks involved in trade transactions. State-owned banks play a significant role in supporting businesses in emerging markets, particularly where access to private sector financing remains limited. The guarantees are expected to encourage greater lending activity while reducing risks for participating financial institutions.
The initiative comes at a time when the global trade finance gap is estimated at approximately $2.5 trillion. Small and medium-sized enterprises (SMEs), which are major contributors to employment and economic activity, are among the most affected by limited access to trade and supply chain financing. By improving liquidity and expanding financing availability, the program aims to help businesses secure the working capital needed to grow, participate in international markets, strengthen supply chains, and create employment opportunities.
HSBC’s participation is expected to enhance the reach and effectiveness of the program. As one of the world’s largest banking and financial services organizations, HSBC facilitated around $900 billion in trade transactions during the previous year. Its global network and expertise in trade finance position it as a key partner in supporting businesses operating across international markets.
The Global Trade Liquidity Program has been active since 2009 and has played an important role in facilitating trade across developing economies. Over the years, the program has supported more than $103 billion in global trade volume and worked with over 400 financial institutions in 75 emerging markets, including several low-income and fragile states. Through these activities, the program has provided critical support to thousands of importers and exporters, many of which are SMEs seeking access to international trade opportunities.
The new IFC-MIGA framework reflects the World Bank Group’s broader strategy of leveraging its institutions’ complementary strengths to address development challenges. By combining trade finance expertise, risk mitigation tools, and private sector partnerships, the initiative seeks to improve economic resilience, expand trade opportunities, and support job creation in countries where access to finance remains a major obstacle to growth.
As global trade continues to face uncertainty and supply chain disruptions, the expansion of trade finance support is expected to play an increasingly important role in sustaining economic activity. The framework aims to provide businesses in developing countries with greater access to capital, helping them participate more effectively in international markets while contributing to long-term economic development and employment generation.
