Guatemala, Honduras and Mexico could gain $90bn in trade with better finance access, IFC-WTO report finds - Trade Treasury Payments

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Guatemala, Honduras and Mexico could gain $90bn in trade with better finance access, IFC-WTO report finds

At a glance, the trade dynamics of Guatemala, Honduras, and Mexico, the so-called CAM-3, present a story of modest but consistent economic ascent. Mexico has strengthened its status as a high-value manufacturing hub, while Guatemala and Honduras have diversified their exports in agriculture and light manufacturing. 

But beneath the surface, a shortfall persists: trade and supply chain finance. In these three countries, access to reliable, affordable trade and supply chain finance remains the exception rather than the norm.

The International Finance Corporation (IFC) and World Trade Organization (WTO) launched their latest joint report, Trade Finance in Central America and Mexico, at an event hosted by the Instituto Tecnológico Autónomo de México (ITAM) in Mexico City on 29 April 2025.

The study, which focuses on Guatemala, Honduras and Mexico, reveals that despite steady trade growth and increasing export diversification, access to trade and supply chain finance remains limited—covering as little as 8–12% of merchandise trade across the three countries. 

The report warns that this persistent financing gap is constraining the region’s trade potential, especially for smaller firms and non-related-party exporters, and estimates that improved access to affordable trade finance could unlock over $90 billion in additional trade annually across the CAM-3.

While access to capital is becoming more efficient globally, trade finance in the CAM-3 remains constrained. According to IFC-WTO data, only 8% of Mexico’s merchandise trade is backed by trade or supply chain finance (TSCF). For Honduras and Guatemala, the figures are slightly higher—10% and 12% respectively—but still lag considerably behind benchmarks in Asia and West Africa.

This is not for lack of trade. Mexico alone has seen its exports to the United States grow by over 30% in a decade, buoyed by its increasingly sophisticated manufacturing base. Meanwhile, Guatemala and Honduras are exporting more food, textiles, and industrial inputs across Latin America. The report highlights that the disconnect lies between the rising complexity of these economies and the maturity of their financial infrastructure.

Much of the region’s trade continues to operate on open account terms, which favour buyers and provide limited protection to sellers. Letters of credit and other traditional risk-mitigating tools are used sparingly. Supply chain finance accounts for only 1% of total trade in Mexico, and even less in its neighbours.

Mid-sized firms need short-term liquidity

In Mexico, paradoxically, the issue is partly structural success. More than half of Mexico’s exports to the US are related-party transactions—subsidiaries trading with parent companies. Such firms, often multinationals, rely on internal financing and tend to bypass domestic banks entirely. Bank intermediation is seen as cumbersome, expensive, and largely irrelevant.

Yet beyond the flagship manufacturers lie tens of thousands of mid-sized firms operating in the shadows of global value chains. These are the companies that need short-term liquidity to fulfil export contracts or import key inputs. According to the report, only 25% of Mexican trading firms receive loans from local banks. Among new exporters, the figure is still lower.

In Guatemala and Honduras, the constraints are more familiar. Banks cite high collateral requirements, low-cost funding shortages, and macroeconomic volatility. 

Correspondent banking relationships remain a bottleneck, especially for smaller lenders. Even where demand exists, supply is scarce, risk appetites limited, and regulatory burdens high.

The $90bn export opportunity

The IFC-WTO model suggests that closing the trade finance gap could be transformative. Doubling TSCF coverage and aligning financing costs with international norms could increase Mexico’s exports by 7.4% annually—an $85 billion gain. For Guatemala and Honduras, export volumes could grow by nearly 8% each, equivalent to $2.8 billion and $2.3 billion respectively.

Critically, these gains would be concentrated in sectors where the region has a competitive edge: textiles and agriculture in Central America; automotive and electronics in Mexico. Imports would rise in parallel, driven by increased access to intermediate and capital goods—fuel for the manufacturing engine.

Recommendations

The report offers a suite of recommendations.

First, regulatory harmonisation, particularly around digital invoicing, receivables finance, and warehouse receipts, would lower entry barriers. Mexico has made strides here, but a patchwork of standards remains a drag on scale and innovation.

Second, cost reductions. Many banks in the region still price trade finance as an exotic product, applying blanket risk premiums that deter use. Developing instrument-specific risk assessments and market intelligence systems would help lenders calibrate terms more accurately.

Third, capacity building. Smaller banks lack the tools to assess trade risk, while many firms—especially new exporters—lack the knowledge to access finance. Targeted training, first-loss guarantees, and industry associations could help bridge the gap.

Lastly, scaling supply chain finance. SCF holds particular promise for mid-sized manufacturers and agribusinesses, allowing them to unlock working capital by leveraging the creditworthiness of buyers. Yet awareness remains low, and market infrastructure fragmented.

The role of Development Finance Institutions

The report highlights the need for multilateral development banks to help unlock the region’s trade finance potential. Regional and international development banks can offer liquidity, risk-sharing instruments, and technical assistance. But more importantly, they can convene stakeholders—banks, regulators, businesses—to foster shared norms and infrastructure.

With remittance inflows high and foreign exchange reserves stable, the macro environment is favourable. But unless trade finance constraints are addressed head-on, the CAM-3 risks missing out on a chance to deepen their participation in global trade.

Mind the trade finance gap 

Guatemala, Honduras, and Mexico are not standing still. They are exporting more, integrating deeper into supply chains, and diversifying partners and products. But trade cannot thrive on grit alone. It needs finance—flexible, affordable, and accessible.

As the global economy grows more uncertain and supply chains more complex, trade finance is no longer a nice-to-have. For the CAM-3, it may well be the hinge on which sustainable, inclusive trade growth turns.

The report can be found here.