MIGA and IDB Invest launch $500m trade finance guarantee for Latin America and the Caribbean - Trade Treasury Payments

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MIGA and IDB Invest launch $500m trade finance guarantee for Latin America and the Caribbean

The Multilateral Investment Guarantee Agency (MIGA), part of the World Bank Group, has signed a trade finance guarantee framework worth up to $500 million with IDB Invest, the private sector arm of the Inter-American Development Bank (IDB) Group. 

The agreement is the first collaboration of its kind between the two institutions and aims to bolster trade finance availability for commercial banks operating across Latin America and the Caribbean.

Structured under IDB Invest’s Trade Finance Facilitation Program (TFFP), the framework is designed to mitigate non-payment risks in cross-border trade transactions. MIGA’s support will enable IDB Invest to extend guarantees and trade loans to regional financial institutions, many of which face structural barriers to accessing liquidity for trade operations.

This initiative responds directly to a significant financing shortfall. The global trade finance gap was estimated to have reached $2.5 trillion in 2022, according to the latest Asian Development Bank (ADB) survey. Latin America and the Caribbean account for approximately $350 billion of this shortfall. 

The framework seeks to narrow this gap by crowding in private capital and reinforcing liquidity for exporters and importers, particularly micro, small, and medium-sized enterprises (MSMEs).

Hiroshi Matano, Executive Vice President of MIGA, said, “MIGA’s guarantee in partnership with IDB Invest will spur trade and boost growth in the LAC region. This collaboration will help address the trade finance gap, support MSMEs, and promote sustainable economic development in the region. We look forward to expanding our partnership with IDB Invest to further enhance access to finance and mobilise additional private sector capital in the LAC region.”

The framework builds on the respective strengths of each institution. IDB Invest has local market knowledge and origination capacity and MIGA has expertise in political and credit risk mitigation. 

The model is designed to be scalable and replicable, aligning with broader efforts to mobilise private sector investment in emerging markets.

James Scriven, CEO of IDB Invest, said, “The collaboration between our institutions provides an efficient and scalable mechanism to channel trade finance where it is most needed. It strengthens our ability to support strategic clients while promoting transparency, integrity, and sustainability in regional trade operations.”

The initiative also supports the strategic objectives of the World Bank Group Guarantee Platform, which was launched in 2024 to centralise the group’s de-risking instruments, and aims to expand annual guarantee issuance to $20 billion by 2030.

By reducing credit constraints, the new facility is expected to improve regional trade resilience and help firms access global markets. 

The agreement is effective immediately.