World Bank Group expands Global Trade Liquidity Program with New MIGA-IFC Guarantee Framework

The World Bank Group has introduced a new framework integrating guarantees from the Multilateral Investment Guarantee Agency (MIGA) to cover state-owned banks under the International Finance Corporation’s (IFC) Global Trade Liquidity Program (GTLP). 

This initiative would broaden the scope of trade finance support in low- and middle-income countries by including state-owned banks alongside private sector institutions, thereby addressing critical gaps in global trade finance.

Expanding trade finance coverage to state-owned banks

The GTLP is designed to support trade in emerging markets through risk-sharing facilities with leading global and regional commercial banks. The newly established MIGA-IFC framework enhances this program by adding MIGA guarantees to cover the risk of non-payment on trade transactions involving eligible state-owned banks. 

These banks play a vital role in trade finance within emerging and developing economies but have historically faced challenges accessing such guarantees.

The first facility approved under this framework is with HSBC, a longstanding World Bank Group partner and a major player in global trade finance, having facilitated approximately $900 billion in trade in the previous year.

Addressing the global trade finance gap

By expanding the range of financing available through the GTLP, the framework aims to grow both public and private sector coverage, increasing the number of banks participating in the program. 

This expansion is expected to narrow the persistent global trade finance gap, currently estimated at $2.5 trillion, and to support job creation and economic growth in countries that need it most.

MIGA will provide $500 million in guarantees on a facility-by-facility basis, specifically targeting trade transactions facilitated by eligible state-owned banks. 

This risk mitigation will enable both public and private sector banks to extend more short-term financing to clients, including small and medium-sized enterprises (SMEs), which are critical drivers of economic development.

Background and impact of the Global Trade Liquidity Program

Launched in 2009, the GTLP combines IFC’s expertise in emerging markets with the capabilities of global private sector banks to support trade in developing economies. 

To date, the program has facilitated over $103 billion in global trade volume, supporting more than 400 financial institutions across 75 emerging markets, including 30 International Development Association (IDA) and 7 fragile and conflict-affected countries.

The program benefits thousands of importers and exporters, many of whom are SMEs, by providing access to trade finance that might otherwise be unavailable.

Leadership perspectives on the new framework

Makhtar Diop, IFC Managing Director, said, “Small and medium-sized enterprises are the backbone of job creation in emerging markets, but many still face severe constraints in accessing trade and supply chain finance. By combining our expertise and networks, this partnership will help unlock the working capital businesses need to expand, strengthen supply chains, and create more jobs and economic opportunities.”

Tsutomu Yamamoto, MIGA Managing Director, added, “Facilitating the flow of trade, particularly during times of global instability, is essential to protecting economic resilience, livelihoods, and jobs in developing countries, which makes this collaboration to expand the suite of guarantees offered under the GTLP to strengthen the program so critical.” 

“The partnership with IFC and HSBC, a long-standing and valued development partner of the World Bank Group, is also a testament to the World Bank Group’s unique ability to offer our banking clients a comprehensive suite of tailored products and services to support their work in developing countries under one umbrella.”

Sir Danny Alexander, CEO of Infrastructure Finance & Sustainability at HSBC, added, “Trade is a powerful driver of sustainable growth. This new MIGA-IFC framework under the Global Trade Liquidity Program is a practical step to help narrow the trade finance gap by enabling more risk-sharing with eligible state-owned banks.” 

“By combining the World Bank Group’s guarantee capabilities with HSBC’s global trade network, we can support more transactions, strengthen trade, and help drive more resilient economies where it matters most.”

MIGA’s trade finance guarantees protect against losses arising from the failure of sovereign entities, state-owned banks, or public authorities to fulfil unconditional financial obligations related to trade finance transactions. 

This protection is crucial in emerging markets where political and sovereign risks can deter private sector participation.