Camilo Thame, Business Reporter

The Inter-American Development Bank (IDB) has approved a US$5 million line of credit to First Global Bank (FGB), which First Global intends to use to provide low-cost loans to Jamaican firms involved in international trade.

"The credit line will be a part of our trade financing product to the manufacturing, exporting and distributive sectors to facilitate pre-post-export and import financing," said Don Wehby, the head of GK Investments, the new umbrella vehicle for GraceKennedy's financial companies.

The IDB line, announced near the end of the year, is being provided from the regional development bank's Trade Finance Facilitation Programme (TFFP), launched in 2005 to increase the availability of funding for international trade.

Drive Development

The bank hopes that enhanced trade will drive development in the hemisphere.

Under the programme, the IDB issues partial guarantees to international banks to mitigate the risk from eligible Latin American and Caribbean banks on export/import contracts with tenors of up to three years. This can translate into financing terms from issuers, or increased availability of funds to exporters by providing credit enhancement to bank portfolios.

While First Global is the first Jamaican bank to be approved under this facility, Wehby said that it is yet to receive the detailed terms and conditions of the credit line.

He nonetheless explained: "The facility allows L/Cs (letters of credit) or advances issued by FGB to be guaranteed by the IDB to the confirming banks participating in the programme. The confirming banks in the IDB programme would confirm payments to beneficiaries or correspondent banks."