Press Release

OFID Signs Cooperation Agreement with the
European Bank for Reconstruction and Development

11/2007 May 21, 2007 Vienna, Austria
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The OPEC Fund for International Development (OFID) has signed a cooperation agreement with the European Bank for Reconstruction and Development (EBRD). Signed by Mr. Suleiman J. Al-Herbish, OFID Director-General, and Mr. Jean Lemierre, President of the EBRD, the agreement will enable OFID to share risk in EBRD’s Trade Facilitation Program (TFP), and will initially benefit five banks in Azerbaijan and Tajikistan.

Commenting on this milestone, Mr. Al-Herbish said: “This is an important region for OFID and we are pleased to participate in the EBRD’s endeavor to help those countries to strengthen and sustain development in their economies, which is part of the mandate of OFID."

International trade remains a challenge in developing countries due to the weakness of their banking sectors. OFID’s guarantees will help lower the cost of local banks to obtain credit confirmation by western corresponding banks, thereby connecting them to the international trade system and facilitating the export and import of commodities and capital equipment. It will also help banks and their exporting clients to establish new markets, thereby fostering open market economies.

Small and medium enterprise transactions, a fundamental objective for OFID, are expected to form the majority of OFID’s guarantee business with more than one half of all transactions likely to be for under €100,000.

Mr. Jean Lemierre stated that the new agreement will help foster the long standing cooperation between the two institutions, and would allow the Bank to increase its risk-taking capacity to further develop trade across the Commonwealth of Independent States, thereby boosting economic growth and helping create jobs.

At OFID’s 2006 Ministerial Council, a decision was taken to extend the institution’s operations to include trade financing, resulting in the establishment of a Trade Finance Facility (TFF). The need to create the TFF emerged through discussions with officials from partner countries who indicated that the lack of availability of trade financing presented a substantial burden. For OFID, conducting trade finance operations was seen as a natural progression, complementing its range of other development products, including long and medium term project financing in the public and private sectors.

Before OFID can consider a TFF project it has to sign an Agreement for the Encouragement and Protection of Investment with the host country, which insures that OFID has the same privileges and protection as international development institutions in which the host country holds membership.