MANILA, PHILIPPINES - Top officials from four Mongolian banks today signed key trade finance agreements with the Asian Development Bank (ADB) that will help companies in Mongolia to conduct more international trade.

The agreements under ADB's Trade Finance Facilitation Program (TFFP) were signed by Golomt Bank, Khan Bank, Trade and Development Bank of Mongolia and XacBank and mark the first such agreements in the East Asian nation.

Firms in most developing economies have difficulty getting hold of financing to support the import or export of key components or final products they need to conduct their own business. In response to that ongoing need, ADB in 2004 kick started the TFFP. The program offers loans and guarantees through, and in conjunction with, international banks and ADB's developing member country banks to support international trade transactions.

"Finance is critical to the expansion of international trade. If trade finance is easily accessible from local banks, companies can use trade to expand their business, which contributes to growth in the economy as a whole," said Philip Erquiaga, Director General of ADB's Private Sector Operations Department. "Economic growth also means more jobs and higher incomes for individuals that helps reduce poverty."

As well as providing much-needed finance to trading companies, the TFFP will also connect banks and firms in Mongolia with their counterparts within Asia and in other regions. This will boost knowledge sharing and establish relationships that should bear fruit in the longer term.

"Greater access to trade finance will help Mongolia's many resource companies sell their goods overseas and provide critical support for its developing manufacturing sector," said Adrian Ruthenberg, ADB's Country Director for Mongolia. "Equally important are the links that the Trade Finance Facilitation Program will foster between Mongolia and its neighbors."

Mongolia borders the Russian Federation and the People's Republic of China but is fostering closer relations with Central Asia through the Central Asia Regional Economic Cooperation (CAREC) program and with other parts of Asia through the Association of South East Asian Nations Regional Forum (ARF) and other organizations.

In 2009, the $1 billion TFFP provided support for $1.9 billion in trade deals, 300% more than in 2008. By attracting private sector financing and because the portfolio can roll over once a year, the program could generate $15 billion in trade finance through 2013.

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