# **Outline**

|**Executive Summary ......................................................................................................... 5**|
|---|
|**Introduction ....................................................................................................................... 8**|
|**I.**<br>**Trade developments since September 2008............................................................. 8**|
|_A._<br>_Drop in merchandise exports preceded decline of imports_.................................. 9|
|_B._<br>_The crisis has affected trade in different ways_................................................... 10|
|_C._<br>_Firms report that the drop in exports is mainly due to lack of new orders and_<br>_lack of finance from buyers_........................................................................................... 11|
|**II.** **Firms’ perspective on scarcity of trade finance: Who is affected and why? ...... 13**|
|_A._<br>_SMEs most affected by tightening trade finance; yet mainly worried about global_<br>_demand_.......................................................................................................................... 13|
|_B._<br>_Banks are requiring more guarantees and insurance while firms usually find_<br>_them unnecessary and expensive_.................................................................................. 16|
|_C._<br>_Firms in Low-Income Countries (LICs)_............................................................. 18|
|_D._<br>_Despite the crisis, firms have not changed their method of payments toward safer_<br>_instruments_.................................................................................................................... 19|
|**III.** **Banks’ perspective on scarcity of trade finance: Weak demand and heightened**<br>**risk aversion .................................................................................................................... 21**|
|A.<br>_Pricing of trade loans increased but not a binding constraint_.......................... 22|
|_B._<br>_Banks reported not lacking liquidity but implementing more stringent lending_<br>_requirements_................................................................................................................. 24|
|**IV.** **Governments’ actions to mitigate the impact of the financial crisis ................... 25**|
|_A._<br>_Governments have implemented measures to alleviate constraints on liquidity_<br>_and trade finance in particular, notably through ECAs or equivalent government_<br>_agencies_......................................................................................................................... 26|
|_B._<br>_Some governments have implemented broader measures that aim at improving_<br>_the competitiveness of the domestic economy and promoting exports_......................... 28|
|_C._<br>_Success of policy measures to increase liquidity and promote exports is still_<br>_difficult to establish_....................................................................................................... 30|
|**Conclusion ....................................................................................................................... 32**|
|**Figures**|
|Figure 1: World Bank export volume projections for surveyed countries, 2009 %......................................10|
|<br>Figure 2: Quarterly exports and imports in surveyed countries, Q3-2008 to Q1-2009..........................10|
|Figure 3: Most firms reported a drop in their exports and imports between September 2008 and March 2009<br>..............................................................................................................................12|
|Figure 4: Lack of finance and cancellation of orders are the main reasons for decline in exports<br>..............................................................................................................................12|
|Figure 5: Access to pre-export financing has been a problem for commodity exporters in Kenya, Ghana and<br>Peru.........................................................................................................................15|
|Figure 6: Most firms report not using guarantees or trade credit insurance...............................................16|

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