(DFID) New financial boost for businesses in developing countries from the UK Government

Businesses in developing countries are struggling to survive due to the economic downturn and need urgent financial support, said Secretary of State for International Development Douglas Alexander.

At the London Summit, world leaders are working to stabilise financial markets and help families and businesses across the world to get through the recession.

And the UK Government today (THURS) intends to take practical action to support firms across the globe, helping stimulate trade in developing countries and ensuring sustainable growth.

This will be done through the World Bank's new initiative called the Global Trade Liquidity Programme (GTLP) set up to support small and medium businesses by helping address the trade finance shortage in developing countries through international banks.

The UK Government, through its development finance institution CDC, intends to make a contribution of up to £300m to the GTLP.

Secretary of State for International Development Douglas Alexander said: "Private sector businesses are an essential engine of growth and play a vital role in stimulating global trade, which provides a lifeline to millions of people across the globe.

"People in developing countries have been disproportionately hard-hit by the economic crisis. This money will help firms keep going during the difficult climate and help to protect and create jobs.

"This is not an initiative to help make commercial banks richer.

Participating banks must all commit to using the money to support trade in developing countries. In the first phase, this will include Kenya, Angola, Ghana, Nigeria, Mauritius, Malawi, Mozambique, Seychelles and Zambia." The proposed sum alone could help fund beween £2bn and £3bn of trade over the next two years, helping small and medium firms to import and export products. The UK money will be invested in the GTLP on a loan basis.

The shortage in trade finance, due to the current economic crisis, is a significant threat to world trade - already projected to decline by about nine per cent this year. The World Trade Organisation has suggested there could be a global shortfall of between $100bn and $300bn.

(BERR) Joint statement by business secretary Peter Mandelson and CBI president Martin Broughton

Business leaders from G20 countries around the world have been meeting UK Government Ministers ahead of the London Summit on April 2nd.

We had a useful and constructive discussion and urged the G20 to achieve three things:

1. Urgently renew the commitment to conclude the WTO Round.

This is the best insurance policy the international community has against a retreat to protectionism; a successful Doha Round alone would insure against protectionist pressures that could cost the global economy as much as $170bn a year.

2. To increase the supply of trade finance.

International and government institutions need to step in to substitute private flows of trade finance which have been drying up. If left unchecked, this could restrain many hundreds of billions of dollars of global trade over the next two years.

3. To pursue the need for anti-protectionism across the globe.

While demand is a factor, protectionism could be playing a part in the fall in trade. We therefore call on G20 to reconfirm and strengthen their commitment not to bring in protectionist measures, reconfirming the outcomes of the Washington summit, but focussing also on non tariff measures such as subsidies, anti dumping action and licencing restrictions. We also agreed it was important to make sure that the monitoring of adherence to these commitments has realty.

As the London Summit draws near, we believe that the response of the G20 leaders must be decisive and wide-ranging, in the interests of our long-term prosperity.