73773 Approach Paper Evaluation of the International Finance Corporation’s Short-Term Trade Finance Program, 2006-2011 Report to the Board of Executive Directors from the Committee on Development Effectiveness ∗ Subcommittee Report Meeting of July 16, 2012 The Subcommittee (SC) of the Committee on Development Effectiveness (CODE) considered an Independent Evaluation Group (IEG) Approach Paper entitled Evaluation of the International Finance Corporation’s Short-Term Trade Finance Program, 2006-2011 (CODE2012-0028). IEG noted that trade finance has become a fundamental pillar of IFC’s business, particularly the Global Finance Trade Program (GFTP). The proposed thematic evaluation will review IFC’s trade finance activities since 2006; assess their relevance, efficacy, and efficiency; and provide an overall assessment of their development effectiveness. The evaluation will draw lessons from experience and make recommendations to help enhance the achievement of IFC’s development mission. IEG added that the evaluation was originally timed to coincide with a Board discussion on the increase of the GTFP expected by end of calendar year 2012. However, IFC management noted that due to higher than anticipated demand it would request an increase in the authorized GFTP in September, 2012. Management welcomed the proposed analysis and looked forward to the results, including possible suggestions on how the development impact of the program could be improved. It noted that when coming before the Board to request an increase in the GFTP it will also be providing development impact analysis based on the Development Outcome Tracking System (DOTS). Management further commented that given current market circumstances and continued bank deleveraging, particularly in Europe, client demand has risen sharply. With respect to the expected request for an increase in the program limits prior to completion of the IEG Report, Management stated (and IEG concurred) that given the short-term nature of the transactions under the program, Management would be able, if necessary, to quickly adapt the program to any modifications resulting from the subsequent IEG report. Members welcomed the proposed approach to the evaluation and looked forward to insights as to IFC’s trade finance activities. They recommended focusing on additionality and the pricing of trade finance. A comment was made to distinguish clearly between crisis and non-crisis related aspects of the program. Queries were posed as to the program’s capital adequacy framework, efficiency, profitability, and demand. Further comments were put forward as to timeline for delivery, choice of instruments, and high-risk scenarios, among others. Members also remarked on IFC moving forward the GFTP increase request. A suggestion was made for IEG’s presence when IFC comes before the Board in September. ∗ This report is not an approved record.