A new trade finance facility to help small Commonwealth countries will depend on a pledge-target of $20 million being met in the coming days.

Malta, India, Sri Lanka and Mauritius have already pledged as yet undisclosed amounts and will be lobbying for more countries to join the initiative.

Foreign ministers meeting yesterday ahead of the Commonwealth Heads of Government Meeting, which starts today, signed a declaration of intent to support the trade finance proposal and to provide the initial contribution to set the ball rolling.

The facility will provide the Commonwealth’s smallest states – Malta ranks in the middle of the table in population size – access to trade finance, which would otherwise be difficult to obtain from domestic financial institutions.

Prime Minister Joseph Muscat said states smaller than Malta faced problems to access finance in the global economy because they did not have critical mass and most often banks shied away from the risk.

He hoped other Commonwealth countries would contribute to the facility, which would be used as a guarantee for up to 20 per cent of a trade deal, making it easier for banks to step in with financing.

The plan is for private financial institutions to administer the facility and deal directly with trade companies from Commonwealth countries.

Commonwealth Secretary General Kamalesh Sharma said the initiative went to the core of the Commonwealth’s values to ensure that the smaller states are also helped.

He said the team of experts, who worked on the initiative included the World Bank.

During the joint press conference, Dr Muscat and Mr Sharma released a publication that documents the volume and extent of trade between Commonwealth countries.

On Wednesday Malta pledged €100,000 for the creation of a Centre of Excellence for Small States, a distinct initiative from the trade finance facility.

kurt.sansone@timesofmalta.com