Access to commodity finance by commodity-dependent countries

Due to the highly credit-dependent nature of commodity trade, inadequate access to finance has usually constrained the commodity productive capacity and trade of many commodity-dependent developing countries, in particular the low-income ones. These countries tend to have more limited access to credit, which is often available at higher costs with sometimes onerous conditions. This background note examines the sources of, and access to, commodity finance and how these have been affected by the crisis, as well as tools and instruments that could be used to improve access to commodity and trade finance. The paper also raises policy-related questions that need to be addressed in order to meet the commodity financing requirements of smaller players in low-income commodity-dependent developing countries.