ISLAMABAD  -  Pakistan and International Islamic Trade Finance Corporation (ITFC) on Monday has signed agreement amounting $386 million for the import of oil and LNG.

The signing of financing agreement amounting to $386 million with the International Islamic Trade Finance Corporation (ITFC), a subsidiary of Islamic Development Bank (IsDB) Group, for import of oil and LNG was held in Economic Affairs Division. This facility will be utilised by Pakistan State Oil Company Limited (PSOL), Pak Arab Refinery Limited (PARCO) and Pakistan LNG Limited (PLL). The Agreement was signed among the Economic Affairs Division and ITFC and the representatives of PSO, PARCO and Pakistan LNG Limited.

The financing Agreement provides trade financing amounting to $386 million for a period of one year for import of oil and LNG. ITFC has agreed to provide trade financing of $1.2 billion during the year 2020 for import of oil and LNG by PSO, PARCO and Pakistan LNG Limited. It may be recalled that this facility is a part of Framework Agreement signed with ITFC in April 2018 for a total envelop of $4.5 billion over for a period of three years (2018-2020).

Signing of this financing facility will be helpful in financing oil and gas import bill of the country and easing of pressure on foreign exchange reserves of the country. This agreement also reflects confidence of international financial institutions in Pakistan’s economy and its future. During the signing ceremony, both sides voiced hope to work closely with each other for mobilization of socio economic development of the country. The financing of $386 million would ease the pressure of country’s foreign exchange reserves. The reserves have started declining due to the massive repayment against previous loans. Pakistan’s foreign exchange reserves are depleting sharply due to the repayment of previous loans, as the county repaid $922 million against previous loans in last two weeks.

According to the latest data, the country’s foreign exchange reserves held by State Bank of Pakistan had declined by $342 million during week ended on 25-September-2020. Later, the reserves had further tumbled by $580 million in the week ended on 02-October-2020. The total liquid foreign reserves held by the country stood at $19.351 billion on 02-October-2020.The break-up of the foreign reserves position shows that foreign reserves held by the State Bank of Pakistan are $12.154 billion and net foreign reserves held by commercial banks are $7.196 billion.