ITFC to provide $761.5m for import of petroleum products on deferred payment
ISLAMABAD – The International Islamic Trade Finance Corporation (ITFC) — a subsidiary of the Islamic Development Bank —has agreed to provide $761.5 million to Pakistan as murabaha financing for import of petroleum products on deferred payment.
As a result of successful discussions between Federal Minister for Economic Affairs Omar Ayub Khan and Eng. Hani Salem Sonbol, CEO, ITFC, Pakistan has secured $761.5 million as murabaha financing for import of petroleum products on deferred payment. “Due to higher demand amid strong economic recovery, financing is enhanced from $300 million to $ 761.5 million,” the ministry of Economic Affairs noted. ITFC murahaba financing facility (US$ 761.5m) has been made effective and ready for utilization for the import of oil and gas.
ITFC financing will help to ease pressure on exchange rate and stabilize forex reserves. It also reflects confidence of IFIs in Pakistan’s economy. ITFC & EAD also agreed to continue their cooperation in future for maximum utilization of $4.5 billion financing window.
This is part of the $4.5 billion new framework agreement signed by the two sides in June this year to finance oil, LNG and fertiliser imports over the next three years (2021-23). The $4.5 billion financing signed by two sides in June this year is to be utilised by Pakistan State Oil (PSO), Pak-Arab Refinery Ltd (Parco) and Pakistan LNG Ltd (PLL) for import of crude oil, refined petroleum products and LNG during the years 2021-2023. Within the context of its trade integrated solutions approach, the framework agreement also covers ITFC’s support for trade related technical assistance projects in Pakistan, which will be selected jointly by both parties according to the national economic priorities and development plan of Pakistan. The agreement also requires identification of other areas of cooperation at country and regional levels and to enhance and promote trade, trade capacities of relevant state authorities and financial institutions and trade cooperation in the country.
Earlier, Saudi Arabia had announced a financial assistance $4.2 billion for Pakistan. Saudi Arabia would keep $3 billion in State Bank of Pakistan’s account and would provide deferred payment facility of $1.2 billion for petroleum products during the year. The Saudi financial assistance would help in addressing the balance of payment issues.