Connect with us

Hi, what are you looking for?


Pakistan to get $600 million financing from ITFC to import fuel, fertilisers

This is part of the $4.5bn 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).

ISLAMABAD: The International Islamic Trade Finance Corporation (ITFC) — a subsidiary of the Islamic Development Bank — would make available this month about $600 million of syndicated loan for commodity financing for Pakistan.

The ITFC conveyed this good news to Pakistan during a virtual meeting between Minister for Economic Affairs Omar Ayub Khan and ITFC Chief Executive Officer Hani Salem Sonbol. “The CEO ITFC updated that the ongoing syndication is about to complete and $600m will be available to Pakistan during this month,” an official statement said.

This is part of the $4.5bn 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 Ministry of Economic Affairs said the ITFC chief also assured the minister that Pakistan remained the top priority for it to invest in trade financing and meet country’s POL procurement requirements. The meeting also discussed how ITFC can arrange financing for broader trade activities in Pakistan under commodity financing.

Mr Ayub appreciated ITFC for arranging financing of about $7bn for import oil & LNG from 2008 to 2021 and told Mr Salem that Pakistan’s POL financing requirement was much bigger and the ITFC could enhance its financing from the existing $1.5bn each year. The minister also discussed how this financing facility could also be utilised for import of food related commodities.

Mr Salem appreciated Pakistan’s interest in ITFC to meet the short-term trade financing needs and encouraged to include other commodities in addition to POL to increase annual financing from $1.1bn under previous arrangement to $1.5bn under current arrangement.

He informed the minister that ITFC had arranged two Warehouse Receipt Financing workshops in Islamabad and Karachi during 2019 in collaboration of EAD and State Bank of Pakistan and will provide technical assistance for capacity building in the agriculture sector.

Dollar Background

The $4.5bn 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.

The ITFC had also committed in April 2018 a similar financing line for Pakistan for 2018-20, but utilisation finally could not cross $3bn as private refineries were unable to import crude under the facility which mostly remained limited to Parco and to some extent to PSO.

Pakistan’s oil import bill has amounted to about $11.4bn last fiscal year but has been rising in recent months because of increasing trend in the international oil prices. ITFC is a member of the Islamic Development Bank Group and provides trade financing to member countries after putting together funds from financial institutions in the Middle East. The sources said Pakistan had last year signed a $1.1bn trade financing facility for the current year which could not be fully utilised due to lower oil international oil prices, depressed demand in Pakistan and limitations of the refineries in availing Arabian Crude. The financing is normally 2 to 2.3pc plus London Inter-Bank Offered Rate (Libor).

ITFC had a limited portfolio of about a billion dollars of its own and normally arranged funds from other private financial institutions. Some of the other major recipients of the ITFC’s trade facility have been Indonesia, Egypt and Bangladesh. The facility is expected to provide relief in oil and gas import bill and ease pressure on foreign exchange reserves. Under the facility, funds do not come into Pakistan’s account but ease pressure on foreign exchange reserves.

Written By

I am an experienced writer, analyst, and author. My exposure in English journalism spans more than 28 years. In the past, I have been working with daily The Muslim (Lahore Bureau), daily Business Recorder (Lahore/Islamabad Bureaus), Daily Times, Islamabad, daily The Nation (Lahore and Karachi). With daily The Nation, I have served as Resident Editor, Karachi. Since 2009, I have been working as a Freelance Writer/Editor for American organizations.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *



Latest Updates

In addition to these two international awards, Farhan Wilayat Butt has also received many other awards in Pakistan and other countries for his dedicated...


Taliban have also shared a picture of several modern military helicopters which they have captured from Afghanistan. With most modern weapons, now Taliban appear...


The Nobel laureate also shared Amnesty International's video on Twitter in which Jolie talks about children under attack from "governments, teachers and parents" who...


The US climate envoy John Kerry quickly welcomed Xi’s announcement, calling it a “great contribution” and a good foundation for success in Glasgow.

Copyright © 2021 The Truth International