Islamabad: The International Islamic Trade Finance Corporation (ITFC), on Monday, informed Pakistan that the ongoing syndication is about to complete and $600 million will be available to the country during this month to finance petroleum products imports.
This was revealed during a virtual meeting held between Minister for Economic Affairs Omar Ayub Khan and ITFC Chief Executive Officer (CEO) Eng Hani Salem Sonbol to discuss the scope of ITFC financing.
It was discussed that how ITFC can arrange financing for broader trade activities in Pakistan under commodity financing.
Sources revealed to Business Recorder that the matter of slow utilisation of the facility by the Pakistan side was also discussed.
Pakistan utilised $532 million only against budgeted $1 billion in 2020-21 from the corporation (ITFC) due to lack of coordination and capacity issues on part of Pakistan State Oil (PSO), Pak-Arab Refinery Ltd (PARCO), and Pakistan LNG Ltd (PLL) for oil import, the sources added.
According to the official statement, the Minister for Economic Affairs appreciated the ITFC, who arranged financing of about $7 billion for import of oil and LNG from 2008 to 2021.
It was highlighted that Pakistan’s POL financing requirement is much bigger; therefore, the ITFC can get bigger portion of financing from the existing $1.5 billion each year.
It also came under deliberations that how this financing facility may also be utilised for import of food-related commodities.
Salem Sonbol thanked the Minister for Economic Affairs and appreciated the EAD’s interest in the ITFC to meet the short-term trade financing needs.
He also encouraged to include other commodities in addition to POL under the 4th Framework Agreement to be commenced from January 2021 and to increase annual financing from $1.1 billion to $1.5 billion.
He further added that the ITFC arranged two Warehouse Receipt Financing workshops in Islamabad and Karachi, during 2019, in collaboration with the EAD and the State Bank of Pakistan and will provide technical assistance for capacity building in the agriculture sector.
The CEO, ITFC, updated that the ongoing syndication is about to complete and $600 million will be available to Pakistan during this month.
The ITFC further assured that Pakistan is the top priority for the corporation to invest in trade financing and meet the country’s POL procurement requirements.
The ITFC had also signed a three-year Framework Agreement in June 2021 for a cumulative amount of $4.5 billion with the government of Pakistan in order to provide financing for the import of essential commodities such as crude oil, refined petroleum products, LNG, and urea.
Within the context of its trade integrated solutions approach, the Framework Agreement also covers the ITFC’s support for trade-related technical assistance projects in the Islamic Republic of Pakistan, which will be selected jointly by both parties according to the national economic priorities and development plan of Pakistan.
The agreement will facilitate 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 Pakistan.
The financing available through this facility will be utilised by PSO, PARCO, and PLL for import of crude oil, refined petroleum products and LNG during the years, 2021-2023.
Copyright Business Recorder, 2021