UK export finance limit for Pakistan increases to £1.5 billion

ISLAMABAD: UK Export Finance, a state-owned credit financing agency, has increased its annual funding limit to £1.5 billion for British businesses to promote trade with and investment in Pakistan, a foreign envoy said on Monday.

British High Commissioner Christian Turner said the UK Export Finance increased its financing limit for UK businesses in Pakistan to £1.5 billion.

“UK credit financing for Pakistan has tripled in the last two years, and is key to achieving my ambition to double the trade between the UK and Pakistan,” Turner said in a meeting with Minister of Commerce Razaq Dawood.

“It is a sign of our confidence in Pakistan and the strength of the unique relationship between the two countries. I encourage all Pakistan businesses to look for opportunities to partner with the UK on their journey towards economic prosperity.”

The meeting discussed trade ties and business potential between the two countries. Dawood welcomed the announcement of an increase of £500 million in the credit limit for business investment in Pakistan, especially at a time when Pakistan is looking to expand its trade potential to mitigate the impacts of COVID-19.

The UK is Pakistan’s third largest export partner. Between July 2019 and March 2020, Pakistan exported 7 percent of its total exports to the UK, and “the increase in the credit financing limit will help turbo-charge trade relations between the two countries,” it added.

Last year, the bilateral trade amounted to £2 billion, up 6 percent year-over-year. Pakistan’s exports increased 3.2 percent, while imports from the UK decreased 1.9 percent. UKEF helps secure large contracts by providing attractive financing terms to buyers and supporting working capital loans. The announcement will boost trade partnerships between the two countries and unleash Pakistan’s growth potential, it said in a statement.

UK Export Finance is the official export credit agency working closely with the Department for International Trade. It ensures that no viable UK export fails for lack of finance or insurance, while operating at no net cost to the taxpayer.

UK Export Finance provided £14 billion of support for exports and international trade in the last five years. In 2019/20, UKEF provided £4.4 billion of support for UK exports globally. The agency recently completed a comprehensive review of its country limits, resulting in increases in over 100 markets including Pakistan. The export financing offered is quite attractive if comparing to a commercial bank

There is a baseline requirement for 20 percent of the whole deal to come back to the UK, but that doesn’t necessarily mean –for example –the whole construction on the ground or the production of a specific product. It looks at the whole supply chain. The 20 percent can come from a UK company that looks after the procurement of services as part of a bigger deal. “This makes UKEF very attractive for multinational consortia.”