ITFC urged to allow commodity imports under $4.5bln facility

ISLAMABAD: The International Islamic Trade Finance Corporation (ITFC) has been called on to expand coverage of its $4.5 billion trade financing facility by adding commodities, such as wheat and sugar, so that Pakistan could fully utilise it over next three years, the government said on Monday.

Islamabad had remained unable to utilise the trade finance facility from ITFC last fiscal year as out of $1 billion per annum facility, the utilisation stood at slightly over 50 percent. Now the trade financing facility will be jacked up from $1.1 billion to $1.5 billion per annum so the expanding of the list through inclusion of commodities like wheat or sugar or other edible items could help Islamabad to exhaust the full financing portfolio over the next three years period.

A virtual meeting was held on Monday between Omar Ayub Khan, Minister for Economic Affairs and Eng. Hani Salem Sonbol, CEO ITFC, to discuss the scope of ITFC financing. It was discussed how ITFC could arrange financing for broader trade activities in Pakistan under commodity financing. Khan hailed ITFC for arranging financing of about $7 billion for the import of oil and LNG (liquefied natural gas) from 2008 to 2021.

The minister highlighted that Pakistan’s POL (petroleum oil lubricant) products’ financing requirement was much bigger; therefore, ITFC could get a bigger portion of financing from the existing $1.5 billion each year.

The meeting also discussed how this financing facility could also be utilised for the import of food related commodities. Eng Hani Salem Sonbol, the ITFC chief, thanked the minister and appreciated Pakistan’s interest in ITFC to meet the short-term trade financing needs. He also encouraged inclusion of other commodities in addition to POL under the 4th Framework Agreement starting from January 2021 and to increase annual financing from $1.1 billion to $1.5 billion.

Sonbol added that ITFC arranged two Warehouse Receipt Financing workshops in Islamabad and Karachi during 2019 in collaboration with the economic affairs division and State Bank of Pakistan and would provide technical assistance for capacity building in the agriculture sector. The ITFC CEO said the ongoing syndication was about to complete and $600 million would be available to Pakistan during this month.

Sonbol further assured that Pakistan was the top priority for the corporation to invest in trade financing and meet the country’s POL procurement requirements. The ITFC is a member of the Islamic Development Bank (IsDB) Group. It was established with the primary objective of advancing trade among OIC member countries, which would ultimately contribute to the overarching goal of improving socioeconomic conditions of the people across the world.

Commencing operations in January 2008, ITFC has since consolidated all trade finance businesses that used to be handled by various windows within the IsDB Group. Earning the A1 rating by Moody’s is a reflection of the Corporation’s creditworthiness and financial strength to responding swiftly to customer needs in a market-driven business environment. Since 2008, ITFC has provided more than $51 billion to OIC member countries, making it the leading provider of trade solutions for the members’ needs.