ISLAMABAD: Pakistan has secured $761.5 million in funds from the International Islamic Trade Finance Corporation (ITFC), a subsidiary of the Islamic Development Bank, to import petroleum products and LNG from Saudi Arabia
According to a declaration issued by the finance ministry, a financing agreement amounting to $761.5 million has been signed between the Ministry of Economic Affairs and ITFC for the import of crude oil, refined petroleum products and LNG.
The financing agreement was signed by Mian Asad Hayaud Din, the secretary of the economic affairs division and Eng. Hani Salem Sonbol, the chief executive officer of ITFC.
The financing, at the time, ensured dollars were available for the state buyer to use for payment at some of its international purchasing tenders, the publication reported.
The facility has been made effective immediately and is ready for utilisation by the Pakistan State Oil Company Ltd, Pak Arab Refinery Ltd and Pakistan LNG Ltd for the import of oil and gas.
This syndicated Murabaha financing facility of $761.5 million is for a period of one year and is part of an umbrella Framework Agreement signed with ITFC in June 2021 for a total envelop of $4.5 billion ($1.5 million annually) for a period of three years.
“Originally, the ITFC had agreed to provide a financing of $300 million. However, due to [the] growing energy needs of the country and enhanced confidence level of international financial institutions on economic reforms and recovery amid the COVID-19 pandemic, the financing was over-subscribed by 2.5 times i.e. from US$300 million to US$761.5 million.”
The statement said the financing facility will also be helpful in financing the oil and gas import bill of the country and in easing the pressure on the foreign exchange reserves of the country.
The country’s oil import bill widened by over 97% to $4.59 billion in the July-September quarter of the current fiscal year due to the rising global oil prices and rupee depreciation.
The continuing increase in the import bill of oil is triggering a trade deficit and may cause uneasiness on the external side for the government. Crude oil imports rose by 81.15pc in value and dipped 2.35pc in quantity during the months under review, while those of liquefied natural gas increased by 144.02pc in value. Liquefied petroleum gas imports jumped by 53.95pc in value in July-Sept FY22.
The IMF viewed the country’s current account deficit to touch over $12 for the current fiscal year against the State Bank of Pakistan’s projection of $6.5 billion to $9 billion.
The statement said the ITFC and Pakistan government have also agreed to continue their cooperation in future to mobilise financial resources to support Pakistan in its endeavours to achieve its economic growth targets through the ITFC financing facility.