Pakistan and the US Export-Import Bank (Ex-Im Bank) have signed a letter of awareness, enabling at last the bank to open of its letter of credit (L/C) Programme in Pakistan.

Ex-Im Bank's L/C insurance policies are available to cover L/Cs issued by three banks in Pakistan - National Bank of Pakistan Ltd., United Bank of Pakistan Ltd., and Muslim Commercial Bank Ltd.

Dollar obligations

According to this arrangement, the banks will receive all requisite permits to obtain the foreign exchange necessary to fulfil their dollar obligations under L/Cs.

Ex-Im Bank officials say the signing of the letter of awareness marked the culmination of a long process of cooperation between the authorities in Pakistan and the bank.

Political undertones

The programme obviously aims to stimulate US exports to Pakistan. These have increased markedly since the US decided to warm to Pakistan's military regime in the wake of the 11 September attacks on the US and the subsequent political imperative for Washington to befriend countries thought to cradle Al Qaeda cells.

Earlier this month Ex-Im Bank agreed to provide US$125 million to Pakistan to help it buy 10 US manufactured Boeing passenger aircraft - the first time the bank has agreed to underwrite a deal between Pakistan and a private US firm.

Last month, the Pakistani government agreed to contribute US$150 million over three years to help the state-run Pakistan International Airlines finance the purchase of 10 new planes.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.