Improved stability in Pakistan's economic situation and probably a number of political considerations have prompted the Export-Import Bank of United States (Ex-Im Bank) to expand its financing facilities for US companies selling goods and services into Pakistan.

New financing facilities will include one making it easier for Pakistan's importers to buy US goods and services on letter of credit (L/C) terms.

Political considerations

Ex-Im Bank, the US federal agency that assists in financing the export of US goods and services to developing markets around the world, through export credit insurance, loan guarantees, and direct loans, says its decision reflects Pakistan's improved economic fundamentals.

The extent to which the US agency is now prepared to help Pakistan however reflects improved US-Pakistan relationships, particularly as Washington realises that its fight against terror in northern Pakistan and Afghanistan depends on the cooperation of the administration of Pakistan's president, General Pervez Musharraf.

L/C programme

Ex-Im Bank is opening a letter of credit programme in Pakistan. In this scheme, Ex-Im Bank's insurance policies are available to cover L/Cs issued by three banks in Pakistan. The participating Pakistani banks are National Bank of Pakistan, United Bank of Pakistan and Muslim Commercial Bank.

Pakistan's Ministry of Finance has guaranteed that the approved Pakistani Banks will receive all requisite permits to obtain the foreign exchange necessary to fulfil their dollar obligations under L/Cs in the future.

The views in this article are those of the author and not necessarily those of ICC or the other partners in DC-PRO.