The International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank Group (IsDB), is to provide importers of crude oil, petroleum products and liquefied natural gas (LNG) into Pakistan with a US$4.5 billion three-year trade financing facility.

The facility is expected to make the country's oil and gas import bill more affordable and ease pressure on foreign exchange reserves.

L/C terms

Funds under the facility are for financing of letters of credit (L/Cs) for imports by Pak-Arab Refinery Ltd (Parco), Pakistan State Oil (PSO) and Pakistan LNG Ltd (PLL).

Jeddah-based ITFC says the funds will be deployed over three years - 2021-23 - at a rate of around US$1.5 billion each year.

Easing forex pressures

Under the facility, funds do not come into Pakistan's account but they will ease pressure on foreign exchange reserves.

Sources have told local media that Pakistan last year signed a similar US$1.1 billion trade financing facility for 2020 but did not fully utilise it due to lower international oil prices and depressed demand in Pakistan.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.