The Islamic Development Bank (IDB) could help facilitate letter of credit (L/C) transactions and provide a range of other facilities to help Libya reengage in international trade.

The IDB is in a unique position to help the north-African country as it contemplates its global trading position in the post-Gaddafi era since Libya is the bank's second largest shareholder.

L/C support

One IDB product Libya could benefit from is the documentary credit insurance policy (DCIP) available from IDB subsidiary, the Islamic Corporation for the Insurance of Export Credit and Investment (ICIEC).

Under the DCIP, the ICIEC guarantees L/C confirmations by foreign banks.

Cover is available for transactions in many locations, including less developed countries where banks would not normally confirm L/Cs without the ICIEC's support.

Shareholdings

Libya owns 9.47 per cent of the IDB. The only larger shareholder is Saudi Arabia with a 23.61 per cent stake in the bank.

Libya is also the only equity subscriber in all four IDB entities - the ICIEC; the Islamic Corporation for the Development of the Private Sector; the Islamic Corporation for the Insurance of Export Credit and Investment and the parent bank itself.

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