ISLAMABAD – The Asian Development Bank (ADB), International Finance Corporation (IFC), Citibank, and MCB have announced completion of a landmark trade transaction that would help boost the local textile industry.
A statement issued by ADB has said that the four banks provided trade finance coverage of up to Euro 110 million for Ibrahim Fibers Limited to import German machinery.
This would help produce polyester staple fiber and polyester chips. The additional 650 tonnes-per-day capacity, made possible by the transaction, will more than double the company’s polyester production, already one of Pakistan’s highest, to 1,250 tonnes per day.
By providing guarantees that cover the payment risk in trade transactions, ADB’s Trade Finance Program and IFC’s Global Trade Finance Program would help increase trade finance and the flow of goods to and from emerging market countries. For this transaction, IFC assumed 30 percent of MCB Bank’s risk, and ADB 19 percent. Citibank managed the balance against the original letter of credit established by MCB Bank.
Head of Trade Finance in ADB’s Private Sector Operations Steven Beck said that ADB’s trade finance programme supports large volumes of trade business in Pakistan on its own. However, cooperating with IFC, Citibank, and MCB was pivotal to closing this challenging deal, a transaction that will support businesses and create jobs in Pakistan.
The cover arranged by IFC, ADB, and Citibank portrays the high degree of confidence these leading global financial institutions have in MCB, said MCB Trade Products Head Farooq Khan.
Citibank is proud to be a part of this transaction. Our widespread global network across more than 100 countries enables us to leverage those relationships to promote our common agenda to support and enhance private sector investment in Pakistan, said Citibank’s Pakistan Country Officer Arif Usmani.
The innovative partnership of this transaction will help stimulate one of the key sectors in Pakistan’s economy. By responding to the shifting needs of its partner banks, IFC’s Global Trade Finance Program is helping steam trade flow and contributing to economic growth, said IFC’s Global Trade Finance Programme Senior Manager Scott Stevenson.
Last year, ADB’s Trade Finance Program supported over $600 million of cross-border trade in Pakistan. Over the past six months, IFC has provided Pakistani banks with $328 million in trade finance guarantees, a $125 million increase in guarantees compared to the same period last year. The trade financing helps Pakistan increase cross-border trade and benefits many important business sectors.
