Four leading financial institutions, including a local bank, have completed a landmark trade transaction that will help boost the country’s textile industry.
The Asian Development Bank (ADB), International Finance Corporation (IFC), Citibank and MCB Bank have provided trade finance coverage of up to €110 million to Ibrahim Fibres Limited for the import of state-of-the-art German machinery, the ADB website announced on Wednesday.
The machinery will be used to produce polyester staple fibre (PSF) and polyester chips and will more than double the company’s polyester production to 1,250 tons per day.
Ibrahim Fibres is part of the Ibrahim Group, which is involved in a range of businesses, including textile manufacturing, power generation and financial services.
By providing guarantees that cover the payment risk in trade transactions, ADB’s Trade Finance Programme and IFC’s Global Trade Finance Programme help increase trade finance and the flow of goods to and from emerging market countries.
For this transaction, IFC assumed 30 per cent of MCB Bank’s risk and ADB 19 per cent. Citibank managed the balance against the original letter of credit established by MCB Bank.
“The cover arranged by IFC, ADB and Citibank portrays the high degree of confidence these leading global financial institutions have in MCB,” said MCB Bank Head of Trade Products Division Farooq A Khan.
“Citi is proud to be part of this transaction,” asserted Citibank Pakistan Country Officer Arif Usmani.
Last year, ADB’s Trade Finance Programme supported cross-border trade worth over $600 million in the country. Over the past six months, IFC has provided domestic banks with $328 million in trade finance guarantees, an increase of $125 million compared to the same period last year.
Published in The Express Tribune, January 6th, 2011.