Government would borrow $150 million from Islamic Development Bank (IDB), of which $50 million are for import of urea and $100 million for oil import. Finance Ministry in a working paper submitted to the Senate Standing Committee on Finance stated that an agreement for Murabaha Financing facility worth $50 million for import of urea is in the process.
The facility has been negotiated with IDB at fixed mark up rate at 5.25 percent for a financing period of one year. Trading Corporation of Pakistan (TCP) is the executing agent of the agreement. The committee was further informed that another agreement for Murabaha Financing Facility worth $100 million for import of oil and oil products is also under process. The facility has been negotiated by 1DB with Pak Arab Refinery Company as executing agency.
The Economic Affairs stated that IDB was requested for a short- term commodity Murabaha financing facility of euro 750 million on the advice of Finance Division and initiative of State Bank of Pakistan (SBP). The committee was informed that Murabaha Financing in this context is used for short- term financing to support balance of payments. The terms and conditions of financing were negotiated in consultation with Finance Division and State Bank of Pakistan which were finalised for euro 100 million. The euro 100 million has already been transferred to Pakistan on August, 15, 2013.
The remaining amount of euro 650 million is still being negotiated through State Bank of Pakistan and the amount is expected to be transferred in due course of time. The EAD added that the short term financing of euro 750 million is on concessionary terms. The IDB was requested to provide the financing for one year on 12 months Euro Libor+230 bps on the advice of Finance Division and IDB agreed to provide the financing on the terms requested.
