Islamabad, Pakistan, January 5, 2011
—IFC, a member of the World Bank Group, the Asian Development Bank, Citibank, and Pakistan’s MCB Bank announced today that they have completed a landmark trade transaction that will help boost the textile industry in Pakistan, a sector that accounts for over 60 percent of the country’s industrial activity.
The four banks provided trade finance coverage of up to €110 million for Ibrahim Fibers Limited to import state-of-the-art German machinery to produce polyester staple fiber and polyester chips. The additional 650 tons per day capacity made possible by the transaction will more than double Ibrahim Fiber’s polyester production, already one of Pakistan’s highest, to 1,250 tons per day.
By providing guarantees that cover the payment risk in trade transactions, IFC’s Global Trade Finance Program and ADB’s Trade Finance Program 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.
“The cover arranged by IFC, ADB, and Citibank portrays the high degree of confidence these leading global financial institutions have in MCB,” said Farooq A. Khan, Head of Trade Products Division at MCB Bank.
“Citi 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 Arif Usmani, Citibank’s Pakistan Country Officer.
“ADB's Trade Finance Program supports large volumes of trade business in Pakistan on its own,” said Steven Beck, Head of Trade Finance in ADB's Private Sector Operations Department. “However, cooperating with IFC, Citibank, and MCB was key to closing this challenging deal, a transaction that will support businesses and create jobs in Pakistan.”
“By responding to the shifting needs of its partner banks, IFC’s Global Trade Finance Program is helping stimulate trade flow and contributing to economic growth,” said Scott Stevenson, Senior Manager of IFC’s Global Trade Finance Program. “The innovative partnership of this transaction will help stimulate one of the key sectors in Pakistan’s economy.”
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. Last year, ADB’s Trade Finance Program supported over $600 million of cross-border trade in Pakistan.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit
www.ifc.org
.
For more information about the Asian Development Bank, visit
www.adb.org
.
For more information about Ibrahim Fibers Limited, visit
www.igcpk.com
.
