ISLAMABAD: Caretaker Finance Minister Dr Shamshad Akhtar has stated that Exim Bank will play an important role in shaping Pakistan’s trade finance infrastructure. Speaking at the inauguration of Exim Bank as chief guest on Thursday, the caretaker finance minister said the Exim Bank’s operationalisation is a proud moment and a major milestone for the country because it would augment the banking and trade finance landscape.
She added that Pakistan is in a unique situation for offering political risk insurance would be an important product and this can be crucial for attracting foreign investment into a riskier market like Pakistan so mitigating risks is pretty instrumental for Pakistan.
She said that as it would grow and mature, it will shape Pakistan’s trade finance and promote it through an institutionally proper framework backed by effective policies and regulatory framework.
The caretaker minister further added that it would of course need to be accompanied by stream lining export policy framework because together both would be able to contribute to balance of payment sustainability which in the past has been hurt by low levels of export earnings.
She said that Exim Bank if effectively managed along with the right policies and regulatory framework has the potential to enhance Pakistani exporters’ competitiveness in the international market by offering lending credit insurance and guarantee services.
The minister continued that it would also create a level playing field for Pakistani exports and facilitate to excess to a wider global market and would protect exporters against foreign risk of default.
Akhtar said as the State Bank of Pakistan (SBP) legally cannot undertake export finance scheme (EFS) for a longer period and complemented the central bank that to make sure institutionalization with the Exim Bank smoothly in this regard. The minister said that this partnership will have to persist until the SBP is able to completely phase it out from this business.
She added that Exim Bank capacity would have to be built with the support of the SBP with regard the EFS because it is a specialised business. The minister added that it would remain a concessionary facility with back-up financing in the budget by the Finance Ministry instead of the SBP.
As a regulatory SBP would ensure oversight of the EFS scheme, said the minister, adding that with dual mandate Exim would emerge as a single-window operation for exporters with a comprehensive range of products, incentives and services.
The EXIM’s success would depend on its ability to adopt international best practices. Across the globe, EXIM Bank plays a critical role in promoting international trade and economic growth.
The minister added that Exim Bank will play an important role in shaping Pakistan’s trade finance infrastructure. The launch of Exim Bank will support the government’s vision to boost exports and investment in Pakistan and will prove helpful in promoting Pakistan’s exports and facilitating Pakistani exporters.
The minister added that it would help to protect against the risk of non-payment of exporters. Exim Bank will bring export credit insurance products to Pakistan. It will help exporters to avoid craft default of foreign receivables, the minister added.
The availability of export credit and trade finance facilities will act as a stimulus for the export industry and in turn would lead to job creation.
Akhtar said that this will help our manufacturers build stronger links within global value chains. The minister added that an export finance scheme is also being launched.
She said that all over the world, Exim banks play an important role in promoting international trade and economic development and specialized financial institutions provide various products and services to importers, exporters, and investors.
About $2.5 trillion in trade finance was provided by EXIM institutions worldwide last year. This helped increase exports to more than 60 countries. Exim Bank’s success can be seen in Vietnam since its launch.
Copyright Business Recorder, 2023
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