51204-002: Promoting Investments and Economic Growth through International Trade | Asian Development Bank

Pakistan: Promoting Investments and Economic Growth through International Trade

Sovereign (Public) Project | 51204-002 Status: Proposed

The proposed knowledge and support technical assistance (TA) from Asian Development Bank (ADB) will support the operationalization of the EXIM Bank of Pakistan (EXIMBP) which will provide trade financing facilities to help local exporters get access to much needed financing to competitively trade internationally. Overtime, this will help the economy increase and diversify its export base and promote long-term economic growth. The TA will build on the outputs by International Financial Consulting under TA-8832 which produced a draft operational roadmap for EXIMBP.

Project Details

Project Officer
Torres, Adrian Central and West Asia Department Request for information
Country
  • Pakistan
Sector
  • Finance
 
Project Name Promoting Investments and Economic Growth through International Trade
Project Number 51204-002
Country Pakistan
Project Status Proposed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA: Promoting Investments and Economic Growth through International Trade
Technical Assistance Special Fund US$ 500,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Knowledge solutions
Private sector development
Sector / Subsector

Finance / Trade finance

Gender Equity and Mainstreaming No gender elements
Description The proposed knowledge and support technical assistance (TA) from Asian Development Bank (ADB) will support the operationalization of the EXIM Bank of Pakistan (EXIMBP) which will provide trade financing facilities to help local exporters get access to much needed financing to competitively trade internationally. Overtime, this will help the economy increase and diversify its export base and promote long-term economic growth. The TA will build on the outputs by International Financial Consulting under TA-8832 which produced a draft operational roadmap for EXIMBP.
Project Rationale and Linkage to Country/Regional Strategy

International trade has historically been a precursor to economic growth of developed countries and, more recently, of many emerging economies. The Government of Pakistan (GOP) recognizes that constraints to international trade inhibit economic expansion, competitiveness and growth. Limited trade facilitation mechanisms, and inadequate trade-related infrastructure facilities and institutional financial support systems have been identified as key constraints and barriers to export trade in Pakistan.

Trade-related financing is largely intermediated by local commercial banks which typically has preference for larger and more established banking clients limiting its exposure to support other prospective local exporters and suppliers, many of which are small and medium-sized enterprises (SMEs). In many cases, funding lines from banks, if available, are not competitive, has short tenor, and typically require high levels of collateral which pose significant capital and liquidity constraints to the borrowers, particularly, to local export-oriented manufacturers and producers that rely on imports of capital goods and raw materials. Moreover, most exporters do not purchase credit insurance against non-payment of their accounts receivables, presumably due to the fact that they cannot access international credit insurance as this is typically provided by a national export credit agency like EXIMBP which is not yet in operation.

Limited access to trade finance place many SMEs and other exporters at a disadvantage to international competitors who can access financial support and credit enhancements from their country's national export credit agency capable of offering insurance for extended payment terms and facilitating lower cost of financing. This situation discourages trade competition which further deprives the economy of productivity growth.

To address some of these trade constraints, GOP established EXIMBP to promote the expansion and diversification of export base of Pakistan and mitigate the risks faced by local businesses conducting international trade. It was incorporated as a company limited by shares under the Companies Ordinance, 1984 in June 2015 with an authorized capital of Pakistani Rupees (PRs) 100 billion (approx. $1 billion), out of which PRs. 7 billion (approx. $70 million) has been paid in and another PRs. 30 billion (approx. $30 million) is expected to be paid in by 2018. The State Bank of Pakistan (SBP), Pakistan's central bank, has deputed five staff at managerial positions at EXIMBP, including its Chief Executive Officer , who is spearheading its operationalization process. EXIMBP is yet to secure its certificate of commencement of business and is seeking the assistance of ADB to operationalize the company through the proposed technical assistance and subsequently capitalize the company from the ensuing sovereign loan from ADB.

Impact Export competitiveness and diversification improved (Pakistan's Strategic Trade Policy Framework 2018 2023)
Outcome EXIMBP made operational
Outputs

EXIMBP operational and institutional structure reviewed

Operational roadmap and business plan updated

Legal and regulatory framework and other institutional arrangements required for EXIMBP's operation determined and enacted

Economic, financial, and safeguards assessment performed

Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Torres, Adrian
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Ministry of Finance, Revenue and Economic Affairs
Block Q, Pakistan Secretariat
Islamabad, ICT, Pakistan 44000
Timetable
Concept Clearance 18 Jul 2018
Fact Finding -
MRM -
Approval -
Last Review Mission -
Last PDS Update 19 Jul 2018

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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Tenders

Tender Title Type Status Posting Date Deadline
Operationalization of Exim Bank of Pakistan (EXIMBP) Firm - Consulting Closed 26 Jul 2018 24 Aug 2018

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.