The Saudi Fund for Development (SFD) has signed an export finance deal worth $10 million with the National Bank of Iraq to provide credit facilities to the Iraqi lender.
The SFD said in a statement that the funding will assist Iraqi companies in purchasing Saudi goods and services, as well as enhance trade relations between the two countries.
SFD Chief Executive Officer Sultan Abdulrahman Al-Marshad remarked that “this agreement reflects the strong ties between the kingdom and Iraq, and our mutual desire to increase co-operation across several sectors. It is part of an ongoing $1.5 billion that the Saudi government allocated to support reconstruction and development projects in Iraq.”
“Supporting stability in countries seeking to achieve sustainable economic and social development is one of the main priorities of the SFD and through this agreement we seek to achieve prosperity for both nations,” Mr. Al-Marshad added.
Iraq is developing stronger trade ties as it attempts to diversify an economy that is almost entirely based on oil revenue. Last year, the country’s economy shrank by 10.1 percent as a result of the combined effects of COVID-19 and low oil prices.
The government devalued its currency, the dinar, in December due to a liquidity crisis triggered by its public sector salary load and pension payment obligations.
The SFD and National Bank of Iraq in Jordan, which is owned by Capital Bank, would extend a $10 million revolving credit line to Iraqi companies, with payback terms of up to 36 months depending on the type of imports and the nature of the trade being financed.
Mr. Basem Al-Salem Capital Bank’s chairman pointed out that “this line of financing will expand trade between Iraq and Saudi Arabia by providing credit facilities for Iraqi investors to import Saudi products and services at competitive prices. It will also increase transport links between our two nations and stimulate the financial and commercial sectors.”