ISLAMABAD, Jan 5: The Asian Development Bank, International Finance Corporation, Citibank, and MCB announced on Wednesday that they have completed a landmark trade transaction that will help boost the textile industry in Pakistan, a sector which accounts for over 60 per cent of the country`s industrial activity.

The four banks provided trade finance coverage of up to 110 million euros 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 to 1,250 tons per day.

By providing guarantees that cover the payment risk in trade transactions, ADB`s Trade Finance programme and IFC`s Global Trade Finance programme help increase trade finance and the flow of goods to and from emerging market countries.

For this transaction, IFC assumed 30 per cent of MCB Bank`s risk, and ADB 19 per cent. Citibank managed the balance against the original letter of credit established by the 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 Khan, head of Trade Products division.

Citi`s widespread global network across more than 100 countries enables it to leverage those relationships to promote common agenda to support and enhance private sector investment in Pakistan, said Arif Usmani, Citibank`s Pakistan Country Officer.

ADB`s Trade Finance Programme 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.

He said 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 programme is helping stimulate trade flow and contributing to economic growth, said Scott Stevenson, senior manager of IFC`s global Trade Finance programme.

The innovative partnership of this transaction will help stimulate one of the key sectors in Pakistan`s economy, he added.

Last year, ADB`s Trade Finance programme supported over $600 million of cross-border trade in Pakistan. Over the past six months, IFC has provided Pakistani banks with $328 million in trade finance guarantees, a $125 million increase compared to the same period last year.

The trade financing helps Pakistan increase cross-border trade, and benefits many important business sectors.