The Saudi Fund for Development (SFD) signed a $10 million export financing agreement with the National Bank of Iraq to provide credit facilities to the Iraqi lender.
The funding will help Iraqi companies to buy Saudi goods and services and will help to strengthen trade relations between the two nations, the SFD said in a statement on Sunday.
“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," SFD chief executive Sultan Abdulrahman Al-Marshad said.
“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.”
Iraq is developing stronger trade ties as it attempts to diversify an economy that is almost entirely reliant on oil revenue. The country's economy shrank 10.1 per cent last year as it was hit by the double blow of Covid-19 and low oil prices. A liquidity crisis sparked by its public sector salary load and pension payment obligations also led to the government devaluing its currency, the dinar, in December.
The agreement between the SFD and Capital Bank-owned National Bank of Iraq in Jordan will extend $10m in a revolving credit line to Iraqi companies, with repayment periods of up to 36 months, depending on the type of imports and the nature of the trade being financed.
“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,” said Capital Bank's chairman Basem Al-Salem.