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The State of Pakistan and the International Trade Finance Corporation of the Islamic Development Bank signed a financing agreement amounting to $ 386 million, to be used in importing oil and liquefied gas. The Pakistani side emphasized the importance of this agreement and its role in promoting economic and social development.
In another development, remittances from Pakistanis working in the Kingdom of Saudi Arabia amounted to 665 million dollars in September this year, an increase of 29%. On the basis of a total, remittances from the Gulf countries and Western countries reached 3 and 2 billion dollars in September this year.

Pakistan is unlikely to fully benefit from $4.5bn financing package it secured about two and years ago from International Islamic Trade Finance Corporation (ITFC). Pakistan and the ITFC on Monday signed about $400 million worth of two facilities to finance oil and liquefied natural gas (LNG) imports by December this year. Another $100m facility is expected to be arranged by December. This is part of a $4.5bn package Pakistan and ITFC had signed in April 2018 to cover oil and LNG imports over a period of three years. Last year, however, the facility could not go beyond $1.05bn owing to limitations of the partner banks of the ITFC.

Al Meezan Investments launched the country’s first Islamic ETF named Meezan Pakistan Exchange Traded Fund (MP-ETF). The ETF will trade at the stock exchange under the ticker ‘MZNP-ETF’. MZNP-ETF is an SECP-approved product which consists of a basket of securities which tracks Meezan Pakistan Index (MZNPI) as the underlying benchmark index of the fund. MZNPI tracks approximately 70% of KMI-30, on average. The ETF is available through stockbrokers (TREC Holders) and trade like stocks with real time pricing during trading hours on an exchange.

Escorts Investment Bank Limited (EIBL) is planning to launch Islamic housing finance. Malik Riaz, the Pakistani business tycoon owns EIBL. The new financing is expected to help in the business of the parent project of EIBL, Bahria Town. Bahria Town recently announced a cheap housing scheme in different cities for both Pakistani residents and expatriates. The scheme would appeal to customers towards the housing project as well as the bank. Shariah-compliant housing finance and micro-financing products are to be issued by EIBL besides the earlier offered interest-based products.

The government of Pakistan is set to raise Rs150 billion with the reopening of its existing five-year Ijarah Sukuk issuance, maturing in July 2025. The steps of reopening of existing Sukuk is similar as that of issuance of a completely new Sukuk. The Sukuk was originally issued last month. Pre-auction target was set at Rs60 billion for fixed rental rate Sukuk for August-October. The target for the variable rental rate Sukuk has been fixed at Rs90 billion. For the subsequent period, the rental rate for the reopened Sukuk would be the same as that of the first issue. Similarly, the maturity of the reopened Sukuk would also be the same as the first issue.

Pakistan's Adviser on Finance and Revenue, Dr Abdul Hafeez Shaikh said the Covid-19 has engulfed the whole world, and the global GDP is going to contract by 3-4%. Hafeez said Islamic banking was growing at a fast pace in Pakistan and he emphasized the potential of Islamic finance to help developing countries cope with the global financial challenges. The adviser said the government established a corona relief fund and transferred cash to 16 million vulnerable families to provide them support in this difficult time.

Meezan Bank concluded the issuance of Pakistan Energy Sukuk (PES) II worth approximately Rs 200 billion by state-owned Power Holding Limited (PHL). The Sukuk aims to help the Government in addressing the challenges for resolving circular debt in the country’s power sector. This is the second issuance of this series of sukuk, bringing the total size of the sukuk to approximately Rs400 billion. The sukuk issue was 1.7 times oversubscribed. The transaction is structured for ten years, with six monthly profit (rental) payments at a rate equivalent to 6 Month KIBOR -10 bps, as determined through the book building process.

As Pakistan gears up to borrow as much as Rs750 billion in Islamic bonds from the country’s financial system, one bank is set to benefit more than all others: Meezan Bank. The forecast for the net interest margin for Meezan Bank is 5.43% in 2020 and 4.72% in 2021. The key cause of the bank’s growth is its rapid expansion of its branch network, coupled with the fact that its brand name and credibility in Islamic finance mean that the bank rarely ever struggles to attract deposits. Over the past two years, Meezan Bank has added 159 branches, which represents a 21% increase over that period.

Pakistan's Power Division has amended the Energy Sukuk Rules aimed at facilitating issuance of Rs 200 Sukuk-II through Pakistan Stock Exchange (PSE). On May 6, 2020, the government approved a new mechanism/criterion for disbursement of payments to the power generators. The Power Division has to disburse Rs 300 billion (Rs 200 billion + Rs 100 billion) through CPPA-G to Power sector entities including the power generators in private and public sector for system operation during the summer season.

The Pakistan Energy Sukuk-II (PES-II) has been delayed by 7-10 days. The Power Holding Limited (PHL) is issuing the second issue of the Energy Sukuk to address the liquidity constraints being faced by the country’s power sector. Sources said the delay occurred as the government had to notify certain rules and regulations which could be completed in a couple of days.

The Islamic Development Bank (IsDB) Thursday offered financial support to Pakistan amid the lockdown due to coronavirus pandemic. In a video call, IsDB President Dr Bandar MH Hajjar assured Federal Minister for Economic Affairs Makhdoom Khusro Bakhtiar of the bank’s support for Pakistan. Hajjar informed that the IsDB Group has approved the $2.3 billion package for the IsDB member countries to mitigate the impact of the COVID-19 pandemic. Makhdoom Khusro Bakhtiar appreciated the special priority given to Pakistan. The minister also underlined the needs of the member countries and applauded Bank’s response.

The Islamic Development Bank (IsDB) Group has approved a $2.3 billion package for its member countries to mitigate and recover from the impact of the Covid-19 pandemic. IsDB President Dr Bandar M H Hajjar said that this will be achieved through a holistic approach aimed to accommodate priorities beyond the immediate and emergency response. Dr Hajjar assured the bank’s full support for the people and the government of Pakistan to mitigate the negative impacts of Covid-19. Pakistan's Minister for Economic Affairs Makhdoom Khusro Bakhtiar informed that International Islamic Trade Finance Corporation (ITFC) has been directed to immediately finalise $500 million for import of oil and an amount of $150 million has been allocated to alleviate the pandemic impact.

Pakistan's state-owned Power Holding announced the 10-year Sharia-compliant sukuk up to Rs200 billion through the Pakistan Stock Exchange. The amount generated from the Pakistan Energy Sukuk-II will also be used for the settlement of partial circular debt related to the power sector. For the first time, ordinary investors have been allowed to participate in buying a government security. The value of each sukuk unit is placed at Rs5,000. The minimum bid size would be 20 units or Rs100,000. In another development, the SECP has relaxed the time for maturity requirement of government Ijara Sukuk for Sharia-complaint money market sub funds of Pension Fund. The SECP has allowed the Sharia-compliant pension funds to invest in government sukuk from three to five years.

The State Bank of Pakistan (SBP) has issued the auction calendar for issuance of Rs225 billion sovereign Sukuk based on Ijarah. Pre-auction target is set at Rs75 billion for April, while similar amounts are set for May and June 2020. The latest issuance is the part of Rs700 billion worth Ijara Sukuk. The federal cabinet approved the launching of this bond early this month. The bond would help mobilise excessive funds available with Islamic banks and help the government to diversify its debt. Last week, the World Bank said the economic output was expected to contract sharply in Q4FY20, bringing overall FY20 growth to negative 1.3%.

The State Bank of Pakistan (SBP) announced the auction for three-year Ijara Sukuk to raise some Rs 225 billion for the federal government. Recently, the federal cabinet approved the issuance of a five-year Ijara Sukuk to generate some Rs700 billion to meet the rising financial requirements for combating COVID-19. Three tenders will be conducted for the sale of the Rs 225 billion sukuk. The first auction will be held on April 16, 2020 for Rs 75 billion, the second on May 16 for Rs 75 billion and the third is scheduled for June 18, 2020 for Rs 75 billion. Pakistan has been issuing Sukuk since 2008 to provide liquidity to the domestic Islamic industry; however, demand for such instruments far surpasses their supply.

The first batch of the much-needed medical supplies donated by the Jack Ma Foundation and the Alibaba Foundation has arrived in Pakistan. The shipment is part of the donation of medical supplies to 10 Asian countries announced on March 21. Collectively, the nations will receive a total of 1.8 million masks; kits for testing 210,000 people, 36,000 pieces of protective clothing, as well as essential medical equipment such as ventilators and forehead thermometers. Pakistan's Disaster Management Authority will transport and distribute the supplies throughout the country. The remainder of the donation is expected to reach Pakistan soon.

Meezan Bank's Shariah Board endorsed new guidelines related to digital accounts, supply chain financing and a housing finance facility. The Shariah Supervisory Board showed its overall satisfaction on the Shariah-compliance environment and operations of the Bank. Guidelines for the digital Meezan Asaan Mobile Account based on Mudarabah were approved during the board meeting. From now on a customer can open his digital mobile account at Meezan Bank without the hassle of visiting any physical branch. The customer will be entitled to receive halal profit based on actual returns of Shariah-compliant financings on monthly basis. Furthermore, the customer can use this account to deposit and withdraw funds digitally or from any Meezan Bank branch all over Pakistan.

Prime Minister Dr Mahathir Mohamad brought an idea of a gold dinar as an international reserve currency for Muslim countries in preference to the US dollar as the dollar was sometimes unstable. Nazari Ismail, a professor of economics at Universiti Malaya thinks, that the idea is not reliable, as countries as Saudi Arabia, Qatar, Pakistan and Indonesia would be not interested in the prime ministers proposal.

A high-level delegation of the Islamic Development Bank (IsDB) and Lives and Livelihoods Fund (LLF) re-affirmed their commitment to support Pakistan in their fight against polio. The LLF has prioritized the eradication of polio and contributed over US$ 100 million to the Pakistan Polio Eradication Programme. During the visit, the LLF and IsDB team visited the outskirts of Islamabad Capital Territory and participated in the nationwide vaccination campaign which started on December 16, 2019. During this campaign 39.5 million children under the age of five were vaccinated. The LLF is the largest development initiative of its kind and donor partners include the Abu Dhabi Fund for Development, the Bill and Melinda Gates Foundation, the Islamic Solidarity Fund for Development, the King Salman Humanitarian Aid and Relief Center and Qatar Fund for Development.

Pakistan sought financial and technical assistance from Islamic Development Bank (IDB) to establish an export-import bank to improve trade among Muslim economies. International Islamic Trade Finance Corporation (ITFC) is an autonomous body under the Islamic Development Bank that aims to promote trade to improve the economic condition of the people of Muslim countries. Minister for Economic Affairs Hammad Azhar said ITFC has provided financing facility to Pakistan to cover its oil and liquefied natural gas imports over a period of three years. Furthermore, he asked ITFC to develop training tools in Islamic banking as Islamic banking is very popular in the country.