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Islamic Development Bank.

The Islamic Development Bank, an affiliate of the OIC, was established in 1975 with 22 founder members and an Authorised Capital of Islamic Dinar (ID) 2.00 billion is the Unit of Account of the Bank and is equal to one Special Drawing Right (SDR) of International monetary Fund and ISDR = $ 1.38 approximately). During the past 17 years its membership has increased to 45 countries and the capital has increased to ID 6 billion. The purpose of the Bank is to foster economic development and social progress of member countries and Muslim communities individually as well as jointly in accordance with the principles of Shariah. To fulfil its purposes, the Bank participates in equity Capital of projects and enterprises, invests in economic and social infrastructure projects and extends loans to the private and public sectors for the financing of projects in member countries. The position of Assets and Liabilities of the Bank during the last fife years has been as under:

As of June 30, 1992 the cumulative approvals since the beginning of the Bank's operations totalled ID 9,389.13 million (US $123,436.44 million), while the cumulative disbursements since the beginning of the Bank were ID 6,894,96 million (US $ 9,867 million). The composition of disbursement during preceding five years has been as above:-

TABULAR DATA OMITTED

The affairs of the Bank are administered by a Board of Governors, a Board of Executive Directors and President of the Bank. Each member state appoints a Governor on the Board of Governors. There are 11 executive Directors, 5 of which are appointed by the member states having largest share viz. Saudi Arabia, UAE, Kuwait and Libya while the remaining 6 are elected by other members of the Bank.

Assistance to Pakistan

Since its establishment, the Bank has financed 27 projects and 80 import Operations in Pakistan for a total of US $ 1481.50 million. The financing has been in the shape of Loans, Equity, Leasing, Instalment Sale and short term trade financing for the import of essential commodities like Crude Oil, Palm Oil, Fertilizer, etc.

The funds are provided by the Bank at lease rate/mark-up varying from 6 to 11 per cent. The current mark up rate is around 7.5 per cent. The period of lease varies from 5-8 years. Concessional loans carry a service charge of 2.5 per cent and have a repayment period of 20 years. Such operations, however, play a very small part in the Bank's overall portfolio.

The annual level of operations for Pakistan involves $150.00 million by way of short-term trade financing and between $ 22.0 to 30.0 million as project assistance. Short term trade financing to the Government of Pakistan is normally for the important of essential commodities such as Palm Oil, Crude Oil, Cement and Fertilizer under IDB's Import Trade Financing Operations.

The financing is provided at a mark-up rate of 7.5 per cent with a 15 per cent rebate for prompt payment. The repayment period in respect of Crude Oil is 12 months while for Palm Oil it is 18 months. Pakistan received US $ 140.05 million and US $ 172.00 million during 1990-91 and 1991-92 respectively. In addition to above sources of financing the Bank has also extended Lines of Equity/Lease/Instalment Sale financing for projects to the following institutions in Pakistan:-
Name of Agency Amount of Credit Line
NDFC ID 10 million
PICIC ID 5 million
BEL ID 10 million


IDB's financial assistance to Pakistan has played a significant role in furthering the socio-economic reforms of Government of Pakistan.
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Publication:Economic Review
Article Type:Company Profile
Date:Mar 1, 1993
Words:600
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