The Saudi Fund for Development (SFD) is setting up a $10 million credit facility to help Iraqi businesses that are looking to import products and services from the kingdom.
The fund announced on Sunday that it has signed a deal with the National Bank of Iraq, a subsidiary of the Capital Bank Group, to extend financing to importers from Iraq, in a move that will boost Saudi-Iraq trade.
Saudi Arabia has been looking for ways to raise its exports in the non-oil sector and move away from oil profits. The country’s gross domestic product (GDP) dipped by 12 percent during the first three months of the year, although the non-oil sector grew by 3.3 percent.
According to SFD CEO Abdulrahman Al-Marshad, the new financing deal is in line with the kingdom’s diversification strategy, as well as reflects the strong ties between the two states.
“This agreement reflects the strong ties between the Kingdom and Iraq, and our mutual desire to increase cooperation 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,” said SFD CEO Sultan Abdulrahman Al-Marshad.
“The agreement… is consistent with the kingdom’s aim to diversify its national economy and increase its non-oil exports, will open new markets for Saudi producers, and it will stimulate the Iraqi commercial and financial sector.”
Trade between the two countries is also likely to increase because of the deal.
“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 Basem Khalil Al-Salem, chairman of the board of directors at Capital Bank.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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© ZAWYA 2021