ANNOUNCEMENT 03 Feb 2013In February 2013, the government of Saudi Arabia announced a change in its trade finance instruments.
NUMBER OF INTERVENTIONS
The Saudi Fund for Development, press release of 3 February 2013: SFD Signs three lines of financing Agreements for exporting a variety of commodities to Turkey and Jordan with a total Amount of SAR (131) Million: http://www.sep.gov.sa/webcenter/faces/oracle/webcenter/page/scopedMD/s5dc73d77_7324_4d08_b347_444721019cba/Page30.jspx?wc.contextURL=%2Fspaces%2Fsfdinternet&DFile=SEP_ACCORDION_DATAFILE&NRow=25&wc.originURL=%2Fspaces%2Fsfdinternet%2Fpage%2FLatest%2BNews&_afrLoop=447757818663628#%40%3FNRow%3D25%26_afrLoop%3D447757818663628%26wc.originURL%3D%252Fspaces%252Fsfdinternet%252Fpage%252FLatest%252BNews%26DFile%3DSEP_ACCORDION_DATAFILE%26wc.contextURL%3D%252Fspaces%252Fsfdinternet%26_adf.ctrl-state%3D19c0dvns21_4263
On 3 February 2013, the Saudi Fund for Development (SFD) announced signing three financing agreements totalling SAR 131 million (approx. USD 35 million) with Tekstil Bank and Turkland Bank in Turkey, and The Housing Bank for Trade and Finance in Jordan. The financing agreement with the two Turkish banks were signed on 28 January 2013, whilst the financing agreement with the Jordanian bank was signed on 29 January 2013. The three credit lines are all funded through SFD's Saudi Export Program (SEP) and will finance Saudi Arabian exports of various goods and services to the two countries.
The Saudi Export Program
The Saudi Export Program (SEP) is part of the Saudi Fund for Development and was established in 1999. The program promotes Saudi exports to contribute the country's GDP and minimize the economic dependence of crude oil. In promoting export of Saudi goods the SEP can support 100% of the value of the eligible export transaction depending on risk and nature of the export. In general the value of exported good/service must contain a Saudi domestic value of 25% or more as well as the transaction having a minimum value of SAR 100,000 (approx. USD 26,666). Additionally, parties benefiting from the SEP fall into one of the following: Saudi companies and establishments; foreign companies, entities or governments importing or purchasing of Saudi goods or services; or lastly local or foreign banks and financial institutions.
The Saudi Fund for Development
The Saudi Fund for Development (SFD) was established by Royal Decree No. M/48 of 1 September 1974. The Fund's main objectives are to: 'participate in financing of development projects in developing countries through granting of loans to said countries and to encourage national non-crude-oil exports by providing finance and insurance in support of such exports.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.
According to the terms of the SFD, the goods and services exported within this transaction must contain a Saudi domestic value of 25% or more.