islamic Development Bank (IDB) has enhanced the US$ 100 million financing facility extended to State Trading Organizatio (STO) by their Islamic wing, International Trade Financing Corporation (ITFC).
Executive Director and Chief Financial Officer Mohamed Mihad confirmed that the facility had been enhanced by an additional US$ 50 million.
"This is not a loan. [IDB] renewed an Islamic facility", said Mihad.
According to the information released by the Finance Ministry on the country's debt and sovereign guarantees, a sovereign guarantee was issued against US$ 150 million financing facility given to STO by ITFC on January 16.
The Islamic financing facility of US$ 100 million was arranged for the largest importer of oil in the Maldives during 2018. The facility granted by ITFC is a Murabaha Financing facility, an Islamic financing structure in which the seller provides the cost and profit margin of an asset. Murabaha is not an interest-bearing loan but is an acceptable form of credit sale under Islamic law.