The Saudi Export-Import Bank (Saudi Exim) is set to bolster its support for domestic trade finance lenders after securing a US$138mn reinsurance agreement.

The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) will provide protection for Saudi Exim for commercial and political risks it might be exposed to through its coverage of issuing banks in ICIEC member states.

The facultative reinsurance agreement comes with a 12-month tenor and covers documentary credits confirmed by Saudi Arabia-based Bank AlBilad and Arab National Bank, the original policyholders.

The export credit agency (ECA) and the ICIEC say the partnership will create additional capacity for Saudi Exim to support exporters and importers of essential goods and services in the Middle Eastern state.

“By providing this facultative reinsurance, ICIEC gives extra confidence to banks – as well as exporters and importers – [that] those transactions will be protected against the range of risks confronting marketing participants today,” says Oussama Kaissi, CEO at the ICIEC, the insurance arm of the Islamic Development Bank.

Since launching in 2020, Saudi Exim has been working to fulfil its remit of helping develop the kingdom’s non-oil export sectors, as part of wider government plans to diversify the economy away from fossil fuels.

Included within the wider Saudi Arabia Vision 2030 strategy is an aim to generate 50% of the kingdom’s power from renewable sources by the end of this decade, while it has targeted net-zero carbon emissions by 2060.

But for Middle Eastern countries such as Saudi Arabia that are so heavily dependent on hydrocarbons for power and export revenues, analysts warn the transition to renewables cannot happen overnight.

In April, Saudi Exim signed an agreement with another branch of the Islamic Development Bank, the Islamic Trade Finance Corporation, which it said would help grow non-oil exports and increase SME access to trade finance.