International Finance Corporation announces first local currency investment in Pakistan
The International Finance Corporation (IFC) – the private sector arm of the World Bank Group – has announced its first local currency investment in Pakistan, which it said was aimed at strengthening the agriculture sector.
According to a press release issued by the IFC on Tuesday, its first Pakistani rupee-denominated investment via an unfunded partial credit guarantee of up to Rs33.6 billion would support long-term financing from Standard Chartered Bank Pakistan Limited to Engro Fertilisers Limited.
“The engagement marks IFC’s first local currency investment in Pakistan, thus expanding access to long-term financing solutions in both local and foreign currency, critical for economic growth, particularly in important sectors such as agriculture and micro, small, and medium enterprises,” the press release said.
It added that the financing would enable Engro Fertilisers to strengthen the agri-value chain in Pakistan by mobilising local capital.
“The investment — aimed at strengthening Pakistan’s agriculture sector and bolstering food security — also benefits from a first loss counter guarantee from the IFC-Canada’s Facility for Resilient Food Systems,“ the press release said
It further stated that by leveraging PKR-denominated financing, Engro Fertilisers “is championing the use of domestic capital to enhance operational resilience”.
“The financing will help Engro Fertilisers make capital investments in maintenance of facilities and turnarounds, enabling uninterrupted supply of urea and other fertilisers to meet national demand.
“This financing will enable Engro Fertilisers to strengthen the agri-value chain in Pakistan by mobilising local capital.“
Moreover, the press release added, the funding was also aimed at supporting farmer programmes, ensuring the continuity of initiatives that complemented Engro’s core mission of reliable production.
It highlighted that the agriculture sector in Pakistan was contributing 24pc of the country’s GDP, 70pc of its exports and 40pc of its employment, making it vital for long-term growth.
“Yet systemic challenges—inefficient supply chains, underfunded farmer programs, low literacy, and rising input costs — persist.
“This investment will help address some of these gaps,” the press release said.
It quoted Engro Fertilisers Chief Executive Officer Ali Rathore as saying: “Engro has always strived to solve Pakistan’s most pressing issues meaningfully. Using local capital to strengthen local value chains reflects our commitment to the country and to our farmers — the backbone of Pakistan’s economy — through reliable fertiliser production.
“We are grateful to our partners, IFC and Standard Chartered Bank, for enabling us to advance this mission.”
The press also included remarks by IFC’s Regional Industry Head of Manufacturing, Agribusiness and Services in the Middle East and Central Asia, Ashruf Megahed.
He was quoted as saying: “This investment reflects the strength of our partnership with Engro Fertilisers and Standard Chartered Bank and our shared commitment to providing innovative solutions to address challenges in a sustainable manner. Through this project, we are opening new pathways for local currency long-term financing that support growth and financial resilience to manage country risk in a sector vital to the country’s economy.”
Similarly, the press release quoted Standard Chartered Chief Executive Officer and Head of Coverage in Pakistan Rehan Shaikh as saying: “At Standard Chartered, we are committed to financing solutions that enable sustainable growth and long-term resilience across Pakistan’s economy.
“This partnership with IFC and Engro Fertilisers reflects our shared vision of strengthening food security and supporting one of the country’s most critical value chains. Standard Chartered is keen to continue working with IFC to replicate this successful structure across its network.”
Today’s announcement by the IFC comes around two months after the State Bank of Pakistan (SBP) partnered with the IFC to expand local currency financing for the private sector.
The SBP had announced on October 21 the signing of an agreement with the IFC under the International Swaps and Derivatives Association (ISDA) framework, enabling the multilateral institution to invest in Pakistani rupees and better manage exchange rate risks.
Borrowing in hard currencies such as the US dollar while earning revenues in local currency exposes companies in developing economies to considerable exchange rate risks. Addressing this mismatch is essential for strengthening the financial resilience of local businesses and ensuring broader economic stability.
