The International Finance Corporation (IFC) and Bank Alfalah Limited (PSX: BAFL) have signed an agreement for Pakistan’s first Diversified Payment Rights program, with the initial transaction expected to provide up to $100 million in foreign currency financing.
The Project Agreement was signed at the Finance Division in Islamabad on August 20 in the presence of Finance Minister Senator Muhammad Aurangzeb. IFC Regional Industry Director Momina Aijazuddin and Bank Alfalah President and CEO Atif A. Bajwa signed the agreement.
The DPR structure is designed to raise foreign currency financing against eligible future foreign currency payment flows. The government said the program is intended to provide another source of foreign currency financing and expand access to international capital markets.
The initial transaction involves financing of up to $100 million. Depending on market conditions and the performance of the first transaction, the structure could be used for additional financing and participation by international institutional and private investors.
Finance Minister Muhammad Aurangzeb said the transaction required regulatory, policy and technical work involving the Finance Division, State Bank of Pakistan, IFC and Bank Alfalah. He said diversifying sources of foreign currency financing remained important and emphasized the need to develop a pipeline of projects that require foreign currency funding.
The agreement could also allow other Pakistani banks to use DPR structures in the future, subject to regulatory requirements, market conditions and the performance of the initial transaction.
The ceremony was attended by Finance Secretary Imdadullah Bosal, IFC Division Director for Pakistan, Afghanistan, Kyrgyz Republic, Tajikistan and Turkmenistan Simon Andrews, and senior officials from the Finance Division, IFC, Bank Alfalah and the State Bank of Pakistan.
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