By Staff Reporter
KARACHI: The International Finance Corp. has made its first local-currency investment in Pakistan, extending a credit guarantee to back financing for a major fertilizer producer in a move aimed at shoring up the country’s vital agriculture sector.
The IFC, the private-sector arm of the World Bank Group, is providing an unfunded partial credit guarantee of up to Rs33.6 billion to support long-term lending from Standard Chartered Bank Pakistan Ltd. to Engro Fertilisers Ltd., according to a statement from the IFC on Tuesday. The deal also benefits from a first-loss counter guarantee from the IFC-Canada Facility for Resilient Food Systems.
The financing will help Engro make capital investments in facility maintenance and turnarounds, ensuring an uninterrupted supply of urea and other fertilizers to meet national demand. It’s also designed to support farmer programs, bolstering initiatives that complement the company’s core mission of reliable production. “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,” said Ashruf Megahed, IFC’s regional industry head of manufacturing, agribusiness and services in the Middle East and Central Asia. “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.”
By leveraging rupee-denominated financing, Engro is championing the use of domestic capital to enhance operational resilience and strengthen the agri-value chain in Pakistan. “Engro has always strived to solve Pakistan’s most pressing issues meaningfully,” said Ali Rathore, chief executive officer of Engro Fertilisers. “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 agriculture sector accounts for 24% of Pakistan’s gross domestic product, 70% of its exports and 40% of employment, making it essential for long-term growth. Yet it faces systemic hurdles including inefficient supply chains, underfunded farmer programs, low literacy and rising input costs. The IFC said this investment will help address some of those gaps while expanding access to long-term financing in both local and foreign currency, which is critical for economic expansion in areas like agriculture and micro, small and medium enterprises.
The announcement comes about two months after the State Bank of Pakistan signed an agreement with the IFC under the International Swaps and Derivatives Association framework, enabling the multilateral lender to invest in rupees and better manage exchange-rate risks. That pact, unveiled on Oct. 21, is part of broader efforts to promote local-currency financing for the private sector.Companies in developing economies often borrow in hard currencies like the US dollar while generating revenues in local currency, exposing them to significant exchange-rate risks.
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