The International Finance Corporation (IFC) has announced its first-ever local currency investment in Pakistan, marking a significant development for the country’s private sector financing. The IFC, which is the private sector arm of the World Bank Group, said the move aims to strengthen Pakistan’s agriculture sector and improve access to long-term financing in local currency.
The announcement was made through an official press release issued on Tuesday. The initiative reflects a broader push to reduce reliance on foreign currency borrowing and to support sustainable economic growth.
Rs33.6 Billion Rupee-Denominated Financing Structure
According to the IFC, the investment will be made through an unfunded partial credit guarantee of up to Rs33.6 billion. This guarantee will support long-term financing provided by Standard Chartered Bank Pakistan Limited to Engro Fertilisers Limited.
The IFC described the engagement as its first Pakistani rupee-denominated investment. It said the structure would expand access to long-term financing in both local and foreign currencies. Such financing is considered critical for economic growth, especially in key sectors like agriculture and micro, small, and medium enterprises (MSMEs).
The investment also benefits from a first-loss counter guarantee provided by the IFC–Canada Facility for Resilient Food Systems. This additional layer of support aims to strengthen food security and reduce financial risks.
Strengthening Agriculture and Food Security
The IFC stated that the financing would help Engro Fertilisers strengthen Pakistan’s agri-value chain by mobilising domestic capital. By using rupee-denominated financing, the company aims to enhance operational resilience and reduce exposure to exchange rate volatility.
The funds will be used for capital investments, including maintenance of production facilities and planned plant turnarounds. These measures are expected to ensure an uninterrupted supply of urea and other fertilisers, helping meet national demand.
In addition, part of the financing will support farmer-focused programmes. These initiatives complement Engro’s core operations and aim to improve productivity and sustainability at the farm level.
Agriculture’s Importance to Pakistan’s Economy
The press release highlighted the central role of agriculture in Pakistan’s economy. The sector contributes 24 percent of GDP, accounts for 70 percent of exports, and provides employment to 40 percent of the workforce.
Despite its importance, the sector faces several challenges. These include inefficient supply chains, underfunded farmer programmes, low literacy levels, and rising input costs. The IFC said this investment would help address some of these structural gaps and support long-term resilience.
Statements From Key Stakeholders
Engro Fertilisers Chief Executive Officer Ali Rathore welcomed the initiative. He said the company has always aimed to address Pakistan’s most pressing challenges in a meaningful way. He added that using local capital to strengthen local value chains reflects Engro’s commitment to farmers, whom he described as the backbone of the economy.
IFC’s Regional Industry Head for Manufacturing, Agribusiness, and Services in the Middle East and Central Asia, Ashruf Megahed, said the investment highlights strong collaboration between IFC, Engro Fertilisers, and Standard Chartered Bank. He noted that the project opens new pathways for long-term local currency financing in a vital economic sector.
Standard Chartered Pakistan CEO Rehan Shaikh said the bank remains committed to financing solutions that support sustainable growth. He added that the partnership reflects a shared vision of strengthening food security and building resilience across Pakistan’s economy.
Broader Push for Local Currency Financing
The announcement follows a recent partnership between the State Bank of Pakistan (SBP) and the IFC. In October, the SBP signed an agreement under the International Swaps and Derivatives Association (ISDA) framework. The agreement allows the IFC to invest in Pakistani rupees and better manage exchange rate risks.
Experts note that borrowing in foreign currencies while earning in local currency exposes companies to significant exchange rate risk. Expanding local currency financing is seen as essential for improving financial stability and strengthening Pakistan’s private sector.
