The International Finance Corporation (IFC) has announced its first local currency investment in Pakistan, marking a significant milestone aimed at strengthening the country’s agriculture sector and expanding access to long-term financing in Pakistani rupees.
According to an official statement released on Tuesday, the IFC’s rupee-denominated investment—structured as an unfunded partial credit guarantee of up to Rs33.6 billion—will support long-term financing extended by Standard Chartered Bank Pakistan Limited to Engro Fertilisers Limited.
A Landmark Step for Local Currency Financing
This initiative represents IFC’s first-ever PKR-based investment in Pakistan, a move designed to reduce reliance on foreign currency borrowing and mitigate exchange rate risks for local businesses.
The IFC stated that expanding financing solutions in both local and foreign currencies is essential for sustainable economic growth—particularly in key sectors such as agriculture and micro, small, and medium enterprises (MSMEs).
Strengthening Pakistan’s Agri-Value Chain
The financing will enable Engro Fertilisers to mobilise domestic capital and make critical investments in facility maintenance and operational turnarounds. These upgrades are expected to ensure the uninterrupted supply of urea and other fertilisers, helping meet national agricultural demand.
In addition, the investment will support farmer-focused programmes, ensuring the continuity of initiatives aligned with Engro’s core mission of reliable fertiliser production and improved farm productivity.
The project also benefits from a first-loss counter guarantee provided through the IFC–Canada Facility for Resilient Food Systems, further enhancing the structure’s financial resilience.
Why Agriculture Matters to Pakistan’s Economy
Pakistan’s agriculture sector plays a central role in the national economy, contributing:
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24% of GDP
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70% of exports
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40% of total employment
Despite its importance, the sector continues to face structural challenges, including inefficient supply chains, limited farmer financing, low literacy levels, and rising input costs. The IFC noted that this investment is intended to help address some of these long-standing gaps.
Leadership Perspectives
Engro Fertilisers CEO Ali Rathore said the company has consistently focused on addressing Pakistan’s most pressing challenges in a meaningful way.
“Using local capital to strengthen local value chains reflects our commitment to Pakistan and to our farmers—the backbone of the country’s economy,” he said, thanking IFC and Standard Chartered for their partnership.
IFC’s Regional Industry Head for Manufacturing, Agribusiness and Services in the Middle East and Central Asia, Ashruf Megahed, described the initiative as a model for innovative and sustainable financing.
“This project opens new pathways for long-term local currency financing that supports growth and strengthens financial resilience in a sector vital to Pakistan’s economy,” he said.
Standard Chartered Pakistan CEO Rehan Shaikh also welcomed the collaboration, stating that the bank remains committed to financing solutions that promote food security and long-term economic resilience. He added that the bank looks forward to replicating this financing structure across its regional network.
Linked to Broader Financial Reforms
The announcement follows a recent partnership between the IFC and the State Bank of Pakistan (SBP) to expand local currency financing for the private sector.
In October, the SBP signed an agreement with the IFC under the ISDA framework, enabling the multilateral institution to invest in Pakistani rupees while managing exchange rate risks more effectively.
Experts note that borrowing in foreign currencies while earning revenues in local currency exposes businesses to significant volatility. Expanding PKR-based financing is therefore seen as a crucial step toward greater financial stability and resilience.
Outlook
IFC’s first local currency investment signals growing confidence in Pakistan’s financial framework and highlights the importance of domestic capital mobilisation. For the agriculture sector—central to food security and employment—the move could play a pivotal role in supporting sustainable growth over the long term.
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