IFC, BAFL ink project agreement for Pakistan’s first Diversified Payment Rights Programme

ISLAMABAD – In a significant development for Pakistan's external financing landscape, a project agreement between the International Finance Corporation (IFC) and Bank Alfalah Limited (BAFL) for Pakistan's first Diversified Payment Rights (DPR) Programme was signed Thursday at the Finance Division, Islamabad, in.

Key points

• The project agreement was signed by Ms Momina Aijazuddin, Regional Industry Director, Financial Institutions Group, Middle East & Central Asia, IFC, and Atif A.
• Speaking on the occasion, Senator Muhammad Aurangzeb appreciated the close coordination among the Ministry of Finance, State Bank of Pakistan, IFC and Bank Alfalah in developing the transaction.
• They expressed confidence that the DPR structure could open an extra avenue for long-term international financing and contribute to further development of Pakistan's capital markets.
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Notably, the project agreement was signed by Ms Momina Aijazuddin, Regional Industry Director, Financial Institutions Group, Middle East & Central Asia, IFC, and Atif A. Bajwa, President & CEO, Bank Alfalah Limited. The DPR Programme, being pursued under the direction of the Prime Minister, provides an innovative mechanism for mobilizing long-term foreign currency financing through eligible future foreign-currency payment flows. The initiative intends to diversify sources of external financing and facilitate greater access to international capital markets. For context, the initial transaction envisages up to $100 million of financing under the DPR structure. Subject to market conditions and the performance of the initial transaction, the programme may provide a platform for further financing and broader participation by international institutional and private investors.

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Speaking on the occasion, Senator Muhammad Aurangzeb appreciated the close coordination among the Ministry of Finance, State Bank of Pakistan, IFC and Bank Alfalah in developing the transaction. He observed that the initiative involved significant regulatory, policy and technical work and described its successful progression as an notable first step that could pave the way for similar market-based financing structures going forward. The finance minister emphasized the importance of diversifying Pakistan's sources of foreign currency financing and developing innovative financing mechanisms to backing investment and productive economic activity. He additionally highlighted the importance of effectively utilizing the financing channel and developing a pipeline of eligible projects requiring foreign currency funding.

Representatives of IFC appreciated the backing and coordination extended by the administration of Pakistan and the State Bank of Pakistan and acknowledged the efforts of all stakeholders involved in bringing the transaction to this stage. They expressed confidence that the DPR structure could open an extra avenue for long-term international financing and contribute to further development of Pakistan's capital markets. Bank Alfalah acknowledged the backing of the administration, State Bank of Pakistan and IFC and highlighted the significance of being the first Pakistani bank to undertake a DPR transaction. The bank expressed its commitment to leveraging the structure to backing eligible foreign currency requirements and productive investment. In practice, the transaction marks an significant milestone in the development of Pakistan's debt capital market and external financing framework. It additionally establishes a potential precedent for future DPR transactions by other Pakistani banks, subject to market conditions and the performance of the initial programme.

Meanwhile, the ceremony was attended by Secretary Finance Imdadullah Bosal; Simon Andrews, Division Director, Pakistan, Afghanistan, Kyrgyz Republic, Tajikistan & Turkmenistan, IFC; along with senior representatives from the Finance Division, International Finance Corporation, Bank Alfalah Limited and State Bank of Pakistan.

In short, IFC, BAFL ink project agreement for Pakistan's first Diversified Payment Rights Programme is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.