Pakistan has introduced a new financing mechanism to raise foreign currency by leveraging future dollar payment flows, with the initial transaction expected to provide up to $100 million.
The International Finance Corporation (IFC) and Bank Alfalah Limited (PSX: BAFL) have signed an agreement for Pakistan’s first Diversified Payment Rights (DPR) program.
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.
Under the DPR structure, foreign currency financing can be raised against eligible future foreign currency payment flows. The government said the initiative will provide an additional source of foreign currency financing and help expand Pakistan’s access to international capital markets.
The first transaction under the program is expected to provide financing of up to $100 million. Depending on market conditions and the performance of the initial transaction, the structure could support additional financing in the future.
The mechanism may also attract international institutional and private investors, creating another channel for Pakistan to access foreign currency funding.
Finance Minister Muhammad Aurangzeb said the transaction required regulatory, policy, and technical coordination among the Finance Division, State Bank of Pakistan, IFC, and Bank Alfalah.
He emphasized that diversifying sources of foreign currency financing remains important for Pakistan and stressed the need to develop a pipeline of projects requiring foreign currency funding.
The government said the DPR structure could eventually be used by other Pakistani banks, subject to regulatory requirements, market conditions, and the performance of the initial transaction.
The agreement marks a new approach to foreign currency financing for Pakistan and could help broaden the country’s financing options beyond traditional borrowing channels.
The signing ceremony was attended by Finance Secretary Imdadullah Bosal, IFC Division Director for Pakistan, Afghanistan, Kyrgyz Republic, Tajikistan and Turkmenistan Simon Andrews, along with senior officials from the Finance Division, IFC, Bank Alfalah, and the State Bank of Pakistan.
