WASHINGTON, D.C., May 31, 2000
--The International Finance Corporation will help rebuild Pakistan's export industries through a new US$100 million trade enhancement facility that will provide short-term financing to import capital goods and raw materials that are used to make exportable products.
The trade enhancement facility will be IFC's first investment in two years in Pakistan. Under its terms, IFC will guarantee ABN AMRO Bank up to $50 million of the total facility amount of $100 million.
Businesses in Pakistan have little access to trade finance from local and international commercial banks. The two-year revolving facility will give them better access to letters of credit, confirmations, and bankers' acceptances by guaranteeing documentary credits originated by selected commercial banks. The facility will initially include six top-tier Pakistani banks but may be expanded to include other Pakistani banks that meet IFC's credit quality standards. IFC will guarantee 50 percent of each transaction.
Mr. Bernard Pasquier, IFC's Director for South Asia, said the project will help restore trade finance flows to the private sector in Pakistan at a time when such finance is urgently needed. The investment will help build confidence in the banking sector and, through it, IFC can reach many smaller businesses in Pakistan.
IFC is also considering participating in other projects that will help strengthen Pakistan's economy and restore investor confidence.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
